dagblog.com - Business

The Business of Universities

Doctor Cleveland — Fri, 12 Mar 2010 03:24:52 +0000

A lot of people who talk about reforming American universities like to say that they should be "run like a business." Those people seldom explain what they mean by that, because they take their "like a business" phrase as self-evident and self-explanatory. But American universities, even if they're non-profits, already run like businesses. In fact, they are businesses. The only question is what kind of businesses they should be.

(Part of people mean when they say schools should be run like businesses, of course, is that they should be run by a businessman: by a CEO much like the CEOs who run large corporations, with a free hand to use the top-down management techniques seen in Fortune 500 companies. That's a subject for another post, but at least a few universities have already tried their luck with a CEO-style President.)

But if we're seriously going to imagine the enterprise of the university as a business, the key question is what university's product is. Most people who talk about "running universities like a business" generally imagine that the core business is selling classes to the students. That makes a kind of easy, first-glance sense: the students pay tuition, so they must be the customers, and they thing they pay for, the classes and credit hours and diplomas, must be the product. In this model, there's no fundamental difference between selling courses to undergraduates and selling slices of pizza at the mall. You give the customers what they want. When you're selling pizza that means cutting your price and throwing on a little extra pepperoni.

But in a complicated business model, the most obvious place where money changes hands isn't always the heart of the actual business, and it's a rookie mistake to make that presumption. For example, thinking of newspapers as in the business of selling readers the actual copies of the paper is a mistake; the core business of the newspaper is selling advertising, not newspapers per se, and the price of a copy is only a way to recoup the distribution costs. In the same way, tuition at non-profit universities merely offsets the costs of operations. In fact, almost every university (without counting the newer for-profit schools) runs a loss on tuition. Even when a student is paying full price, that full tuition doesn't actually cover the expenses of teaching the student for a year. Maybe that's a sign of inefficient, unbusinesslike practices that require a CEO to whip things into shape. But more likely it's a sign of a different business model entirely. The wealthiest and most successful universities actually take a bigger loss on tuition than other schools, because they can afford to, and because doing so furthers their long-term goals.

The actual product of university teaching is alumni. (The university has another product, research results, but I want to keep the focus on teaching for this post.) The goal of a university, properly understood, is to produce as many educated and successful people as it can. The wealthy private schools, such as the Ivies, spend more money on their undergraduates, give out more financial aid, and keep their sticker price pretty much the same as any other private college's; the top price at Harvard or Princeton is the same as the top price at a less famous place. So Princeton, to take an example, collects less in overall tuition money than a second-tier private university does, but spends much more. Yet it keeps growing richer than its less famous rivals. Princeton's core business is alumni development; the school lives off the gratitude of its successful former students. And the more generous those grateful alumni are, the more Princeton can afford to invest in its current students, in order to maximize their later success. That is a business model, and judging by the last century or two a quite viable one. Public universities also succeed when their alumni donate to them, but the chief source of extra revenue there is funding by state governments. The current rhetoric about free markets makes any government spending look suspect, but funding state universities is a deeply rational economic decision. In effect, the state legislatures are buying in-state alumni, subsidizing tuition in order to have a better-educated and better-paid corps of adult taxpayers in the future. The question of how much to spend on, say, the University of California could be rendered, economically, as the question of how much to spend to increase California's tax base.

The difference between selling classes and producing alumni is enormous, and affects the educational strategy on every level. If you're selling classes by the slice, you keep the costs as low as you can. If you're producing alumni, you keep the quality as high as you can, even if it means taking short-term losses. If you're selling classes, you're focused on providing the customers what they want before they take the class. If you're producing alumni, you're focused on creating long-term satisfaction and long-term success. If you're selling classes, the students only have to be happy when it's time to enroll for next semester, but if you're producing alumni, they have to be happy with the education they got twenty years later. If you're selling classes, the impulse is to sell, and indeed too often to oversell, the benefits of the classes. If you're producing alumni, there is sometimes even an incentive to block students from a career path they might not be suited to; the pre-med courses at Princeton aren't designed to maximize customer satisfaction. They're in fact designed to redirect young people who think they want to be doctors, but who don't seem to have the skills or the motivation to become very successful as physicians, into some other field where they are more likely to thrive. (Princeton would rather have an alumnus become a leading art historian than a pediatrician with lots of malpractice suits; and while it allows its students to make that decision on their own, it lets them face the reality of the professional demands.) Now, that would make for very poor advertising copy ("Princeton: Where We Disabuse You of Your Less Realistic Dreams") but it's ultimately more interested in the student's success than other models of education are.

Universities are in business, right now. Their business is their students' eventual fulfillment and success. When you hear university administrators talking about building up a school's "brand," remember that universities were building their brands, through the quality of their alumni, before business types ever stumbled across the concept. You can try to build a school's brand the way you would for sneakers, or pizzas, or car stereos, with fancy logos and advertising, but at the end of the day a school's real brand is the reputation it gets from the quality of its alumni. If your old students are impressive, people will be impressed with your school; if your old students aren't, people won't be. A university's prosperity is inevitably and rightly linked to that of its former students. And in the end, a school doesn't deserve to be rewarded for anything else.

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Got Torts? William K. Wolfrum’s Tort Reformation is here to help

William K. Wolfrum — Sun, 28 Feb 2010 14:16:35 +0000

Do you have Torts? Do you wake up each morning to see a Tort-infested life that is destroying everything you hold dear?

If that’s the case, then William K. Wolfrum’s Tort Reformation* is here for you.

As we are all well aware, Torts have destroyed this great nation. Where once freedom and liberty reigned, now there are only Torts. They need reformed, and now. At William K. Wolfrum’s Tort Reformation, our team of trained Tort Reformation experts will clear your house of all annoying Torts, from the biggest to most minuscule.

Using our patented Tort-Reformation Procedure©, we’ll take you from being Tort-haunted to being Tort-Free in just a matter of minutes. Or your money back.

For years, people have ignored the savage intensity and destructive nature of Torts. But now, thanks to the GOP, we all know that Torts are the root of all evil in this great nation.

Did you know:

That 45,000 Americans die each year because of Torts?
That Anthem Blue Cross was forced to raise its insurance premiums 39 percent due to Torts?
That every Pre-Existing Condition is somehow Tort related?
That 60 percent of all U.S. bankruptcies are due to Torts?
That the U.S. ranks 39th in the world in life expectancy due to Torts?
That the U.S. spends far more per person for total health care costs than any other nation due to Torts?

We at William K. Wolfrum’s Tort Reformation realize that Torts have caused everything from the financial crisis to shingles. Left unchecked, Torts will destroy everything we believe in. This is why Torts are truly the only thing that need to be obliterated for all Americans to live lives of Freemen and Freewomen.

So call William K. Wolfrum’s Tort Reformation. We’ll De-Tort you, and help make this country what it is meant to be – a Nation for the people, not Torts.

–WKW

* A fully owned subsidiary of Anthem Blue Cross.

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The Decline, Fall, Plunge and Demise of Journalism

acanuck — Sat, 27 Feb 2010 18:38:04 +0000

If you go to the Drudge Report right now, you'll see the teaser:

PAPER: Soros 'at center of hedge funds plot to cash in on demise of the euro'...

If you click on the link, you'll see the Mail Online headline:

Man who broke the Bank of England, George Soros, 'at centre of hedge funds plot to cash in on fall of the euro'

If you read the lead paragraph, you'll see:

A secretive group of Wall Street hedge fund bosses are said to be behind a plot to cash in on the decline of the euro.

And if you read the entire story, you'll see it is spun entirely around a private dinner meeting that Soros himself did not attend:

At the dinner, the speculators are said to have argued that the euro is likely to plunge in value to parity with the dollar.

As for the alleged plot to cash in on this decline, the Mail story itself doesn't offer one word of detail or evidence. Rather, it sticks that totally unsubstantiated assertion in a cutline that accompanies the article:

The man about to break the euro? George Soros is said to be placing large bearish bets against the single currency

So that's what passes as journalism today: an overreaching original story, minimally sprinkled with fact, gets further sensationalized by an editor with an agenda, then is further goosed up by the execrable Drudge, and is swallowed whole by millions of semi-literate mouth-breathers.

An ongoing decline in value of the euro is escalated verbally to a fall, a plunge, and finally -- in Drudge's fevered mind -- the currency's demise. And the underlying cause becomes not the well-documented economic problems of countries like Greece, but a plot by international speculators. If it's all a plot led by Soros, why is he publicly urging the Europeans to take the tough steps he thinks necessary to shore up the currency?

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Bring back slavery (or build more prisons)

William K. Wolfrum — Tue, 23 Feb 2010 11:58:30 +0000

While the U.S. economy continues to operate, the unemployment situation in the nation is still a giant area of concern. When unemployment hits 10 percent, economic heads explode. When it stays that way, it could be disastrous.

So while the recently passed “Jobs Bill” may seem like a nice addition to the battle for employment, U.S. politicos have yet to propose the only plan that could conceivably put the U.S. back on top.

It’s time to bring back slavery.

Slavery can bring this nation back to what it once was – a group of slaves and slave owners. With slavery, the American economy will once again be competitive. With slavery, once again, everyone will work.

No, before the screams of racism come wafting down, let me note that my vision for Slavery 2.0 is not based whatsoever on race. No, race is insignificant. All that matters is social standing. If you can afford a slave, you’re a slave owner. If you can’t, you’re a slave. It’s that simple.

And, of course, there would be rules. For instance, you can’t just up and kill a slave. There needs to be some type of paperwork filed beforehand. No other rules would be required, as the market would take care of itself.

In the end, slavery will help the U.S. in every way conceivable. Illegal immigration would end, as any illegal immigrants caught would be made into slaves. The U.S. labor market would have a way to fight back against China’s human-rights-violation labor market. New business would sprout up to take advantage of the cheap new labor market. Those that make manacles will have incredibly lucrative years.

My friends, America is known for its innovations. That’s why it’s time to return to slavery. Now, only slaves can save us.

Or, we could always just start putting more people in prison. Either way, it’s win-win.

–WKW

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Overstock.com & Patrick Byrne help define “Cookie Jar Reserves”

William K. Wolfrum — Fri, 05 Feb 2010 11:25:10 +0000

While it’s all fun and games with the pretend tough guys over at Overstock.com, Patrick Byrne and crew have done all us financial layman a favor – they’ve made the term “Cookie Jar Reserve” easier for us to understand. Yesterday, Overstock.com – working on deadline – restated their 2009 financial report.

A Cookie Jar Reserve is an illegal practice when when a company under-reports
income during an earlier reporting period in order to inflate income for future reporting periods. It is a practice that misleads the investors of publicly traded companies like Overstock.

From Overstock.com’s restatement:

“Correction of these errors is expected to shift approximately $1.7 million of income recognized in fiscal year 2009 back to fiscal year 2008.”

Sam Antar – he of the Crazy Eddie Fraud scheme who was profiled here – has long been asserting publicly that Overstock.com has been cooking the books in this way. Antar has been vilified, threatened and mocked non-stop by Byrne and his PR shill/Partner-in-crime Judd Bagley. But this last restatement vindicates him, and shines an even greater light on the issuer retaliation tactics of Overstock.com.

Last year, I wrote a post titled “For Patrick Byrne and Overstock.com, the real story is in the financial reports.” I led it off thusly:

Overstock.com CEO Patrick Byrne has had a busy week, attacking messengers and filing reports. As should always be the case with Byrne and Overstock, the real news goes on top – Overstock’s financial reporting.

And the song remains the same. Because while Byrne’s rants about naked short sellers and his blatant attacks on any who question his accounting may be all fun and games, it is pure diversion. What matters is the financial reports. And Byrne’s guilt is consistently written all over them.

–WKW

Crossposted at William K. Wolfrum Chronicles

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The name is Judd: Bagley, Gregg, others give Judd a bad name

William K. Wolfrum — Wed, 03 Feb 2010 12:34:48 +0000

There is a Judd problem in the U.S. these days. Whether named Bagley, Gregg or Wynonna, the name Judd has been slung through the mud, as it now carries baggage like pedophilia, pederasty, murder and more. One needs an Apple iPad to keep track of the carnage. Some recent examples:

Judd Bagley: Conservative hero Patrick Byrne’s PR shill has long operated on the Karl Rove, Lee Atwater theory that viciously attacking your enemies is a good way to shut them up. Having been accused of being a possible pederast, a stalker and of outright threatening those that dare speak out on the disaster that is Overstock.com. From this Judd:

“I don’t want to cause anybody unnecessary harm, but I’m beyond tired of the lies.

If you choose to continue as you have been, I will write about you on AntiSocialMedia.net. In doing so, my goal is not to intimidate, but to let you own your words; under those circumstances, I think the lies will take care of themselves.

Having said that, I’m also very much aware of the impact this could have on your reputation, especially where you live, and I feel obligated to offer you a way out.”
Judd Gregg: After deciding not to be part of Barack Obama’s Cabinet, Gregg quickly became just about as anti-U.S. Government as Hugo Chavez and as unpopular with the ladies as Tiger Woods is popular. To drive home the point, this Judd attacked two female MSNBC reporters for having the temerity to ask if he believed in Ronald Reagan’s theory that the Department of Education must go. Some of Gregg’s work:
Wynonna Judd: Ok, Wynonna herself seems Ok lately. But the country star sure can find trouble for the name Judd. A pedophile & Child porn lover entered her life via Scott Z. Myers, who home-schooled her two children. He been charged with distribution of child pornography. From Perez Hilton:

“Myers, who is only 27, admitted in an online chatroom that he engaged in sexual activity with four boys who lived nearby and was also seen leaving his apartment with two boys when the feds showed up to execute a search warrant.”

Of course, this Judd seems to have a thing for men with pedophilia tendencies, as just three years ago:

“Wynonna Judd filed for divorce Tuesday from her estranged husband, less than a week after his arrest in Texas on sex charges involving a minor.

Dan R. Roach, 49, was arrested Thursday in Abilene and charged with three counts of aggravated sexual battery against a child younger than 13 in Nashville, police said.”

On the bright side, sister Ashley Judd seems to be staying out of trouble quite nicely.
Judd Apatow: Ok, he hasn’t been involved in any crimes that we’re aware of, but he’s apparently the only human allowed to make a comedy in Hollywood. And they’ve become little more than unfunny sexist dramas. No wonder entertainment fans are more interest in Brad Pitt, Angelina Jolie, Taylor Swift and Lady Gaga than watching an American-made comedy. This Judd is an anchor that’s rapidly driving American culture down the crapper.
Charles Judd: Proving you don’t need to be a famous Judd like Wynonna, Gregg or Bagley, this Judd is a paroled sex offender that was arrested on charges of second-degree murder in the slaying of a father and son.

While all this makes a compelling case for just arresting anyone with Judd in their name, that is sadly not the type of society we live in. But, hopefully, it will give something for Judd-minded parents to think about when naming their children. Better to stick with more conventional, conservative names. Like Madonna. Or Jesus.

–WKW

Crossposted at William K. Wolfrum Chronicles

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Now for something completely different: But nor ...

acanuck — Tue, 02 Feb 2010 05:02:15 +0000

OK, there's this nagging problem I have. Sort of an obsession. I push it to the back of my mind, where it stays quiescent for months, causing me no grief. Then it re-emerges, always re-emerges. Help me, dagblog community. HELP ME!

I blame Genghis for this latest relapse. In a comment to a post by Orlando (below), he wrote:

"A lying Mrs. Tebow would have no significance on the abortion debate. But nor would an honest Mrs. Tebow."

This is wrong. Wrong, wrong, wrong! Not Mrs. Tebow. I mean the combination of the words "but" and "nor." Substitute the word "neither," and it rolls off the tongue and/or the printed page. But "but nor" definitely does not; it jars my virtual ear. Where does this barbarism come from? Do they teach it in American schools?

I have never heard this phrase uttered in real life, or seen it submitted by a Canadian writer during more than three decades as a copy editor. I have only encountered it on the internet, in the texts of such otherwise reputable bloggers as Ezra Klein, Ed Kilgore, Tony Karon and -- as I noted above -- Genghis. Clearly some people think "but nor" is not only acceptable, but grammatically prescribed.

Kilgore, for example, wrote on TPM:

A huge number of Republicans didn't endorse or campaign for Barry Goldwater in 1964, but nor did they endorse or campaign for Lyndon Johnson.

Clearly, there is some school of thought -- some authority, some grammarian, some respected author, perhaps some "language" columnist -- backing this construction.

My half-century-old Fowler's backs me up at least partially when it condemns the very similar usage "and nor." Addition of the "and," it says, is "clumsy." There is no mention of "but nor," perhaps because that usage was unknown 50 years ago.

At the very least, we have a pleonasm here, as in, "But he did not consider, however, that ..."
I think that is the problem in the above quotation: the writer realizes, when he gets to a certain point in the sentence, that he did not signal clearly enough, early enough, the contrast that he intended to draw. He probably should have backtracked and written:

Although a huge number of Republicans didn't endorse or campaign for Barry Goldwater in 1964, neither did they endorse or campaign for Lyndon Johnson.

A British or Canadian writer might even drop the "although" altogether, and simply preface "neither" by a semicolon. If one adamantly insists on keeping the "but," it's clearly less offensive to use "neither" with it, rather than "nor."

Help me out here, dagbloggers. And any grammarians who may be listening in. Either convince me there is some logical reason for "but nor" to exist, or join my campaign to stamp it out before it enters the actual spoken language.

Thank you.

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Chris Matthews: “I forgot Prince & Paris Jackson were black”

William K. Wolfrum — Mon, 01 Feb 2010 11:19:47 +0000

During last night’s Grammy Awards, Michael Jackson’s children Paris and Prince Jackson accepted a Lifetime Achievement Award on behalf of their late father, in what was easily the most moving moment of the show.

“We are proud to be here to accept this award on behalf of our father, Michael Jackson,” said Prince. “First of all, we’d like to thank God for watching over us for the past seven months. And our grandmother and grandfather for their love and support. We would also like to thank the fans. Our father loved you so much because you were always there for him.”

Later in the evening on MSNBC, political and cultural commentator Chris Matthews said that for just a moment, he forgot that the two were Black.

“I was trying to think about who they were tonight … It’s interesting. They are post-racial, by all appearances … I forgot they were black tonight,” said Matthews.

While some were appalled by Matthews’ statement, others gave him a pass.

“I’m sure he just messed up,” said Grammy winner Taylor Swift. “Who’s Chris Matthews, anyway?”

–WKW

Crossposted at William K. Wolfrum Chronicles

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Amazon caves to Macmillan

Deadman — Mon, 01 Feb 2010 02:48:21 +0000

Just read that Amazon has decided to give in to publisher Macmillan's demand that the online bookseller sell its books under an agency model for the price the publisher sets (which for the new books that make up most of the market will be 30-50 percent higher than the $10 Amazon currently charges).

For a few days, Amazon tried to play tough by removing Macmillan's books - both physical and digital - from its inventory (tho the titles were still available from third parties). But that didn't last long and the company has put a statement on its Web site that it "will have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books."

To be honest, Amazon's decision to cave was a no-brainer. By showing some defiance, Amazon was able to get press to show that they were trying to be an advocate for the consumer, and now if the price changes stick and other publishers even adopt a similar strategy, Amazon could actually make money on its e-book sales as opposed to the losses it currently incurs when selling new titles at the $9.99 price point. The decision by Apple to agree to the higher price points for its imminent iPad tablet made it even tougher for Amazon to play tough.

Of course, Macmillan's decision is a complete joke. The idea that digital books - which have a near-zero marginal cost of production (printing, transportation and distribution costs are all basically de minimus) - should cost the same as a printed copy is laughable. i don't think other publishers will play along here, but even if they do, the higher prices will only lead to people buying fewer books or pirating more content.

When will old school, offline companies learn the lessons of recent history? Book publishers - which in the end are mere middlemen - should be trying to do whatever they can to embrace and encourage legal consumption of their content in the new medium and not go down the same path as the music industry.

I have no doubt that the wholesale cost of e-books will eventually be cheaper than their physical counterparts. And over time, more and more authors will take advantage of the opportunity to go direct (Amazon offers authors a 70% split on titles sold without a publisher), bypassing the middlemen completely.

For the truth of the matter is, neither Macmillan nor Amazon will in the long-run be able to set what they think the ultimate fair price of a book should be. Assuming competition is allowed to flourish and regulation remains minimal, the market will be the decider.

And trust me, the market - and time - is on the consumer's side.

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Blogger laments upcoming loss of Overstock.com CEO Patrick Byrne

William K. Wolfrum — Wed, 27 Jan 2010 12:36:31 +0000

BRAZIL – Blogger William K. Wolfrum stared off into the distance, desperately trying to come up with an idea worth writing about. Looking forlorn, he finally gave up the chase and went to bed. It was 3 p.m.

“There’s nothing, just nothing,” said Wolfrum. “Not anymore.”

The reason behind Wolfrum’s malaise was simple – soon, he’d no longer have Overstock.com CEO Patrick Byrne to write about. And after spending the majority of the past two years writing about him, he was deflated, if not defeated.

Wolfrum – a self-described satirist known for posting pictures of his dogs and writing silly little things about Brad Pitt and Angelina Jolie – called Byrne a “Once-in-a-Generation” topic.

“Someone like Byrne doesn’t come along too often,” said an unshaven, unkempt Wolfrum. “Sith Lords, the Russian Mob, Diamond heists, naked short selling, stalking, bizarre and libelous attacks on business journalists, karate, pretending he’s actually a journalist, etc. You can’t invent someone like Byrne.”

While Overstock.com continues its day-to-day operations, and could possibly survive in a healthier non-Byrne atmosphere, Wolfrum said the CEO is in the final stages of complete collapse. He pointed to SEC investigations, a possible tax evasion charge and the company’s loss of David K. Chidester as CFO, as signs that the Byrne charade was nearing its end.

“Chidester either jumped ship or was pushed,” said Wolfrum. “He left about three seconds after Roddy Boyd published a damning article about Byrne. But thus far, no one has really reported on it.”

While Wolfrum admitted that Byrne was now, for all intents and purposes, completely impotent and only of interest to bloggers like him who liked making silly little jokes about him, there was at least one person in the Overstock.com crew who would likely keep going strong – PR Guy and “possible pederast” Judd Bagley.

“Bagley’s a PR shill so he’ll be fine, he’s like a less-likable and less intellectually honest Karl Rove,” said Wolfrum. “With the 2010 elections coming up, I’m confident he’s far too nasty and soul-less to stay unemployed long once Byrne is done.”

Still, Wolfrum said that people should expect to see Byrne in the public eye for a while. He pointed to Byrne’s repeated appearances on Fox News, where friendly Fox News anchors would never even bother bringing up the fact that Byrne was under investigation by the SEC. Nonetheless, Wolfrum admitted the thrill was gone.

“Don’t get me wrong, Byrne’s committed to his clown act and getting attention,” said Wolfrum. “And right now, the guy can’t open his mouth without giving up Insider Information.

“So he’ll be around – at least for now and then after he gets out of jail,” added Wolfrum. “But all that’s left now is the crying, for all parties. What can I say, I’ll miss him. Patrick Byrne is a douchebag for the ages.”

–WKW

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