The Second Machine Age – GDP and Jobs

April 10, 2014

In order to plan for economic and social change, it is useful to know what is happening in an economy. Various economic measures indicate current developments, GDP being a widely used overall measure of how national economies are changing. Employment levels and the skill structure of the economy, and those employed or unemployed are other statistics reported quarterly and annually. Others have proposed a measure of happiness.

The remainder of this posting deals with two topics, 1. The adequacy of GDP accounting to assess the state of an economy, and 2. How skill requirements are changing as a result of computers and communications technology, and what this may mean for those providing and receiving education.

 

  1. GDP

GDP was never designed as a measure of overall social welfare although, perhaps out of convenience or laziness, it is often used as a proxy for welfare. Its shortcomings are well known, recently discussed by Diane Coyle in GDP: A Brief but Affectionate History, (Princeton, 2014). To paraphrase Coyle’s preliminary comments on the limitations of GDP (p.35):

  • It measures paid for goods and service, excluding many unpaid services such as parents’ care of children, cooking at home and housework.
  • It includes “bads” such as the environmental costs of pollution.
  • It ignores improvements in the quality of new goods, especially when technology changes (for example from manual to electric typewriter to word processor).
  • It excludes many indicators of progress such as health, education, infant mortality and life expectancy.
  • The simple reporting of GDP per capita does not show the distribution of GDP between rich and poor.

Coyle surveys other indicators such as the Human Development Index, Gross National Happiness, and the output of a working group lead by Nobel winning economists Amartya Sen and Joseph Stiglitz examining the Measurement of Economic Performance and Social Progress.

In sum, there is ongoing research both to improve the measurement of GDP and to develop indicators which incorporate other aspects of social, political and economic welfare. Economic activities associated with the second machine age create some urgency for this work, as many information related activities generate free but valuable goods and especially services, and therefore underestimate a country’s GDP.

Downturns, such as followed the recent recession, may not be as bad in aggregate terms as reported. By April 2014, ninety-three percent of the labour forces in Canada and the USA were employed. But the downside is that at the same time the internet and communications have altered the skill structure of the labour force leading to un- and underemployment. We look at this in the next section.

  1. Skill requirements for employment 

Andrew McAfee, coauthor of Race Against Machines and The Second Machine Age predicts that rapid advancements in automation are eliminating more middle class jobs. The skill profile of the workforce will change from looking like a bowl, with lower skills at one end moving bowl-like to higher skills at the other, to a Tuna can with almost entirely low skilled jobs at one end and high skilled jobs at the other, and very little need for medium skilled (perhaps middle class) jobs. The hamburger flippers are at one end and computer scientists at the other. These skill changing forces are reflected in the rhetoric of politicians who try to win votes by pledging to save the middle class. which is adversely affected by the changes. Probably they cannot deliver.

These trends will likely accelerate. While Canada decries the loss of so-called good jobs in manufacturing to low wage countries, the same loss is happening in China. While initially the jobs moved from high to low wage countries, low cost automation is now replacing low wages.

John Carroll, co-author of The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups, states:

  • “Technology has improved so much, and will keep improving for the foreseeable future. Sensors are so cheap that you can build them into anything for almost no cost. Add a motor and you have a robot. Computing power costs essentially nothing, and everything can be controlled wirelessly these days, so it isn’t hard to imagine interesting things that the robots can do.”

If robots are going to substitute for people, then schools and post secondary institutions will have to adjust their course offerings and their means of delivery with more of it online. Students who want a liberal arts education will still be able to find one, but it may not lead to the desired type and level of paid employment. At the same time they will have the opportunity for lifelong learning, due to the availability of various combinations of online and in-class learning with some of the best instructors from around the world.   Indicative of this trend is the appointment of the former President of Princeton University to become the CEO of Coursera, one of the main commercial firms offering online courses.

 

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Three of the current remarkable examples of computer robots are Google’s driverless car, the computer which beat a chess champion, and the one which won at Jeopardy by answering questions.

Following are some further references to the probable changing skill structure of the workforce, from the Conversible Economist posting for April 9, 2014. (http://conversableeconomist.blogspot.ca/).

It reads as follows:

The current discussion is about robots that are mobile, able to receive a variety of commands, and with the capability to carry them out. For example, the March 29 issue of the Economist has a lengthy cover story on the “Rise of the Robots.” But I’ll focus here on Stuart W. Elliott’s article, “Anticipating a Luddite Revival,” which discusses how robots will affect the future of human work. It appears in the Spring 2014 edition of Issues in Science and Technology.  Elliott did a literature review of the robot capabilities that are cutting edge and now becoming feasible as discussed in AI Magazine and IEEE Robotics & Automation Magazine from 2003 to 2012. Here, I’ll refer to his discussion of the more recent capabilities of robots in four areas: language capabilities, reasoning capabilities, vision capabilities, and movement capabilities.

 

Language capabilities. “[T]he tasks included screening medical articles for inclusion in a systematic research review, solving crossword puzzles with Web searches, answering Jeopardy questions with trick language cues across a large range of topics, answering questions from museum visitors, talking with people about directions and the weather, answering written questions with Web searches, following speech commands to locate and retrieve drinks and laundry in a room, and using Web site searches to find information to carry out a novel task.”

 

Reasoning capabilities. “[T]he tasks included screening medical articles for inclusion in a systematic research review, processing government forms related to immigration and marriage, solving crossword puzzles, playing Jeopardy, answering questions from museum visitors, analyzing geological landform data to determine age, talking with people about directions and the weather, answering questions with Web searches, driving a vehicle in traffic and on roads with unexpected obstacles, solving problems with directions that contain missing or erroneous information, and using Web sites to find information for carrying out novel tasks. One of the striking aspects of the reasoning systems was their ability to produce high levels of performance. For example, the systems were able to make insurance underwriting decisions about easy cases and provide guidance to underwriters about more difficult ones, produce novel hypotheses about growing crystals that were sufficiently promising to merit further investigation, substantially improved the ability of call center representatives to diagnose appliance problems, achieved scores on a chemistry exam comparable to the mean score of advanced high-school students, produced initial atomic models for proteins that substantially reduced the time needed for experts to develop refined models, substituted for medical researchers in screening articles for inclusion in a systematic research review, solved crossword puzzles at an expert level, played Jeopardy at an expert level, and analyzed geological landform data at an expert level.”

Vision capabilities. “[T]he tasks included recognizing chess pieces by location, rapidly identifying types of fish, recognizing the presence of nearby people, identifying the movements of other vehicles for an autonomous car, locating and grasping objects in a cluttered environment, moving around a cluttered environment without collisions, learning to play ball-and-cup, playing a game that involved building towers of blocks, navigating public streets and avoiding obstacles to collect trash, identifying people and locating drinks and laundry in an apartment, and using Web sites to find visual information for carrying out novel tasks such as making pancakes from a package mix.”

Movement capabilities. “[T]he tasks included moving chess pieces, driving a car in traffic, grasping objects in a cluttered environment, moving around a cluttered environment without collisions, learning to play ball-and-cup, playing a game that involved building towers of blocks, navigating public streets and avoiding obstacles to collect trash, retrieving and delivering drinks and laundry in an apartment, and using the Web to figure out how to make pancakes from a package mix.”

Second Machine Age – Are the good times here?

April 8, 2014

Each generation blames previous ones, usually their parents, for the current state of the world. This can be a perilous exercise depending on whether one emphasizes the good bits or the naughty bits which precede the present. I would argue that today’s younger generation has much to be thankful for from the past, despite the problems that exist in the world, but then that’s what you would expect from me.

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The Way We Live Now is the title of a satirical novel by Anthony Trollope describing the trials and tribulations of young love, the pettiness of Victorian upper class life, the energy of London, the most powerful city in the world, and the greed and corruption that lay just below the glittering surface. Queen Victoria reigned from 1837-1901. My grandfather lived from 1824 – 1899 and my father from 1889 – 1976. Both survived this era and some years thereafter. They witnessed Trollope’s world at first hand and passed down some of it. Evelyn Waugh, his son Auberon and grandson Alexander, Somerset Maugham, P.G.Wodehouse, George Orwell and Rudyard Kipling chronicled parts of the 1900’s, and Christopher Hitchens the more recent years. For the USA today, Jon Stewart, on the Comedy Channel, focuses a television spotlight on greed, corruption and other kinds of knavery. No change from the past here.

Each generation blames the previous one for causing the mess it lives in. The current younger generation is no exception. No doubt their children will do it to them. But how bad is the current state of today’s world? After the crash of 2007-08, the pessimists point to unemployment, the loss of good paying jobs, public and personal financial deficits and high debt levels, environmental problems, deteriorating public infrastructure, growing income inequality, the failure of public and private institutions and democracy in general.

But are things really that bad relative to the past? Since 1900, there was the Boer War, World War 1, the Great Depression, World War 2, the Cold War, Korean War, Vietnam War, the rise and fall of Nazi Germany and of Japanese militarism, the overthrow of the Tsar and the rise and fall of Communism. Many other military and domestic conflicts, in China for example, could be listed. So conditions today  are probably no worse, perhaps better than what took place in most of the twentieth century. There is no need for today’s older generation to feel overly defensive about the accusations of those younger. For example, today’s elderly had to live through and adjust to the destruction caused by WW2 and the great depression.

A world war cured the high levels of unemployment of the 1930s. But a postwar recovery did occur and there is a partial good news story to tell future generations. Today, people in developed and developing countries have a much higher living standard than a century ago. There remain pockets of poverty in rich countries, but globally, the proportion of people living below the poverty line has decreased. The absolute numbers of poor may be higher but this is because the world population of 1.7 bn in 1900 is now over four times higher at 7.2 bn (Canada is almost six times higher, 5.5 bn and 32 bn).

Before examining today’s problems in the next section, let’s look at the forces affecting global society today.  Erik Brynjolfsson and Andrew McAfee in the Second Machine Age describe how, the world has entered a second industrial revolution. While the first one from about the 1760s revolved around the steam engine replacing manpower and horsepower, the second one is related to the computer and the digitization of information and communications stemming from developments since the 1930s which are ongoing.

The effects of the second machine age are seen in the growing interdependence between people, firms and other institutions locally, domestically and internationally, labeled as globalization; the changing patterns of skills required in the workplace; the demise of some businesses and the restructuring of others. Examples include the book and newspaper industries (the magazine industry seems to be less affected, as do community newspapers which grow fatter as daily newspapers slim down). Restructuring has occurred in the music, television, cable and film industries as well as in the financial industry and many traditional manufacturing industries with the use of programmable robots. Some industries have speeded up their operations so that a fraction of a second makes a difference to the value of a transaction (see Michael Lewis, Flash Boys, A Wall Street Revolt, 2014). Quality has improved for many goods and services, while at the same time prices have fallen, for example for computing power, an online stock trade, payment of a bill, watching a movie and listening to music online.

These changes are causing disruptions. Some are weathering them better than others, but the changes which need to be made so that those in the workforce adapt to the Second Machine Age are fairly clear. Measurement of economic change in terms of GDP and the skills required for the new economy are the subject of a future posting.

The Second Machine Age – Some Comments

April 5, 2014

The Second Machine Age (Norton 2014) or 2MA by Erik Brynjolfsson and Andrew McAfee has received several excellent reviews. Some can be located via Amazon or other web searches where summaries of the book are also available. Rather than repeat them, I note aspects of 2MA which especially struck me.

  • As a book about economic history and the economic aspects of current technological  developments, it is written in a style which is widely accessible. There is an absence of economic jargon and the explanation of economic concepts is understandable to the informed layperson. Even the difference between mean, median and mode is outlined, for example when dealing with the measurement of changing income inequality.
  • The book’s title identifies around 1765 as the start of the first machine age with the development of Watt’s steam engine, which substituted mechanical power for man and animal (horse) power for many types of economic activity. Railways were a big part of this age. Water power and canals were also features of this earlier period. The latter are now often used for tourism, although some like the Suez and Panama remain as busy shipping highways.
  • The second age, 2MA, relates to computers and developments in digital communications. Like most inventions they begin with a series of inputs, one of which was Alan Turing who is often considered the founder of the modern computer with the publication of his 1936 paper. But things took off later. A 1965 article by Gordon Moore, then working for Fairchild Semiconductor, predicted correctly that “Integrated circuits will lead to such wonders as home computers – or at least terminals connected to a central computer – automatic controls for automobiles, and personal portable communications equipment.” Home computing and laptops appeared in the early 1980s. This paper was the source of Moore’s Law, which forecast that the amount of integrated circuit computing power bought for one dollar would double each year. That has happened for over four decades and some extend this forecast for another eighteen months. Others say the law will end in about 15 years due to various physical constraints. Who knows? But scientists are probably better forecasters than economists and meteorologists.
  • Government statistical agencies first noted information technology as a corporate investment expenditure in 1958, another approximation for when 2MA begins. The world is now in its early stages with pioneers like Bill Gates (Microsoft), Steve Jobs and Steve Wozniak (Apple), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), and Larry Page (Google). Not long ago the leaders were persons in charge of firms like IBM, Hewlett Packard, Digital Equipment, Dell and Cisco. Because this 2MA is still young, the exponential changes are best graphed logarithmically showing the growth of supercomputer speeds, supercomputer energy efficiency, residential internet download speed and hard drive cost efficiency, as well as the number of microprocessors per chip. A graph with a normal scale would go off the top of the page.
  • Two schools of thought prevail about the prospects for future growth. One, supported by Tyler Cowen, sees economic growth declining in the future because we have “picked the low-hanging fruit” of recent technological changes. Another, supported by the authors of 2MA, argues that we are in the early stages of a new machine age and that there will be many applications of information technology which entrepreneurs will introduce. They also argue that the way we measure economic output in terms of GDP grossly underestimates the actual output of the economy, and that new diagnostic tools are required. They do agree that the occupational structure of the labour force has changed and that this accounts in part for growing income inequality.
  • What are the shortcomings of the system of national accounts which provides a measure of annual and quarterly GDP? The US accounts were developed in 1937 by a NBER team lead by Simon Kuznets, and have since been refined and adopted by other countries. Economic texts have always noted problems (they are listed in my 1985 fifth edition of Lipseys’ introductory text and I am sure it would have been in the first edition). National accounting does not distinguish between activity associated with cleaning up after an oil spill and with producing tankers. Both are counted as part of annual GDP. And there is nothing like a war to expand economic output. As well, some economic activities go unreported such as criminal acts and certain activities including the services of housewives. As a measurement of change, as opposed to levels of economic activity, if these omissions are constant, then it doesn’t matter too much. But with 2MA the changes are significant.
  • Much of what is consumed each year is now either free or cheaper than in the past. Take Wikipedia, it is available for free over the internet, except for the cost of having an internet connection. Individuals provide and consumers use the content for no charge, leaving no recorded activity for the national accounts. Many other electronically delivered services have one or other or both of these features. One result is that calculations of ratios such as the productivity of labour (output per worker) would be higher if the numerator (output) was fully reported in monetary terms. A similar argument could be made about many of the apps which are prepared, often for free, to access some service which may or may not valued in monetary terms. (Chapter 8 of 2MA elaborates on these issues).
  • Contrast GDP accounting and reporting with other activities which do record flows of activity. Stock market prices are available in real time, as are current air, rail, and probably truck transportation data (unless the plane disappears). The same is true for the weather, and medical conditions of a patient who wears some type of sensor for blood, heart and other conditions. Why is this not possible for the output of the economy which is used for setting economic policies?   Where is the app for real time GDP measurement? (In Canada, Statistics Canada releases information on a daily basis, but not for the day but for some past period. For GDP, the latest data are for January 2014 as accessed in The Daily for April 4th, 2014.) One explanation is that it takes time to collect the data. But if the data are being generated continuously, then it should be possible to collect and report them even if they are revised at a later date – which is the present case anyway.

A future posting will examine what 2MA means for the nature of employment, education and training, and income inequality.

Eighteenth Century Bitcoin

March 22, 2014

Or everything old is new again

Richard Arkwright (1732 – 1792) was a Steve Jobs for his times, and one who also organized a type of Bitcoin currency for making transactions. He died 32 years before my grandfather was born, which is of no import except to show that all this happened not that long ago.

The eighteenth century industrial revolution was powered by water and the steam engine, both of which substituted for manual labour and horse power. Before the introduction of railroads, canals were a means used to ship products. Canals had a short life span but some survive and are used mainly for tourism today in the UK.

Arkwright, one of a family of thirteen children was, for financial reasons, home schooled, and first apprenticed to a barber and wigmaker. His main inventions were cotton related. He developed the spinning frame and carding engine, which reduced the labour required to spin raw cotton for making cloth. For the 18th century these developments were as significant in their way as the information age is today in other areas.

The modern factory system was a product of these earlier times. Workers were brought to his factories from other parts of the country ,

“Richard Arkwright’s employees worked from six in the morning to seven at night. Although some of the factory owners employed children as young as five, Arkwright’s policy was to wait until they reached the age of six. Two-thirds of Arkwright’s 1,900 workers were children. Like most factory owners, Arkwright was unwilling to employ people over the age of forty.”  See http://www.spartacus.schoolnet.co.uk/IRarkwright.htm

Too ensure a steady supply of labour, Arkwright built housing close to his factories so that workers would be on site and on time for work. He also owned stores nearby which supplied the workers and reduced the time needed for travel. These stores became was another revenue source, and this is where an eighteenth century version of Bitcoin enters the picture.

Arkwright was keen that his workers and their families would spend their earnings on things he owned, so he provided a currency specifically for this purpose.  In fact this was the only currency which was acceptable in his stores. Unlike today’s Bitcoin, it was a tangible currency using Spanish silver coins, but these were stamped to show both their value in exchange, and the fact that they could be, and had to be, used in the company stores.

An example of a coin can be seen at http://www.massonmills.co.uk/News/Wins-Silver-2006.html.php

Printed on these Spanish coins by the mill owner are the words “Cromford, Derbyshire and 4/9”. Cromford is where the mill was located, and 4/9 denotes four shillings and nine pence which is what the coin was worth for transaction purposes, although its silver value must have fluctuated over time, creating problems when it exceeded its face value.

Some Economics of Online Learning

March 14, 2014

Who benefits and how much?

From a search of online learning, e-learning, distance education and MOOCs in text, audio and video formats, there is more material on the web than most people will have time to access. And more flows in daily. Journals on this topic include the Journal of Online Learning and Technology, the American Journal of Distance Education, the Canadian Journal of Learning and Technology, and the International Journal of Instructional Technology and Distance Learning, amongst others. Online learning is a rapidly growing field of interest, which can relate to traditional educational systems as well as to those training people for artistic, industrial and other types of activity.

The following looks at some of the costs and benefits of online learning with implications for how traditional university models may change. One aspect to keep in mind in any comparison of distance learning with on campus learning is to understand how they differ. If I watch the Wimbledon tennis championship on television, it is a markedly different experience from attending the championship live, where I can enjoy the matches, mix with the spectators, visit the bars and eat strawberries and cream. Or, if I buy a meal in a restaurant, it is not the same as staying in a hotel with all its facilities including eating in its restaurant. Contrasting these alternatives is a case of apples and oranges, which is also the case for online and on campus courses.

I start by focusing on the three main players of the educational system, the students, the faculty and the university.

Students

Students are required to pay a fee for an online course if they wish to receive a certificate which states that they have completed the lectures, quizzes and written assignments. They may also have to grade the assignments of other students. As an option, a written text may be offered for purchase. Anyone not wishing to fulfill these requirements can access the lectures for no charge, although registration is required. Thus the reports show that several thousand people from around the world are often registered, but only about five to ten percent receive a certificate. Many, like myself, take them for free, out of interest and because of the convenience.

Aside from these direct costs which are low, students can access the material in their own time. They do not have to travel to the lectures or reside away from home or on campus. Convenience and time is acquired for other activities. The main costs for on campus students are fees, residence, if away from home, and foregone income from having full or part-time employment. All three items are reduced or eliminated for online students.

At the same time, some features of the on campus experience are missing, such as the interaction with students and faculty, and the use of athletic and other facilities offered on campus. Interaction with other students does take place online as witnessed by the popularity of social media, and athletic opportunities are often available elsewhere. Direct comparison of online and on campus courses is an apples and oranges situation. They are not the same. Each offers something different from the other.

Another online advantage is that students find it easy to interact at negligible cost with other students taking the same course. They can form discussion groups, create online forums and identify issues which they want to question or dont understand. They feel connected and not isolated. A number of professors emphasise that they have improved their courses by altering the format or material of their inclass as well as their online lectures as a result of listening to and accessing student forums.

Online connection to the internet is not free. It requires owning some form of hardware and paying for wired or wireless access. A printer may also be useful.

Faculty

The fixed upfront costs of developing the material for delivery online is one of the main costs to the online lecturer. If the person is employed by a university then it is a university salary cost. If the course is delivered by a firm like Coursera, then it is a firm cost negotiated between the teacher and the firm. The Kahn Academy provides instruction online for free for tutoring a student.

These upfront costs can be high but are spread over the number of students taking the course in the current and future years. It is similar to the costs of producing a film where the cost per film are high but the cost per viewer depends on the number of people who watch the production. Since a lecture is a type of video performance, viewers are used to the values incorporated in TV productions. Just putting a camera in a classroom with a teacher is not enough to hold an audience. My admittedly limited viewing has seen cheap unappealing productions from distinguished academics, and those with outstanding production values from lesser known people. Software such as Desire2learn is available to help format lectures.

Duke University Professor Cathy Davison, the instructor of a recent MOOC, which I accessed, writes “We spent an estimated 40 hours a week from May 2013 through January 2014 working on the MOOC — and that’s before the course even begins. The investment in time makes sense for me, since I am passionately interested in innovation in higher education, and (meta again) I wanted to learn about making a MOOC inside and out”. 

The posting from which this quotation is taken is worth reading as one view of the costs and related issues http://www.hybridpedagogy.com/journal/10-things-learned-from-making-a-meta-mooc/

In Canada, the University of Waterloo is at the forefront of developments. Professor Katherine Acheson in the Department of English has commented as follows:

“The situation with the development of online courses is different now, overall, than it was when the University of Waterloo started its distance education program. Online courses no longer necessarily imitate in-class courses. They are developed using technologies that offer affordances that classrooms can’t. Group work is enabled, potential for content is expanded, contact with the instructor and with other students can be richer. (There are down sides too.) At this point I am not sure that we have enough experience with this model (both the costs and the quality) to come to conclusions. 

But it is apparent that building the infrastructure and cultivating the talent to use the new technology well can be costly. It’s unbelievable to me the amount of admin, space, time, expertise etc. required to produce courses that are really cutting edge. And all online courses are delivered through a Content Management System (we use Desire2Learn) — also used as adjunct to in-class courses. It is expensive and extremely frustrating as it does not always work.”

University

Costs are incurred in developing the courses, arranging their delivery, both of which involve capital as well as operating costs. It would be interesting to know whether the development costs are treated as capital or operating costs. Athabasca University in Alberta is primarily an online university. Contrasting its financial statements with that of an online university would be one way of making a comparison. While universities publish statements which are available online, comparisons might be difficult, since almost all universities offer some online courses in conjunction with on campus courses, and on campus courses may involve some online features.

A personal note — as far back as 1990, I gave up having regular office hours. Instead I was available by email to interact with students and if desired would arrange an in person meeting at our mutual convenience. It worked more efficiently for both student and teacher, and many issues could be resolved by email. Other faculty did the same. In fact a visit to faculty offices in many departments today finds them unoccupied, as faculty work at home and attend the university mainly for teaching and administrative duties such as committee meetings. Many non-academic businesses no longer offer individual offices but provide shared space which can be used when needed. A university could save on building costs by reducing the number of offices in many faculties. Online teaching should reduce the need for more buildings and may allow existing buildings to be rented out to other users.


Credentials for online courses

March 12, 2014

Do I get a credit?

The short answer is no, because I am not looking for one.  At my age I enroll in online courses out of interest and for free. I dont write the assignments, answer the quizes or fulfill the requirements that will earn a certificate. This is not the case for students looking for a degree qualification and a job.

 Following are a few facts published by the Babson Survey Research Group:

  1. In 2013, of the 21.3 million students enrolled in higher education in the US, one-third is enrolled online.
  2. Since 2003, annual growth in online enrollment has varied between 35% and 5%, higher in the earlier period when it was starting.
  3. Sixty-six percent of university chief administrative officers think that online education is critical to the long term strategy of the institution.

Another number frequently quoted is that only four to ten percent of those who enroll in online courses actually complete them, presumably meaning that they get some type of certificate. Many like myself take them out of interest and because it costs nothing to enroll.

What is a university degree ?

It represents certification by the university that the person has completed a particular course of study, and is recognized as such by potential employers. Universities are given the right by governments to issue degrees and diplomas. The value of the degree (or course) varies with subject matter (medicine, law, engineering, arts, social science), as well as with the reputation of the institution granting the degree. Thus a graduate in history, engineering or business from Oxford, Stanford or the Sorbonne may receive an intial salary higher than that of graduates from state and local universities in their respective countries. The market is responsible for this outcome and there is nothing surprising about that.

What happens when a person receives a certificate as a result of taking a MOOC? It depends in part on who is offering the instruction. (The term was coined in 2008 by Dave Cormier of the University of Prince Edward Island and now with the National Research Council of Canada.) In the US, three of the firms offering MOOCs are Coursera, Udacity and edX. Each business was started mostly by academics going into business and then arranging for courses to be offered online. There is no one format for how the courses are priced and staffed, but the firms try to make them equivalent to a university course so that they are attractive to students. Others are entering the field and there are many varieties of the online experience. The Kahn Academy offers a different type of instruction for free.

The question is whether a certificate issued by a private firm, received as a result of someone taking an online course given by a PrincetonUniversity professor, for example, is the same as a similar course taken by someone enrolled at Princeton. The answer is no, but the online course does have value as a certificate of accomplishment. An employer will treat the MOOC certificate as a screening device, and may take the person on as an employee on a probationary basis to find out what knowedge the person has. Over time, firms, instructors and online courses will gain reputations (good or bad) for their worth and be rewarded accordingly by employers. 

The MOOC certificate will probably remain valued less in the labour market than the equivalent university course, but the former’s value over time will depend on the experience of employers. In the meantime employment contracts are sufficiently flexible to allow testing to occur, giving opportunities for employees to showcase their skills however acquired. Students will benefit if their costs of education are reduced, a topic for a future posting.

 

Will Online Learning Replace Inclass Learning?

March 11, 2014

What future for education?

The fact that this is being written on a website suggests that some form of online learning already exists. A web search of this topic provides an ocean of postings with conclusions all over the map. Online learning works; it doesn’t work; it works in some cases, and so on. Because we are in the early decades of the internet age, when developments in communications and information technology are changing how many things are done, it is not surprising that the future is unclear. People are trying to navigate through mists to determine how education, medicine, travel, privacy, crime, government, broadcasting, publishing and many other social, political and industrial activities are being and will be affected.

My interest is to understand how these developments will affect my grandchilren and their parents, by drawing on what little I have learned over the past 80 years, 40 of which were spent in university teaching and research, plus a number of years before that as a student in schools and universities.

One starting point for considering the future of higher education is to decompose the university as an organisation into three parts, staff, students and facilities.

Staff — consists of the academic staff undertaking teaching and research, the support staff and administration.

Students — include full and partime students, on and off-campus students, online, out of town and by correspondence, and former students.

Facilities — include land, buildings (classrooms, offices, residences), equipment (vehicles, laboratories, computers), athletic, medical and other.

This is a bare bones description of a university as an organisation and in some ways similar to a conglomerate firm, because of the range of activities undertaken. Consider these and the associated facilities. They may include student residences, athletic facilities, restaurants and cafeterias, book, computer and other stores, a post office, medical and nursing facilities, banks and cash machines, parking and security services.

Like firms, universities compete with each other and look for a wide variety of revenue streams to meet their costs. Like firms, universities have to negotiate with unions and faculty associations. Another way of looking at a university is to see it as a community neighbourhood, village or suburb.

The complexity of the administration is something I did not appreciate when I was a faculty member, and even when I held a minor administrative position. As a student it never crossed my mind. 

Similar to a conglomerate, a university has certain activities which are essential such as teaching and research, while others are useful or convenient to have but less essential. The business models include full service universities and others offering less services. When I attended the London School of Economics in the centre of London, it consisted of classrooms, library, computer facilities, squash courts, cafeteria, pub, bar, admimistrative offices and washrooms. Other facilities such as residences, restaurants, pubs, cinemas, theatres, book and other stores, parking, and tennis courts were available nearby but not owned by the university. Costs for a university will vary with the services offered, while revenue streams come from fees, rent, research and government grants, donations from alumni, and from various services, such as parking.

Common to many universities is the under utlisation of the facilities, both daily and year round. This has changed as some courses are offered in the evening and year round, such as summer courses, both on campus and online off campus. This is where online teaching can further change the economics of universities.


On and off campus courses

Discussion of online learning often focuses on Multiple Open Online Courses or MOOCS, offered by commercial enterprises in conjunction with university and other academics. A more useful distinction for present purposes is to contrast on campus with off campus delivery of courses.

Earlier versions of off campus delivery were correspondence courses where students were mailed material, listened by radio or view by television, and then wrote proctored examinations near where they lived. E-learning, a general term which includes off campus courses began in 1960 at the University of Illinois and Stanford University. In 1969, the Open University opened in the UK and continues to the present, while in Canada the University of Guelph was an early entrant in the field. MIT was another pioneer.

“ MIT OpenCourseWare (MIT OCW) is an initiative of the Massachusetts Institute of Technology (MIT) to put all of the educational materials from its undergraduate- and graduate-level courses online, partly free and openly available to anyone, anywhere. MIT OpenCourseWare is a large-scale, web-based publication of MIT course materials. The project was announced in October 2002 and uses Creative Commons Attribution-Noncommercial-Share Alike license.” (Source: Wikipedia).

Today, university offerings range from one hundred percent on campus to one hundred percent off campus delivery of courses as well as blends of the two using various combinations of hardware and software. This is the likely future direction which delivery will take.

Consider some alternatives using the internet. Video lectures are delivered online. Forums are set up for students from around the world to discuss with each other and with the instructor the material presented in the lectures. Social media such as Facebook and Twitter are used to create a community of those participating in the online lecture. Assignments are set and marked by fellow students online with some direction from the instructor.

Contrast this with the past where lectures were “the sage from the stage” variety on campus. Students were given a reading list, encouraged to read ahead of the lecture and perhaps could ask questions, if time permitted in large undergraduate classes. Discussion groups might be held on campus lead by teaching assistants with often few students attending. One possible blended course format would be for students to watch an online lecture from a first rate professor, and then attend on campus classes where discussion of the lecture would take place. Such blended possibilities are numerous and are already occurring on a formal and informal basis.

Conclusion

The question posed in the title of this posting remains unanswered, because it depends on two other sets of factors, how credentials for off campus learning are established and recognised, and the likely economic implications for students, faculty and universities. These will be discussed in subsequent postings.

Online Learning – some initial thoughts

March 2, 2014

Introduction

A MOOC, offered by Coursera (https://class.coursera.org/highered-001), entitled The Future and History of Mainly Higher Education provides an introduction to how developments in information technology are affecting the way education and its delivery is viewed by those who specialize in and study this topic. The issues discussed are not only the impact of the internet and associated sites like Wikipedia and blogs but how email, Facebook, Twitter and social media influence what we do and how we do it as it relates to education. The historical approach provides information about what has and has not worked in the past, while the future reviews how current conditions may be improved.

A second theme of the MOOC is to contrast top-down learning, the sage on the stage, to more collaborative forms of learning where those being taught may provide input to both what is taught and how it is taught. What may be new to older generations, like myself, is the extent to which students are expected to provide such input. While graduate and undergraduate students at Duke University and the University of North Carolina, where this MOOC is located, may, because of screening for admission, have the knowledge to provide useful input, I would have doubts about whether less qualified students would be able to contribute much, and especially students at junior and high school levels.

Cases discussed of where students have and are providing input to the structure and operation of classes are impressive, but I suspect they are few in number, and as suggested involve students who have been screened for the caliber of their educational achievements. This is a minor quibble with what is a highly stimulating course. For me it was worth listening to the online lectures a second time as well as reading the referenced material.

 

Economics of online learning

How are institutions (schools, colleges and universities) affected by online developments? Consider first the case of university students – for college students it would be similar.

For an on campus experience, the main costs are fees, books and equipment, living costs, borrowing costs and foregone income if the student would otherwise have a job. Savings may be made by living at home, working part-time during the school year and working during vacations. The expense of an education is an investment in the future and financial institutions will provide loans which can be repaid when earnings commence. For those planning on entering a profession, loans are easily obtained, and the transaction is similar to obtaining a mortgage to purchase a house.

Time is saved by a student attending an online class as opposed to travelling to and from the lecture room. Reading materials may be available online and at a cost lower than by purchasing these items. Interaction online may take place between those enrolled in the class and with the instructor, so that the learning experience is improved. Of course, something is missing, the face-to-face relationships between students and between students and instructors. The social and perhaps cultural aspect of university attendance is lost by online learning. But there can be all kinds of hybrid alternatives where online displaces only some of the on campus experience, and today’s students are active users of social media.

In the case of the institutions, costs will depend on the extent of the changes and the mix (blend) of online and onsite lectures offered. Graduate courses and those requiring face-to-face seminars and lab work will still require onsite facilities. Some institutions are moving to online only which means that they will not offer courses which require an onsite presence. Much experimentation is underway. There will probably be high fixed capital costs in the initial move to online offerings, but these will be spread over the years. Savings will be possible with operating, especially salary, costs if less instructors are required. Technical and administrative staff will have to be trained to manage and run the new types of online offerings. Fewer buildings may be required.

This is a quick look at some of the factors in the costs of online learning. Institutional experimentation is underway, and has been for some time. The results will provide data for a clearer assessment of the future. Doubtless, governments will pressure institutions to make cost saving changes.

 

Where to look for data on online learning?

Wikipedia is an obvious starting point both for the numbers involved and for the types of experiments under way. Following are a few published facts (Babson Survey Research Group):

  1. In 2013, of the 21.3 million students enrolled in higher education in the US, one-third is enrolled online.
  2. Since 2003, annual growth in online enrollment has varied between 35% and 5%, higher in the earlier period and 5% in 2012.
  3. Sixty-six percent of chief administrative officers think that online is critical to the long term strategy of the institution.
  4. E-learning, a general term which includes online courses, started in 1960 at the University of Illinois and Stanford University. The Open University in the UK opened in 1969, while in Canada the University of Guelph was an early entrant. Correspondence courses predate the online variety.

A search of Wikipedia for online learning takes you to e-learning with extensive discussion and references to issues associated with online learning. There is also a Journal of Online Learning and a World Association of Online Learning.

Reforming Higher Education

January 23, 2014

Higher education is experiencing rapid change due to developments in information technology which are creating new opportunities. People are finding new ways to gain experience and the skills they need for pursuing a career; they are discovering careers which they never knew existed. The internet is awash with ideas on this topic. Suppliers are active in providing new opportunities.

To understand these change I have enrolled in online courses, at no cost – see websites for Coursera and Udacity amongst others – and with the opportunity to interact online with faculty and students from around the world. I have tried history courses and ones dealing with the future of the university. Reactions and changes include:

1. The University of Phoenix is an e-learning university with no campus or buildings. It can offer a new course within six days by accessing online resources anywhere in the world.

2. Employers who complain of students being ill-prepared for the workforce are asked to provide input for the curriculum and opportunities for training.

3. Costs are falling in many areas, especially hiring full-time faculty, building and maintaining physical facilities. Other costs may arise but the net effect is to reduce the cots of higher education.

4. Students will have to take more responsibility for discovering the programs they want to take and finding ways to access these programs. The programs may originate anywhere in the world. Students and faculty may be from any place with an internet connection.

Major changes have already occurred in the music, video and publishing industries due to communications technology. A similar impact will take place in higher education which will hopefully alleviate some of the high student borrowing costs.

World War 1914 to 1945

November 30, 2013

1. As a result of an online History Course on Global History Since 1300(Coursera: Professor Adelman, Princeton University), I feel I have a better understanding of the nature and consequences of WW2. One way to start is to compare the military and civilian casualties by some of the major participating countries: I consider these to be reasonably reliable facts.

World War II Casualties

Country                         Military                            Civilian
China                           7-16 million                    10-20 million
Germany                     5.5 million                      1.1-3.1 million
Japan                           2.1 million                       2.6-3.1 million
USSR                           8.8 – 10.7 million         12.7-14.6 million
Britain                           383.8 thousand           67.1 thousand
United States              416.8 thousand             17 thousand
All Countries          22.6-25.5 million         37.6-55.2 mil.

The figures show that China and Russia (later the USSR) had by far the largest military and civilian casualties. Both were allies of the west. Their main opponents, Germany and Japan, suffered considerably more than either their allies the US or Britain. Some of the Asian losses are due to Japan’s invasion of China, which began in the early 1930s, and to the civil war taking place in China between communists and nationalists.

2. WW1 and WW2 were one war with two active periods and in between a worldwide recession especially in the developed world. The recession ended due in large part to WW2. Unemployment fell when men and women were recuited for the war effort, either in the armed forces or in wartime production. This also provided a fiscal stimulus which was partly chanelled into savings and the purchase of government bonds as a way to finance the war effort and to prevent consumer spending from generating inflation.

3. Both WW1 and WW2 were global. In the east the Japanese had invaded China in the 1930s where a civil war was already in progress between the Communists and Nationalists. The Japanese were only forced to withdraw after surrendering when the second atomic bomb was dropped. The other aspect of war in the east was fighting between the West, mainly the US and the Japan, which also ended with bombing of Hiroshima and Nagasaki.

4. Another arena of WW2 saw the contest between the Germans and Russians where both sides suffered enormous military and civilians losses. At times, there were almost five times as many German troops on the eastern than on the western European front, and the devastation in the east was much greater.

5. Other parts of the world were also involved especially countries in Asia and Africa with ties to the main combatants. And while much of the reported fighting took place on land with ground troops supported by air power, there were major naval actions undertaken by the fleets of the US, Britain, Germany, Japan, and Russia.

6. At the start of the war the major combatants had to increase the number of those enrolled in their armies, navies and airforces. A combination of volunteers and conscripts made up the armed forces. This consisted of taking untrained members of the public, putting them into uniforms, giving them some basic training and sending them off to fight. Only members of the regular forces had more than basic training. When reading about how the Russians enrolled millions of fighters, this was achieved by rounding up members of the public, putting them into uniform and sending them off to fight.

7. As a result of being educated in the UK, my previous impression of WW2 is that it took place mainly on the western European front with a focus on events like the Battle of Britain, the Normandy landing and the allied advance eastwards to meet up with the Russians in Germany in 1945.

8. The casualty figures have revised my views. The period 1914 to 1945 was one of continuous war, at some times more intensive than others. The fighting and deaths were far higher in Asia and eastern Europe-Russia than in western Europe. Also to be considered in this period is the flu pandemic of 1918-20 which infected 500 million people and accounted for 50 to 100 million deaths around the world.


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