Privatization in Higher Education

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Privatization in

Higher Education

P r o c e e d i n g s o f t h e i n t e r n a t i o n a l c o n f e r e n c e

The Samuel Neaman Institute

Technion - Israel Institute of Technology

Haifa, Israel

January 7-8, 2008

BASHAAR

Academic Community

for Israeli Society

AZRIELI CENTER

for Economic Policy

SAMUEL NEAMAN INSTITUTE

for Advanced Studies in

Science and Technology

UNITED STATES-ISRAEL

Educational Foundation

TECHNION

Israel Institute

of Technology

THE S. NEAMAN PRESS


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PRIVATIZATIONINHIGHEREDUCATION


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ProceedingsoftheInternationalConference

PRIVATIZATIONINHIGHEREDUCATIONTheS.NeamanInstitute

Technion

Israel

Institute

of

Technology

Haifa,Israel

January78,2008

OrganizingCommittee:NadavLiron(DirectorandEditor),

Elise

S.

Brezis,

Avi

Ronen,

Mordechai

Shechter,

NealSherman,MeirZadok

ExecutiveEditors:CharlotteDiament,RachelFeldman

Theconferencewassponsoredby

TheSamuelNeamanInstitute,

TheTechnion

Israel

Institute

of

Technology,

TheAzrieliCenterforEconomicPolicy,

TheUnitedStatesIsraelEducationalFoundation(Fulbright),

and

BASHAARAcademicCommunityforIsraeliSociety.

.

THESAMUELNEAMANPRESS HAIFA,ISRAEL


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Theviewsexpressedareattributablesolelytotheauthorsofthis

publicationanddonotnecessarilyreflecttheviewsof

TheSamuelNeamanInstitute.

Copyright2008bytheSamuelNeamanInstitute.

Allrightsreserved.

ISBN978

965

9011

40

Nopartofthisbookmaybereproducedinanyformwithout

permissioninwritingfromthepublisher,exceptbythereviewer,

whomay

quote

brief

passages

in

areview

to

be

printed

inamagazineornewspaper.

Published

by

The

Samuel

Neaman

Press

TechnionCity,Haifa32000Israel

http://www.neaman.org.il


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ContentsPage

FOREWORD .............................................................................................. 1

KEYNOTEPRESENTATIONS.Rothblatt,WhatdoesitMeantobe Private?NotesfromHistory ..3

SESSIONI,Part1CurrentTrendsinthePrivatization

ofHigherEducation .................................................................................31DanielC.Levy,TheGlobalGrowthofPrivateHigherEducation:ComparingAgainstU.S.Reality.............................................................32

GuyNeave,NowYouSeeit,NowYouDont:Privatizationas

theWillotheWispintheHigherEducationPoliciesofWestern

Europe.....................................................................................................53StevenStavandGalitEizman,TrendsinIsrael...............................88DISCUSSION:SarahGuriRosenblit.............................................105

SESSIONI,Part2CurrentTrendsinthePrivatization

ofHigherEducation...............................................................................112JandhyalaB.G.Tilak,CurrentTrendsofthePrivateSectorinHigherEducationinAsia.....................................................................113

AliDoramaci,PrivateUniversityInitiativesinTurkey:TheBilkentExperience.........................................................................144GrantHarman,AustralianExperiencewithPrivateHigherEducation..................................................................................174DISCUSSION:GuyNeave,OnSteeringPolicy,StrategicPositioning,theRiseofMarketsandtheGivingofGiftsSession.........195


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SESSION2TheRoleofPublicandPrivateHigherEducation

InstitutionsintheEconomy ............................................................... 204PhilippeAghion,EconomicGrowthandtheFinancingofHigherEducation..............................................................................205HagitMesserYaron,ResponsibleTechnologyTransferinStarvingUniversities............................................................................229

UriKirsch,CommercializationofProgramswithinPublicInstitutionsTheViewofVATAT...........................................237

DISCUSSION:SheldonRothblatt ..................................................243

SESSION3EffectsofPrivatizationofHigherEducation

onSocialNeeds ......................................................................................246RananHartman,TheSocialResponsibilityoftheInstitutionsofHigherEducationinIsrael...................................................................247

EliseBrezis,EffectsofPrivatizationontheQualityofHigherEducation...................................................................................256ThorstenNybom,TheFutureConstitutionalFormsandInstitutionalGovernanceofEuropeanUniversitiesAMatter

ofpoliticized Autonomy?....................................................................294

DISCUSSION: YaacovIram ............................................................305

SESSIONIVTheGradualPrivatizationofHigherEducationinIsrael ....................................................................................................309RhananHarZahav,PrivatizationofHigherEducationandConstitutionalPrinciples......................................................................310ZviArad,TheRevolutionofPrivatizationofHigherEducationinIsrael................................................................................................321


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SESSIONVCommercializationofProgramswithinPublicHigherInstitutions ................................................................................332

GabrielMotzkin,Non

Commercial

Value

in

Higher

Education

andtheChallengeofCommercialization...............................................333EliezerShalev,PrivatizationofHigherEducationandConstitutionalPrinciples..............................................................................................345ShoshanaArad,TheImpactofthePrivatizationProcessonthe

HigherEducationinIsrael....................................................................350DISCUSSION:MeirZadok..............................................................361

SESSIONVIPANEL:ReflectionsontheFutureDevelopments

inPrivateHigherEducation..................................................................366MortonM.Denn................................................................................367NehemiaFriedland...........................................................................372GuryZilkha........................................................................................377ZviPiran..............................................................................................383ManuelTrajtenberg .........................................................................389ZehevTadmor ...................................................................................395

CONTRIBUTORS...................................................................................399ABOUTTHESAMUELNEAMANINSTITUTE..............................417


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ForewordIn accordwith thepolicy of the SamuelNeaman Institute to tackle

national problems of major significance for the State of Israel, the

SamuelNeamanInstitutehasbeenworkingforseveralyearsnowin

theareaofHigherEducation.

Intheworldithasbeenclearnowforsometimethatthebasisfor

an affluent society is KNOWLEDGE, knowledge that is taught and

researchedatInstitutesofHigherEducation.Thus,inDecember2004,

theNeaman

Institute

held

an

important

international

conference

where the agenda was the changes that are happening in higher

educationalnationalsystemsaroundtheworld,especiallyduetothe

dramatic expansion in thedemand forhigher education and in the

availability ofhigher education.Webrought thebest researchers in

theworldtodebatetheissuesandtheproceedingsofthebookwere

published under the title Transition to Mass Higher Education

Systems:InternationalComparisonsandPerspectives ,andreceiveda

lotof

attention

from

the

policy

makers

of

Higher

Education

in

Israel.

One of the outcomes of this conferencewas the establishment of a

Higher Education Forum to openly debate the problems of higher

educationinIsrael,especiallybetweenUniversitiesandColleges.Both

in the 2004 conference and at the Forum, problems related to

privatizationwerebroughtup,butnot inasystematicway.Because

ofthelackoffundsduetothemeteoricgrowthofthestudentbodyin

Israel AND the decreasing support from the government,both in

relative

and

absolute

terms,

the

higher

education

institutes

dramaticallyincreasedthesearchforalternativefundingandnewso

called privateinstitutes emerged.Wethusdecideditwashightime

to have a global look, and perspective on the entire issue of

privatization,andinJanuary2008weorganizedanotherinternational

conference, againbringing in thebest people on the subject in the

world,tolookattheproblemof PrivatizationsinHigherEducation.

Theaimwastoseehowcountriesaroundtheworldcopewiththese

problems and consequently debate and suggest how Israel should

expanditsHigherEducationsystemsothatthesystemwillstayopen,

amenable,honest,independent,meetingtheneedsofSocietyandthe


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Country and maintaining independent research, both pure and

applied,atthehighestinternationallevel.

Asin

the

previous

cases

this

was

ajoint

effort

of

the

Samuel

Neaman Institute, BASHAAR Academic Community for Israeli

Society, and the United StatesIsrael Educational Foundation

(Fulbright). Wewerealsosupported this timeby theAzrieliCenter

forEconomicPolicyatBarIlanUniversity.

Thepublishingofthetalksanddiscussionsnowhasanevenmore

profoundimportance inviewofthe internationaleconomiccrisiswe

arecurrentlyinthemidstof,andwhichunderscoresthenecessityof

the Institutes of Higher Education to diversify and find additional

sourcesofsupport,sothatthesystem inIsraelwillkeepplayingthe

samevitalroleinthedevelopmentofIsraelithasplayedsofar,forthe

benefitofIsraelanditsinhabitants.Myhopeisthattheseproceedings

willservethepolicymakersofHigherEducationinIsraelinthebest

possibleway.

NadavLiron

FormerDirector

SamuelNeamanInstitute

November2008


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KEYNOTE

3

WHATDOESITMEANTOBEPRIVATE?NOTESFROMHISTORY

SheldonRothblattUniversityofCalifornia,Berkeley

[email protected]

Oursubjectforthisconferenceisprivatization.Insubsequentremarks

Iwill link it toprivateeducation.The former isaprocess,while the

latterisanoutcome,andIwillnotsaythateffortstoprivatizeresult

insuchanoutcome.Iwill,however,suggestthatprivateisastateof

mind,aswellasareality,thathasimportantconsequencesforpublic

higher education. It is true that neither the public nor the private

dimension of higher education canbe grasped apart from national

and historical contexts, but this only means that privatization

initiatives must be cognizant of those contexts. During my

presentation, I will provide a list of the current pressures for

privatization,familiar

enough

and

common

to

all

of

our

societies,

and

mention someof the ensuingdifficulties aswellas thebenefits.An

accountofthestumblingevolutionofprivate,nonprofitcollegesand

universitiesintheUnitedStatesfollows,withacomparisontoBritain,

whichhasamorecentralpoliticalinheritance.Butthepointistoshow

that overall, the distinctions between public and private are not

simple. I will close with some useful examples of European

institutionsthathavepursuedprivatizationstrategies.

Privatizationis

an

awkward

word

in

the

English

language.

Isuppose thatwe have the British philosopherJeremy Bentham to

thank for such a clumsy term. This leftover Enlightenment figure,

whose clothed skeleton andwax head adorn a cage in the foyer at

UniversityCollegeLondon,aninstitutionofwhichhewasaspiritual

founder,wasadevotedcoinerofwordsandgaveussuchneologisms

asmaximizeandminimize.Asaphilosopherof thedoctrineof

utility and principle of mass gratification, he may well be an

interestingtarget

for

present

discontents.

Inthelexiconofhighereducation,privatedenotesnotforprofit

institutions that are expected to meet their operating expenses


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4

withoutgovernmentassistance.(Onlineprofitorientedpurveyorsof

educational courses lie outsidemy presentation. That is a different

subject

altogether.)

Privatization

is

the

pursuit

of

non

governmental

sourcesofrevenueeither toreplace lostor inadequate fundingfrom

central (or local) authorities or to acquire support for new research

initiatives, programs, equipment, buildings, staff, and student

assistance.Both goals can anddo occur simultaneously. Some such

activity is occurring throughout the developed democracies, and

Israeliacademicsarecertainlyfamiliarwithit.Infact,since1988Israel

hashadaconspicuoussectorofprivatecollegesandlawschools,and

byadecisionof2003suchinstitutionscannotbeprofitoriented.Fears

are expressed that the resulting high tuition charges are not

adequatelydefrayedbyscholarshipassistancefortheneedy.iOnefear

everywhere is thatgovernmentswillreducepublichighereducation

budgets according to income privately raised. While I do not, at

present,havecrossnationalstatisticsthatjustifythefear,Iwouldnot

dismissthesuspicionthatthisisalwaysatemptation.ii

RunawayCostsofHigherEducationIdaresaytherehasneverbeenatimewhentheleadersofuniversitiesor collegeswere relaxed about their fiscal prospects. In theUnited

States, hundreds of weaklyprovided institutions collapsed in the

nineteenth century.Even colleges anduniversitieswith recordhigh

endowmentsendlesslypursuedonorsas ifcatastrophe lurksaround

the corner. It cannotbedenied that the costs of financingnational

systemsofhighereducationhavereachedstaggeringproportions.The

causes arenowheremysterious. First is the shift from elite tomass

highereducation.

Until

the

twentieth

century,

only

about

1%,

sometimes2%butnomorethan4%ofarelevantagecohortwentinto

higher education.Historically, higher education everywhere in the

Westernworld(orChina)waselitist in therestrictedmeaning that

fewattended,orintheexpandedmeaningthattheyweredrawnfrom

the more affluent sectors of society. But selection was not fully

meritocratic. Students were chosen because of family, birth and

connectionsorbecause theirparentscouldafford tuition fees.Much

historicalattention

has

been

devoted

to

the

social

basis

of

entrance.

The task is a vexed onebecause past admissions registers employ

classorstatus information incommensuratewithours.Nevertheless,


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KEYNOTE

5

ingeneralhistoriansarenotconfidentthataccesspoliciesguaranteed

admissiontothemanypossiblecandidatesfromthelowestsegments

of

European

or

American

society

not

even

in

Scotland

with

its

famousnationalcommitmenttothepoorfarmboy,theladofparts.

Buttheredoesseemtohavebeensomereachingdownintotherural

communitiesinSwedeninthefirsthalfofthenineteenthcentury.

Today, depending upon country and how we define higher

education,probablyhalformoreoftheagecohortisinsomeformof

higher education. I am not even counting the numbers of lifelong

learnersorthoseinextramuralprogramsorclassesdesignedforthe

upgradingofskills.Morestudentsareavailableforhighereducation

because the provision for secondary education expanded first, and

access to higher education is historically drivenby the numbers of

those who leave school and go on into tertiary education. The

expansion of secondary education is a combination of demand and

supply, with governments intent on spreading the advantages of

educationmorewidelyanditisthehopemoreequitably.

Furthermore, where oncemost undergraduateswere dropouts,

the numbers staying on to degrees, and then to advanced degrees,

contributesheavilytocostincreases.Second, before the middle of the nineteenth century, or the

twentiethcenturyinmostinstances,collegesanduniversitiesfocused

their attention on teaching, and often on teaching to a relatively

limited syllabus. The curriculum has since exploded with choices,

requiring larger teaching staffs. The numbers of books, journals,

reports and other documents produced by relentless publishing

strains the budgets of university libraries, although electronic

publishingprovides

some

shelf

relief.

Cooperative

library

sharing

schemes are essential. We also have researchled universities and

technical institutions that areunder continual pressures toupgrade

facilities,expandinquiryandprovidemultipleservicestosociety.We

all understand that in the age ofbig science and high technology,

universities not only must acquire the expensive talent needed to

perform expanded missions: they must provide the laboratory

equipment and sophisticatedmachines requiredby todays research

necessities.Universities

have

also

become

purveyors

of

culture

and

entertainment,andinmanycasesareexpectedtoconstructmuseums

and galleries and offer theatrical performances. When universities


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6

acquiredresearchfunctions, theyopenedupaprocessofknowledge

expansion and dissemination that theoretically has no limits.

Disciplinary

specialization

and

sub

specialization

are

the

pathways

to

modern conceptions of a good life.While in some countries critics

complain that teaching is overspecialized and students are not

providedwiththekindofbreadthrequiredofcitizensinademocracy,

the fact remains that discovery involves intense specialization,

especially in the sciencesand technology.Myownview is thatboth

breadth and specialization arevital,although Imayhaveparticular

understandingsofwhatbreadthmeans.However,thisisnotadebate

thatIwishtoengageintoday.iii

Athirdcauseofescalatingcostsisinternationalcompetition,with

nationsdemanding that research provide the necessary competitive

edgeandproducts, aswell asother aspectsof the sameworldwide

condition,namely acquiring the necessary and contingent academic

talent, professors, students and graduate students. Talent at the

expected levels is rare and consequently governedby the laws of

supplyanddemand.

Afourthreasonisthatonallsideshighereducationisexpectedto

advance thehealthandprosperityof society and its citizens. In thenationstatesrepresentedinthisconference,governmentsareorhave

been theprincipalprovidersof resources forhighereducation.With

very fewexceptions (ifany), thiswill remain the case in the future.

Although half of some 3,000 colleges and universities (twoyear

colleges comprise another 1,000) in the United States are legally

private, they educate only about 20% of the relevant agecohort of

undergraduates,sotherestare in institutions thatreceivetheirbasic

operatingexpenses

from

municipal,

state

or

federal

sources.

Japan,

Iunderstand, has threequarters of its students in private

institutions.ivHowever, privatization has long occurred in the state

researchledinstitutions,althoughwithouttheintensitythatwenotice

atpresent.TheUniversityofCalifornia, for example, receivesmuch

less than30%of its total revenue from thegovernmentof the state,

althoughhalfa centuryago it receivedasmuchas twothirds. (The

percentages,however,varybycampusinwhatistodayatencampus

system.)


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KEYNOTE

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DecliningFiscalAssistanceofGovernmentsGovernmentassistancehasfallenorhasnotkeptpacewithoperating

expenses.

Academics

have

also

long

complained

that

funding

for

primary research is inadequate. Sometimes it is the case that

particular governments, ministers and civil service officials

responsibleforhighereducationhavebeenshortsighted,focusedon

thekindof immediate results thatareantithetical todiscovery. It is

almost an axiom of research that discovery, so valued by our

profession and our societies, is often the result of cumulative

investigationswhose ultimate outcome is unpredictable. TheNoble

laureate,CharlesTownes,principaldiscovererof the laser,wrote in

hisautobiographythathehadnoideainitiallyhowthelasermightbe

usedbutwas certain that applicationswouldbe found.v This story

couldberepeatedtenfold.

We also have instances of populism: ministers who accuse

universities of elitism, a term once neutral but now apparently

invidious. IreferyoutoPresidentZehevTadmorspaper,TheMomentofTruth,forafullerexplicationofthisthemeasitappliestoIsrael.Butletmeremarkuponanirony.Thepressuresforwealthgenerationand

socialameliorationproducecompetition for talent,which,because itisalways limited, is ipsofactoelitist,andwehopemeritocratic.This

inturnimpliesthatsomecollegesmustbeselectiveinwhomtheyhire

and thestudentswhom theyadmit.Buthighlyselect institutionsare

then denounced as discriminatory andbiased toward economically

disadvantaged minorities or the children ofworkingclass parents.

Our societies are schizophrenic on the issue, which is politically

charged and admits of no simple solution. But one result is a

suspicionof

high

stakes

testing

because

it

handicaps

many

who

seek

entrytoelitecollegesanduniversities,andwefindthatbothschool

leaving standards and university entry requirements undergo

continual revision,which critics call dumbingdown.viBut this, in

turn, produces another irony, as those demanding preferential

treatment for the children of families with inadequate resources

suddenlyshiftcourseand insistonoutputmeasurementsandvalue

addedassessments,asifhighereducationdidnothavealonghistory

ofraising

standards.

But

how

does

one

ever

assess

the

intangibles

of

education,theslowbutdefinitegrowthinmaturity,deportmentand


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S.ROTHBLATT

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judgment that result from coming of age in an environment of

learning?vii

However,

it

must

be

said

that

higher

education

has

not

always

been assiduous in reporting its true expenditures. An absence of

financial transparency in todays environment ofmedia scrutiny is

fatal. It immediatelyprovides amoraljustification fordemands for

enhancedaccountability.What especially raises the ireof legislators

andthepublicintheUnitedStatesisthefailureofpublicinstitutions

to fully explain expenditures while crying poverty, especially

regarding administrative salariesand related inhouse expenditures.

To thepress, theseappear to riseat an exponential rate.Unlike the

compensation of research and teaching staff, administrative salaries

cannot always be defended on the grounds of competition. Press

reports in the United States liken such costs to the huge salaries

somehow received by unsuccessful corporation executives.

Carelessnessintheuseandreportingofpublicandprivatefundsled

toamajorscandalinthecentralofficeofthetencampusUniversityof

California in 2007, and the president was asked to submit his

resignation.

The more dominant reason for the decline in higher educationsupport has been the multiple pressures on government itself,

consisting of a much broader demand for social services, law

enforcement, infrastructure improvements,public amenities and the

exigenciesofnational emergencies,which Israelunderstandsall too

well. Some governments are reluctant to raise taxes to pay for the

increasing demands. The result is a certain circularity: universities,

throughtheirownknowledgeimperativeandthecontinualpressures

fromoutside,

are

required

to

assume

heavy

costs.

But

governments

are either unable or unwilling, politically or ideologically, tomeet

those increased costs. As expenses mount, new forms of external

accountability,budgetaryreviewandresearchandteachingrankings

are devised to provide abasis for rewarding some institutions and

punishing others. Thisprocess appears tobemost advanced in the

UnitedKingdom. It is timeconsuming, detracts from teaching and

research, and actually contributes to the real costs of running the

highereducation

system.

No

one

is

certain

that

any

of

the

new

measuresaresuperior toolderandcheaperones.Astheformulasof


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KEYNOTE

9

accountability and assessment are constantly revised, higher

educationcannotrelyonanysteadycalculusofassistance.

SourcesofRevenueFor these interconnected reasons, universities with expensive

educational missions have been driven to consider a variety of

alternativesourcesof funding.Noneof this isabsolutelynew in the

historyofuniversities.Requiringstudentstopayfortheirtuition,for

example,was present at the founding ofuniversities in the twelfth

century.Notuntil the twentieth century,when theywere still inan

elitemode,wereBritishuniversitiesmoreorlesstuitionfree.Sweden

remains reluctant to overturn what is a cornerstone of its social

democracy,but I doubt that it can hold outmuch longer.German

universitystudentsofthenineteenthcenturypaidtheirprofessors,as

did Scottish students, and American education, apart from

community colleges,was never actually free, although in the state

sectortheincidentalfeeswereverylowuntiltheystartedtoclimbin

the last few decades. In almost all cases, tuition increases advance

morerapidlythaninflation.

Forsomefamilies,theescalatingcostsofattendinguniversityhavereachedcrisisdimensions,entailingsacrificesofwhich theymaynot

becapable.Butonecannotforgettheresidentialfactor.Residenceata

university has long been considered desirable in Anglophone

countriesforreasonsembeddedinconceptionsofcomingofageand

elite leadership,aswellas fromreligiousconcerns,whereas inother

countries,childrenattendinguniversitylivewiththeirparents.These

potentiallyinterestingculturalcomparisonsaside,theundeniablefact

isthat

away

from

home

residence

easily

doubles

the

amounts

required to study.Most American undergraduates do not, in fact,

reside,butarecommuters,as in thecelebratedsubwaycollegesof

NewYorkCity. Before the SecondWorldWar, theNewYorkCity

collegesreceivedthechildrenofJewishimmigrantswhoeithercould

not afford to go elsewhere or were subject to a numerus clausus,Harvardwasparticularly,butnotsolely,notoriousforthelatter.

Philanthropic gifts also have a long past, and they have been

essentialto

the

survival

of

private

colleges

and

universities

in

America. These continue to be assiduously sought, and by public

institutions as well. Some donations are restricted to particular


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S.ROTHBLATT

10

purposes. Besides single donors, philanthropic foundations are

important contributors to universities, and American foundations

such

as

Rockefeller

and

Ford

have

been

active

in

countries

other

than

the United States. Critical assistance was provided to the London

School of Economics before the Second World War. The Ford

FoundationhelpedpublicinstitutionsinLatinAmerica.viiiObviously,

universitiesprefer contributions that areunencumbered andpermit

maximum discretion in their use. In view of our theme of

privatization,thehistoryofprivategivingisanessentialaspectofthe

story. Itwould include the culturalmotives forgiving, thekindsof

loyaltiesandattachmentsthatuniversitiesandcollegesinspireorfail

to inspire. The large numbers ofbrochures and solicitations that I

receivefrominstitutionsthatIhaveattendedintheUnitedStatesand

Britain, and those that I have visited elsewhere, indicate that

American practice isbeingwidely emulated. Taxation policies are

critical,sincetheycanstrengthenvoluntaryorcivilsocietyorweaken

donor incentives. Inmy estimation, historians of higher education

havepaidrelativelylittleattentiontothetaxationpoliciesandvalues

that propel philanthropy, although we understand that in the

centuries when the Christian churches influenced mainstreamuniversities, salvation and redemptionwere primemotivations for

giving.

An important source of outside support of course derives from

industry.While,onceagain,wecanpointtoprecedentsthatgoback

into the late nineteenth century, alliancesbetween universities and

industry then were not nearly so important as at present. The

academicbaronsdidnotaltogether trustorvaluebusiness,and the

ideabehind

auniversity

as

we

approached

the

twentieth

century

was

toviewtheprofitmotiveasantitheticaltotheclaimthatthepursuitof

knowledgewasofahigherorderofactivity.Knowledgewassacred

inonereading,spiritualandnotmaterial. It isalso thecase that the

industrial giants reshaping capitalist culture were not particularly

interested in universities, deeming them, as the academics in fact

wished, as impractical and unworldly. All that has changed.High

technology itself is a product of university thought, and the

organizationof

activity

to

be

found

in

the

great

computer

age

companiesof SiliconValleyand thenumerousothersiliconglens

and silicon wadis around the world are often patterned on


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KEYNOTE

11

universities.Theyvalueindependentthoughtandcreativity,aremore

horizontalthanvertical inmanagementstructureandare located

in

the

sort

of

kindergartens

that

go

by

the

university

name

of

campuses.Sohere isanalliancethat ismorecongenialtoresearch

universities than the old rustbelt industries that largelymet their

technicalneedsfrominhouseemployees.

It issobering to remember thataprincipaldriverandsponsorof

universitybased sciencehasbeen themilitary,whose investment in

university infrastructure and support for fundamental inquiry has

beenmonumental.WouldStanfordUniversityhave flourishedquite

soearlyasabuilderoftheSiliconValleyphenomenonhaditnotbeen

for theOffice ofNaval Research and its sponsorship of electronics

duringtheSecondWorldWar?Itissometimesdifficulttodistinguish

Research fromDevelopment inR&Dbudgets.Anduniversitieshave

managed federal laboratories in theUnitedStates.TheUniversityof

Californiamanages or hasmanaged three of them: one inBerkeley

itself,oneinnearbyLivermoreandoneatLosAlamos,NewMexico.

Mentionoftherelationshipbetweendefenseanduniversitiesleads

ourdiscussionof thesearch formoney towardsomeof theconflicts

that have been arising between universities and industrial orgovernmentsponsors.TheUniversityofCaliforniasmanagementof

twooutof three federal laboratorieshasbeen controversial for two

reasons.Poormanagementhasbedeviledtherelationship,leadingto

doubtswhethertheUniversityofCaliforniawascompetenttomanage

labs, and Los Alamos is now a shared responsibility with other

organizations.Livermoreisnowinthehandsofaprivatecorporation.

Butbyfarthemostcontentiousissueiswhetherinthedefinitionofa

universitythere

is

room

for

secret

research,

which

is

what

weapons

researchoftenentails.Afterall,auniversity issupposed tostandfor

publicandaccessibleknowledge.

Thisissuecontinuestoraiseitsheadeverytimealucrativecontract

withglobal industrialgiants isproposed.Acontractbetweenoneof

the schools of applied science at Berkeley and the Swiss

pharmaceuticalcorporationNovartistroubledthecampusformonths

until theuniversitywasassuredthatacademicnormsoffree inquiry

andreporting

were

being

observed.

Iunderstand

from

colleagues

initiallyopposedtothecontractthattheoutcomewassatisfactory.At

present, Berkeley and several other institutions have entered into a


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S.ROTHBLATT

12

largescale enterprisewith British Petroleum to develop alternative

fuels.This toobroughtdoubters to the fore.The fear isalways that

insofar

as

industry

uses

universities

for

product

development,

academics will ignore the inherited requirement of disinterested

inquiry.GrantHarman,present today,haswritten aboutuniversity

and business relations in Australia, and these include jobs for

graduatestudentsandtheuseof industrialfacilitiesandexposureto

management styles that differ from those customarily found in

academia. Those participating in these arrangements have not

particularly complained of a violation of the principles of

unhamperedinquiry,butIdonothaveacomprehensivegraspofthe

multipleexperimentscurrentlyunderway.

Certainly,thespecialidealqualitiesofauniversityasthehomeof

independent thought, and the place where the outcomes of such

thought are openly circulated, require a certain vigilance. The late

PresidentoftheUniversityofCalifornia,theeminentClarkKerr,once

wrotethatmoneyisnottherootofallevil,butitistherootofsome.

Theheavyemphasison theuniversityasageneratorofwealthora

manufacturerofskillsandmanpowertrainingtendstoobscurethose

other importantelementsofauniversity:asa locationwherehumancuriositycanbesatisfied,asasourceofsuperiorthinking,asaplace

thatoffers the ingredientsofa richpersonal life,as thepurveyorof

valuesessential to thehealthofademocraticsociety.Theuniversity

today is a multilayered organization whose strength lies, as

sociologistsof the subjecthave explained,at thebottom in the sub

structures responsible for teaching, research andpublic service.The

explosion of knowledge, the multiple methods and styles of

sophisticatedinquiry,

and

the

range

of

talents

contained

in

institutionsofhigherlearningareachallengetocentralpolicymakers

whowantrapidresultsandclearfoci.

All of us understand that themodernworld of competition for

markets and reputation leads to exaggerated claims and to

preoccupationwithwhat are called outputs, learning outcomes

andproductivitygainsthatareshallowlymeasuredbywhatisnow

termedmetrics.Iamsorrytosaythatevenprofessionalassociations

thatshould

be

in

alliance

with

universities,

as

well

as

non

governmentalaccreditingbodiesand theOrganization forEconomic

Cooperation andDevelopment, are caught up in themaelstrom of


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KEYNOTE

13

accounting.The resultwillbe amountain of comparativedata that

willproveimpossibletodigestorinterpret.Manyofuswearyofthe

daily

barrage

of

a

sound

bites

culture,

league

rankings

and

popular

magazine ratings. The loud clamor for attention is at oddswith a

more traditionalandmodestviewof scholarshipand science.But it

mustalsobesaidthattreatingknowledgeasacommodityhasalong

pedigree,evenifouradvertisingageisspecialandparticularlyshrill

initspersistenteffortsatpersuasion.

ServingManyMastersIsuggestthatwepausenowandexamineprivatizationasanecessary

strategy for higher education, especially for the researchled

university. It isameans for responding topressuresgenerated from

theoutsidebutalsofromthe inside;and ifpursuedcarefully,witha

clearunderstandingoftheprocess,itcanalsobeameansforcrafting

structuresandproceduresmoreconsistentwithprofessionalacademic

inheritances. President Tadmor is concerned that a big, messy,

marketdominatedandmediocresystemwill result in Israel froma

failure to align access possibilities with excellence.ix That is a

legitimatefear,butitisalsopossibletoconsidermarketsinthepluralas the classical economists did. Markets are arenas for trials (and

errors), spaces for negotiation broadly conceived. Markets do not

dictate results, unless there is amonopolybuyer. Therefore, let us

remember that governments have long been monopoly buyers of

educationalproductsandservices.Andletusalsorememberthatthe

greaterthedegreeofcentralizedpowerinasociety,themorelikelyit

is that state leaders andbureaucracieswill seek policies that avoid

complexityand

flexibility,

both

of

which

are

prime

necessities

of

creativeacademicinvestigation.x

Soallowmetoprovidethisshorthanddefinitionofprivatization:it

is theprocessbywhichuniversitiesacquiremanymastersandserve

manymasters. In sodoing, theyhave abetter chanceofpreserving

parts of their inheritance than if only one master pays the piper.

Iwouldarguethethoughtishardlyoriginaltomethatthegreater

thenumberofpossible sourcesof revenue and support, thegreater

arethe

chances

that

in

todays

dynamic

and

risk

prone

economic

environments universities will be better able to maintain valuable

elements of their traditions and insulate themselves from certain


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S.ROTHBLATT

14

vagaries thanunder conditionswheregovernmentsare theabsolute

sourceoffunding.

Surely

the

European

experiences

of

the

past

three

decades,

or

those

of Israel asPresidentTadmorhas related, isproof that government

agenda are not necessarily commensurate with university agenda.

Writingin1991,GuyNeaveandFransvanVughtaskedwhetherthe

higher education systems of the West [were] chained, like the

miserable Prometheus, to a rockwith the eagle ofbudgetdom and

intervention tearingdailyattheirentrails?xiAndthequestioncould

certainly be asked of the European past. Monarchies pressed

universities into supportof state churches and imperial adventures,

suppressed academic freedom as we understand it, rewarded

academic friends and called in royal charters in order to enforce

religious obedience. In the last century, totalitarian governments

destroyeduniversities asplaces of independent inquiry and spread

the poison of antisemitism through them, with some academics

unseemlyrushingtocomply.Effortstosuppresstheindependenceof

universities and to constrain intellectual inquiry are going on

elsewhereevenaswemeet.xii

TheOdditiesofBeingPrivate(Britain):aConfusingHistoryTobetter explain privatization as theprocessbywhichuniversities

andcollegesacquiremanymasterssothattheyarenotoverlyreliant

uponone,orfailtodoso,Ineedtoofferafewnotesonthehistoryof

institutionsthataredeemedprivate.Thefirstpointtostressisthatthe

divide between private and public is historically late and almost

unimaginable as a way of cataloguing institutions. Until the

nineteenthcentury,

colleges

and

universities

were

neither

public

nor

private in any strict legal or financial meaning of the word. The

distinctionandcategoriesdidnottrulyexist.Universitiesandcolleges

existedby sufferance. They had tobe licensed or chartered, given

corporatestatusbyprincely,royalorecclesiasticalauthorities.While

we do not always know the exact date when medieval European

universitieswere founded,wedo knowwhen theywere chartered,

receiving statutes and ordinances allowing them to legally own

propertyand

govern

themselves

as

corporations

on

the

medieval

guildmodel.ColonialAmericancollegeswerecharteredbytheBritish

crownandbythestatesoftheUnionfollowingtheRevolution.Boards


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KEYNOTE

15

of trusteeswere the commonmodeof legal control for schools and

charitable institutions.The charterprovided abasis for intervention

by

recognized

outside

authority

in

cases

of

dispute

or

malfeasance.

ThecollegesofOxfordandCambridgearetodaylegallycharitable

institutions, but it is unclear whether the designation private is

suitable.Thewordisnotgenerallyused,butitwasusedforatimein

thefirsthalfofthenineteenthcenturywhenthecollegeswerefearful

ofgovernmentintervention.Historicallytheywereheavilydependent

upon tuition charges,assessing studentsaccording todefined status

categories, some thereforepayingmuchmore thanothersand some

paying little or nothing. From the earlymodernperiod onward the

tendencyforcollegeauthoritieswastotoleratetheoftenunbecoming

behaviorofwealthyundergraduates as thepriceof accommodating

theirprominent families.Thecolleges,universityprofessorshipsand

the twouniversity librarieshad longattractedgiftsandbenefactions

that were bestowed upon them by wealthy merchants, bishops,

aristocratsandroyalcourts.Thesesupportedpoorerundergraduates

and the college fellowship.The collegeswereby nomeans equally

endowed (nor are they today), and in themiddle of thenineteenth

century,schemeswereputinplacetospreadsomeofthewealthmoreequitably. These still exist. Compared to the colleges, Oxford and

Cambridge Universitieswereweakly endowed. Because of this, as

wellassomeothersocialfactors,teachinggravitatedtothecolleges,a

consequence that needed correcting in the second half of the

nineteenthcentury if thenew idealofspecialized teachingbasedon

researchwas tobe established.Buta researchmission couldnotbe

supplied from existing resources, and soon enough the two senior

universitiesbegan

to

campaign

for

money

derived

from

the

proceeds

of taxation.One prominent scientist, circa 1900, even advanced the

positionthatuniversitieswerelikebattleships:themoreandstronger

the better. The context was imperial competition with France and

Germany.

Parliamentwasreluctanttosupportthisposition,beingunderthe

influenceof laissezfaireeconomicdoctrines,althoughsmallergrants

had been given to other higher education institutions for specific

purposes.The

Scottish

universities,

much

poorer

than

Oxbridge

and

long accustomed to assistance from theCrown, had always sought

andwelcomed state assistance evenwhen the pricemight require


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S.ROTHBLATT

16

compromises. The Scottish universities of the time were more

national in their identity than theEnglishones,whichwere in the

process

of

outgrowing

their

historical

connections

to

landed

society.

But in the third decade of the twentieth century, the universities

received central government funding and became de facto state

universities.Thecollegesbythenhadbecomedependentuponcentral

andlocalgovernmentassistancetothestudentstheyadmitted.

Inthefirstpartofthenineteenthcentury,theargumentstartedto

circulate in England that the difference between a college and a

universitywas that the firstwas private and able to dispose of its

income as the society of fellows decided (in accordance with the

wishesofdonors),whilethesecondwaspublic.xiiiThedistinctionwas

unneededearlierbecauseOxfordandCambridgeenjoyedmonopoly

status inEnglandwithoutcompetition.So thedistinctions firstarose

whenthepossibilityofarivalappearedinthe1820sintheformofthe

first LondonUniversity. The specific issuewas the right to award

degrees.TheOxbridgeestablishmentopposedextendingtherightand

arguedthattheUniversityofLondonwasonlyacollegeandnot,asit

wanted tobe,auniversity,and thatcollegeshadnodegreegranting

privilegesby lawbecause theywere private. In retrospect this is apeculiar argument. It did not, for example, apply to the Anglican

TrinityCollege,Dublin,butitheldneverthelessforreasonsthatareas

yetillunderstood.Oncethemastersandfellowsdecidedthatcolleges

wereprivate,theyusedtheirstatustoopposeparliamentaryeffortsto

revise their statutes some decades later. Opposition failed. Royal

governmenthadlongestablisheditsrighttocallinchartersandrevise

statutes. Yet government had found a new weapon to dominate

highereducation:

the

degree.

Whatever

authority

controlled

the

degree also controlled the curriculum and through the curriculum

teaching itself. There was one loophole: institutions that did not

awarddegreeswerenotas subject to regulation.ButBritish society

wasmoving toward certification andqualifications as conditions of

professionalemployment,anddegreeswereassuminganimportance

thattheyhadneverbeforeheld.UntilthefoundingoftheUniversity

of Birmingham in 1901, every new institutionwas legally a college

withoutthe

right

to

award

degrees

except

through

acentral

university

createdpreciselyforthepurposeauniversitythatwasodd,sinceit


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S.ROTHBLATT

18

seekcreativesolutions to fundingexigencies.Universitieshavebeen

pursuingprivatizationstrategiesanddiversifyingtheirrevenuebase.

Initially

opposed

to

tuition

charges

(it

is

the

case

that

parents

had

beenmeanstested,however),theuniversitiesreversedthemselves in

due course.Butprivatization isnotonlya shift inbehavior. It is aufond a shift in attitude ormentality,with some institutionsplowing

aheadfasterthanothersandgainingrecognitionfordoingso.

MoreOddities:TheEvolutionofPrivateInstitutionsinAmericaThe American university situation is quite different, andwas also

virtuallyunforeseen.Therewasnointentionattheoutsetonthepart

of any higher education institution tobecome private. The earliest

university colleges,most ofwhich have grown into famous private

institutions(RutgersinNewJerseyandWilliamandMaryinVirginia

arepublic),were institutions subsidizedbycolonial legislatures ina

variety of ways. Historians have carefully worked over the

circumstances that converted these statedependent university

colleges into private institutions. The story that they tell is not

straightforward.ItusuallybeginswithwhatiscalledtheDartmouth

College v.Woodward Case of 1819, ultimately a decisionby theSupremeCourtinWashingtonthatallowedDartmouthtodeclare its

independencefrominterferencebythelegislatureofthestateofNew

Hampshire.Butthatinterferencehadnothingtodowithinstitutional

autonomy or academic freedom. It involved political party

disagreements, vested interests, the heirs of founding families and

fights overwho should sit on theboard of trustees.The legislature

only entered the story when askedby a member of the founding

familyto

intervene

in

his

favor.

A

state

election

in

1816,

however,

led

toaneffortbythelegislature,nowconsistingofnewmembers,toalter

theboard, an effort upheldby the high court of the state ofNew

Hampshire.But the federalSupremeCourtruled that the legislature

hadnorighttointerveneinthefirstplace.

Yetgovernmentshadalwaysintervenedinuniversitiesinoneway

or another. Effortsby theOxbridge colleges to restrict intervention

had and have failed. What caused the shift in legal thinking in

America?The

efficient

cause

was

the

American

Revolution,

and

the

ultimate cause was eighteenthcentury thought regarding the

importanceatlawofchartersascontracts.Thepowersofgovernment


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KEYNOTE

19

werelimitedbytheideaofsocialandlegalcontractsasexplainedby

the philosophy of John Locke regarding political sovereignty. The

American

constitution

was

itself

a

contract

that

validated

other

contracts.The decision, it hasbeen said, hadmore implications for

businessthanforeducation.Butwhatisfascinatingisthatnosooner

hadthisdecisionbeenrenderedthantheformerboard,nowrestored,

continued toask theNewHampshire legislature formoney,and the

governor ofNewHampshire sat as a trustee until the end of the

century.

IfDartmouthCollegewasnowtoberegardedasprivate,neither

theCollege leadershipnor the leadershipofmanyother,often faith

related,collegesunderstoodthatstatusinanythingliketheconditions

presumably in use today. In otherwords, the ramifications of the

SupremeCourt rulingwere not fully grasped. Private colleges and

universities understood their educational role to be one that was

committedtothepublicgoodandtotheeducationofcitizensforthe

new Republicmuch as they had donebefore. In undertaking that

responsibility, theyargued thathistoryentitled them togovernment

fiscal support support, incidentally, that governments were

reluctanttoprovide.IntheUnitedStates,foratleasthalfacenturyormore after the Revolution, some of the great names in American

universityhistoryYale,HarvardandColumbiareceivedlandand

cashgrants.TheGeneralCourtof theStateofMassachusettsgavea

large sum toHarvardsMuseum of Comparative Zoology in 1868.

Membersof the stategovernments saton theirboards.To thisday,

CornellUniversity, founded in the later nineteenth century, isboth

private and a public landgrant university. The Massachusetts

Instituteof

Technology

was

founded

with

state

as

well

as

private

money.Thecyclesofsupportwaxedandwaned,whiletheleadersof

colleges complained of neglect. The founding of a new type of

publiclyassisted institution, the socalledA&M (agricultureand

themechanicalarts)orlandgrantuniversityoftheMorrillActof1862

(of which Berkeley is a representative),xvii even occasioned some

opposition from established private institutions fearing a loss of

publicmoney. The point is thatwe had not reached that historical

momentwhen

distinctions

between

public

and

private

bore

any

clear

and instrumental meanings. Universities and colleges, however

founded,expectedtobesupportedfromtaxesorlandgrants,andthis


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S.ROTHBLATT

20

continued in the case of Dartmouth, the sometimeimagined

prototypicalprivateinstitution,until1921.

A

shift

in

mentality

became

apparent

around

the

time

of

the

American Civil War. The first reason was the war itself and the

perceivedincompetenceofpublicresponseagenciesandgovernment

bureaux. State and federal administrations, whose record of

educational supportwas in any case spotty,were now regarded as

unreliable. The second reason was largescale philanthropy, the

consequence of fortunes made as America industrialized. And the

third,possiblyconnectedtothesecond,wastheappearanceofactive

alumniassociations.Whereasalumnigivinginsomeformdatedback

tothefinaldecadeoftheeighteenthcentury,itwasnotuntilthenext

century that the alumni voice was pronounced, and graduates

assumed amoredirect interest in thework of trustees.Yet another

reasonwasanenhancedroleforcollegesanduniversitiesassuppliers

ofservices tourbanizingAmericaand,while limited,tothebusiness

communities.WhileAmerica did not yet have a reliable system of

secondary education that could feed colleges and universitieswith

suitableundergraduates,therewerestirringsinthatdirectionasnew

elitepreparatory schoolswere founded onEnglishmodels.Around1900we find that universities such asHarvard arebecomingmore

selfconsciousabouttheirheritageandplaceinAmericansocietyand

are starting to create the sagas and narratives thatwill go into the

making of the Ivy League image of elite selection.xviiiCharles Eliot,

president of Harvard, once a defender of public support for all

institutions (aswas his fatherbefore him), declared in 1873 that in

Europeitwasanaxiomthatthegovernmentistodoeverything.He

continued:This

abject

dependence

on

the

government

is

an

accursed

inheritancefromthedaysofthedivinerightofkings.xix

HowDifferentfromPublicarePrivateInstitutionsintheU.S.?Forcollegesanduniversitiesnowabsorbedinthetaskofdevelopinga

corporatementalityasprivate inanerawhen largescalebusinesses

were transformingAmerican economic and cultural life, one future

objectivewouldbe to redefine themeaningof their responsibility to

societyas

awhole.

Would

institutions

legally

private

be

expected

to

live of ones own in the seventeenthcentury English expression?

Wastheroleofaprivatecollegeoruniversityfundamentallydifferent


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KEYNOTE

21

fromthatofinstitutionsmorefullydependentupontaxrevenuesand

political decisions? Or was that role a special aspect of American

democracy,

something

unique

that

separated

a

private

from

a

public

university? What about access? Who would be admitted? Would

private institutions be expected to participate in student credit

transfer schemes, so important toAmerican conceptions ofupward

educationalmobility,thustyingthemtothepublicsectorinstitutions?

Thegrowthofstateuniversities inAmerica,and thenewversion

of landgrant institutions, provided an opportunity for the private

institutionstobecomemoreselective.Someprivateinstitutionswould

concentrateontopslicingthecandidatepool.Whilethemovementfor

select admissions did not start to occur until the 1920s, when

secondary education improved, already at the beginning of the

twentiethcenturywefindthestandardsmovementsandIntelligence

Quotient testing that have played an important and increasingly

controversial role inAmerican higher education.xx Stateuniversities

were supposed to absorb the increasing demand for university

admission.ButIwouldberemissinleavingyouwiththeconclusion

thatthecardinaldistinctionbetweenapublicandaprivateuniversity

was thatpublicsprovideddemocraticaccesswhile thewholeof theprivates concentrated on identifying and promoting excellence.

Adhering to theirreligiousoriginsorbeliefs,orconcernedabout the

urbanpoor,manywerelessmeritocraticorcompetitive.xxiInfact,the

numberofselectprivatecollegesremainsfairlylimitedgiventhesize

ofAmericanhighereducation,andsomeof thestateuniversitiesare

more selective, especially those that are researchled and contain

increasingly expensivegraduateandprofessional schools.Theseare

oftentermed

flagship

campuses

and

are

usually

the

first

ones

to

be

foundedintheirstates,althoughgivenpresentstatussensitivities,the

wordflagshipisonlymentionedsottovoce.xxiiI now come to another important point regarding the public

privatedivide.Thedivideissimplynotassharpaswemightimagine.

WewouldbemorecorrectinnoticingthatmuchofAmericanhigher

education is in some senseahybridaconclusion thatothershave

certainlynoticed.xxiiiPublicuniversitiesbehavelikeprivateones.They

arealso

in

the

business

of

raising

endowments

and

soliciting

gifts,

to

includebuildings (which certainly has occurred in Israel), and they


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S.ROTHBLATT

22

assiduouslycultivatetheiralumniassociations.Freehighereducation,

atleastabovethelevelofthetwoyearcolleges,isathingofthepast.

Distinction

in

mission

does

not

simply

divide

according

to

public

or private. Institutions are also defined as to research and degree

giving capacities.Fora long time,wehave reliedona classification

createdbytheCarnegieFoundation,andthisisundergoingrevision.

Relative independence from state political influence or intervention

doesmarkan importantdistinctionbetweenpublicandprivate,and

thisispossiblythemostenviedaspectofthebrandnameinstitutions.

However,theNewYorkStateBoardofRegentsexercisescontrolover

allcharteredinstitutionsinthestate,asdotheRegentsoftheStateof

Massachusetts. In 1997, the New York Regents intervened in the

governance of Adelphi University, charged the trustees with

misconductandremovedallbutonememberfromtheboard.Going

the otherway, a few public universities have certain guarantees of

selfgovernment under their state constitutions the University of

California isoneof them.Thisdoesnotbyanymeanseliminate the

pressures thatcanbebroughtagainst theuniversitybythegovernor

andlegislature,whostillcontrolthepurse:thegovernor,incidentally,

isoneofseveralexofficiopublicmembersoftheboardandappointsalltheregulartermmembers.Nordoesitremovetheforceofpublic

opinionasexpressedthroughthemedia,butitaffordsacushionand

providesalegalbasisforchallengingintrusion.Faithrelatedcolleges

inreceiptofassistancefrom thereligiousConventionsof theirstates

cancertainlyexpectoccasionaleffortsto intervene inthecurriculum,

especiallyinBaptiststatessuchasAlabamaorSouthCarolina,where

theConventionsmoved rightward.Thispressure led solid southern

campuseslike

Samford

and

Furman

to

sever

financial

relations

with

theirConventionsinordertopreserveinstitutionalautonomy.xxiv

Researchled private universities are as dependent upon federal

sources of income as are the publics. They are subject to the same

controllinglegislationregardingtheuseofthosesums,suchashealth

provisionsandhumansubjectsresearch. Allcollegesanduniversities

are recipients of various studentaid programs from the federal

government, or loan programs, which, unfortunately, have a

scandalousrecent

history.

Financial

aid

officials

at

some

institutions

havedirectedstudents toparticular loancompanieswithwhichthey

had developed personal ties. New institutions are intent onbeing


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KEYNOTE

23

officially accredited in order to receive federal student support.

However,no institutioncontrolsthatsupport,whichgoesdirectlyto

students

if

they

qualify.

The

idea

there

was

to

strengthen

the

student

marketand tokeep colleges anduniversities fromdispensing those

funds according to their own criteria and goals,which at one time

would certainlyhave included favoritism.As foradmissionspolicy,

privateinstitutionsmaywellhaveafreerhand,althoughthelegacy

institutionshave longhadaspecial relationshipwith the familiesof

theirgraduates.Acertainmysteryhangsovertheadmissionscriteria

used by many private institutions, no one on the outside being

absolutely certain how officials arrive at selection. The officials

themselves struggle hard tobalance selectionwith equity,being as

sensitive to external pressures to admitmoreminority students as

publicinstitutions.

To a list of howblurringsbetween private and public identities

haveoccurredoncethedistinctionappearedhistorically,Iwouldadd

another component. The growth of academic specialism and

careerismprovidesa fairly commonnationalandeven international

standard of achievement and evaluation. The development of

doctoralgranting graduate schools in the twentieth century amovement thatbegan to spreadoverseas severaldecades agohas

produced an academic class with widelyshared intellectual and

occupationalattributes.Theinstitutionaldifferencemayexpressitself

more in classroom size and staffing ratios than in mission or

performance,buteven thatgeneralizationdoesnotconsistentlyhold

acrossthepublicprivateboundary.Bothsectorsofferlargelecturesor

smallseminarsandtutorialteachingdependinguponhowtheywish

toallocate

resources.

Course

offerings

and

intellectual

trends

are

more

or less identical irrespectiveofapublic/privateseparation,orevena

college/universitydistinction.Fouryearprivatecollegesareeager to

send their best graduates to the major research institutions and

professional schools and prepare them accordingly. The word

diversity todescribeunique intellectualqualitieshasvirtually lost

allmeaningandinsteadhasbecomeashopwornwordtoindicateany

institutionsdesirableethnicmix.

Ihave

deliberately

pursued

the

notion

of

the

contemporary

universityasacompositeandhaveperhapsunderplayedpublicand

privatedistinctions.Youmay therefore find itnecessary todisagree


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S.ROTHBLATT

24

withme,butIhopethatI(andothersourcesthatIcite)haveatleast

persuadedyouthatthedistinctionbetweenpublicandprivatehasto

be

made

carefully.

I

would

also

soften

the

claims

of

private

sector

institutions tobespecial.Theirfiscalpositionrequires them tomake

the claim in order to survive and flourish. Institutional identity

seeking is a consequence of market discipline, the need to attract

donor supportbut also reputation.Europeans areperplexedby the

strongemphasisonteamsportsinAmericancollegesanduniversities,

butthesearepartofthesamephenomenonofprofilerecognition.The

Ivy League was first of all an athletic league. Burton Clark has

brilliantly studied reputationhunting in liberal arts colleges in the

United States. Their narratives are clear: in order to be noticed

(nationally,regionally,internationally),aninstitutionmustdevelopa

history of itself that is special. It uses its network of graduates to

disseminate an image.This requires an investmentof time, thought

andeffort,and itneeds tobecontinuousandconsistentlyguided.xxv

Butpublicinstitutionsdothistoo.

TheEntrepreneurialUniversityClarkhasalsoturnedhisattentiontoEuropeanuniversitiesthathavesystematically adopted the hybrid form. I highly recommend his

studiesascasebookaccountsofhowuniversitiesnotonlysurvivebut

flourish under conditions of extreme competition.xxvi The five

universitieshestudiesinEngland,Scotland,Sweden,theNetherlands

andFinlandaredependentupongovernmentforoperatingexpenses

or on governmentfunded research councils for targeted andblue

skies research.One,however,ChalmersTechnologicalUniversity in

Gothenburg,has

become

private,

albeit

with

substantial

government

assistanceintheinterim.

Knowing that government sources are subject to ministerial

decisionmakingandarecontended forbynumerous interests, these

universitieshavebecomeentrepreneurial,awordthatClarkknows

will raise hackles because it appears to equate universities with

businessfirms.Buthispointisnotthattheyarebusinesscorporations

andhave foregone theiruniversity inheritances.Hemeans that they

haveaggressively

pursued

strategies

and

innovations

calculated

to

improvetheirindependenceandinitiative.Theyhavediversifiedtheir


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KEYNOTE

25

income streams, offering to servemanymasters in order to avoid

servingonlyone.

Those

who

expect

a

single

model

for

success

will

find

none.

That

is

critically important.Thebasic requirement is a spirit ofboldness, a

willingness to take risksand rethink inheritedstructuresandmodes

of decisionmaking, the avoidance of a begging mentality and an

unembarrassed strategy for entering the numerous markets that

characterizemodern society. In the caseofChalmers, changebegan

below,among theprofessors, andpercolatedupwards.Warwick, in

England,tookanoppositestrategyandmanagedchangefromabove,

employing amore centralized approach. Sometimes, the traditional

faculty structuresweremaintained,atother timesdiscarded.Cross

disciplinary organizationswere created, aswere science parks and

institutes, and allianceswith local industries. Specialtieswith high

market value were developed and an emphasis was placed on

attractingandkeepingtalent.Managementteamswereestablishedin

some instances,but therule inallcasesappears tohavebeensteady

vigilance, taking nothing for granted and searching for economic

alternatives on almost a daily basis. This required dedicated and

persistent academic leadership. It also entailed a willingness tosubordinateacademicfiefdomstothewelfareoftheentireinstitution.

While it is customary in academia to hear complaints that a

managerial attitudehas overtaken an institution to thedisregard of

guild and collegial traditions of cooperation, the entrepreneurial

universities regardmanagementasa fullcollaborationwith senates,

courts and colleagues. Collegial and guild cultures have not been

discarded. The techniques and structures that these universities

employedand

created

are

indeed

astonishing

in

their

variety

and

dynamism.However,whatismostastonishingofall,atleasttome,is

how the fiveuniversities arepermeated throughoutwith apositive

spirit:howenergyisdiffusedeverywhere,toincludeundergraduates,

postgraduates and alumni (yes, this American habit has been

borrowed).Furthermore,itisunderstoodasithasbeenunderstood

inAmericanuniversities and colleges thatwhilemanydisciplines

arenotdesigned toexploit financialmarkets, they can contribute to

theanimating

spirit

of

the

institutions,

which

in

turn

rewards

them

by

distributingtheopportunitycostsandbybuildingtheaterfacilitiesto

promote the arts and humanities. Furthermore, the fact that the


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S.ROTHBLATT

26

universities have taken their fate in their own hands and are not

content towait forgovernment toprovide recurrentgrantshaswon

the

approval

of

civil

servants

and

politicians,

who

are

relieved

to

find

thattheircrudeeffortstodriveuniversitiestomarketshasproduceda

farmoresophisticatedapproachtolivingintheworldthananysetof

governmentartificerscouldeverdesign.

This is thebrief story of privatization and private that I put

beforeyouthismorning,awaitingthemoredetailedcountryanalyses

thatourcolleagueswillprovideoverthecourseofthenextfewdays.I

havetriedtoshowthatevenintheexampleoftheUnitedStates,the

preeminentupholderof the ideaofprivate education, the storyhas

neverbeen simple.Colleges anduniversities evolved as composites

and hybrids, learning how to negotiate amongbuyers and praying

that the negotiations were a means of preserving core values of

teaching and research. Some institutions have clearly been more

successfulthanothers;and inallcases,asangryAmericanobservers

weresayinginthefirsthalfofthetwentiethcentury,thereweretrade

offsanddepartures from theGermanuniversitymodel, thecardinal

exampleofwhatuniversitiesweresupposedtobe.

PartisanshipMoretobeFearedthanMarketsTherewerefailures.Ialludedtothat.Thereareanxieties,eveninthe

UnitedStateswhere,comparativelyspeaking,highereducationdoes

well.Thereissometalkaboutthecrisisofthepublics,thetitleofa

symposiumheldinBerkeleylastyear.Tuitionchargesaretoohighfor

millionsofAmericans,although thepublics, like theprivates,are in

thebusiness of tuition discounting. There are other issues that are

equallyor

more

troubling

to

me,

most

noticeably

the

use

of

the

classroomtodispensepoliticalandideologicalpositions,especiallyin

connection with issues regarding the Middle East and Israel. A

proposedboycottof IsraeliacademicsbyBritishacademicunionsor

theactivitiesbyagroupoffacultyatColumbiaalongsimilarlinesare

almost unimaginable in the context of university ideals. The real

threats to academic integrity, to considerations of honesty and

objectivity,toabeliefinreasoneddiscoursearenotmarketforcesbut

theone

sided

narratives

being

concocted

by

members

of

the

humanities and social sciences.Academic freedom requires that the

classroom be free of partisan rants and be home for the sober


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KEYNOTE

27

exchangeofwellgroundedfacts.Otherformsofinternalintimidation

havearisenasaconsequenceofthediversitymovement.Studentsand

faculty

adhering

to

older

canons

of

merit

hesitate

to

voice

their

views

because of charges that in sodoing they are discriminating against

students from lessprivilegedhomes.For thosewhoare troubledby

privatizationbecause itopensuniversities tomultiple influences, let

me insist that the university is already open tomany political and

ideologicalinfluencesthataffectthequalityandnatureofscholarship.

Facultyandstudentsbring theworld, itsconflictsand itsaggressive

tendenciesintotheuniversity.

But ups and downs notwithstanding, and despite the restless

natureofcontemporarysocietyandanoccasionalbutegregious lack

ofpoliticalvision,universitiesarestillrecognizedasvitaltothehealth

of our nations. It is always important for those of us in higher

educationtokeepthatargumentforemostinourdealingswiththose

outside and to explainwhy some governmentpolicies arenot only

detrimental to universities but to national wellbeing. In the

nineteenthcentury,highereducationhadnotyetbecomethelifeblood

ofthenation,thesourceofitsscientificandintellectualdevelopment,

theprovinggroundsfor theeducationof thenations talent.Womenwere a neglected source of talent. They are no longer. As we

contemplatethenumbersofwomenenteringhighereducation inso

many places now greater than that of men we have another

indicationoftheimportanceoftheuniversitytoourideasofprogress

andimprovement.Weseewhathashappenedorishappeningto

nations that discriminate against women or steer their higher

education systems toward limitedends.Theyhave failed toprovide

thedynamic

economic,

political

and

social

conditions

that

in

turn,

if

we recognize the historical process, can create colleges and

universities that understand how to live under those conditions,

contribute to them, and I am bold enough to say may even

prosper.

TheTrueMeaningsofPublicandPrivateUniversities today cannot be isolated from the many confusing

strandsof

competing

interests.

Democracy

and

market

economics

require that theybemixtures, uneven crossesbetween private and

public,eachrequiringaparticularstateofmind,asIsaidattheoutset.


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S.ROTHBLATT

28

Thetruemeaningofprivateisamentalityofindependence,abold,

honest,fairandgenerouscommitmenttolearninganddiscourse.The

true

meaning

of

public

is

responsibility.

All

universities,

public

or

private, are fiduciary institutions. Whatever they do, they must

pursueand retain the trustof theirmanymasters.Andeach typeof

institution should also appreciate how much it requires the

collaborationandsupportofothers.Ahealthyuniversityandcollege

system can endure competitionbut not squabbling andjealousies,

which only invite intervention from outside the academic

communities. Finally, itmustbe insisted that service to society and

government is not the same as servitude.The oftquoted remark of

Hillelisalwaysapt.Iwillonlygivethefirsthalfofit:IfIamnotfor

myself,whowillbeforme?

Publicandprivate:thatisthecombinationthathistoryofferstous.

Dionysius ofHalicarnassus is supposed tohave said thathistory is

philosophyteachingbyexample.Shallweleavethematterthere?

i Noga Dagan-Buzaglo, The Right to Higher Eduction in Israel, a Legal and

Fiscal Perspective (Tel Aviv: Adva Center, January 2007), p. 36ff. The

Adva Center describes itself as a non-partisan, action-oriented Israeli

policy analysis center, founded in 1991 by movements to advance the

welfare of Mizrahi Jews, women and Arab citizens. See the online

description, About Adva Center. (Adva means ripple in Hebrew.)ii The Thatcher Government in Britain reduced the grant for overseas

students at Oxford according to an expected increase in charges. Anthony

Kenny and Robert Kenny, Can Oxford be Improved? A View from the

Dreaming Spires and the Satanic Mills (Exeter: Imprint Academic, 2007),

p. 112.iii

As expressed in Sheldon Rothblatt, The Living Arts, Comparative and

Historical Reflections on Liberal Education, in The Academy in

Transition, (Washington DC: American Association of Colleges and

Universities, 2003).iv

Roger Geiger, Finance and Function: Voluntary Support and Diversity in

American Private Education, in Private Education, Studies in Choice and

Public Policy, ed. Daniel C. Levy (New York and Oxford: Oxford

University Press, 1986), p. 215.vHow the Laser Happened(New York: Oxford University Press, 1999).


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KEYNOTE

29

vi

I have addressed this subject in Educations Abiding Moral Dilemma:

Merit and Worth in the Cross-Atlantic Democracies, 18002006(Oxford:

Symposium Books, 2007). The three democracies are Scotland, England

and America. Merit refers to measurable talent, and worth to a

broader and deeper conception of human value.vii

The current Secretary of Education in the United States appears to be amember of this camp, although the American constitution makes

education a responsibility of the individual states.viii

Daniel C. Levy, To Export Progress, the Golden Age of UniversityAssistance in the Americas (Bloomington: Indiana University Press,

2005), p. 99.ix

Zehev Tadmor, The Moment of Truth, p. 11. Paper circulated to the

conference.x James C. Scott, Seeing Like a State. How Certain Schemes to Improve the

Human Condition Have Failed (New Haven: Yale University Press,

1998), pp. 11, 353.xi

Guy Neave and Frans van Vught, Conclusion, in Prometheus Bound,

The Changing Relationship between Government and Higher Education

in Western Europe, ed. Guy Neave and Frans A. van Vught (Oxford and

New York: Pergamon Press, 1991), p. 253.xii Precisely because of the dangers that centralized power represents, Martin

Trow has discussed the advantages of weak government for higher

education. Market competition for resources is one way of diminishing

the threat of central intervention by providing alternatives. See his paper,

In Praise of Weakness: Chartering, the University of the United States,

and Dartmouth College (Center for Studies in Higher Education,

University of California, Berkeley, March 2003).xiii

There appears to have been a similar notion in America at about the same

time, but none of the historians whom I have read offers any explanationfor it, nor do they recognize an historical problem.xiv

Can Oxford be Improved?, pp. 119, 141.xv

Ibid., p. 128.xvi

A. H. Halsey, The Decline of Donnish Dominion (Oxford: Clarendon

Press, 1992).xvii

There is a long if interrupted history of land grants, later sea grants, going

back to the early Republic.xviii

See John Thelin, The Cultivation of Ivy: A Saga of the College in America(Cambridge, MA: Schenckman Publishing Co., 1976).


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S.ROTHBLATT

30

xix

John S. Whitehead, The Separation of College and State, Columbia,

Dartmouth, Harvard and Yale, 17761876 (New Haven and London:

Yale University Press, 1973), p. 191. See also John R. Thelin, A History

of American Higher Education (Baltimore and London: The Johns

Hopkins University Press, 2004), pp. 7073; Lawrence A. Cremin,

American Education, The National Experience, 17831876 (New York:

Harper and Row, 1980), pp. 402403; Daniel C. Levy, Private and

Public: Analysis and Ambiguity in Higher Education, in Private

Education, Studies in Choice and Public Policy, pp. 170192.xx

Universities like Harvard, hitherto dominated by privileged New England

families, found to their dismay that the children of Jewish immigrants

were hugely successful in meeting tougher admissions standards. Theresult was the introduction, de facto or outright, of a numerus clausus.

These policies were not in every instance ended until after 1945.xxi

Daniel C. Levy is of the view that public institutions in Brazil are

probably superior to those in the private sector. Private Education, p. 178.xxii

This makes the recent report of Indiana Universitys MissionDifferentiation Project team particularly interesting. The report calls for

officially labelling the Bloomington campus of the multi-campus system

as flagship, thus setting it apart from the other campuses as a research-

led, elite campus. Indiana University News Room News Release(November 9, 2007). Robert M. Berdahl, former Chancellor of the

University of California, Berkeley, delivered an interesting address on thesubject of flagship designations on October 5, 1988, called The Future of

Flagship Universities, in which he advocated a return to the use of the

word.xxiii

E.g., Levy and Geiger in Private Education.xxiv

For further remarks along these lines, see Robert O. Berdahl and John D.

Millett, Autonomy and Accountability in US Higher Education, in

Prometheus Bound, pp. 215238.xxv

Burton R. Clark, The Distinctive college: Antioch, Reed and Swarthmore

(Chicago: Aldine Publishing Company, 1970), republished by

Transaction Books, 1992, with a new introduction.xxvi

See Creating Entrepreneurial Universities, Organizational Pathways of

Transformation (Kidlington, Oxford: Pergamon/Elsevier Science Pressfor the International Association of Universities Press, 1998 and 2001);

and the follow-up study, Sustaining Change in Universities; Continuities

in Case Studies and Concepts (Maidenhead, England, and New York:

Society for Research into Higher Education and Open University Press,2004).


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31

SESSIONI,PARTI

CurrentTrendsinthePrivatizationofHigherEducation


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CURRENTTRENDSINTHEPRIVATIZATIONOFHIGHEREDUCATION

32

PRIVATEHIGHEREDUCATIONSGLOBALSURGE:EMULATINGU.S.PATTERNS?

DanielC.LevyDistinguishedProfessor,StateUniversityofNewYorkand

DirectoroftheProgramforResearchonPrivateHigherEducation

SUNY,UniversityatAlbany

[email protected]

AbstractOne of the most striking global changes in higher education is

privatization. Privatization encompasses both partial privatization

withinpublicuniversitiesand thegrowthofseparateprivatehigher

education institutions. Many countries, Israel included, experience

bothformsofprivatization.Itisthegrowthofprivateinstitutionsthat

is the subject of this paper. Private institutions now account for

roughlyathirdoftotalglobalenrolment.

PrivatehighereducationspreadhistoricallyfromitslongtimeU.S.

hometoamplerepresentationinAsiaandLatinAmerica. Butjustin

thelastcoupleofdecadesnotonlyhasitgrowninthosetworegions

butalsospread to theMiddleEast,CentralandEasternEurope,and

Africa.Wecanidentifythecausesoftheprivategrowthandassessits

maincontours.Yetprivatehighereducationisfarfromuniform.Some

provide forgroup identity,others foreliteorsemieliteoptions,and

the risingbulk are nonelite institutions accommodating exploding

demandforhighereducation.Throughout, thispaperparticularlyhighlights theU.S. case. It is

themostpotent, largest,andofgreatest interest to Israelis.Different

frommuchoftheglobalprivatehighereducationinmanyrespects,it

typifies and leads in other respects.At the same time,U.S. private

highereducationisitselftransforming. Wecanidentifyseveralofthe

majortrends.

****

ThemeThis conference presentation focuses on private higher education

(hitherto PHE), which, astonishingly, now accounts for roughly a


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D.C.LEVY

33

thirdoftotalglobalenrolment.1Despitethis,PHEhasnotbeenmuch

studied,atleastuntilaroundtheyear2000. Policyofficialsoftenhave

littleknowledgeofPHE,which,ofcourse,doesnotalwayskeepthemfrom setting rules. One purpose of this presentation is to give an

informedglobalviewofPHE.2

A relatedpurpose is toanalyze theglobal tendenciesagainst the

backdrop of U.S. reality. Both similarities and differences are

highlighted. U.S. reality can helpusunderstand global reality and

global reality should help provide us perspective on increasingly

private dimensions ofU.S. higher education. Widespread popular

impressionswouldhaveitthattheU.S.isthekingofPHE. Insome

respects thisremains true.Inotherrespects, itdoesnot.I like toask

audiencestoguessattheshareofprivatetotalenrolmentgloballyand

in theU.S.Almost invariably, respondersare too lowon theglobal

sideandtoohighontheU.S.side. Infact,theglobalshare(omitting

the U.S.) is roughly 50 percent higher than the U.S. share (of 23

percent).3 (Israels PHE share remains lower thanboth, around 13

percent.)

Thedinneraddressthatopenedtheconferenceraisedthequestion,

for Israel, of whether reform is to be associated with

privatization. Globally,thereisheavyassociationbetweenthetwo,

at least in the minds and plans of policymakers domestic and

international(e.g.,WorldBank)andleadingscholars. Reformreport

after reformreporteitherexplicitlyor indirectlyadvocates increased

privateness (World Bank 2000). On the other hand, much of the

higher education establishment and the general public remain

opposedorwary.

This presentation is divided into two parts: (1) the astounding

growthofPHE; (2) themajor typesof institutions thatconstitute the

sector. The second part is crucial, because PHE is not uniform.

Rather,weseenotonlyprivatepublicdistinctiveness(Levy1992)but

alsogreatdistinctivenessbetween typesofPHE. Foreachsectionof

thetwoparts,wewillprovidetheU.S.backdropandthenturntothe

world.

Private is not a clearcut term, not used the same way by

everyone. Professor Rothblatt will help enlighten us on historicalmeanings. Myapproachtakesprivateandpublicbylegaldefinition,

but assumes little about how they function,which is a matter for


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CURRENTTRENDSINTHEPRIVATIZATIONOFHIGHEREDUCATION

34

empirical investigation (Levy 1986b). Reality also differs greatly

across regions and countries, and across time. In the U.S. alone,

significant change continues within PHE and there are greatdifferencesdependinguponregionandstate. PHEisawideranging

and multifaceted phenomenon. Most generalizations about it are

simplifications, often conveying a distorted view. Nonetheless,we

cannowmake anumberofwarranted andweighty generalizations

aboutPHE.

A final introductoryword is that global privatization in higher

Documents

Privatization in Higher Education