On For-Profits in Higher Education
All this needs to be interrogated now as we are in the middle of an era-defining recession, which may last a generation. This isn't a temporary business cycle thing, but one that changes our societies and politics irreversibly. It is hard to see the public subsidies to education growing the way it did in the last twenty years, yet we are going to require more skilled individuals to provide the increasingly complex products and services that we need. Therefore, the need for education that works is at an all-time high. So is its demand, with a billion people joining Middle Classes from India and China, and the African societies emerging into urban modernism. The Public systems of education has no answer to this explosion of demand for education, and Not For Profits offer only a limited solution. It would be incumbent on For-Profits to do the heavy lifting, to prepare a generation of middle class, and they can only do this if they can sort out their business model beyond the rent-seeking that they currently do.
So, in a way, we are a tipping point when higher education may emerge as a capitalist enterprise at the expense of the rent-seeking entities that exist now, but we also need a new model for this enterprise as the current models of For-Profit emulate too much of the rent-seeking behaviour themselves and do not seem to be sufficiently ready for the job at hand. For this, we may need to look closely at the very western thinking of 'Profit Maximization' at the expense of everything else, a model which is already coming under pressure because it is inherently unsustainable, from the perspectives human relationships and environmental requirements. This thinking, shaped in an era of slave trade, discovery of new lands and materials and colonial dominion, is at odds with our time of greater public responsibility and dwindling natural resources. Today, it is important to see a business organization's job to create a value stream over a period of time, and profit as a pay-off that the organization will draw at a given moment: In essence, a balanced view of long term and short term is extremely important if one has to build a sustainable business.
Such thinking is currently absent in For-Profit Higher Ed and needs to be introduced. Higher Education is a long term business by design and the value stream thinking is most relevant in context, far more than the traditional margin thinking that dominates western enterprise. It is impact, not margins, that defines the success even of a For Profit college, and one must therefore build capacity to create that impact, even if this moderates the short term returns on capital. This is exactly why endowment funds (where the institutions had it) or debt funding worked better in creating better institutions than money raised in public capital markets or the public money in the modern era, which is often tied to short term returns (as in the UK). It is possible to have a For-Profit enterprise without having the Profit-maximization mantra, as many organizations across the world demonstrate through greater commitment to customers, people and environment (ahead of shareholder returns). Higher Education still being in early stages as an enterprise, such matured thinking hasn't yet emerged in the sector: But it is time it does so.