Higher education suffers from Baumol’s disease—the tendency of costs to soar in labour-intensive sectors with stagnant productivity. Whereas the prices of cars, computers and much else have fallen dramatically, universities, protected by public-sector funding and the premium employers place on degrees, have been able to charge ever more for the same service. For two decades the cost of going to college in America has risen by 1.6 percentage points more than inflation every year.
Like all revolutions, the one taking place in higher education will have victims. Many towns and cities rely on universities. In some ways MOOCs will reinforce inequality both among students (the talented will be much more comfortable than the weaker outside the structured university environment) and among teachers (superstar lecturers will earn a fortune, to the fury of their less charismatic colleagues).
Politicians will inevitably come under pressure to halt this revolution. They should remember that state spending should benefit society as a whole, not protect tenured professors from competition. The reinvention of universities will benefit many more people than it hurts. Students in the rich world will have access to higher education at lower cost and greater convenience. MOOCs’ flexibility appeals to older people who need retraining: edX, another provider, says that the median age of its online students in America is 31. In the emerging world online courses also offer a way for countries like Brazil to leap-frog Western ones and supply higher education much more cheaply (see article). And education has now become a global market: the Massachusetts Institute of Technology discovered Battushig Myanganbayar, a remarkably talented Mongolian teenager, through an online electronics course.