Doing the Right Thing: Facing Externalities Head On

Externalities are the costs or benefits that impact society but are not included in the market price of a good or service. It is an economic term used to describe the residual impact of commerce. Specialization, motivated by self interests, creates externalities by the actions taken to produce and consume in a market driven economy. That is, organizations and individuals are drawn to specialize and concentrate effort in line with their self interests as they produce and trade with other parties monetized by the utility of products and services.

Industry focuses resources to maximize profit within a market driven economy. Governments tend to cover the societal implications of commerce or the lack thereof. Institutions, or generally any organization deemed to provide educational training and credentials, focus on sustainability and mission as they serve their communities or markets. The pendulum swings between freedom and regulation (whether through self-regulating or mandatory laws enacted) controlling the implications of responsibility.

Our orientation to and expectation of government evolves from these implications. The social and democratic perspectives of fairness, goodwill, safety and freewill pull and push to an unbalanced state similar to a Monopoly game where winner takes all. The loser walks away empty handed. Fairness is not in the cards.

Balancing motives and return is difficult in the competitive real world, even with shared values. The engine of our economy needs a carburetor to mix the right balance of fuel (what goes in), work (what comes out) and waste (the residuals unused) – which then has to be buffered by mufflers and exhaust systems to minimize the impact on the environment and our health. Think of the evolution of the automobile industry and its many changes since the first innovation brought the value of faster horses to the market. Producers and consumers made adjustments as the value/benefit/cost shifted and as we learned more about the impact of the automobile on our world. Think about the role governments played in the evolution of the automobile industry, from requiring gas mileage disclosure to bumper safety. And, think about how the industry banded together to fight against moves to regulate or require social responsibility.

Government generally focuses on what is the common good, depending on perspective, policy and orientation. What falls within or outside one’s commercial area of focus is external. Pollution is an example of a negative externality. Smoking and the impact of health is another. Driving while intoxicated is an externality created by the selling and consumption of alcohol. Global warming is another. Agriculture and planting stimulate the production of oxygen and the reduction of CO2. Education is an example of an externality benefit when members of society other than the students themselves benefit from a more educated population.

Government-sponsored educational organizations, influenced by industry to train and prepare people across our society for the work force, are the foundation of our growing economy. Most would agree the collaboration between government and industry is aligned to foster what is often called human capital in a state, region, or country.

Capital equates to resources that can be accumulated, saved, and spent. Capital is property. It is an asset; something we can buy and sell. In general, I don’t like the impersonal nature of calling people human capital, since it removes the obligation and responsibility to consider the feelings and needs of people across our society. We all have equal rights, but we don’t have equal intellect and aptitude. People can’t be bought and sold literally – like slaves prior to 19th century to facilitate industry, comfort or desire. However, when we refer to human capital, disconnecting ourselves from humanity, we are able to provide an abstract explanation for one of the most important ingredients in growing the economy – people with skills and knowledge ready to contribute. The economic incentives of profit and capital accumulation are what drive industry to invest in education and seek good returns. It is not a perfect system. The inputs, outputs and residuals have to be managed by its stakeholders including government, institutions and industry.

The American Dream promotes the benefits of improving one’s educational credentials for decades. It has created the finest postsecondary education system in the world fueled by research funding and government spending in order to foster educational opportunities. The stimulated drive to serve knowledge creation through research and knowledge sharing through teaching is rooted in economic development. We often call out the linkages between academic pursuit and work force as the means to justify the investment in educational aspirations, since theoretically we can make more money, if we are better educated. We would also pay more taxes and consume more products and services – thus making this a win/win for society overall.

The knowledge economy values innovation because it drives change, which is the catalyst for selling products and services between those that have them and those that desire them. The knowledge economy is rooted in the intellectual investment of education. The return on investment, when analyzed, reveals how interests are motivated and influenced by credentials, which is how we distinguish prior efforts in pursuit of knowledge and innovation. Thus, we place a high value on knowledge – often celebrated as “knowledge is power.”

Who is interested in helping reduce the “incompatibles” across the education industry that are contributing to confusion, frustration and inefficiency? Our decentralized higher education system conceived of institutional autonomy and academic freedom has resulted in the unintended consequences most discount as the “leaky faucet” in the supply chain. Students “flow” through K12, postsecondary education and into the workforce in fits of starts and stops as they manage day to day life circumstances. Many policy makers are attempting to stimulate changes in how educational organizations and government agencies work together to tighten up the joints, so to speak. This takes real data -- measured and reported to reveal gaps and cracks. And, with varying means of defining data, we often take the lowest common denominator abstracting the underlying differences meant to be measured.

Why? Well, there are millions of students completing course credentials from multiple providers as they aspire to complete their degree through various course offerings. Representing the higher education continuum (previously completed college courses from years ago, proficiency exams, and military training) adults are re-entering colleges and universities hoping to enhance their employability. Overwhelmingly, people are struggling to matter as they seek respect for their prior learning or credentials.

One thing we know for sure: Like no other generation before us, today’s learners are mobile. And, the data tracking their actions are disconnected, particularly between the systems most used by government, industry and education.

The cycle is repeated across time and location over and over again. Millions and millions of people are sold on the belief their course investment will have currency, value and will be worth something in the future as they pursue to improve their lives. They seek to compile prior learning across incompatible sources to reflect relevancy and purpose. We call them contemporary students because they are older, more mobile and generally employed - and they outnumber traditional students 7 to 1.

Nope, it is not our responsibility to address the incompatibilities of programs, courses and policies even though the today’s systems contribute to the confusion and frustration found on most college campuses. Institutions and States are responsible for aligning and tuning their curriculum, right?

The paralyzing impact of the confluence of data, process and people spanning thousands of institutions is outside our control and we are not interested in allocating resources on something we can’t make money from because no one is responsible. Bottom line, the economic success derived from selling and deploying proprietary systems is harmful to the community we are trying to serve the most – the student. The answer heard across the academy is often we don’t care enough about this problem to address the resources needed to solve it.

How can we fix the consequence of our industry’s myopic business plans that have so negatively affected the social welfare of so many others – namely the students? We have sold, deployed and maintained stand-alone, proprietary and often closed administrative and academic systems for decades without thinking about the consequences on students stopping and starting.

Thousands of institutions have deployed software designed to address resource management issues under the auspices of their institutional missions. Actually, in retrospect they were more likely satisfying institutional needs without consideration for the future impact of those decisions on our increasingly mobile, global, and diverse students. How could they have known? Can you help them?

Will you help?

We have limited resources is the most obvious answer. How can we expend resources on something that has no benefit to our organization directly is often the follow-up answer. We can't justify spending resources on fixing the implications of how localized systems can't help students and advisors map out academic pathways and progress because they are disconnected. Can we?

Thus, the PESC call for EdUnify. EdUnify is a concept that highlights our desire to keep systems decentralized, yet enable a means to connect, share and exchange data services to bridge the differences. Even though we all contribute to the externalities by producing systems apart from the entire ecosystem, we can contribute effort and respect the differences, instead of marginalizing them. Through the development of a simple and elegant automated look-up service, we can help stimulate the market forces to align organizational interests by bridging technologies that can enable collaboration and communications of interest. That is a good thing for industry, education, government and most importantly, the students we serve as they aspire to improve their lot.

The social contract for people spanning organizations, corporations and institutions has been debated for centuries. Rousseau's 1762 treatise, see The Social Contract, Or Principles of Political Right had a major impact on the formation of the United States of America and our constitution. It is time we recognize the need to form new governance on the rules of data in the virtual world of computing, education and commerce that balance our rights/interest to sustain the evolution of the academy.

This is what PESC is all about.

Come join us. www.pesc.org