What’s Wrong with Universities?

At my university (Rhodes University in South Africa), we have a policy of not outsourcing things a university traditionally does itself – even if that sometimes adds to our costs. We may be paid slightly lower than average, but we are also a happier campus than average.


Our outgoing Vice-Chancellor (president, in US terminology) Saleem Badat is rare among university leaders in understanding the character of a university and maintaining it against outside pressures. We are in a small town and account for a large fraction of the local economy – if we outsourced basic services to out of town companies, we may save a little money, but at what cost? Our local community is depressed as it is, and being an island of plenty in a sea of poverty is an unpleasant situation for those in both places.


You could argue this is no different from corporate social responsibility taken seriously. A mine, for example, could also source all its supplies as locally as possible.

But it goes further than that.

Universities around the world have made the same mistake: hiring expensive business consultants who tell them to run more like a business. Universities have been around a lot longer than the modern concept of a business, and have not caused major financial meltdowns, wars or corrupted the political system. At very modest cost to society, they have spearheaded curing disease, inventing revolutionary technologies and transforming society in more ways than I can think of.

Academics of  course, do sometimes cause major problems – but not operating as academics, where they have limited scope to do damage. Academic economists, for example, have at times spread highly dysfunctional ideas but, even there, it is not universities that have done the damage, but politicians who are ready to take bogus advice if it suits their agenda. On the whole, when ideas are kept within academia, the bad ones are eventually rooted out. And an academic who is not subject to commercial pressures is more likely to be honest about such mistakes.

Why is it that places that are supposed to be the home of the smartest people on the planet take advice from people who have no clue about how to run their institution, when the people who know most about how to run a university are those already there?

The only reason I can think of is that, having paid big money to corporate consultants, you would feel a right idiot if your didn’t take their advice.

What is wrong with all this?

A university has aims that are hard to quantify economically. Sometimes it is necessary to maintain a discipline that does not cover its costs because it is required for other subjects, or is at the core of research initiatives. Or maybe it is a discipline that no one else supports, and it has to exist somewhere. Achieving equity in the face of an unequal school system also has costs and a simple bottom-line based accounting system cannot adequately capture the value of that kind of redress.

The real difference though between a university and a business is the time horizon. A university aims to build for the long term. There may be no immediate return from a PhD or even a slightly better quality undergraduate curriculum. The value may only be seen years or decades later when a graduate cures a disease, invents a new technology or discovers a new way of economically empowering the poor.

We recently held a farewell for Dr Badat, who moves on to a major private funding agency. I hope Rhodes continues with his philosophy because that is one of the things that makes this place special – I have done the big city university trying to be a “business” too often to want to repeat the experiment.

Peak Oil, Poverty, Moore's Law and Manure

Peak Oil

As oil and with it products we use to fuel our cars and trucks gets more expensive, there is growing anguish about the effects on the cost of living. China alone is adding millions of cars a year to the total, and peak oil theory says we should be hitting limits soon on production growth.

In reality, as prices go up, there will be options of exploiting kinds of oil previously too expensive: under the deep sea, in the arctic (conveniently being freed of ice; what's doing that, I wonder, if there's no climate change?), tar sands, shale oil… so production may not drop off as fast as predicted by peak oil theory. But should we want to squeeze every last drop of oil (and coal and gas) out of the ground?

Not only do we have climate change to worry about, but the economics of fossil fuel has a lot to do with the gap between rich and poor nations.

The Poverty Gap

In the twentieth century, the cost of communication increasingly split rich from poor. By communication, I mean movement of people, goods and information. Part of this was energy; another part telecommunications. The common thing was the distinction between countries with a comprehensive network of roads, rail, electricity and telephone connections, and those without.

Addressing this gap became increasingly hard, as the cost of new infrastructure has to compete with infrastructure created in an era of lower costs (e.g., coal was cheaper because demand was lower). It is this gap which for example makes fruit in a third world country absurdly cheap in tradable currency terms, while making a local phone call is ridiculously expensive. There's a kind of arbitrage, but one where the places where the price differences occur are too hard to connect, to correct the pricing anomaly (as would happen for example if the US$ to euro exchange rate was out of synch with the US$ to pound sterling exchange rate).

Somehow, despite all this, we have arguments from climate change inactivists that addressing poverty is an alternative to addressing climate change. Yet if you accept that poverty is largely structured into communication infrastructure (or lack thereof in poorer countries), new technologies that reduce the need for infrastructure can go a long way to closing the poverty gap.

An example is the cell phone. In many poor countries, cell phone roll-out has been many times faster than predicted, because of communication starvation. People in Nigeria didn't have phones not because they were poor, but because there was no infrastructure. Cell infrastructure is relatively cheap to put in: as long as you have electrical power, you can virtually parachute base stations in. By contrast, a nation-wide wired phone network needs wiring to the home, with extensive local wiring, even if trunk lines are wireless.

This example generalizes to other cases like electricity. If you can generate power locally without a grid, you can make energy accessible a lot faster in countries without infrastructure. Eliminate the cost of consumables, and you also eliminate another huge problem: rapid price increases as supply fails to keep up with demand. If you think this is bad for wealthier countries, what will doubling the fuel price to to someone who can barely afford a car?

Moore's Law

The nice thing about renewables is that technology changes reduce prices. It doesn't matter if coal supply runs low, oil runs out or gas slows to a trickle. The wind will still blow, the sun will still shine. Just as Moore's Law has pulled computer prices down dramatically over decades, photovoltaics and wind are getting cheaper. Eliminate the consumables and you have a real revolution in energy economics, far bigger than Henry Ford's revolution in personal transport.

This is an exciting time once we forget doom and gloom and think of what could actually be done.

Instead of living in terror at consequences of change, how about accepting that we are looking at a change as big as the move from horse and buggy to cars?

Think of it this way: the cost of renewable energy sources only depends on the technology, not consumables. Once we get this right, we can make energy cheaper with every new development. As long as we are stuck with fossil fuels, prices can only go up as demand overtakes supply.

Why are we so scared of this great new concept? Once we solve the energy storage problem (there are already good ideas like compressed air) poorer countries will benefit too. What's the downside? Unless you own a coal mine ... the horse industry lost big time when the Model-T appeared, but think of the advantages to society as a whole: personal mobility on a level never experienced before.

Now we have the next level: energy with radically lower constraints on supply and infrastructure. If you can do local microgeneration with efficient storage, you no longer need a grid. In rural Africa, for example, you could almost parachute in (where have we heard that before?) a solar or wind microgenerator.

Manure

Back in the nineteenth century, it's alleged that someone predicted that London would be metres deep in horse manure in a few decades. It's a nice story, even if it's improbable that it's true (I have yet to find a direct source for it, and there are several variants – the hallmarks of a myth or urban legend). It is certainly true that getting rid of horse manure in the streets of major cities was a growing headache – just as cutting carbon emissions is today.

So why, today, are we staring down the problem of curbing carbon emissions when there are far superior alternatives – alternatives that only need a little development to be viable?

The only alternative is to consume fossil fuels like there's no tomorrow, then it's back to the stone age. Why are we even debating this?