 Welcome to the Mises Academy podcast. I'm Danny Sanchez, Director of Online Learning at the Mises Institute. For this episode, I interviewed Peter Klein, Executive Director and Carl Manger Research Fellow at the Mises Institute, about his Lou Rockwell.com article, Universities to MOOCs. We will assimilate you. Now, you've talked a lot about how the state influences higher education through funding. What are some of the ways that they influence higher education through restrictions and licensure? Right, so in all fields of education, just as with other professions where there are entry requirements that are regulated or even directly imposed by state agencies, you have exactly the phenomenon that you described. You have an artificial restriction of the supply. We see that with attorneys and physicians and so forth. So, most universities in developed countries report to some kind of accreditation agency, which is typically a publicly funded entity. So, you know, you or I, Danny, could decide this afternoon that we want to start providing medical services and we can advertise that we're providing medical services. But if we don't have a license from the state, we cannot call ourselves physicians, and there are certain things we're, of course, not allowed to do in terms of advertising because we have not passed the state's licensing requirement. Same thing with law and, you know, as many of the listeners know on a humorous note, even with barbers, you know, hairdressers have to get licenses from the state, you know, to protect the public from bad air. If we wanted to do this for higher education, now there's some things that we can do, right? We can do what we're doing now. We can have a podcast on the higher education industry. I mean, this is a form of education. We can certainly give lectures. We can write books and articles, and we can even organize our materials in a way that they look more like a formally structured university as with the Mises Academy. But we cannot issue a bachelor's degree that is licensed by the state of Alabama or the Mises Institute or whatever the jurisdiction is. We can't be accredited by the, for example, the AACSB is a national organization that does the accreditation for schools of business. So we cannot offer degrees that have the stamp of approval of the state on them. Now, to the extent that students looking at educational alternatives, employers looking to hire people who have certain credentials to the extent that they see this state stamp of approval as valuable, then the inability to get it, of course, puts you at a competitive disadvantage. And there are a number of other ways in terms of curriculum control, you know, the whole environment of political correctness, hate speech codes and so forth, in which state intervention both directly and indirectly constrains the kinds of things that academic institutions can do. The way you talk about how much producer vested interest has affected higher education, it reminds me that the word university originally meant guilt. It actually meant a guild of instructors. So it's always been about gatekeeping, hasn't it? No, that's right. And the professorate, like other kinds of professions, of course it has all of the marks of a medieval style guild, not only the gowns and the Latin titles and so forth, all the traditions that come directly out of that particular approach, as you mentioned. And most, just as in other professions, most current practitioners, those who hold a PhD degree, are deeply concerned to prevent what they would consider to be unqualified persons also to be able to obtain that credential. It's in the interest of the established professors to restrict the supply of new professors, or at the institutional level, to put it differently, it's in the interest of established mainstream universities, Harvard, Yale, Stanford, Wisconsin, Auburn, Tennessee, whatever, to restrict the supply of competing universities. So everyone in the kind of mainstream establishment university space, four-year colleges and universities, they freely acknowledge that there exist out in the community, you know, smaller entities, there are community colleges, there are vocational schools and trade schools, and even online institutions like the University of Phoenix or the Mises Academy. People would agree that these institutions are out there, but they're at great pains to distinguish themselves from these rival providers. They say, well, yes, of course, it's fine to have community colleges, but that's not, you know, they're not providing the same service that we're providing. It's like a junior version, or it's maybe a feeder into what we're doing. It's a nice compliment, but people have to understand that you don't get the same high-quality product from those entrants that you get from us. And that's exactly the kind of behavior that you would expect from a privileged, protected incumbent, right? When the personal computer was introduced in the early 80s, the producers of mainframe computers said, oh, well, that's a nice toy. Sure, it's great that people want to have one of those, but that's not a real computer. That's not a substitute for a mainframe. Right now, that's an example where this happening in more of a market context without the state privilege. But you do see, I mean, this is the story of, you know, sort of dynamic competition over time, especially when new technology is introduced. The new technology, it's often very difficult for the incumbents to adopt, to integrate, to make best use of the new technology. It's typically entrants, new firms, entrepreneurs who are creating startup vehicles to exploit the new technology. And the incumbents always fight back. They try to erect barriers. They try to prevent people from patronizing the entrants. They want to direct business to themselves. And it's exactly what we see in the history of technology in almost every industry. Why would we expect that higher education would be any different? Thank you for listening to the Mises Academy podcast to enroll in online courses to access other episodes of this podcast or for more information visit academy.mesis.org