Recently, the chair of Oklahoma’s Board of Regents called into question the state’s cartel in higher education. These days, when people hear or read “cartel” they think of drug cartels. But “cartel” is actually the name given to a monopoly created by many participants. If a group of companies get together and agree not to compete, with each firm given an exclusive right to sell in a specific territory or for each to sell a fixed amount of a product so that monopoly pricing can occur, a cartel exists and each company operates and prices its product as a monopoly.
Independently created cartels generally fall apart. Cheating on pricing and territory agreements is so profitable that someone eventually gives in to the temptation and drops price or violates the territorial agreement to rake in more sales and profit. When that happens, everybody else starts cheating. Legally, its nearly impossible to enforce a cartel agreement, especially in the United States where they are explicitly illegal under federal law. Drug cartels last because they’re enforced, through violence. Any cheater is summarily dealt with in the severest possible way. The law means little to those who are definitionally lawbreakers, after all.
The most enduring of all cartels are those created by government. Federal anti-trust laws generally don’t apply to governments. So, municipalities can grant exclusive rights to one company to sell television and internet cable services within their borders. States can grant exclusive rights to electric companies to sell power within a region. And Oklahoma, unfortunately, can slice and dice the state among higher education institutions so that only Tulsa Community College can physically teach freshman and sophomore classes to the general public in Tulsa while OU and other community colleges around the state can’t.
Cartels don’t just fall apart because of cheating, though. Another way they fall apart is through innovation. And innovation has happened in higher education. Just as the internet has revolutionized communications, the retail industry, and entertainment, it has revolutionized education, especially higher education. Higher education, which has always depended on students’ self-direction, self-motivation, and independence, is ideal for disruption by internet-based education services.
Indeed, as Oklahoma Higher Education Regent Jeff Hickman was quoted in a recent Oklahoma Council of Public Affairs article, “[Y]ou can sit in your living room in your pajamas and take a freshman English or freshman Algebra class from the University of Hawaii if you want to…” Indeed, this very point has been made by this Institute. Today, over the internet, people can participate in live lectures, or they can watch the best lecture ever given by the best teaching professor in a given university, or they can read lessons and answer reinforcing questions while taking all the time they need to learn and internalize concepts. The days of taking “correspondence courses” by mail are gone. And the days of higher education exclusive territories in Oklahoma are gone, too. It’s only that Oklahoma’s higher education system, and Oklahoma’s legislature, which created the system, is just now catching on.
The challenge now is for OU, OSU, and other institutions of higher education in this state and other states to learn how to effectively compete in a world where education is no longer geographically limited. That actually begins with cooperating by standardizing courses enough to make credit transfers essentially seamless. In this way, institutions can more readily compete with each other by not artificially penalizing an individual for failing to take all their courses at a single institution.
Another key to competing is to attract students as early as possible. That involves opening the system so that high school students can earn dual college/high school credit from anywhere, not just from the community college serving the same artificially-defined region as a student’s school district. Without costing the state’s taxpayers an additional dime, and without forcing students to trek miles beyond the confines of their schools, it is possible now for motivated high school students to complete two years of college before they graduate high school. That’s where things are now; that’s where they are going. It’s just a matter of time. Regent Jeff Hickman is on the right track. And Oklahoma’s universities and community colleges need to not only look to compete beyond the confines of exclusive territorial jurisdictions within the state, but beyond the state’s borders. Whether they like it or not, they’re competing on that very basis now.
The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.