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The basic objectives of this paper are to explain the future financial squeeze of faculty members at public colleges and universities by demonstrating that there are various business forces such as online education, outsourcing, intellectual properties, and PQ that have been developed to form a business strategy aiming at reducing the future salaries of faculty members and at dismantling the tenure system in the long run. The announced basic goal behind such a business strategy is to reduce the cost of higher education. But if the tuition rates do not decline, the reduction of faculty's salaries means higher profitability for the institutions of public higher education in the short run, assuming other elements of cost are fixed. The expected cut in faculty's salaries and the dismantling of the tenure system are called the squeeze of faculty, launched by some public universities' administrators for their own vested interests, that will deteriorate the quality of public higher education and deprive many young women and men from attending public colleges and universities. This will in turn deteriorate the global competitiveness of the United States of America, because it will slow down innovations and downgrade the quality of the labor force. This business strategy will negatively affect various communities as well, because these communities will be losing revenues gradually, as online education becomes a dominant institution. [PUBLICATION ABSTRACT]

1. INTRODUCTION

Thorstein Veblen (1904 and 1923) and Wesley C. Mitchell (1941) provided an excellent theory of the business cycle called by Sherman (1991) the nutcracker theory of the business cycle. In this theory an expansionary phase of the business cycle is explained by higher revenues and lower costs, or larger profits, and a recessionary phase is explained by low revenues and higher costs, or smaller profits. What is fascinating about this theory is its applicability to microeconomic organizations such as the institution of public higher education. In accordance with any business model profitable colleges of public higher education must increase revenues and reduce costs. Revenues can be increased if the tuition rate increases, or if number of credits generated by a college can be increased, assuming the tuition rate is fixed. The revenues can also be increased if both number of credits generated and tuition rate rise. Similarly, revenues can be augmented by donation from various individuals, families, and other institutions. In fact, the action of making higher revenues will open the upper part of the nutcracker. Costs of public colleges of higher education can be reduced if salaries of faculty and other operating costs are cut. The decline in costs will indeed lower the bottom part of the nutcracker. Both actions of higher revenues and lower costs will augment profitability of colleges of higher education.

Public colleges of higher education have been experiencing a rise in costs and in tuition rates. Administrative cost has been on the rise as well. If each public college and university is investigated, one can find that even in a small public university that many expensive administrative positions have been created and that salaries of important administrators have been increasing by more than 300 percent over the last fifteen years. Similarly, tuition rates and fees have been increasing by the same percentage or more, a situation that has created many difficulties for the middle class and poor families in sending their young women and men to public colleges and universities. The act of raising tuition rates has become a form of warfare against students. Although loans and financial assistance can be secured to finance education, interest rates have been on the rise, which will make it very hard for students to pay their education loans in the future.

This paper aims at showing the effects of the application of business strategy to public colleges of higher education, a strategy that has been used by some administrators to financially squeeze faculty members and communities. Basically, this business strategy is manifested in cutting faculty cost and reducing communities' revenues by shifting to the regime of online education. Several administrative forces designed to cut faculty cost are investigated in this paper, forces that will even lead to the dismantling of the tenure system. Section 2 analyzes the concept of professionally qualified (PQ) instructors introduced by the AACSB as a form for providing practical knowledge, and section 3 is devoted to explain some of the problems with the intellectual property rights in online education. Section 4 analyzes global online education and profit making through outsourcing of courses to foreign countries, and section 5 tackles the negative financial effects of online education on the community. The last section is devoted to a summary and conclusions.

2. THE AACSB AND THE PRACTICAL KNOWLEDGE

In an eNewsline on 15 December 2006, John Fernandes, the President and the Chief Executive Officer of the AACSB International, provided some justifications for the need of the concept of Professionally-qualified faculty member, PQF, stating that the AACSB has "developed and launched the Professionally-Qualified Faculty Bridge Program", which includes a "one-week intensive [program] designed to help individuals with appropriate practical credentials and work experience jumpstart a career shift to PQ business school faculty." The basic goals of this program are to supply more faculty members to teach business courses, to provide practical knowledge and experience to other faculty members, a mix of academic and professional knowledge for better education in business colleges, and to help solving the problem of rising cost of higher education. It is usually understood that faculty members have academic knowledge which has two components. The theoretical component is designed to provide a general explanation for a particular segment of reality. The practical part is to apply the theory to reality for solving problems, or formulating policies for achieving some future goals. Both of these components create a cohesive whole of knowledge which is provided by colleges to students through academic professors. Once students graduate and are employed by firms, these students will complement their knowledge with vital experience from the working place. Still, the knowledge they carry with them will be the backbone of their future. It follows that the argument of adding practitioners in order to enhance education is very disturbing. Essentially, it means that higher education lacks the proper components of relevant education, and the latter proposition is an unrealistic and a misleading statement designed to downgrade college education for other purposes. It may also mean that some colleges, those that do not offer the applied aspects of science, are out of touch with reality.

The introduction of the PQF concept will downgrade the quality of college education. Those practical professionals working in insurance, finance, management, marketing, and the like must have high quality credentials to teach and practice their fields in business colleges, because having practical knowledge does not necessarily mean knowing the scientific component of the field. A basketball player who is not knowledgeable in physics may shoot the ball in a trajectory to score points, but she cannot teach physics. The physist is the one that is able to explain why the shot must go in that direction. That is to say, a competent college professor must know both parts in order to teach students. These professors develop theories through scientific procedures and apply them for solving business problems. Practitioners cannot provide such a task. In other words, the quality of education will be deteriorated if PQFs becomes an important source for delivering the curriculum of higher business education.

The main rationale for the introduction of PQFs is to lower the salaries of business faculty and to dismantle the tenure system in the long run. In a competitive business model a shortage of workers will generate higher wages as a result of excess demand. In the case of CEO Fernandes, however, the best solution is to increase the supply of faculty by introducing the PQFs in order to cut salaries. A similar response was engineered by hospitals when there was a shortage of nurses during the 1980s. Hospitals did not raise wages in order to stimulate people to become nurses; rather, they imported nurses to increase their supply in order to solve the problem of shortage, a process that reduces wages and eventually increases profits. In fact, this is deliberate manipulation of the market forces for controlling wages and salaries.

With respect to the tenure system, it is reasonable to contend that the PQFs will be used to eliminate the tenure system in business colleges. Once these PQFs become available in the long run, many colleges will try to minimize their cost by employing them and reducing the need for tenured faculty members. This is because the tenured faculty members are expensive and can express opinions about educational issues. This behavior is resented by many administrators who tend to plan and execute decisions in their own ways. But it should be noted that some faculty members who are loyal to administrators may be granted tenure for defending the latter' s actions and strengthening their positions against uncertain outcomes.

Business faculty will face a similar problem. The PQFs will augment supply and will reduce salaries. Cutting salaries may reduce the cost of public colleges of higher education, as the salary item declines. If cost and tuition rates fall, then this decline generates a condition that helps many families and stimulates them for sending their women and men to public colleges. But students' cost of public colleges of higher education will not decline, because no college will reduce its tuition rate and fees. In fact, the expected decline in salaries will be accompanied by higher rates of tuition, a situation that will increase profitability of public colleges of higher education. Many public colleges will adopt this business strategy. Eventually, the quality of higher public education will decline in colleges employing PQFs, given the fact that students will pay higher tuitions and fees.

There will be some misuse of the PQFs by some business colleges. These colleges will rationalize the employment of low cost PQFs to deliver business education for more profits. Some or most of those PQFs do not have degrees in these fields, nor have they shown solid scholarship, because they may not be able to publish articles in their fields of employment. Therefore, a tendency will rise to allow these PQFs to publish in the so-called practical journals. And this practice will be echoed by other business faculty. Thus, many faculty members will seek practical journals to publish their articles, but many of these journals are either unknown or of low quality. Business faculty with solid scholarship will have difficulty to survive in such colleges.

The PQFs will be misused by some of the existing faculty members who were hired at a higher level of salary. Those faculty members may deviate from the requirements of qualifications of academic faculty and resort to satisfy the requirements of scholarship by using the so-called practical journals. At several levels of consultation, I have reached the conclusion that most of these practical journals are not suitable for business colleges in higher public education. In other words, reasonably-paid business faculty members will not produce a high level of scholarship.

3. INTELLECTUAL PROPERTY RIGHTS

One of the tools that has been used to deliver online and offline courses is the Blackboard, where students and faculty can interact. It is indeed a very useful tool for enhancing education and communication between all parties involved in the education process. The Blackboard, however, has a very serious problem that can be considered as a way of looting faculty scholarship. Every element communicated through the Blackboard is copied. When a faculty member produces her intellectual product, the faculty can share the product with the students by posting it on the blackboard. But once the material is posted, the university will have a copy of it; hence, the university will own the intellectual product.

Some universities pay a faculty member some stipends to develop online courses. Whether or not the faculty member is retired, the university or the college can ask another faculty to teach the course. The college can also develop a derivative of that course and can ask another faculty or a part-time faculty to teach it. In either way, the faculty members may not teach the same courses they developed earlier. Nor will they receive royalty form the college when the course is offered. Some universities, it should be stated, pay faculty royalty, say 50 dollars, for every student takes her online courses whether or not the same faculty member teaches the course.

There are some cases where faculty members developed online courses without signing any intellectual property rights document. Once the faculty is about to finish teaching these online courses, the college asks them to sign the intellectual property rights form. Under these conditions, if the form is not signed, then the faculty will have to lose the materials they developed because the materials are copied by the university through the blackboard. If the faculty member does sign the form of intellectual property rights, then their scholarly work is no longer theirs, and the faculty member has to obtain an approval from the university if she wants to use her own work elsewhere.

In fact, there is a risk in signing the intellectual property rights form after teaching the course. Some of the forms have some clauses such as the materials of the course have to be original. But in reality most of the course materials are not original, because they may be similar to the materials that already exist. In this case, the faculty may be accused as a plagiarizer by the university. Stated differently, these intellectual property rights forms can be used by the university administrators as another leverage to terminate even tenured faculty members.

The intellectual property rights have different effects on faculty. If one divides faculty into two groups, one group that has solid scholarship and the second does not have scholarship, then the intellectual property rights will negatively affect the first group. Usually, the first group of faculty spends a great amount of time developing thenown course materials, or products. In fact, the products they develop may be used for publishing several scholarly papers and books. The other group spends a less period of time for developing their products, because their course materials include items obtained mostly from publishing companies. Therefore, the intellectual property rights documents will confiscate the scholarly products of the first group of faculty, but they will obtain nothing from the second group. In some cases scholarly faculty members have to take permission from their universities to publish their own work, and in others, faculty have to provide funds or part of the proceeds to their universities for their published products

As can be readily seen, intellectual property leads to two opposing trends. The first trend is when the faculty members are paid loyalty when their online courses are offered and taught by any other faculty. In this case the faculty members are stimulated to develop excellent courses, because there are some financial incentives for the developers of these courses. The faculty can receive royalty for each student taking the course, and this royalty is an additional source of income for that faculty. This incentive compels faculty to develop high quality courses, which they become excellent investment and a source of income for the faculty members. It follows that high quality courses provide students with better education and enhance the university's reputation, These courses also can be significantly used for recruiting many students.

In contrast, the second trend leads to a low quality course development, particularly when the faculty members understand the process. When the university does not provide long run incentives for the faculty members to develop these courses, the faculty may not develop good online and offline courses. Usually, faculty members do not develop courses of high quality where students can receive the materials through the blackboard. This is because the faculty's product can be confiscated by the university each time that faculty posts the course materials on the blackboard. Eventually, the course materials will be owned by the university, and the faculty may not be able to teach them elsewhere after they retire.

These developed courses can also be taken by the university and be given to other colleagues to teach. The university may even outsource the courses to other faculty to teach them. Thus, both ways will compel the faculty not to develop a comprehensive high quality online or offline course. In short, intellectual property rights, if it is not maintained properly, can become a tool for deterioration of quality of product and a form of looting of faculty scholarship. Both outcomes will affect higher education negatively, and will provide ample of low-cost faculty to teach these courses. Consequently, salaries of faculty will decline, and the tenure system can be dismantled.

4. GLOBAL ONLINE EDUCATION: OUTSOURCING AND PROFIT MAKING

Any university offering online courses, or global education (or campus), can become an important case of study to explain global outsourcing and profit making. Such a business strategy, which some universities will employ in the future, is designed to generate more profits and to push faculty's salaries downward in the long run. It is also designed to dismantle the tenure system. Global campus is an excellent tool for exploitation and unequal exchange, a phenomenon introduced and explained by Emmanuel (1972) and Amin (1972 and 1976) to show the exploitative global relationship between developed and developing countries. Marx (1967) thinks that the value of a product (P) consists of wages (W), depreciation of fixed capital [C], and surplus value (S). This can be written as

P = W + C + S (1)

The rate of profit (R) is

R= S /(W+ C) ...(2)

and (S/W) is the rate of surplus value, or the rate of exploitation. Equation (2) can be rewritten as

S = R (W + C) (3)

Using equation (3) in equation (1), equation (5) is obtained

P = W + C + R(W + C) = (W + C)(1+R) ...(5)

That is, the price of the product reflects the total (or average) cost of the product multiplied by one plus the rate of profit (R), or the markup. Fundamentally, equation (5) can be restated to mean that the product is sold at a price (P) such as

P = (AVC + AFC)(I + R) . . .(6)

where AVC, AFC, and R are the average variable cost, the average fixed cost, and the rate of profit, respectively. Assume there are two countries such as the United States of America and India, and since labor of equal productivity is cheaper in India relative to the USA, the price of the product will be higher in the USA relative to India. Under the global capitalist economy a capitalist firm usually sets the price at the cost of the advanced country. The firm, therefore, can make a very high rate of profit if it produces the product in India and sells it globally at the USA price.

Simply, workers in two different countries, whose productivities are equal, are paid unequal payments which are the basic source of profitability. An electrical engineer in India makes $100 a month and another in the United States of America of equal skill and productivity makes about $8000 a month. If they produce a computer, the computer is sold at a price that is consistent with American engineer's cost. The Indian engineer may purchase the same computer at the price set at the USA rate. Thus, the same labor time of the two engineers is exchanged unequally. The American labor is 80 times more valuable in money term than the Indian labor, given they have the same productivity. This stimulates a computer company located in the USA to move to India and be able to make a huge rate of surplus value and profits compared to its previous location.

Similarly, online global education can be delivered by better faculty members than those who teach at university campuses, faculty who can generate huge profits for the university. An example may illustrate this situation. A university offers an online course, say, Principles of Marketing, a course that can be taught by a tenured faculty member employed by the university or by a foreign faculty living outside the United States of America. If the course is taught by the tenure faculty, the faculty cost may be as follows. If the faculty makes $90,000 a year (nine months) and the faculty teaches (6) courses a year, the faculty cost per course is $15,000. If the course has 25 students and worth four credits, then 100 credits will be generated. If the cost (price) per credit is $200, which is determined by the US market condition, then the revenue of this course is $20,000. Let assume for simplicity that all other types of cost are equal to zero, it follows that the profit of this course is $5,000.00. That is, the rate of surplus value is (5000/15000)(100) or 33 percent.

But if the course is taught by the foreign faculty, the following situation occurs. The university can hire an excellent faculty living in a foreign country to teach the course by using her personal computer. The faculty may be a graduate of one of the top universities in the world, whose cost for teaching the course may be less than $1000. The foreign faculty may be better than the university tenured faculty. Let us assume that the cost is $1000. Under this condition, the profit of the course is $19000, and the rate of surplus value is (19000/1000)(100), or 1900 percent. Therefore, global online education generates more profits for the university, and the quality of the course is very high. If the university hires a low quality foreign instructor to teach the course for say $200, the rate of surplus value will increase tremendously to (19800/20O)(IOO), or 9900 percent. Parenthetically, if for simplicity the average labor cost of the course credit is ($200/100) or $2.00, and the price which is determined by the US market is $200, then this means that the rate of profit R is $200 = (2.0O)(I + R) = 2.00 + 2.00R, or (198/2.00) or 9900 percent.

The profit motive has provided greater incentives for many universities to deliver online education. But the misuse of this type of education will reduce the quality of education, as these online courses are taught by faculty members who are not of high quality. Low quality education will not help the country to be globally competitive, because low quality education creates low quality graduates who cannot be useful for capitalist firms. The opposite is true if universities employ high quality faculty to teach these online courses. In either case, the online education will increase profitability and reduce faculty salaries. This is because the more faculty members that are available to teach online courses, the more the supply of faculty in that market; and hence, the lower faculty salaries if the demand for university instructors is fixed. Under this condition, the tenure system will be eroded and dismantled, because it is very expensive compared to outsourcing.

The fascinating conclusion can be stated as follows. The rate of tuition has been increasing over the years, and if faculty's salaries are not increasing significantly, then this situation is usually associated with higher profitability and salaries for university administrators. If we ignore the national data and consider a specific college or a university, the conclusion is very clear. Tuition rates have been increasing by more than 300 percent over the last 10 years. And if a faculty had started working at $40,000 in 1990 and the university president had a salary of $90,000, then the ratio was 225 percent. After fifteen years, the faculty's salary may be $90,000 but the university president is $400,000. That is, the ratio is 444.44 percent, ignoring other elements associated with the university president's salary.

5. THE EFFECTS OF THE ONLINE EDUCATION ON CUMMMUNITIES

I would like to use a small university of about 4800 students as a special case to analyze the effects of online education on the community, and the analysis can be applied to any college offering online education. The online education has been a very important source for increasing the enrollment for several colleges and universities. Online education compensates for the decline in enrollment, and in other cases it enforces the rise in the enrollment. For my case, this source has been assumed as a compensatory source for the decline in enrollment. I have assumed that the online enrollment is about 2000 students or less, or about 44 percent of the total enrollment. The university I am using as a case of study does indeed generate credits and revenues. For simplicity, I am assuming that the online education is as good as the offline education.

Let us investigate the negative effects of online education on the local community where the university is located and on the university itself, by assuming that the online enrollment is 2000 students. Let us add another assumption that all the 2000 students are from other locations or cities. Stated differently, the previous assumption means that the university has exchanged 2000 local (on campus) students for 2000 not local (on campus) students. This exchange is not beneficial to the local community. A simple calculation, which is based on the Leontief inputoutput model, suggests that if you exchange two thousands on campus students for two thousands online students, the community will lose the following. For every single student, not living in a dorm, a spending amount of at least $600 will be required to live in an apartment, eat, commute, and the like. If the $600 is multiplied by 2000 students, we obtain $1,200,000.00 as a total monthly spending. If the outcome is multiplied by nine months, the result is $10,800,000.00. But this spending is subject to what economic theory calls the multiplier (Leontief 1986 and Mouhammed 2000). Usually, a local multiplier (magnification) of at least (2) is used. For this value of the multiplier, the community will lose about $21.6 million annually; an amount that could have obtained had students studied on campus. If the multiplier is one, then the total loss is $10.8 million. It follows that the estimated loss to the community will be between those two values.

Think about a situation where all 4000 students chose to have online education. In this case, the local community will be losing $43.2 million a year, but the university will receive its normal revenues from the 4000 students. This revenue however may be lower because online students do not pay some fees.

If one thinks deeper about this case, the situation becomes a calamity for the future of the university, because the overhead cost and other costs of many employees will be paid by the university, given there are no students on campus. This is indeed a very high total cost. For example, the university has to pay for power, insurance, salaries for sport activities, high salaries for administrative positions, maintenance, and the like. These costs are usually not paid by online universities, because they do not have these activities anyway. In addition, what will the university do with many employees on campus? What will the university do with many administrators and CEOs on campus? Are we going to keep these buildings and sophisticated technologies idle? Who will pay the cost of maintenance? It is indeed true that if all students are on line students, then all these costly elements will not be needed. Simply, this university (students and faculty) can be an appendage to other campuses, and instructors can teach their courses from homes and receive their checks through automatic deposits. In other words, the university will become a historical case of high-tech public college of higher education and may take a different form of ownership in the future.

Let us make advantage of the analysis of the previous extreme case by making the assumption that 50 percent of the students are online and the other 50 percent are on campus. This situation makes little difference compared to the previous case. This is because all the on campus employees and supporting cast of the educational process, including buildings and land, will not be fully utilized. The cost of all these elements per student on campus will be very high. In such a condition it can be rationally argued in the future that if the university cuts the 50 percent on campus students and keeps the 50 percent on line students, the university will cut its cost tremendously or may even make profits. This is because the cost the university pays will be greater than the revenues obtained from the 50 percent of on campus students. Market-oriented CEOs have been habituated to cut such programs and colleges. In sum, the prosperity of online education will generate negative effects on the future existence of the university.

5. SUMMARY AND CONCLUSIONS

Business profits in the American economy have been associated with the squeeze of labor income, or wages, which is the basic cost for the business economy but an income for the working people. A reduction of wages reduces the business cost and decreases income and spending of the working people. Hence, the cut in domestic wages has been associated with the search for global opportunities.

Similarly, the aim at reducing faculty salaries and dismantling the tenure system, or the squeeze of faculty members, by various policies such as global campuses and PQFs will increase the profitability of public colleges of higher education, assuming other elements of cost are fixed. Profits are useful for expanding colleges and universities and for enhancing the use of modern equipment and technologies. Profits are useful if they are used to finance research and development which are important forces for innovations and prosperity of the country. But these goals will not be achieved by cutting salaries of faculty. In fact, a trend for cutting salaries of faculty members is a path toward redistributing of income toward administrative positions and high salaries for CEOs. Administrators cannot provide high quality of public education for enhancing the competitive position of the United States of America in the global economy. Administrators must have efficient and productive faculty members, not PQFs, in order to offer useful education.

The outcome of this administrative warfare against faculty members becomes more severe when salaries of faculty are cut and tuition rates and fees are increased, because this combination will also squeeze students and disturb their future, particularly when it is associated with lower salaries and wages in the national economy, a result that will put more pressure on many men and women not to attend colleges and universities. All these outcomes can be reinforced when the AACSB recommends that practical knowledge is very useful, and consequently the PQFs will be used to reduce salaries of faculty and to dismantle the tenure system. Moreover, using the PQFs will deteriorate the quality of education, creating more disturbances and problems for future graduate students, particularly when they cannot find employment.

The basic conclusion of this paper is that administrators should encourage academic faculty and accommodate their research and scholarship and try to raise their salaries to stimulate more people to go to graduate schools. Fruitful and solid education has to be associated with productive and modern curriculum that will make below the average students skillful and employable by businesses and government institutions after they graduate. When they work for these employers, they will learn more skills and useful practical knowledge that will complement their academic knowledge. That is to say, public colleges and universities have to improve the quality of public higher education, have to recruit more students, have to cut wasteful spending and practices, have to reduce tuition rates in order to attract more students from poor and middle class families, and have to minimize administrators' power. More recruited students associated with lower tuition rates will increase profitability in public colleges of higher education and make them more competitive globally. More recruited students on campus will generate a reasonable amount of revenues to the communities, which will create excellent relationship between the university and the community