Global U.

As universities are increasingly exposed to the rough justice of the market, their institutional life is distinguished more by the rate of change than by the observance of custom and tradition. Few examples illustrate this better than the rush, in recent years, to establish overseas programs and branch campuses. Since September 11, 2001, the pace of offshoring has surged and is being pursued across the entire spectrum of institutions that populate the higher-education landscape -- from the ballooning for-profit sectors and online diploma mills to land-grant universities and the most elite, ivied colleges. No single organization has attained the operational status of a global university, after the model of the global corporation, but it may be only a matter of time before we see the current infants of that species take their first, unaided steps.

The World Trade Organization has been pushing trade-services liberalization for several years, of which higher-educational services are a highly prized component, with an estimated global market of between $40 billion and $50 billion (not much less than the market for financial services).

Opponents of liberalization argue that higher education cannot and should not be subject to the kind of free-trade agreements that have been applied to commercial goods and other services in the global economy. After all, WTO agreements would guarantee foreign service providers the same rights that apply to domestic providers within any national education system while compromising the sovereignty of national regulatory efforts. Yet the evidence shows that, just as corporations did not wait for the WTO to conclude its ministerial rounds before moving their operations offshore, the lack of any international accords has not stopped universities in the leading Anglophone countries from establishing their names and services in a broad range of overseas locations. The formidable projected growth in student enrollment internationally, combined with the expansion of technological capacity and the consolidation of English as a lingua franca, has resulted in a bonanza-style environment for investors in offshore education.

As with any other commodity good or service that is allowed to roam across borders, there has also been much hand-wringing about the potential lack of quality assurance. Critics argue that the caliber of education will surely be jeopardized if the global market for it is deregulated. Much less has been said in this debate about the impact on the working conditions of academics or on the ethical profile and aspirational identity of institutions. How will globalization affect the security and integrity of livelihoods that are closely tied to liberal educational ideals such as meritocratic access, face-to-face learning, and the disinterested pursuit of knowledge? Will these ideals wither away entirely in the entrepreneurial race to compete for a global market share, or will they survive only in one corner of the market, as the elite preserve of those who are able to pay top dollar
for such hand-crafted attention?

No slouch when it comes to entrepreneurial conduct, New York University has eagerly sought recognition as a global player. In the course of the 1990s, it established itself as the national pacesetter in sending students abroad. Currently, 25 percent of its vast student body, many of whom refer to their alma mater as Global U, enrolls in one of its eight study-abroad programs -- in London, Paris, Madrid, Berlin, Prague, Florence, Shanghai, and Accra. The administration has mandated this student number to rise to 50 percent by 2011, new programs are being set up in Buenos Aires, Tel Aviv, and an additional one is likely to resume operations soon in Mexico. NYU professors ritually bemoan the quality of offerings in many of the overseas “island” programs (in which students study with other Americans on campuses abroad) or lament that students spend their time abroad in an edu-tourist bubble, cosseted from any authentic contact with a non–American culture or environment.

Much less discussed is the financial reasoning behind these and other NYU offshore operations or the overall logic behind the rapid expansion of the university’s existing global network in recent years. Some of this neglect is due to the lack of fiscal transparency at a private university and to the eroded state of faculty governance over academic affairs. But to approach the topic adequately requires familiarity with the larger picture of how and why American, British, and Australian institutions, in particular, are going global. This essay charts some of the dimensions of that aggregate move, assessing NYU’s profile in a sector that, for all its mercurial growth, is not well documented, let alone widely understood.

Greenwich Village in the Desert?

At some point in the course of the strike by graduate students at NYU, the NYU administration was approached by representatives of the United Arab Emirates with a proposal to set up an NYU branch campus in Abu Dhabi. The campus would be built from scratch with UAE money, and a donation of up to $100 million, according to some estimates, would be made available to NYU on signing the agreement. The degrees would include a full range of liberal-arts subjects and would be on offer, primarily, to UAE nationals. For colleges with prestige names, this kind of offer from the government of a developing country is increasingly common. As long as the source of the offer is not wholly disreputable, the prospect of acquiring an overseas facility at minimal cost and administrative energy is welcomed as an invaluable revenue “opportunity.” The emirates and neighboring Qatar have been especially successful in attracting foreign colleges with such generous offers and are engaged in a bidding war to outdo each other to add cultural cache to their portfolio of corporate brands. The Louvre, Sorbonne, and Guggenheim had all been approached by Abu Dhabi government representatives before NYU was asked to set up a branch campus.

Dubai hosts a complex called Knowledge Village for offshore branch campuses from Pakistani, Russian, Canadian, and Indian universities, in addition to select British, Australian, and American universities, In Qatar, several top-brand American universities, including Carnegie Mellon, Cornell, Georgetown, Texas A&M, and Virginia Commonwealth Universities, are already established in Doha’s 2,500 acre Education City, with all expenses paid for by the royal family’s Qatar Foundation.

Students in the Middle East have every reason to feel they may not be welcome in the United States after 9/11, while the philosophical world-view associated with the War on Terror has provided administrators with an additional set of arguments to justify their newfound presence in the region. Many of their faculty are no doubt persuaded by Thomas Friedman-style reasoning that aspiring Middle Eastern students would be better served by a Western, liberal education than by the curriculum of a glorified madrassah. Yet those with a modicum of knowledge about the region are all too aware that the host countries in question are quasi-feudal monarchies that ruthlessly suppress Islamism, among other belief-systems, and are in no small measure responsible, as a result, for the flourishing of terror in the Middle East and beyond.

So the debate falls along familiar lines, as it did at NYU: Is it better to try to influence the political climate in illiberal societies by fostering collegial zones of free speech, or is the instinct to engage student elites in such societies a naïve or, at worst, colonial instinct? Notwithstanding the politics of any university’s overseas mission, it is not at all easy to distinguish some of the new offshore academic centers from free-trade industrial zones where outsourcing corporations are welcomed with a lavish
package of tax holidays, virtually free land, and duty-free privileges. Indeed, in many locations, Western universities are physically setting up shop in free-trade zones.

In Dubai, the foreign universities are basically there to train knowledgeworker recruits in the Free Zone Authority’s other complexes -- Dubai Internet City, Dubai Media City, Dubai Studio City, DubaiTech, and the Dubai Outsource Zone. In Qatar, the colleges share facilities with the global high-tech companies that enjoy tax- and duty-free investments under that country’s free-zone law. Some of China’s largest free-trade locations have begun to attract brand-name colleges to relieve the shortage of skilled labor that is hampering the rate of offshore transfer of jobs and technology. The University of Liverpool, the first to open a branch campus in Suzhou Industrial Park (which attracts more foreign direct investment than any other zone in the People’s Republic of China), advertised entry-level positions at salaries beginning at $750 per month.

By the summer of 2006, the NYU administration had attracted widespread criticism -- reinforced by events surrounding the graduate student strike -- about the chronic lack of faculty consultation in decision making. Consequently, it felt the need to circulate the Abu Dhabi proposal to members of Faculty Senate Council. (A decision the year before to enter into a collaborative venture with the American University in Paris at a new site on the Isle Seguine was reached with minimal faculty consultation.) Even so, the faculty representatives were enjoined by President John Sexton himself not to talk about the proposal beyond the confines of the council and, in particular, not to mention the location of the proposed site. Though he placed a quasi–gag order on faculty senators, President Sexton himself took the liberty of discussing the proposal publicly during conference presentations elsewhere. In the interim, he formed a branch campus committee under the leadership of a
friend and outsider, Tom Jackson (a bankruptcy law specialist who had just served 11 years as president of the University of Rochester), to advise on this policy decision. Committees were also formed by the provost and by Faculty Senate Council, and a delegation of faculty and senior administrators was sent to Abu Dhabi to research advanced details of the proposal.

From the outset, faculty input about the Abu Dhabi proposal was highly circumscribed, and, given the administration’s record of non-transparency, few expected that the circle of consultation would be notably widened over time. Some regional specialists with close ties to the administration were invited to serve on the top-level branch-campus committee, but they distanced themselves after learning more details about the planned site. For those few, and for other faculty who ended up accepting the invitation (select faculty senators were sent on a site visit), the primary skepticism about the proposal focused on the limits to academic freedom that might be imposed by the host country. Would slides of nudes be permitted in art history classes? Would queer students be allowed to organize their interests? What if the students ended up espousing radical versions of Islamism? Concerns were also raised about the opportunism of the proposal and about the likely student constituency in a country where a huge service class (up to 80 percent of the effective population) of low-wage, indentured migrant workers caters to the needs of a small citizen elite. There were no firm legal grounds for assuming that the royal sponsor could be wholly trusted to follow through on details of an agreement; nor ultimately was there any guarantee that the venture would not turn into a vast money pit.

On the face of it, the Abu Dhabi proposal put NYU on the threshold of a decision that other colleges had already made about whether to offer degrees abroad to local nationals. Would the reasons to make this move be fully debated in light of the experience of other colleges, and how would such a decision affect the character and resource map of the institution? Open deliberation on this question might help redress the ailing condition of faculty governance. It might also pressure the administration to observe some measure of transparency in policy-decision making. But in practice, NYU had long ago crossed that threshold, and in the larger world of higher education, the distinction between onshore and offshore education -- like that between private and public, or nonprofit and for-profit -- has become very blurry, indeed.

The distinction matters even less when viewed from the perspective of how the export trade in educational services is defined. The WTO, for example, recognizes four categories under this heading. Mode 1 involves arms-length or cross-border supply such as distance learning. Mode 2 is consumption abroad, which is primarily covered by international students’ studying overseas. Mode 3 is commercial presence, or, basically, foreign direct investment in the form of satellite branches of institutions. And Mode 4 is movement of natural persons, such as academics teaching abroad.

Most of the current and foreseeable growth is in Mode 1 and Mode 3, and much of this is assumed to be linked to a perceived decline in Mode 2 growth. Statisticians justify their own trade as well the core principles of free trade by showing how these patterns of ebb and flow are interconnected. In response, and as a general fiscal principle, organizations will try to balance their budgets by pushing expansion in one area to compensate for shortfalls in another. This is how global firms have learned to operate, by assessing and equalizing the relative return on their investments in various parts of the world, both in the world of real revenue and in the more speculative realm of brand building for the future. University accounting departments have begun to juggle their budgets in a similar way. A deep revenue stream from a facility in the Middle East will be viewed as a way to subsidize unprofitable humanities programs at home (as is the case at one Midwestern institution where I inquired) just as an onshore science center capable of capturing U.S. federal grant money may be incubated to help fund an Asian venture considered crucial to brand building in the region.

A Balance of Trade

In the interviews I conducted with faculty and administrators at NYU and elsewhere, a clear pattern of talk about this kind of fiscal juggling emerged (though no hard numbers could be accessed with which to match the rhetoric). NYU’s own global programs are an eclectic mix of ventures, spread across several schools and divisions, each of which has its own fiscal boat to float. When viewed in their entirety, the programs clearly do not hold to any overall rule about the demarcation of onshore from offshore education, let alone any systematic educational philosophy.

Though they lack a coherent profile, they show a clear pattern of exponential growth and expansion onto every continent -- beginning, historically, with the Madrid and Paris study-abroad programs in “Old” Europe -- and into each regional market as it was declared open to foreign direct investment. While its eight study-abroad sites are primarily for NYU students to spend a semester abroad, places are offered to non–NYU students as and when vacancies open up. In addition, as many as 60 summer study-abroad programs are currently offered to non–NYU students in Brazil, Canada, China, Cuba, the Czech Republic, England, France, Germany, Ghana, Greece, Ireland, Italy, Mexico, the Netherlands, Russia, South Africa, Spain, Sweden, and Switzerland. The absence from New York, during the fall and spring semesters, of between a quarter and half of its students allows NYU the option of increasing enrollment at home or reducing the costly expense of providing leased dorm space in downtown Manhattan.

Either option has a huge impact on revenue and seems to be a primary motivation not only for university policy in this area, but also for other colleges to emulate NYU’s successful fiscal example. By 1998, less than a decade after then President Jay Oliva pledged to shape a global university to match Ed Koch’s global-city aspirations for New York itself, NYU had outstripped all other American universities in the volume of students it sent overseas. It also enrolled the highest number of international students. Oliva was known internationally as the founder and host of the League of World Universities, whose rectors met regularly in New York to discuss how to respond to the challenge of globalization, and his successor, Sexton, had made his name by pioneering a Global Law program as dean of the NYU Law School.

In the years since then, NYU has found itself in the forefront of online efforts to offer distance learning abroad (one of which, NYU Online, was a notorious $20 million casualty of the dot.com bust, though its successor has thrived) while each of its schools has been encouraged to make global connections. The Stern business school entered into partnership with the London School of Economics and the Ecole des hautes études commerciales to offer an Executive MBA on a global basis, and the law school set up a Master of Laws (LLM) program in Singapore for Asian students. The scale of the university’s proposed joint venture with the American University in Paris has upped the ante. While it is not likely to involve more than a small minority of NYU students, its growth potential is tied to recruiting well beyond the one thousand international students currently enrolled by the American University.

Most conspicuously, NYU’s School of Continuing and Professional Studies (SCPS), which educates more than 50,000 adult learners annually in more than 125 fields, has become widely known for its provision of services abroad. This has even extended to graduate programs, which it has offered online since 1994, first through the Virtual College and now through NYU Online. The SCPS was one of the first university institutions in the United States to register with the Department of Commerce’s BuyUSA program, described as “an electronic marketplace that connects U.S. exporters with qualified agents, buyers, and partners overseas.” In the words of one of the school’s assistant deans, this program has helped SCPS to locate agents and partners in countries that they “never would have considered otherwise.”

Examples of the school’s penetration in the China market include instructional seminars offered to executives in that country’s publishing industry and a program in real-estate finance designed for brokers and developers active in the People’s Republic of China’s vast construction boom. The SCPS is a hugely profitable arm of NYU, and its instruction is carried by an almost wholly adjunct workforce whose compensation in no way reflects the lucrative revenue harvested by course offerings in such non-orthodox disciplines as Philanthropy and Fundraising, Life Planning, Food and Wine, and Real Estate.

Not surprisingly, the SCPS was one of the first educational institutions in the nation to receive the President’s Export Award for its work in promoting U.S. educational services overseas. In the U.S. trade balance, education is the fifth largest export service, bringing in $12 billion in 2004, and arguably the one with the biggest growth potential. In New Zealand and Australia, among the other leaders in this field of trade, education is the third- and fourth-largest export services. Given the intensification of the global competition for high-skill jobs, educational services are increasingly a number-one commodity in fast-developing countries. The Department of Commerce will help any U.S. university to develop this trade, here or abroad, in much the same way as it helps corporations. For relatively small fees, its Commercial Service will organize booths at international education fairs, find an international partner for one of your university’s ventures, help it with brand recognition in a new market, perform market research, and, through use of the premium Platinum Key Service, offer six months of expertise in setting up an overseas campus and marketing that campus in one of more than eighty countries.

The Race to Deregulate

The U.S. Commerce Department’s activities are fully aligned with the trade liberalization agenda of the WTO, where higher education falls under the General Agreement on Trade and Services. Dedicated, like all WTO agencies, to the principle that free trade is the best guarantee of best quality at lowest cost, GATS was formed in 1995, and higher-education services were added to its jurisdiction largely as a result of pressure in 2000 from the U.S. representative to the WTO, backed by representatives from Australia, New Zealand, and Japan. This inclusion has been fiercely opposed by most higher-education leaders in WTO member nations, most prominently by a 2001 Joint Declaration of four large academic organizations in North America and Europe and the 2002 Porto Alegre Declaration, signed by Iberian and Latin American associations.

The signatories of these two declarations agree that trade liberalization risks weakening governments’ commitment to and investment in public higher education, that education is not a commodity but a basic human right, and that its reliance on public mandates should make it distinct from other services. Yet the concerted opposition of these professional bodies has made little difference to the 45 countries (the European Union counts as one) that had already made commitments to the education sector by January 2006. Indeed, if the Doha Round of WTO negotiations had not been log-jammed by acrimonious disagreements over agricultural trade, GATS would have concluded its work some time ago, imposing severe constraints on individual government’s rights to regulate education within their borders.

Such constraints are particularly debilitating to developing countries that will lose valuable domestic regulatory protection from the predatory advances of service providers from rich nations. Indeed, a new ministerial mandate at GATS allows “demandeurs” such as the United States, New Zealand, and Australia to band together to put plurilateral pressure on the poorer target countries to accept their education exports (demandeur governments are those doing the asking under the
WTO’s request–offer process).

Officially, GATS is supposed to exclude services “supplied in the exercise of governmental authority” -- that is, by nonprofit educational organizations -- but most nations that are committed have chosen not to clarify the distinction between nonprofit and for-profit. With good reason we can expect creeping, if not galloping, liberalization in all sectors if the GATS trade regime proceeds. After all, the free-trade culture of the WTO is one in which public services are automatically seen as unfair government monopolies and should be turned over to private for-profit providers whenever possible, all in the name of “full market access.” From the standpoint of teaching labor, this tendency points in the direction of increasing precarity, an interim environment of job insecurity, deprofessionalization, and ever eroding faculty governance in institutions stripped of their public-service obligations and respect for academic freedom.

Even in the absence of any such formal trade regime, we have seen the clear impact of market liberalization at all levels of higher education; the voluntary introduction of revenue-center management models in which every departmental unit has to prove itself as a profit center; the centralization of power upward into managerial bureaucracies; the near-abdication of peer-review assessment in research units that are in bed with industry; the casualization of the majority of the academic workforce, for whom basic professional tenets such as academic freedom are little more than a mirage in a desert; and a widening gap between the salaries of presidents and the pittance paid to contingent teachers, which is more and more in line with the spectrum of compensation observed in publicly listed corporations. None of this has occurred as a result of an imposition of formal requirements. Imagine, then, the consequences of a WTO trade regime that legally insists that regulatory standards affecting procedures of accreditation, licensing, and qualification might pose barriers to free trade in services.

By the time that GATS negotiations over education were initiated in 2000, the range of educational organizations that had established themselves overseas was already voluminous. These organizations included (1) corporate spin-offs that do employee training and offer degrees such as Motorola University, McDonald’s Hamburger University, Microsoft’s Certified Technical Education Centers, General Electric’s Crotonville Colleges, Fordstar’s programs, and Sun Microsystems’ Educational Centers; (2) private for-profit education providers such as the mammoth Laureate Education group (which now owns higher education institutions all over South America and Europe, operates in more than 20 countries, and teaches a quarter-million students), the Apollo Group, Kaplan Inc., and DeVry; (3) virtual universities such as Walden University and Western Governors University in the United States, the Learning Agency of Australia, India’s Indira Gandhi National Open University, and the United Kingdom’s Open University; (4) traditional universities that offer distance learning, especially in countries such as Australia and New Zealand, where governments mandated the marketization of higher-education services; and (5) for-profit arms of traditional universities such as NYU’s SCPS, the University of Maryland’s University College, and eCornell.

In the years since then, the volume and scope of overseas ventures has expanded to almost every institution that has found itself in a revenue squeeze, whether from reduced state and federal support or from skyrocketing expenses. As a result of market-oriented reforms in higher education, every one of Australia’s public universities is aggressively involved in offshore education in Asia, creating a whole class of educational entrepreneurs, onshore and offshore, whose pursuit of monetary gain has inspired repeated calls for audits. Since many of these programs carry large fiscal risks, the tendency increasingly is to favor conservative models such as franchising or producing syllabi in Australia to be taught entirely by local instructors offshore.

There is not even a pretense of academic exchange involved in this arrangement, in which education is little different from a manufacturing product designed at home, produced and assembled by cheaper labor abroad, and sold to consumers in emerging markets. In the U.S. for-profit sector, entrepreneurs scrambling to meet overseas demand for degrees (“with no frills”) that have an unambiguous market value are taking advantage of notoriously loose accrediting procedures to set up shop and pitch their products. Lax regulation in some Southern and Western states and in offshore diploma-mill havens such as St. Kitts, Liberia, and the infamous Seborga, a small self-proclaimed principality in Italy that has granted accreditation to dozens of dubious degree-granting entities, make it easy to license operators who open and close programs overnight to suit market demand.

Most recently, the widespread practice of outsourcing study-abroad education to for-profit intermediaries has attracted investigative scrutiny. In August 2007, New York Attorney General Andrew Cuomo’s probe into the student loan kickback scandal was expanded to assess evidence that universities had received perks from companies that operated their study-abroad programs. These included “free and subsidized travel overseas for officials, back-office services to defray operating expenses, stipends to market the programs to students, unpaid membership on advisory councils and boards, and even cash bonuses and commissions on student-paid fees.” The investigations began to uncover patterns of corruption endemic to the economy of subcontracting and offshore outsourcing. With China’s economy leapfrogging up the technology curve, the jumbo demand for high-value, professional–managerial talent there has sparked a gold rush, with foreign universities scrambling to meet a need that the state (whose professed priority is to fund basic rural education) cannot.

There are few U.S. colleges that have not sent prospecting missions to China to scout out offshore opportunities in the past few years. As for their return on investment, many administrators come back from these trips pondering the lesson that foreign companies learned: It is not at all easy to make money in China, let alone break even, and least of all from a joint venture with a Chinese partner, which is the obligatory arrangement for most colleges. Even in the absence of guaranteed
revenue, many will set up shop for the same reason that corporations have persevered there: to build their brand in the China market or establish their name in the region in anticipation of a future windfall.

Corporate Universities?

If universities were to closely follow the corporate offshoring model, what would we expect to see next? In a labor-intensive industry (a characteristic that education shares with the garment industry; 75 percent of education costs go to teaching labor), the instructional budget is where your employer will seek to minimize costs first, usually by introducing distance learning or by hiring local, offshore instructors at large salary discounts. Expatriate employees, employed to set up an offshore facility and train locals, will be a fiscal liability to be offloaded at the first opportunity. If your satellite campus is located in the same industrial park as Fortune 500 firms, then it will almost certainly be invited to produce customized research for these companies, again at discount prices.

It will only be a matter of time before an administrator decides it will be cost-effective to move some domestic research operations to the overseas branch to save money. And once the local instructors have proved themselves over there, they may be the ones asked to produce the syllabi for and, ultimately, teach remote programs for onshore students in the United States. Inevitably, in a university with global operations, administrators who have to make decisions about where to allocate
budgets will favor locations where the return on investment is relatively higher. Why build expensive additions at home when a foreign government or free-trade–zone authority is offering you free land and infrastructure? Why bother recruiting overseas students when they can be taught more profitably in their countries of origin? If a costly program can only be saved by outsourcing its teaching, then surely that is the decision that will be made. And so on.

But is this the way it has to be? For all the zealous efforts to steer higher education into the rapids of enterprise culture, it would not be hard to demonstrate that, with the exception of the burgeoning for-profit sector, most universities for the most part do not and cannot function fiscally like a traditional marketplace and that the principles of collaboration and sharing that sustain teaching, learning, and research are inimical or irreducible in the long run to financialization after the model of the global corporation. Yet one could say much the same about the organizational culture of the knowledge industries. High-tech firms depend increasingly on internationally available knowledge in specialized fields; they collaborate with one another on research that is either too expensive or too multisided to undertake individually, and they depend, through high turnover, on a pool of top engineers to circulate brainpower throughout the industry.

So, too, the management of knowledge workers has diverged appreciably from the traditions of Taylorism and is increasingly modeled after the work mentality of the modern academic, whose job is not bounded by the physical workplace or by a set period of hours clocked there. Modern knowledge workers no longer know when they are on or off the job, and their ideas -- the stock-in-trade of their industrial livelihoods -- come to them at any waking moment of their day, often in their most surveillance-free moments. From this perspective, talk about the “corporate university” is lazy shorthand. The migration of our own academic customs and work mentalities onto corporate campuses and into knowledge industry workplaces is just as important a part of the story of the rise of knowledge capitalism as the importation of business rationality into the academy, but the traffic in the other direction is all too often neglected because of our own siege mentality.

In all likelihood, we are living through the formative stages of a mode of production marked by a quasi-convergence of the academy and the knowledge corporation. Neither is what it used to be; both are mutating into new species that share and trade many characteristics. These changes are part and parcel of the economic environment in which they function, where, on one side, a public commons unobtrusively segues into a marketplace of ideas, and a career secured by stable professional norms morphs into a contract-driven livelihood hedged by entrepreneurial risks, and on the other side, the busy hustle for a lucrative patent or a copyright gets dressed up as a protection for creative workers, and the restless hunt for emerging markets masquerades as a quest for further international exchange or democratization.

It may be all too easy for us to conclude that the global university, as it takes shape, will emulate some of the conduct of multinational corporations. It is much more of a challenge to grasp the consequences of the co-evolution of knowledge-based firms and academic institutions. Yet understanding the latter may be more important if we are to imagine and build practical educational alternatives in a civilization that feeds on mental labor to enrich its economic lifeblood.