Max Borders devotes one of the items in his latest Ideas Matter update to a comparison between the American system of higher education and a classic cartel.
[W]hen one turns a business lens on higher ed, one comes to realize that the system is a cross between a guild and a cartel.
The system has persisted for centuries due largely to its resistance to change and to its tight control over the flow channels that compose it. And, as with guilds and cartels, benefits accrue to members. But parties outside the system can be harmed or at least don’t benefit as they ought to. Those who might compete with universities for talent or the privilege of teaching (i.e. would-be competitors) cannot. Those who transact with or subsidize universities (students, taxpayers and donors) pay too little or too much. And those in society at large receive fewer benefits than they might otherwise. To repeat, this is due to an organizational structure that functions very much like a guild or labor cartel. And these organizations fiercely protect their rents.
