Home Uncategorized The Nearly Free University and the Emerging Economy: The Revolution in Higher Education by Charles Hugh Smith
The Nearly Free University and the Emerging Economy: The Revolution in Higher Education by Charles Hugh Smith

The Nearly Free University and the Emerging Economy: The Revolution in Higher Education by Charles Hugh Smith


51LxRrFZZYL__BO2,204,203,200_PIsitb-sticker-v3-big,TopRight,0,-55_SX278_SY278_PIkin4,BottomRight,1,22_AA300_SH20_OU01_My three greatest interests in higher education are (in order): affordability, student persistence, and technology-enabled education. Given the size of the sector, researchers or authors usually write about one of those topics in a focused or nuanced paper/book. Having read a reference to the above book that appeared to focus on affordability and technology-enabled education, I ordered a copy. The author, Charles Hugh Smith, is neither an academic nor an economist. He clearly is an independent thinker. His website, www.oftwominds.com, is rated as one of the top 10 alternative financial websites by CNBC with more than 20 million page views. While Smith’s opinions certainly do not reflect the mainstream thinking by regular higher ed scholars and critics, it’s important to consider them as we look at how the economy and technology may influence change in higher education.

Smith begins by framing his opinion of the current status of higher education through eight points. The first two, (1) that higher education is a legacy system based on a scarcity of recorded knowledge and that (2) current higher education is a factory of broadcast lectures and mass-distributed reading/coursework/tests, are not new to most observers. The next three points relate to economic theory and are: (3) higher education is an informal cartel that limits its product through accreditation and restricts its output to certificates or diplomas, (4) since the higher education cartel is the sole provider of accreditation, it is unaccountable for the failure to provide its customers (students) productive employment in the emerging economy, and (5) the four-year college system is disconnected from the economy since its primary product, a diploma, is a passport to a better job rather than an indicator of competency. The last three points relate to affordability and value and are: (6) the present system of higher education is unaffordable for all but the wealthy and is a crushing burden on individuals and society, (7) the higher education cartel is an intrinsically elitist force charging an extraordinary premium for a free product, and (8) the only way the higher education cartel can continue to charge a premium for its product is to mystify its product and promote an artificial value utilizing public relations and political lobbying.

Smith proposes that an alternative to the current system should be the nearly-free provision of instruction and knowledge and accreditation of students directly instead of institutions. The latter step will eliminate higher education’s ability to extract huge premiums for the scarcity of its accredited diplomas and certificates. Through deductive reasoning, the author further posits that the sole purpose of higher education should be to prepare students to establish and maintain a livelihood in the emerging economy. Critical thinking and embracing lifelong learning are two purposes generally espoused by others for higher education, but Smith states that these skills are taught in primary and secondary schools and don’t need to be repeated. He further states that the only major change in higher education over the past 40 years has been the substantial increase in costs which are four to 10 times the inflation-adjusted charges of 40 years ago and, alarmingly, are primarily funded by debt.

There are four technology-enabled solutions that the author predicts would free higher education from its cartel status. These are: (1) accredit the student, not the school – this removes control of credentials and supply from the cartel and establishes the value of what the student learns based on objective standards; (2) restructure learning so that it no longer depends on large physical campuses and costly administration – eliminating the need for the traditional sites of college learning will eliminate the sole remaining reason for the cartel to charge a premium; (3) tailor the curriculum to the needs of the real-world emerging economy and the methods of learning to the individual student – digital courses are available 24 hours a day, 7 days a week, conforming to the needs of the student; and (4) eliminate the artificial scarcity of admissions and accreditation – make higher education open to all, reducing the concept and pricing of scarcity.

By utilizing MOOCs and more traditional labs for hands-on learning/training, Smith proposes that a four-year education that costs approximately $100,000 can be reduced to $4,000. He states that this price reduction is necessary given the reduction in middle-class jobs and income by the ongoing technology revolution. Higher education’s solution to this, according to Smith, has been to promote the concept that to remain more competitive, students need to earn a master’s or doctoral degree, further reinforcing the need for their cartel-like product and increasing the cost to the student and to society. The unjust cost/benefit of an undergraduate education is ignored by the cartel and much of society.

By virtue of my position as a member of Smith’s higher education cartel, I should blast the book and his premises. Unlike our current elected leaders, I value my ability to read contradictory opinions and determine where we as members of traditional higher education need to focus on change and improvement. I wholeheartedly agree with him that technology has the potential to substantially reduce the costs of higher education. For a number of reasons – including the reluctance of politicians to implement incentives that reduce the viability of institutions in their backyards – that change won’t occur as fast as it might in a less restricted and more open market.

I agree that accreditation needs to be more responsive to certifying non-traditional providers but believe that a role for accreditation is better than opening the market to a million different providers making claims that would take the market decades to determine the quality of the certification. Both of these changes, increased affordability through technology-enabled education and expansion of accredited providers, will occur on the edges and will influence higher education for years to come.

While I don’t agree with all of Smith’s conclusions, I highly recommend his book for the way in which he challenges the status quo in higher education and recommends a solution that could provide an alternative mode of affordable education.



Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston continues to serve as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), a member of the Board of Overseers of the University of Pennsylvania’s Graduate School of Education, and as a member of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.


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