Politics and Profits of Academia

Jan 16, 2015

Even if universities are not for profit, budgets loom large in higher education--and global markets hold revenue potential. In this episode, we look at three ways universities are involved in global markets and how this can create ethical considerations and unintended consequences.

JULIA TAYLOR KENNEDY: You're listening to Impact from the Carnegie Council. I'm Julia Taylor Kennedy.

Last time, we looked at the cues non-profit organizations take from global corporations. This time, we're looking at ways universities echo businesses. After all, even if universities are not for profit, budgets loom large in higher education—and global markets hold revenue potential.

Plus, schools are finding, just as corporations did, the interconnected nature of our world means new markets bring ethical considerations and unintended consequences.

We'll look at three ways universities are involved in global markets and why those choices can be so controversial.

JASON LANE: I'm Jason Lane. I'm an associate professor of education policy at the State University of New York [SUNY] at Albany, and a co-director of the Cross Border Education Research Team.

JULIA TAYLOR KENNEDY: Lane studies the international branch campuses of other universities. He's discovered that universities went on a global expansion tear about 10 years ago and continue to open up branch campuses all over the world, sometimes in controversial places in the Middle East. Lane finds they run into some of the same challenges global corporations encounter as they expand.

JASON LANE: You've got to create a whole new organization. You've got to try to replicate to the extent you can what is happening in the home campus, in a foreign environment. You have to understand the foreign environment. You have to adapt to the foreign environment.

JULIA TAYLOR KENNEDY: There's also a quality control issue.

JASON LANE: How do you make sure that what you're doing in this foreign environment is comparable to what you do at home? A lot of countries want branch campuses to open up because they want something comparable to what is back home.

JULIA TAYLOR KENNEDY: For example, University of Nottingham out of the UK opens up a branch in Malaysia.

JASON LANE: Part of the expectation is that there is a UK education being provided in Malaysia that's different than what is happening in that native environment.

So how do you ensure that there is a quality of education comparable to the home campus?

JULIA TAYLOR KENNEDY: Corporations have to maintain the quality of their brand overseas while also fitting into the local culture, like Coke or McDonalds might do.

Why do this at all? A few reasons: First, as we just discussed, it's worthwhile for a major university to spread brand awareness through international branch campuses. Second, these campuses bring research opportunities for scholars abroad. Third, there's revenue potential.

JASON LANE: They're looking at ways in which to expand their resource base, and in that there are opportunities to move to new student markets.

JULIA TAYLOR KENNEDY: But student tuition isn't where the real money lies.

JASON LANE: A number of these branch campuses—recent ones anyway—have been, at least in part, subsidized by foreign governments.

JULIA TAYLOR KENNEDY: Take New York University's branch campus in Abu Dhabi.

JASON LANE: We know from the outset they were offered initial payment of $50 million just to come and set up shop, in addition to some other costs that are being covered by the country.

JULIA TAYLOR KENNEDY: That's where things can get a little messy. What if a foreign government pays big bucks for a major American university to set up shop in their country? What kind of expectations does that bring from the foreign government?

JASON LANE: In many other countries, higher ed is a nationally governed enterprise and they often operate in conjunction with the government.

JULIA TAYLOR KENNEDY: The United States, of course, is very different.

JASON LANE: We're very decentralized, state-controlled, and, in a large part, universities are self-governed. They make decisions in their own right.

But when they set up in a foreign environment, they can be looked upon as an actor of the government. So I think an important consideration for the administrators of these foreign branch campuses is to what extent their actions reflect upon the home country within that environment.

JULIA TAYLOR KENNEDY: In the extreme case, what if the hosting government then wants to censor the material introduced in the branch campus classes?

JASON LANE: When branch campuses set up, they often try to, in their agreements, ensure that academic freedom will continue to exist, at least within their academic enclave in this foreign environment.

That said, these branch campuses are embedded in a foreign culture that does have different expectations. So there may be times when faculty choose to self-censor themselves out of fear of what might happen. But it's hard to get that sort of evidence.

JULIA TAYLOR KENNEDY: Just like corporations opening up a country office or launching a brand in a new market, universities have to sort through how much to tailor their product for the local market or stay true to their original brand; how closely to work with the government and how much independence to maintain.

But is this all worth it? How much revenue do they really bring in?

JASON LANE: In large part, I would say that most universities are not getting rich off of these endeavors. It is enough to try to provide the revenue for the branches to be self-sustaining without drawing on resources from the home campus.

Places like Qatar and Abu Dhabi, you do see the government providing a high level of subsidization for these branch campuses. But there are others—Dubai, for example, another emirate within the UAE [United Arab Emirates]—where the government has provided very little; though what they have sought to do is provide the policy flexibility for branch campuses to come in and be successful in providing a type of education that isn't otherwise available within that emirate.

JULIA TAYLOR KENNEDY: Despite their reputation, then, these international branch campuses don't tend to be huge revenue sources.

JASON LANE: There's often been an uneasy relationship for decades between government and higher education. Higher ed as a cultural entity has an important role to play in influencing the ways in which societies think, particularly in the long term.

Branch campuses weren't necessarily created with the idea of extending one country's influence over another. But governments certainly see that there are important aspects of what branch campuses are doing for advancing cultural awareness and cultural understanding between two countries, and I think it goes both ways.

The home country certainly sees it as a way to create another, maybe let's say, an academic embassy in a foreign country, which provides the opportunity to talk about questions that are critically important to the home country, or to extend conversations from the home country into a foreign environment. The importing country sees it as important as well, because it creates, at least implicitly, a partnership between that country and the home country, which might end up increasing their local influence because of this perceived partnership between a dominant higher education system and their own country.

JULIA TAYLOR KENNEDY: That may go some way toward explaining why these universities wouldn't stop at simply making their courses available online. A professor's physical presence might be quite different from an online lecture.

ANANT AGARWAL: Online interaction can be extremely personal and much more so than if the student were sitting in my class, in a classroom with 300 students, in the back row. When I taught my own course on MIT [Massachusetts Institute of Technology] ex in circuits, students would write to me telling me that they almost felt as if I were sitting next to them, doing a one-on-one tutorial with them.

I'm Anant Agarwal. I'm the CEO of edX and a professor of electrical engineering and computer science at MIT.

JULIA TAYLOR KENNEDY: EdX is one of a group of emerging platforms that puts university-level classes online for free. Called massive open online courses, or MOOCs for short, this new form of education is highly endorsed by major players in the education space like Gates Foundation as the way to bring high-level education to every corner of the globe. Most of these platforms offer free courses from major universities around the world, with a mix of video lectures and reading and written course materials.

ANANT AGARWAL: EdX is the only non-profit MOOC provider, and Udacity, Coursera, Future Learn, Iversity, and a number of others are for-profit MOOC providers.

I think that's the highest level of partitioning, in terms of how the market is differentiating itself.

JULIA TAYLOR KENNEDY: Agarwal feels edX's non-profit status allows it to stay true to its core mission.

ANANT AGARWAL: Since education is a basic human right, we believe that everybody should have access to it, like the air we breathe. For something this important, and this foundational, we felt it's really important that it be governed as a non-profit so that as we make decisions along the way, the decisions can be in the interest of the entire community, as opposed to maximizing the return on investment for venture capital investors, or other investors.

JULIA TAYLOR KENNEDY: Still, revenue matters, as it does to all organizations. EdX was founded with an injection of $60 million from MIT and Harvard, and other universities have donated big bucks to the effort, as well.

But the technology to run edX gets really expensive, and Agarwal and his team are exploring ways to reach sustainability. They're charging a bit for certain professional education courses and for courses that are part of certification curricula. But one major source of revenue may start to sound a bit like the branch campus model. EdX offers the code for its MOOC hosting platform for free. The course material, though, is a different story.

ANANT AGARWAL: As many nations begin to adopt the open edX platform to create a national infrastructure for online learning, such as China, France, India, Saudi Arabia, Jordan, and others, many of them are very interested in licensing courses from edX and our partner universities.

JULIA TAYLOR KENNEDY: EdX has revenue-sharing agreements with the universities that post course materials on its website. Maybe this is the cash cow that's been eluding international branch campuses.

ANANT AGARWAL: We have not announced our revenue numbers. Right now, we're still not in a state where the revenue is steady or predictable.

JULIA TAYLOR KENNEDY: Guess not. For now, the cost of an online platform seems nearly as unwieldy as an international branch campus.

ANANT AGARWAL: Our hope is that we will get to sustainability in three to five years. Again, virtually all our partners are non-profits, and edX is also a non-profit. So sustainability is a key metric. ROI [return on investment] for investors or substantial earnings growth is certainly not a metric. Therefore, if we can be sustainable while meeting our mission goals of access and improving education quality, I think we will all be very happy.

JULIA TAYLOR KENNEDY: Meanwhile, edX is also adjusting its model to meet its mission of improving access to education. The site's administrators open their data to academic research, and a recent study revealed most of its 3.3 million users already have college degrees.

ANANT AGARWAL: That was a bit surprising. We certainly, from a mission standpoint, wanted to educate people who needed it most, people who did not have access to education, and two-thirds of the people had a degree.

JULIA TAYLOR KENNEDY: So edX is tweaking its offerings.

ANANT AGARWAL: We launched a number of high school AP [advanced placement] courses, and other STEM-related [science, technology, engineering, and math] high school courses. So today we have about 40 high school level courses.

Our hope is that that kind of course set, more of the basic courses, the high school courses, will steer our demographic in the direction of people that really need the access.

JULIA TAYLOR KENNEDY: EdX is also partnering with 70 universities from countries around the world, hosting content from Chinese and Indian schools, as well as the Ivy League and the Sorbonne. It's encouraging community colleges and other local universities to pair MOOC materials with in-person instruction, in an effort to bring personalized education together with those online lectures and curricula curated by top professors from top universities.

Finally, edX has worked with the U.S. State Department to navigate some of those thorny public diplomacy questions that international branch campuses also face.

ANANT AGARWAL: In the early days, the U.S. government had said that edX could not offer courses in some of the embargoed countries. However, we really partnered with the U.S. State Department, which felt very strongly, as did edX, that education is probably our most powerful foreign policy tool. With their help, particularly as a non-profit, we were able to get a special permission to offer our courses all over the world, even in places like Syria, and so on. So that has been a big help.

The way I look at it is, really oppressive regimes try to prevent the broad dissemination of knowledge and exercise control by doing so. In free societies and so on, I think the broad dissemination of knowledge and education simply creates a better world. I think that an educated world is a better world, and a more peaceful world.

JULIA TAYLOR KENNEDY: While edX and international branch campuses can provide amazing resources for students in remote parts of the world, SUNY's Jason Lane worries they both put diversity of education at risk.

JASON LANE: As we export more and more education from dominant higher education systems, to what extent are we influencing the education in the countries that are importing them?

Education is so locally based, and it's important, at least in my mind, that native institutions are reflective of the home country, and the home culture, and the home environment. I fear sometimes that if we begin to overly rely on things like MOOCs, where we are providing not just one type of education, but one course of education around the world, are we pushing out other more non-traditional ways of thinking about a particular topic or a subject?

ANANT AGARWAL: I think in many respects, when you have a massive scale dissemination of knowledge, I think the worry and risk of homogenization always comes about.

JULIA TAYLOR KENNEDY: Take the Sorbonne, one of edX's partners.

ANANT AGARWAL: If you have Sorbonne creating a course on interpretation of art, clearly, if I'm a community college professor, I'm going to gravitate to the course from Sorbonne.

But I think, in many respects, textbooks have been like that. We've had textbooks for a long time. If there's a great textbook in the field, there's always a risk of homogenization.

When something becomes highly popular, whether it's online or whether it's a textbook, or whether it's just food—we have McDonald's spreading out all over the world. It's not online. It's food. Is the world's "food" becoming homogenized?

JULIA TAYLOR KENNEDY: Agarwal raises one of the classic examples of global homogenization—the Big Mac. It's ubiquitous globally and it will be interesting to see if one of the unintended consequences of MOOC education is an equivalent of a Big Mac in a given subject.

According to a database of MOOC platform data called Class Central, the three most popular MOOCs in 2013 were Introduction to Databases, University Spanish Level I, and Inspiring Leadership through Emotional Intelligence. Now, what if one approach to these subjects becomes the Big Mac of university education? An interesting prospect and another piece of evidence that this globalization business is never simple, for universities or for corporations.

In the final chapter of this podcast on global education, global revenue, and unintended consequences, we'll take a bit of a detour—but I promise, everything will make sense in the end.

SIDNI FREDERICK: My name is Sidni Mackenzie Frederick and I'm one of the co-coordinators of Divest Harvard.

JULIA TAYLOR KENNEDY: We couldn't have an episode on university education without interviewing a university student. It's easy to forget that Frederick is a sophomore because she's also a passionate and articulate leader in Harvard University's divestment movement, agitating for the administration to stop including fossil fuel companies in its endowment portfolio.

SIDNI FREDERICK: We are looking to get Harvard University to freeze its current endowments in the top 200 publicly traded coal, oil, and natural gas companies, and to stop investing in them for the future.

JULIA TAYLOR KENNEDY: Divest Harvard is part of a bigger movement kicked off in 2012 by climate change author and activist Bill McKibben. [For more on McKibben, check out his 2012 Ethics Matter interview.] Several small liberal arts schools responded to an article he wrote in Rolling Stone by pledging not to invest in fossil fuel companies.

Stanford University added legitimacy to the movement by pledging to divest from coal companies in May 2014. Stanford's administration declined to be interviewed for our podcast. A rep said in an email that the decision to divest should speak for itself.

The Harvard administration stopped responding to our requests for an interview, but according to Divest Harvard, the university held $79 million in these companies as of early 2014. Administrators continue to be reluctant to engage with student protesters and the media, but they've published open letters with their reasons not to divest.

First on the list? The university's written it's choosing to fight climate change in another way—by supporting research into scientific solutions to the challenge.

SIDNI FREDERICK: We, as a group, completely understand that Harvard has a really important role to play in necessary research and teaching on the issue of climate change, and on solutions to the issue of climate change. We believe at this point in time that that isn't enough.

JULIA TAYLOR KENNEDY: By divesting, perhaps Harvard's brand would have as big of an impact as its research. Frederick thinks the statement Harvard would make by divesting would be far greater than any minor financial impact it might have on fossil fuel companies in selling its shares.

SIDNI FREDERICK: We know that Harvard has a really big name in this country and all over the world, and that if it chose to divest and to take this moral stance against the way that the fossil fuel industry has prevented real solutions to climate change, then it would really push this national conversation forward, and show our political leaders that people are serious about taking these steps to end our fossil fuel consumption.

It would also align the university's endowments with its moral values. We claim to know that climate change is a very serious issue, and that it deserves all kinds of action, and that the fossil fuel industry is doing things to directly prevent the things that Harvard claims to stand for when it acknowledges that. We know that Harvard University has taken steps to align its endowment with values in the past, like when it divested from apartheid, when it divested from the tobacco industry, and more recently, when it divested from companies that were involved in the genocide in Darfur.

We don't feel like Harvard has any reason not to take this step.

JULIA TAYLOR KENNEDY: What does Divest Harvard have to do with international education issues that we brought up earlier? It's further evidence that universities have more in common with corporations than their need to generate revenue.

Global interconnectedness means so much more than market opportunity. It brings with it greater responsibility. As Harvard and other universities develop their global brands, they also develop global power. They are more than financially sustainable education institutions.

Whether their administrations like it or not, universities—just like corporations—are also diplomats with the capacity to shape global perceptions of their home countries, and global norms, even global policy on issues like climate change.

Our most popular Impact episode so far was called "Corporations as Agents of Change." In it, thinkers and business leaders shared how companies are starting to recognize their global roles outside of making a profit and creating jobs. Perhaps universities are also beginning to understand their global roles outside of forward-thinking research and broad education.

Thanks for listening to Impact from the Carnegie Council.

A special thanks to our production team Mel Sebastiani, Terence Hurley, Deborah Carroll, and Amber Kiwan. I'm Julia Taylor Kennedy. You can find out more about this podcast at carnegiecouncil.org. You can also find us on iTunes and policyinnovations.org.

We welcome your feedback—do let us know what you like or what we can improve. And while you're at it, please feel free to suggest future topics in our comments box so we can continue to make stories that interest you.

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