Wednesday, January 23, 2013

Open Letter to Virginia Delegates RE: #UVa Rector #Dragas

Here is my open letter to the Members of the Appointments Subcommittee of the Virginia House of Delegates.

Dear Honorable Appointments Subcommittee Members:

Tomorrow morning, you will be visited by several of the University of Virginia's brightest and most idealistic students. They will arrive with much weight on their shoulders, to address you with regard to their concept of Honor at the University. Inspired by this concept, the students will sincerely represent the case against the reappointment of Rector Helen Dragas. I implore you to listen carefully to their comments and study their intentions.

While a faculty member at the University, I saw firsthand the severe consequences of the actions orchestrated by Rector Dragas last year. Within mere hours, the University's reputation and special relationship with its Alumni were dealt a severe blow. I have never witnessed such capricious and damaging executive misjudgment.

Frankly, I believe that I understand the Rector's original intent with regard to seeking leadership more dynamic than it has enjoyed in past decades. However, Ms. Dragas methods were injurious and remain a constant and festering insult to the entire community of the University. Truly, Ms. Dragas' only impressive accomplishment has been her ability to coalesce opposition to herself... among a broad community composed of many diverse interests. And yet, Ms. Dragas remains, somehow unaware or unimpressed that she has become the most divisive character in the University's entire history. One wonders what competent executive would let this happen to the organization they lead.

At this moment, we are faced with the disheartening possibility that Ms. Dragas' managerial incompetence and disregard for community consensus will be overlooked because she has certain financial ties to various interests on both sides of the political aisle.

Please consider what the University needs most at this juncture, as financial pressures continue to rise on our students and their families. These are difficult times for higher education, for the University, and for many families who sincerely believe in the value of an excellent college education. To move forward on its path toward affordable excellence in the Commonwealth, the University very much needs a solid relationship with *you* in Richmond. Clearly, Ms. Dragas is not the right person to mediate that relationship: she cannot capably represent your concerns to the University, nor the University's concerns to you. Ms. Dragas simply isn't the right person to mediate that important conversation.

I ask that you listen very carefully to the students tomorrow. You will identify in their voices the idealism that brought you to Richmond to work for a better future for your constituencies. Please respect the ideals that they express, and recognize within yourselves those similar ideals. And please consider the egregious affront to those ideals that Ms. Dragas has come to represent.

Most Sincerely,

Keith Williams
Visiting Professor
University of Virginia

Monday, January 7, 2013

Higher Ed's Administrative Cost Problem

American higher ed continues to struggle with questions about what amount of administration is optimal. Obviously, this issue is front and center because headlines highlighting the problems of escalating tuition and poor job prospects continue to appear. Many faculty feel that administrative cost is to blame. Are they right?

Recently, the Chronicle published a little article discussing the scale of administration, relative to faculty and enrollment size:

Here are my stray thoughts on this matter. As usual, I tend to see this as a much bigger-picture issue than simply deciding what number of administrators is the right number.

Inevitably, the market for any product or service contracts and then expands and then contracts etc... and so the optimal administrative structure is elastic and adaptive. Outside of academia, excessive administrative burden is addressed quite directly and ruthlessly: management positions are consolidated, and redundant or outmoded positions go away. What if academia did that?

An adaptive administrative structure is apparently rather foreign to academic institutions that were configured around very long-term (~30 yr), ultra-stable, conservative investments. Academia wasn't designed to grow rapidly... in stark contrast to a typical American company that pursues several percent growth, year-over-year. So many of the problems we see in higher ed stem from this issue: we saw very large spike in enrollment beginning in the 90s, facilitated by artificially low loan rates, and higher ed simply wasn't built to accommodate the influx. Higher ed wasn't designed to scale rapidly nor to respond to the bubbles we've seen in the employment market e.g. in the tech sector. And various politicians have naively assumed that we can simply drop more and more students onto our campuses and assume that their tuition would pay for the needed infrastructure and all would be well. If only it were so simple!

There are very large burdens associated with growing our schools. To borrow some manufacturing lingo, we've had to do much more than simply expand: we've had to retool. Entire degree programs have vanished or been supplanted by entirely new fields of study. The academic mission has greatly expanded and (in the view of many) defocused. And the upfront infrastructure cost per added student is apparently much worse than it was, say, in the 60s. For every student that we add to the rolls today, we need to add a *lot* more infrastructure and administration. 

Today's academic hierarchies are the opposite of elastic and adaptive. Obviously, the hierarchy is now much more "I" shaped than "A" shaped: it has large steps of responsibility and salary as you go from adjuncts to junior TT faculty through all the ranks to senior leadership. E.g. at my institution, there are junior TT faculty hired in the ~$60k range, and then there are Deans making 5x that, and a President making more than 10x that. That's what I mean by "I" shaped. And this "I" structure isn't only about salary, of course; it is about the responsibility that these individuals carry. A typical $60k junior TT faculty member is probably expected to bring in ~$100k or so per year, if anything; meanwhile, the $400k administrative had better bring in many tens of millions or (s)he is out. And there is a vanishing in-between.

All of this has a very negative impact on academia's ability to adapt and reconfigure. In a flatter hierarchy, there is the possibility for the more adaptive people to migrate between adjacent ranks and thus help the whole organization adapt much more fluidly to market conditions. So, for example, if there is a decrease in demand for law degrees, then that part of the structure can contract and those individuals can go support other areas. I don't think we have nearly enough of that adaptive capability in academia at present... at least not in our administrative hierarchies.

The obvious paradox is that academia needs to figure out how to become more adaptive to short-term trends, while also preserving the long-term leadership and vision. This is a very difficult problem, but there are some good solutions, and perhaps academics could learn a lot from the millions of business models that have been explored by the markets over the years. 

I am *NOT* saying that we necessarily need to become Zynga and selling credits online, or start fracking in our campuses or something like that! We simply need to look at how to make the whole organization a more adaptive and versatile, while also protecting the most valuable aspects of the long-term academic investment. Perhaps that means outsourcing contract and finance management or such; or maybe we simply need to look at the most rapidly inflating expenses and address those with minor structural changes. In any case, it's time for academia to put *everything* on the table except quality of instruction. And if this isn't done from within academia, then it will be done by politicians. And then there is no guarantee that the result will be something that upholds the long-term value of a higher education.

Friday, January 4, 2013

Dumb Platinum #Supercoin Idea Just Won't Go Away

There is an amusing idea going around that the Treasury could mint a trillion dollar platinum supercoin and use it to exceed the debt ceiling, thus effectively sidestepping Congress and any constitutional concerns about the ability to exceed the ceiling.

I initially thought the idea was a wry commentary on the absurdity of the political problems surrounding the debt ceiling. But no! Some people actually take this **** seriously...
Since our media thinks it appropriate to propagate this nonsense, I'll just interject that the coal standard is more sensible. At least then we could prop up the value of the currency by producing energy... and a consumable currency has the advantage that it makes people want to spend it! Hey, if you're really worried about inflation....

I am kidding.

But seriously... the notion that the Treasury could perform this legal maneuver without massive repercussions is laughable. We might as well sprinkle fairy dust across the land or send PDFs of million dollar bills for people to print at home.

Let's be clear: we don't need an obscure legal trick to permit Treasury to go over the ceiling. The ceiling can already be exceeded, and the only consequence is that the matter might be litigated in Congress... a very lengthy process that might result in a slap on the wrist. What, you think it'd be as bad as the Nixon shock?! Big deal.

These legalities of what Treasury should or shouldn't do in the short term don't matter one iota. What really matters is global confidence in our bond system. Those who invest in our bonds need to know that we have the basic mathematical competence to live within our means. And doing that is really not complicated: the Simpson-Bowles plan is a realistic, sensible framework. All we need now is national leadership which cares more for our children than themselves. We don't need fairy dust or platinum coins or clever legal tricks... we need back-to-basics common sense and responsibility.