Usually I depend upon Thomas Frank for this sort of thing, but Howard Fineman has read the newest conservative bestseller so that the rest of us can ignore it. Here’s the part that speaks to the main subject of this blog:
Our superior culture of risk, [Ed Conard] says, is fostered by comparatively low personal taxes and light government regulation. And that, in turn, has yielded growth rates way above those of Europe and Japan. “The Internet is the key and they have produced NOTHING–no Facebook, Google, Amazon, YouTube, Apple, Microsoft–NOTHING.” Bottom line: leave the market alone.
Of course, for every Facebook, Google and Amazon this culture produces, there are several Pets.coms. Indeed, social media companies that once looked like the future are already tanking on Wall Street. Yet, as Historiann recently noted, successful, established universities are falling all over themselves to sign up with private companies so that these firms can host brand-extending MOOCs despite the fact that those firms currently have no revenue stream at all.
Where’s the money going to come from? There are no good answers.
When your typical venture capital fund comes in and buys a company, they monetize their investment by selling off the pieces, sometimes even when that company is already profitable. This is what’s led to all those ads with steelworkers explaining how Mitt Romney shipped their jobs off to China. Unfortunately, college professors aren’t particularly sympathetic figures. Therefore, tearful explanations of how Coursera left us unemployed won’t evoke any sympathy from anyone.
However, the second line of attack on the Mittster’s business career might be much more useful in our situation. Besides outsourcing American jobs, Bain Capital has made scads of money whether the companies they’ve taken over have been successful or not. Create the next Apple, the risk takers get rewarded. Act like this, they still get rewarded:
And on Thursday, the 800-pound gorilla of the group, Facebook Inc, reported tepid results that shaved some $10 billion off the company’s market cap. The stock has gone straight down since its botched May initial public offering and now trades over a third below its $38 IPO price.
“The VCs, the private equity guys at the early stages, already cashed out and made their fortunes,” said Peter Schiff, chief executive of Euro Pacific Capital. “Everybody else who ran to buy the stock at the IPO at a sky-high valuation ended up holding the bag.”
In the case of higher education, the VCs backing Coursera and Udacity are only part of the problem. What about the administrators who sign their universities up with these companies, or worse yet, spend tens of millions of dollars of other people’s money pursuing a homegrown version of the flavor of the month? They can point to their “record of innovation” then move on to greener pastures before the effects are felt.
Seriously, if you really want to disrupt higher education, don’t you think it would be a good idea to make sure that there are different people with different attitudes in charge when you’re done?