The crack-up

I ran into the following economic dictum at Paul Krugman’s new Substack. The author is Rudi Dornbusch, who formulated it originally in the context of monetary policy and financial crises, but it clearly has wider applications:

The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.

This is reminiscent of Mike’s description in The Sun Also Rises of how he went bankrupt: “Two ways. Gradually, then suddenly.”

I was thinking about these insights in the context of the economic future of higher education in this country. I’ve spent all but three years of my adult life in academia, first as a student and then as a faculty member. For the last quarter or so of that 47-year span, I’ve been wondering how much longer this thing of ours could keep going in the direction it’s been going, certain in the knowledge that the answer was “definitely not indefinitely,” but also unclear in my mind, or the back of my mind, when it would become clear to everyone that our methods were unsound.

Here is the change in the total revenues for degree-granting institutions of higher education in America over the last four decades, per total full-time equivalent enrollment, converted into 2022 dollars:

FY1980: $26,417

FY2001: $39,141

FY2022: $49,749

How did this happen? The answer has a lot of components, so let’s take a look at some of them, in no particular order.

(1) America as a nation is a lot richer than it was 40 years ago, and the growth in higher ed revenue reflects this broader economic growth pretty closely, as both figures have roughly doubled over this time.

(2) Some costs in higher ed are necessarily much higher than they were 40 years ago. The most obvious is IT, although this raises the question — not begs the question, raises the question — of whether and to what extent the cost savings to institutions generated by IT should cancel out or exceed costs of IT itself (I would think the answer would be “by a lot” but I’m no expert).

(3) Colleges and universities are expected by pretty much everybody involved with them to be far more full-service sorts of institutions than they were 40 years ago. This is true in both serious (mental health services) and relatively frivolous (the infamous climbing walls and lazy rivers) ways.

(4) The professional incentives of upper administrators in higher education are perverse. Essentially, upper administration is evaluated and rewarded in terms of a hyper-capitalist model, in which the prime directive is always more growth, especially of revenues. Obviously, the parallel between the economics of the university and those of the larger society is not coincidental.

(5) An extremely clear example of the perverse effects of this model is provided by comparing the change in compensation between faculty and upper administrators. The average salaries of all FULL TIME university faculty essentially didn’t change between 1970 and 2022, going from $96K to $98K, in constant dollars. But the PERCENTAGE of faculty that was full time changed from 78% to 52% over this same time frame, which means that faculty salaries have gone down very sharply over the past couple of generations, if you count the half of the faculty that does two-thirds of the teaching in higher ed as actual faculty, which I realize many a chaired professor doesn’t, for reasons that are too obvious to belabor.

Meanwhile, compensation for upper administrators has exploded. 40 years ago, hardly any university president was making more than $300,000 per year in constant, 2022 dollars. Today, dozens of presidents make many multiples of that, but what’s even more relevant is that literally thousands of other administrators have larger salaries than the highest-paid university presidents did a generation ago. And the sheer NUMBER of upper administrators has proliferated, for both good and bad reasons. The good or at least arguably good reasons have to do with the demands that universities be full service institutions in ways that they weren’t, referenced above.

The bad reasons include the fact that the very highest administrators will strive to unload their putative job responsibilities onto underlings, who will perform the actual work that the Lord High Chancellor of Synergistic Interdisciplinary Synergies is in theory paid to perform. Also, as the professional administrative class has been increasingly hived off from the faculty into a separate career track/social caste, its members naturally come to consider administration to be the most central and important and valuable thing that happens at the university, as opposed to research and teaching and other stuff that members of the professional administrative class no longer do, because they have achieved academic escape velocity.

(6) It’s difficult to overstate the corrupting effects that pseudo-evaluative ranking rituals have had on higher education. US News and its various imitators have, over the past generation, created a ready-made pragmatic excuse for what upper administrators want to do anyway, which is to constantly spend more money. This is because these institutions are rewarded directly and indirectly for spending more money, as a proxy for the quality of the institutions themselves. This is, from an economic and social standpoint, very obviously insane, but when sanity collides with the social and economic self-interest of the relevant decision makers, sanity is going to lose.

(7) A critical factor in regard to how all of the above happens is the extremely weak and inadequate governance structure at so many institutions of the higher learning in America. I can from personal experience state in the most polite terms that I can muster that, for example, the regents of the University of Colorado don’t have the faintest idea about what’s going on at my employer, let alone any clue how to go about managing whatever that might be. This is not, I hasten to add, because of any character flaws on their part as individuals, but rather because the combination of the regents’ professional backgrounds and the essentially total control that the upper university administration exercises over the information available to the regents makes anything resembling an independent check on the administration’s self-dealing — which, again, is structurally overdetermined down to the last turtle — all but impossible.

For various economic, demographic, and political factors, these dynamics are hurtling American higher ed toward a reckoning, that is even now approaching gradually, but will one day arrive suddenly.

Until that day, the motto of the powers that be in academia is exactly the same one that governs the behavior of the masters of our increasingly plutocratic universe: I’ll be gone; you’ll be gone.