Creative Destruction

Career College Central Summary:

  • Higher education suffers from Baumol’s disease—the tendency of costs to soar in labour-intensive sectors with stagnant productivity. Whereas the prices of cars, computers and much else have fallen dramatically, universities, protected by public-sector funding and the premium employers place on degrees, have been able to charge ever more for the same service. For two decades the cost of going to college in America has risen by 1.6 percentage points more than inflation every year.
  • The second driver of change is the labour market. In the standard model of higher education, people go to university in their 20s: a degree is an entry ticket to the professional classes. But automation is beginning to have the same effect on white-collar jobs as it has on blue-collar ones. According to a study from Oxford University, 47% of occupations are at risk of being automated in the next few decades. As innovation wipes out some jobs and changes others, people will need to top up their human capital throughout their lives.
  • Like all revolutions, the one taking place in higher education will have victims. Many towns and cities rely on universities. In some ways MOOCs will reinforce inequality both among students (the talented will be much more comfortable than the weaker outside the structured university environment) and among teachers (superstar lecturers will earn a fortune, to the fury of their less charismatic colleagues).

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THE ECONOMIST

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