The feedback on the Caterpillar piece I wrote a couple days ago was highly provocative. It appears that Cat may have overplayed its hand by playing hardball in Joliet, Illinois, at their hydraulics components plant. By locking in new workers at $12 per hour Caterpillar has made the calculation, I believe, that it is willing to let skills erode, and make up for the decline in talent with sophisticated machinery like robots and automated inspection machines. This is not so different from what you see in hospitals where very expensive equipment is simplified so technicians making $15 per hour can operate it. McDonalds uses this model with great success.
The industry that is really on the verge of a mass assault today is the university complex. Colleges have seen their costs expand in a fashion similar to the auto industry of the 1980s and ’90s. Eventually the wage structure brought chaos to those industries. With college tuitions reaching absurdity today, the Internet warriors are about to crash the colleges’ headlock on degree giving, which will dramatically erode their power to charge crazy tuitions.
Internet education companies are just beginning to ally themselves with degree granting colleges, which is moving us into the $99 per credit hour world. If it takes 120 credit hours to graduate we are talking about a $12,000 Bachelors Degree. This will crash the $150,000 degree, which is becoming the norm.
There will be hybrid programs combining Internet and classroom, but if the credential granting power of colleges is cracked, the game will be in the late innings for old-school schools.
Colleges and Caterpillar are different kinds of entities, but the union cartel and the education cartel are both aimed at artificially propping up prices. Caterpillar Corporation is testing the market to see if it can find enough talent to produce an excavator with $12 per hour labor. Knowing Cat, they will add incentives if they need them to lure and hold workers.
And when the colleges can no longer find kids and parents who will pay stupid tuitions because $99 credit hours make sense, the colleges will adapt too.
Question: Do you think Internet education will become more popular than traditional college education?