Apple Should Buy a University

by on October 28, 2015 at 7:25 am in Economics, Education, Science | Permalink

Apple has more than $205 billion in cash. What should they do with the money? Apple should buy a university and rebuild it from the ground up.

In recent years, some private equity firms have bought universities and turned them into for-profits. The for-profit model, however, has yet to produce a world-class university. But consider Jerry Falwell’s Liberty University, it was only established in 1984 and yet today with its online students it’s the largest private, non-profit university in the United States. Liberty University doesn’t get accolades but it is a technology leader and it shows what is possible starting from a small budget.

Apple_Campus_2_renderingApple is a for-profit corporation not a charity but there are plenty of ways to make money from a non-profit university. Aside from the tax breaks and other deductions, Apple University would be a proving ground for educational technologies that would be sold to every other university in the world. New textbooks built for the iPad and its successors would greatly increase the demand for iPads. Apple-designed courses built using online technologies, a.i. tutors, and virtual reality experimental worlds could become the leading form of education worldwide. Big data analytics from Apple University textbooks and courses would lead to new and better ways of teaching. As a new university, Apple could experiment with new ways of organizing degrees and departments and certifying knowledge. Campuses in Delhi, Seoul, Shanghai, Berlin, and Sao Paulo could provide opportunities for studying abroad. Apple’s reputation would attract top students, especially, for example, if it started with a design and business school. Top students would lead Apple University to be highly ranked. The more prestigious Apple University became the greater would be the demand for Apple University educational products.

Apple already has the beginning of this model with iTunes U and its own internal Apple University for training in business and design. By buying a university, Apple would commit to a learning process to develop these technologies in entirely new ways.

More than a century ago Stanford, Carnegie, and Rockefeller used their industrial-age fortunes to build some of our best universities. Isn’t it time for another great university built for the information age?

1 Blake October 28, 2015 at 7:28 am

Give out bigger dividends & profit the shareholders more directly than share price, since share price does not directly profit the shareholders until they sell their shares.

2 The Anti-Gnostic October 28, 2015 at 9:44 am

That was my first thought as well. What are they doing sitting on that much cash? Appalling corporate governance, or some serious distortions by the tax code.

3 jorgensen October 28, 2015 at 10:00 am

Apple is playing games with where profits are earned. Design a phone in America, build it in China; sell it in Germany. Where is the profit earned? Ireland or some other tax haven – according to Apple. The result is that Apple has a huge amount of cash notionally domiciled offshore (but probably invested in US dollar assets) while they wait for a tax holiday so they can repatriate the money at a low tax rate. Apple should bite the bullet, bring the money to the U.S. and declare the mother of all dividends.

4 Rahul October 28, 2015 at 10:20 am

Interesting.

So for now it’s basically the US Government and Apple Shareholders playing a game of who blinks first.

5 Jaap October 28, 2015 at 2:49 pm

No, the European tax regulators will blink…. very likely, Apple, Starbucks and others will have to pay tax first in Europe as that is the place they should be taxed (where their subsideries are based). Cases are decided in a few days to a few weeks….. 😉

6 Sigivald October 28, 2015 at 3:38 pm

What they’re doing is having cash on hand?

Also, note that to repatriate that money to pay dividends would entail a nice big tax hit; so, yes, tax distortions.

But there’s no general unvarying principle of corporate governance that says Thou Shalt Not Ever Have Lots Of Cash; it’s useful if you do acquisitions.

7 Adrian Ratnapala October 29, 2015 at 1:18 pm

AT has just suggested an acquisition.

Apple is not likely to even want to buy Facebook or Google or Microsoft any time soon. True, they are likely to buy a lot of small tech startups; but that will not make much of a dent in their cash pile. So if they make a big acquisition, it will be in something seemingly left-field. An airline, an auto manufacturer, or why not a university.

8 Gochujang October 28, 2015 at 9:48 am

Absolutely this.

It is well understood, I think, that management plays with OPM when it does acquisitions of all kinds, and that dividends would return more to shareholders.

I think it is less well understood, but true, that Apple management in particular plays with OPM. Gaudy watches and fanciful cars are ego projects, springing more from cash reserves than available market.

To go even further, Apple is running on OPM but is missing a cult of personality it recently enjoyed. Tim Cook, by his actions and me-centered speech seems to refocus that cult, but we’ll see if that is successful, and how Apple, without jobs, and without a really big post-phone market plays out.

Dividends are the honest and responsible answer to this situation.

9 Rahul October 28, 2015 at 10:02 am

+1

What puzzles me is how come their shareholders don’t raise a stink? Does none of them want a share of this $205 Billion Dollar Windfall?

10 jorgensen October 28, 2015 at 10:08 am

To pay dividends they need to move the funds to the United States which will trigger a significant tax bite (ball park 25% of the funds brought back.)

Shareholders and management are hoping Congress will declare a tax holiday so Apple and other multinationals can bring offshore profits back to the United States at a low tax rate.

It would actually make some sense for Congress to say:
1) repatriate the funds and pay 10 or 15% tax but you must immediately disburse the funds as dividends
2) we will grant an amnesty from prosecution for tax fraud for any of the money brought back if there was a crime involved in you taking the position that the money was earned offshore in the first place.

11 Gochujang October 28, 2015 at 10:14 am

Since dividends are taxed at the recipient, and at a progressive rate, you could just do a pass through. Has that ever been proposed, free repatriation for dividends?

12 jorgensen October 28, 2015 at 11:39 am

“free repatriation for dividends”

I think that is what Apple, Google, Microsoft, Cisco etc are asking for. The last time industry got a tax holiday they had said the money would be invested in the businesses but instead the money went on management bonuses and share buybacks.

Lots of dividends would flow through to tax exempt vehicles – IRAs, 401(k) plans, pension plans, charitable and education endowments etc.

13 Sigivald October 28, 2015 at 3:39 pm

Shareholders and management are hoping Congress will declare a tax holiday so Apple and other multinationals can bring offshore profits back to the United States at a low tax rate.

What on earth makes you think anyone is hoping that?

(I mean, in the sense of actually thinking it’s plausible and hoping they’ll get a cent out of it?)

14 msgkings October 28, 2015 at 6:11 pm

@Rahul: Big shareholders like Carl Icahn actually raise a huge stink all the time, there are constant calls by him and others for Apple (and other mega-techs) to return more cash to shareholders.

15 Brian Donohue October 28, 2015 at 12:30 pm

Who could have predicted that Apple would try to maximize profits considering tax rules.? Shocking!

16 Gochujang October 28, 2015 at 12:46 pm

Oh sure, but this is a “problem” only in the sense that they both want short term stock appreciation, and not to repeat the IBM curve.

17 Tom West October 29, 2015 at 12:14 am

Wow – excellent graph! It really puts IBM’s dominance in perspective.

18 Jake October 28, 2015 at 1:31 pm

Watches and cars? Bah! Let’s ignore what the most profitable company in the world thinks is going to be good business. Let’s instead listen to the rando on the internet.

That gave really good predictions when the iPod came out.

Whatever you think about Apple not paying out dividends from its profits, it’s been doing that literally forever. If bought AAPL in the last few years expecting dividends, you haven’t been paying attention.

19 Sigivald October 28, 2015 at 3:40 pm

Yeah, that.

Anyone who bought into Apple did not do it expecting dividends; they did it expecting stock value increases.

20 msgkings October 28, 2015 at 6:13 pm

Apple pays 1.744% in regular dividends, just slightly less than the S&P average. They also buy back a ton of stock. But they still bring in more cash than they pay out that way.

21 JWatts October 28, 2015 at 6:48 pm

“Whatever you think about Apple not paying out dividends from its profits, it’s been doing that literally forever. – See more at: http://marginalrevolution.com/marginalrevolution/2015/10/apple-should-buy-a-university.html#comments

22 JWatts October 28, 2015 at 6:49 pm

I agree with msgkings, Apple actually has excellent dividends for a Tech company.

23 RustySynapses October 28, 2015 at 10:07 am

When you hold options (management), the last thing you want to do is pay dividends. You do it only grudgingly. Share repurchases, on the other hand, are great.

24 j r October 28, 2015 at 9:45 pm

The tax thing is only part of the story.

The bigger part is that technology companies don’t like to give out dividends and people who buy Apple stock are in it for the growth and not the dividends. Apple handing back money to its shareholders is a tacit admission that they don’t have any more profitable things to do with that money, which is the last thing that Apple wants to imply.

25 Norm October 29, 2015 at 11:50 am

Apple should buy a bank and go world wide with it. It has Apple Pay, it is an international company.

26 Andrew Duncan October 28, 2015 at 7:34 am

What a superb idea.

27 Rahul October 28, 2015 at 9:52 am

Every professional thinking Apple’s pile of cash should be used for a stimulus to their sector.

Why not start a hospital chain? For-profit, of course. Or a gym chain. Or driver-less car fleet. Or massive wind farms.

There’s an option aligned for everyone’s pecuniary interest.

28 Hazel Meade October 28, 2015 at 1:09 pm

Because education is something that can be efficiently delivered online. It requires no physical interaction.

Also education is largely about presenting information efficiently in an easy to process and learn way, and Apple seems to excel at user-friendly GUI design. There’s probably some crossover between designing user-friendly GUIs and designing online courses that efficiently deliver learning.

29 Gochujang October 28, 2015 at 1:32 pm

There is a vibrant economy in this area already (Coursera with 11+ million enrollments, edX with 3+ million, Udacity 1.5+ million, MiriadaX 1+ million, FutureLearn 800,000+) 2014 numbers. And of course local experimentation, above.

I think we have enough going on for something good to emerge.

30 MGordon October 28, 2015 at 7:23 pm

Lectures can be conducted without in-person physical interaction, but education is far more than just lectures. In the physical sciences for example there is no substitute for hands-on lab experiments and field testing. The kinds of assignments that have the most educational value are collaborative projects, which would be difficult to do well in almost any field without being co-located.

31 Steve Sailer October 28, 2015 at 7:36 am

As a former libertarian fellow traveler, I’m pretty depressed by the evolution of for-profit college, which has largely turned into a honey trap for dumb people entitled to government-subsidized loans.

32 Jan October 28, 2015 at 7:59 am

Yeah, I don’t think Apple would do this. It would be terrible PR due to the deservedly bad reputations for-profit colleges have.

33 Careless October 28, 2015 at 12:45 pm

You don’t think Apple would start a not-for-profit university because for-profit universities have a bad reputation?

Didn’t actually read the post, did you

34 Jan October 28, 2015 at 1:07 pm

Um, did you read the post?

Alex is saying it would basically function as a for-profit. And a company owning a university will be seen as simply a money-making endeavor by anyone with a brain.

35 Careless October 28, 2015 at 2:37 pm

Alex is saying it would basically function as a for-profit –

Uh… no, he is not saying that it would work by taking money in tuition and create profits for Apple. Or are you confused by how for-profit schools work?

36 Sigivald October 28, 2015 at 3:48 pm

And a company owning a university will be seen as simply a money-making endeavor by anyone with a brain.

How is this different in practice from notionally-not-for-profit schools?

Being incorporated as a non-profit really doesn’t change much there…

37 Jan October 28, 2015 at 8:09 pm

His whole point is that it would make money for Apple!

38 Andrew M October 28, 2015 at 8:32 am

Education is subject to winner-take-all effects. It doesn’t cost significantly more to provide an Ivy League education – in fact it might even cost less since you’re working with brighter students – but nevertheless the Ivy Leagues can charge huge fees.

The failure of private colleges is easier to fix. Firstly, the government should mandate separation of education and testing. Company A provides the education, but company B provides the tests which validate the education. Secondly, the subsidy model needs to change: instead of subsidising individual students, college A should receive the subsidy once x% of its students have managed to pass company B’s tests. This puts the onus on the school to improve its product.

Further gains could be obtained by basing the funding on relative improvement. Make the students sit tests both before and after college, and issue a subsidy of $n per grade point increase.

39 Rahul October 28, 2015 at 9:53 am

The separation of training and testing is a huge thing.

Unfortunately I don’t think it will ever happen because I think this change doesn’t really have any lobby group behind it.

40 Floccina October 28, 2015 at 11:57 am

+1

41 Swami October 28, 2015 at 2:45 pm

These are great ideas. Thanks for sharing them Andrew!

42 mavery October 28, 2015 at 9:55 am

I feel this was entirely predictable. Regardless of whether they’re getting government loans, its obvious when folks are spending 40k per year for a Communications degree at a correspondence school that they’re getting screwed. The fact that society has told people for years that the only way to get ahead is academic credentialing just confuses the issue further.

43 Rahul October 28, 2015 at 9:56 am

Agreed.

What puzzles me is why haven’t any big industries or consortia come together to found a college truly catered to producing the kind of employee they need.

Isn’t there backward integration possible with labor inputs?

44 Gochujang October 28, 2015 at 10:05 am

To some degree the MOOCs are doing this quietly, in the background. They’ve stopped talking about being the new university and started offering employment oriented certificates, in partnership: How Google and Coursera may upend the traditional college degree

45 Ricardo October 28, 2015 at 10:46 am

As you said elsewhere, aren’t we at the point in management thinking where everyone is trying to outsource every activity that isn’t part of the organization’s core competence? Why try teaching future employees when you can outsource that — for free! — to Stanford, MIT and even the state-funded IITs in India?

46 Floccina October 28, 2015 at 12:26 pm

What puzzles me is why haven’t any big industries or consortia come together to found a college truly catered to producing the kind of employee they need.

Because all the good students are going to State schools and existing not for profits.

As a former libertarian fellow traveler, I’m pretty depressed by the evolution of for-profit college, which has largely turned into a honey trap for dumb people entitled to government-subsidized loans.

It surprises me that that a high percent of the students in the for profits fail to graduate. You would think that the schools would be motivated to advance everyone to maximize income, but they have high flunk out rates. It means that the schools are really trying to provide a good signal (education). What they are doing that is bad is accepting students who are not up the task which is something that Politicians seem to be encouraging. Politicians, including President Obama, sometimes say that they want more college graduates which means starting more people in college and/or educating better (very difficult if not impossible) and/or making college easier (which is what you might expect from a profit maximizing organization).

47 Andao October 29, 2015 at 3:10 pm

https://www.kettering.edu

Formerly the general motors institute. Pretty popular in Michigan and the model is work a semester, study a semester. Presumably you’d still have a good shot at landing a GM job after graduation. Still, the big state schools in Michigan still considered much more prestigious.

48 Dude October 28, 2015 at 11:11 am

> honey trap for dumb people entitled to government-subsidized loans

Quite possibly the best one-liner on for-profit universities I’ve ever read. Thanks for this.

49 Jason Bayz October 28, 2015 at 12:48 pm

+1

Libertarians ask why if other things are more efficient when run by the private, for-profit sector education is not. The reason is that “education” is not what is being sold. The credential is. So a for-profit university would have an incentive to maximize its sale of credentials. Which is exactly what has happened.

50 Sigivald October 28, 2015 at 3:47 pm

Best summary.

51 Neil S October 28, 2015 at 2:33 pm

While I agree about the depressing evolution of for-profit colleges, I think many of the commenters downthread are ignoring the fact that open-admission not for profit colleges are almost exactly as bad. From https://nces.ed.gov/fastfacts/display.asp?id=40 the 6 year graduation rate for for-profits is 32%, for the least selective not-for-profits it is 34%.

The scam in both cases is just as bad, with young people trying to do what they are told is right and ending up with a load of debt and a worthless degree. The problem is not necessarily with for-profit colleges, but with the idea that everyone should go to college. I actually suspect that the not-for-profit colleges are worse, as many of the graduates, even from selective institutions, end up with degrees that have zero market value.

I’d love to see someone pay close attention to the not-for-profit college scam of drawing in more and more kids, who waste years of their lives to end up with a pile of debt.

52 Sigivald October 28, 2015 at 3:46 pm

“Entitled to government-subsidized loans” kinda takes the libertarian sting out of it.

Indeed, one would expect exactly the rent-seeking we’ve seen when there’s all that “free money” being shoveled out, by people who think “any degree means I win”…

53 RZ0 October 28, 2015 at 7:38 am

Stanford, Carnegie and Rockefellers used their individual fortunes to found universities, not money from the corporations they operated. You are contemplating something considerably different.

54 Axa October 28, 2015 at 8:30 am

Well, Tim Cook says he has a 785 million stash and plans to donate all of it. Is it enough? http://www.reuters.com/article/2015/03/26/us-apple-ceo-tim-cook-idUSKBN0MM2YM20150326 I don’t know if it’s comparable to the fortunes of the guys a century ago.

55 Gochujang October 28, 2015 at 10:06 am

According to Business Insider, John D. Rockefeller had an inflation adjusted $336 billion

56 enoriverbend October 28, 2015 at 10:13 am

“I don’t know if it’s comparable to the fortunes of the guys a century ago.”

Well, at Stanford, for one, the Stanfords ended up donating $40M over the first twenty years. This is over $1 billion today. I’m not sure if that figure includes the substantial real estate they gave over to the university.

The original donation was far less, but the university ran into financial troubles (starting with the 1893 panic) and Jane Stanford actually took over the administration for a while; most of that $40M was actually from Jane after Leland had died.

57 Jan October 28, 2015 at 7:42 am

Cheaper and better ROI for them to just buy lots politicians.

58 The Engineer October 28, 2015 at 7:47 am

They would never get accredited, and thus no one would go there.

59 rayward October 28, 2015 at 7:50 am

RZO makes a very good point. It’s not clear why Tabarrok is promoting this. Is it to shelter part of Apple’s income in the tax exempt college? That’s not necessary, as Apple has already learned how to shelter much of it’s income with a tax scheme that is successful if ludicrous. Is it to do good? It’s not Apple’s role to do good, it’s Apple’s role to make profits for its shareholders; if the shareholders wish to do good, let them fund a college (which is RZO’s point). What Tabarrok is doing is conflating the mission of a for profit corporation and the mission of a not for profit college. One can guess where he might get that idea.

60 Jim October 28, 2015 at 9:58 am

Did you not read the post?

“Apple is a for-profit corporation not a charity but there are plenty of ways to make money from a non-profit university….”

61 NOPASF October 28, 2015 at 7:53 am

A better analogy might be Brigham Young University?

The Mormon Church asks its members to pay 10 percent of their income to the church as tithes. By subsidizing members’ education, they increase the earning potential over the lifetime and also subsequent revenue.

It also fosters an environment that encourages college age members to become lifelong committed members and find a spouse that shares the same values.

62 Ironman October 28, 2015 at 7:54 am

That kind of business model is ore difficult to successfully execute than you think.

63 Ironman October 28, 2015 at 7:56 am

Referring to my previous comment, that should be more difficult. And before you ask, why no, I haven’t had any coffee yet this morning….

64 Ted Craig October 28, 2015 at 8:00 am

Why do people always want to spend Apple’s cash? By the way, I love how Tabarrok feels the best use of that money is to benefit his field.

65 Rahul October 28, 2015 at 9:58 am

People always want to spend other people’s cash.

66 Eustis October 28, 2015 at 10:19 am

yup — what exactly is now stopping Alex and his employer from “experiment{ing} with new ways of organizing degrees and departments and certifying knowledge.” ?

And there are over 2500 other universities & colleges in the U.S. that could run with this idea. Many are well endowed $$$.

Money and opportunity ain’t the problem — the problem is calcified bureaucratic educational institutions, dominance of ancient pedagogic customs and superstitions, cumbersome classroom rituals, and massive government interference with education at all levels.

Apple & Microsoft look so good and rich because their computer field was new and unburdened by bureaucracy & government. There’s nothing so unique about Apple — it was just able to develop free of institutional and government burdens. Alex is dreamily wishing for a White Knight (Apple) to magically fulfill his education hopes.

67 Careless October 28, 2015 at 1:07 pm

I think in this case it’s clear that Apple doesn’t see any good ways to spend (much of) their cash, so why not toss out suggestions?

68 Shane M October 28, 2015 at 8:25 pm

The shareholders don’t view it as Apple’s cash, but as shareholder cash.

69 rayward October 28, 2015 at 8:03 am

I will acknowledge that Tabarrok’s reference to Liberty University is appropriate. Many of the elite colleges today had their origins as religiously affiliated colleges (Christian). I’m keenly aware of it because my ancestors (great uncles) attended the most elite college for free because their father (my great grandfather) was a minister. Not exactly legacy admissions but much the same. Also, I regularly watch i-tunes university videos, including Professor Shiller’s finance class and Professor Martin’s new testament class, and have been enriched by the experience. The videos are simply the regular classes tatught by them at Yale, so Apple didn’t do much besides making them available on its website. Just the same, Apple deserves credit for it. If Apple purchased a not for profit college (even Apple can’t afford Yale with its enormous endowment), would Apple promote itself (which is its mission as a for profit corporation) or would Apple promote education (the mission of a not for profit college)?

70 Professor Mojo October 28, 2015 at 8:25 am

Apple should not buy a school. Schools aren’t where the money is. The money is in publishing and in learning management systems, particularly as players such as Pearson move to merge the two. Blackboard is coming back on the market, isn’t it?

71 Hazel Meade October 28, 2015 at 1:20 pm

Good point. What do they need a physical campus for? Much less the current administrative structure and staff of an existing institution.

They would be much better off building a university from the ground up, that doesn’t have obsolete institutions like tenure. And they don’t need researchers either, it would just be focused on teaching, so they would hire totally different people. Apple already has it’s own R&D staff.

72 Axa October 28, 2015 at 8:37 am

Well, organizations are not people. Tim Cook’s personal fortune is around 700 million and Steve Jobs had approx 7 billion in stock. Why look at 205 billion that is stockholder’s money?

73 AndrewL October 28, 2015 at 8:41 am

Why would they want to buy one? and all the baggage that it comes with? Why don’t they just build one from the ground up? Who wouldn’t want to go to Apple University?

You wouldn’t even have to poach existing university professors, they would either come begging to teach at Apple U. or just get some department heads to lecture part time.

74 Careless October 28, 2015 at 1:10 pm

Why are you convinced they would immediately have top-tier reputation, even before having any professors or students?

75 zbicyclist October 28, 2015 at 9:11 am

This would be a successful business in one set of areas (hardware and software) assuming they could do a better job in an unrelated area (education).

The history of conglomerates suggests this is not easy to do. And they’d be competing against tax-advantaged and state-subsidized institutions.

76 whatsthat October 28, 2015 at 9:12 am

Surface >>> Ipad

77 Ryan October 28, 2015 at 9:12 am

I thought professors sitting on corporate boards would increase profits.

78 derek October 28, 2015 at 9:14 am

The problem would be that almost everyone there would be an insufferable Apple user. Imagine them coming up with a solution to the consent nonsense. An easy to use app that makes all the decisions for you.

79 Nick October 28, 2015 at 9:16 am

“Aside from the tax breaks and other deductions, Apple University would be a proving ground for educational technologies that would be sold to every other university in the world. New textbooks built for the iPad and its successors would greatly increase the demand for iPads. Apple-designed courses built using online technologies, a.i. tutors, and virtual reality experimental worlds could become the leading form of education worldwide. Big data analytics from Apple University textbooks and courses would lead to new and better ways of teaching.”

**Good morning, class.**

**Good morning, Apple Genius Smith.**

**All rise for our morning pledge of allegiance.**

**I pledge allegiance to the Apple, of the United Corporations of America. And to the Company, for which it stands, one corporation, indivisible, with discounts and iPods for all.**

—-

Seriously, though, are we not worried about the incentives Apple would have not to provide information, but propaganda for their company? To provide only information insofar as it is needed for a new potential employee opening? Why learn Civics and Government when you can learn about how great Apple is to work for?

80 JasonL October 28, 2015 at 9:31 am

It is not clear to me that there is a gap to be filled by a large private university. The gap is in skills attainment that connects to employment prospects in a way that doesn’t require an expensive 4 year degree. It is also not clear to me that Apple would have any idea how to teach people anything.

81 Rahul October 28, 2015 at 10:00 am

+1 It’s like Shell or BP diversifying into Organic Food.

Management thinking seems to run on a 10 year cycle that oscillates between diversification and focusing on your core competence.

82 Abhijit Nagaraj October 28, 2015 at 9:51 am

Wouldn’t this model (for-profit owning a non-profit school) violate IRS rules on private benefit and private inurement?

83 Jeff R. October 28, 2015 at 9:51 am

Speaking of Andrew Carnegie, the university he founded has attracted satellite offices of Google, Apple, Intel, and others hoping to commercialize some of the technology that’s been developed there:

http://ridc.org/view-property/cic/

That’s a point in its favor…build your own university, and you don’t have to compete with anyone else for the technology it develops.

On the other hand, why is running a whole university, with a drama department, sports teams, ethnic studies hucksters, inter-fraternity councils, etc, worth Apple’s time and money? It’s probably easier and cheaper to build an engineering+business college and avoid all that other crap.

84 Hadur October 28, 2015 at 10:21 am

Apple has had giant cash reserves forever, it’s a long-standing company policy, not something Tim Cook came up with in the last few years. They had massive cash reserves even in the 1990’s when they were in most people’s corporate death pool…though then it was only in the single digit billions.

85 DS October 28, 2015 at 10:22 am
86 Ricardo October 28, 2015 at 10:27 am

Would Tabarrok leave his tenured position at GMU to teach full-time at Apple U instead? Would Tabarrok advise any GMU graduate students to turn down tenure-track positions at state universities for a position at Apple U, instead?

If not, there is potentially a hint here in why for-profit colleges don’t take off. For profit ventures are supposed to be profitable within a few years and it seems genuinely difficult to build and sustain a world-class university when facing the pressure to turn a quick profit. It is a market for lemons where universities will feel pressure to accept marginally qualified students and oversell the benefits of taking courses from their marginally qualified instructors. I don’t know quite why this is but the U.S. model of having non-profit or state-run universities, building a sense of loyalty among their students and then hitting them up for fat contributions years later does seem to produce amazing results.

87 Dulimbai October 28, 2015 at 10:27 am

After all this time Apple understands that a college education is useless, if not outright harmful. What they should do is start a national program to track high IQ programmers at 12 years old, and then hire them for cheap. But that’s illegal.

88 Cooper October 28, 2015 at 12:53 pm

Big state colleges do this for sports stars. The various major league sports teams do it too.

It might not be an official policy but it certainly exists on some level.

89 Dulimbai October 28, 2015 at 1:49 pm

It would be interesting to try this on black kids. So Cook comes out and says they’ve found a way to identify black IT geniuses, and they want to run special schools in-house to train them into Apple-awesomeness.

I can’t think of why the NYT could protest. But then they’d think about the same thing with white children, and…

90 Albigensian October 28, 2015 at 10:28 am

I could see Google doing this long before Apple considered it.

Apple is such a notoriously secretive company, but a university is open; thus, there would be a huge culture clash, to the point where little about the university would or could be “Apple” other than the brand name.

91 whatsthat October 28, 2015 at 10:36 am

Also expect more education “patents”.

92 Dave Barnes October 28, 2015 at 10:41 am
93 Ron October 28, 2015 at 11:25 am

Why buy a university, as opposed to starting one from scratch? What do you get? Apple has a better brand than any university that would sell itself. The alumni will probably not want to donate as much. The physical plant would probably be a net negative (archaic, etc.) And you can get professors.

94 Floccina October 28, 2015 at 11:44 am

Nah they should give bigger dividends to investors.

95 JW October 28, 2015 at 11:57 am

Liberty University is a joke.

96 Dan Weber October 28, 2015 at 3:10 pm

I’ve worked with a number of graduates from there. High conscientiousness and creativity. The age of the earth never came up in my line of work.

97 Art Deco October 28, 2015 at 6:13 pm

The status games that leftists play seldom rise to the level of amusing.

98 prior_approval October 28, 2015 at 12:08 pm

‘Liberty University doesn’t get accolades’

Yep, creationism has a hard time getting taken seriously, much less lauded, in academia. Even at GMU, one assumes.

99 Art Deco October 28, 2015 at 6:24 pm

In addition to being a continual snit over being fired for cause 30 years ago, you know nothing. Liberty emphasizes occupational programs, like most other schools.

It admits about 20% of its applicants, it’s four year completion rate, at 29%, compares favorably to the median of a number of state college networks (see Maryland’s, New York’s and Ohio’s), it is reasonably priced for a private institution at $22,000 per annum (sticker in line with out-of-state tuition for Virginia state schools), and it’s a reasonable wager seldom produces graceless individuals who fancy themselves sophisticated because they live around krauts.

100 Joe-fact October 28, 2015 at 8:22 pm

Liberty is one of the worst student debt generators in the country. They are right there with Phoenix and other for profit and online education firms. They are a wolf in sheep’s clothing. Other institutions routinely deny their credits for transferring students.

It is not the great savior Mr.Fallwell would have you believe.

101 Art Deco October 28, 2015 at 10:04 pm

Liberty is one of the worst student debt generators in the country.

Pretty neat trick given that their tuition is dirt cheap for a private institution.

102 Ricardo October 28, 2015 at 10:40 pm

Maybe, but it’s true. It is number 12 on Brookings’ list. The only traditional, non-profit university that has them beat in terms of student debt as of 2014 is NYU.

103 Art Deco October 29, 2015 at 9:55 am

That should tell you something about the Brookings list and about Brookings.

104 msgkings October 29, 2015 at 11:58 am

Yes, the something it tells you is that Brookings is accurately reporting the fact that Liberty creates a lot of debt for its students.

105 John Mansfield October 28, 2015 at 12:11 pm

Well, even with a lousy football team Apple U. would have a bigger, more loyal group of supporters who never went to the school than even Notre Dame or Alabama.

But financially supporting education, doesn’t seem to be an interest of Apple. Last year Apple announced that it would give out a total of $20,000 in scholarship money to two recipients. (href=”http://appleinsider.com/articles/14/09/02/apple-to-give-20k-in-college-scholarships-as-part-of-diversity-initiative”>link) For comparison, back in the ’80s and ’90s, the Golden Nugget casino in Las Vegas gave out $55 million to 554 students over a 17 year span. (link) As a high school junior I was present at awards night when Elaine Wynn came on campus to bestow this gift to a member of the Eldorado High class of ’83. The next year Steve Wynn was there to do the honors. Not really the Steve Jobs way. Universities are supposed to give Apple money, not the other way around. That was one of the core principles of NeXT.

106 John Mansfield October 28, 2015 at 12:13 pm

Sorry about the bad linking. Repeating:

Well, even with a lousy football team Apple U. would have a bigger, more loyal group of supporters who never went to the school than even Notre Dame or Alabama.

But financially supporting education, doesn’t seem to be an interest of Apple. Last year Apple announced that it would give out a total of $20,000 in scholarship money to two recipients. (link) For comparison, back in the ’80s and ’90s, the Golden Nugget casino in Las Vegas gave out $55 million to 554 students over a 17 year span. (link) As a high school junior I was present at awards night when Elaine Wynn came on campus to bestow this gift to a member of the Eldorado High class of ’83. The next year Steve Wynn was there to do the honors. Not really the Steve Jobs way. Universities are supposed to give Apple money, not the other way around. That was one of the core principles of NeXT.

107 Eric October 28, 2015 at 12:18 pm

They should buy a professional sports franchise or 10. Lots of synergies between tech, media, and sports. Hell, why not buy the entire MLS and flood it with EPL levels of remuneration and then charge ESPN and the BBC billions in broadcast rights and have the players all wear Apple iPhone, Apple TV, Apple Car jerseys?

108 Alain October 28, 2015 at 12:21 pm

I’m not sure, but I think that this was a marvelous troll by Alex. He proposed some silly idea, he floated a number of ‘social’ benefits and then offered up that it should be enacted with OPM. Amazingly, many of our tried and true liberal commenters were rallying against the use of OPM and noting that they money should be returned to the rightful owners, the shareholders.

Well played Alex!

109 Art Deco October 28, 2015 at 12:28 pm

Stanford, Carnegie, and Rockefeller used their industrial-age fortunes to build some of our best universities.

“Rockefeller University” is a research center in Manhattan enfranchised by the New York State Board of Regents to award the occasional PhD. It’s student body consists of fewer than 200 people. It bears very little resemblance to a university.

110 Brian Donohue October 28, 2015 at 12:34 pm

University of Chicago?

111 zbicyclist October 28, 2015 at 1:44 pm

Chicago is almost certainly what Alex had in mind. From their Wikipedia entry:

“The University of Chicago was created and incorporated as a coeducational, secular institution in 1890 by the American Baptist Education Society and a donation from oil magnate and philanthropist John D. Rockefeller on land donated by Marshall Field….Money that had been raised during the 1920s and financial backing from the Rockefeller Foundation helped the school to survive through the Great Depression.”

112 So Much For Subtlety October 28, 2015 at 1:36 pm

Beijing University and Tsinghua also bear little resemblance to a university. But Rockerfeller gave them a lot of money.

113 enoriverbend October 28, 2015 at 1:49 pm

Art Deco, I believe the reference was to the University of Chicago.

John D. gave a lot of money to several different universities, not just to the research center you mentions.

Aside from the University of Chicago: Harvard, Johns Hopkins, University of Sao Paulo, Teachers College Columbia University, Washington U., Vanderbilt, Rochester, Yale, Meharry….

114 Art Deco October 28, 2015 at 5:57 pm

Don’t think he was a donor to the University of Rochester of enough consequence that you see his name on anything. George Eastman was their big patron.

115 enoriverbend October 29, 2015 at 5:07 pm

https://www.urmc.rochester.edu/dentistry/about/history.aspx

$5M in 1920, about $62M in 2015 dollars. There may be other contributions.

116 Bill October 28, 2015 at 12:37 pm

I was going to suggest

That the Koch Brothers purchase a University, or its Econ Department,

But

They already have.

117 Greg Vutrano October 28, 2015 at 12:38 pm

Why don’t they bail out Greece as a marketing tactic? They could directly influence the lives of 11 million people and be held as heroes, not to mention help turn an economy around that has shrunk 25%. Maybe they could even get a few islands named for them.

118 Moreno Klaus October 28, 2015 at 6:11 pm

Why not just buy Syria/Iraq from ISIS and install new headquarters there ??? 😉

119 Hazel Meade October 28, 2015 at 1:12 pm

I think this is a brilliant idea. Although I would much rather see Google do it than Apple. I have this picture in my head of an Apple U full of cultish Mac People, living in identical cubes like some dystopian sci-fi novel. By comparison, Android U would be full of anarchists living in messy self-constructed shanty-towns.

120 Robert October 28, 2015 at 1:23 pm

How about we let corporations repatriate cash from overseas tax free if they use the money to pay off student loans of their employees?

For those without student loans, they can contribute to the employees’ 401k plans no limit.

121 Thomas October 28, 2015 at 2:33 pm

Professional rent-seeker urges wealthy organization to establish large rent-seeking institution……

122 The Original D October 28, 2015 at 2:48 pm

Maybe they can partner with Khan Academy like Pixar – https://www.khanacademy.org/partner-content/pixar/start

123 Rich Berger October 28, 2015 at 2:53 pm

I thought at first that this would be a good idea, but then I realized that any Apple U would be excruciatingly PC.

124 Swami October 28, 2015 at 2:58 pm

I love this idea, whether done by Apple, Google, or whomever.

For profit universities are not the only dysfunctional institution. So are traditional universities, with their giant quads overlooking the surf of La Jolla, their football teams, their frats, their government subsidies of rate hikes, their three hundred dollar text books, their lack of verifiable knowledge, their ten million dollar library nobody needs, their bloated administrative staffs of multicultural grievance peddlers, their justice warriors and trigger warnings and sociology departments with open hunting season on anyone with a diversity of opinion or politics.

They have both become massive rent seeking dinosaurs.

We need a new paradigm, and it is simply a matter of time until someone creates it. If I had a billion dollars I would do it, and I would come out of retirement to help design it (assuming it was still overlooking the surf).

125 Dmitri Helios October 28, 2015 at 4:53 pm

You are very eloquent and precise in your defense of sanity, have you considered writing an essay or a book?

Just kidding. Tool.

126 Jason Bayz October 28, 2015 at 3:28 pm

I hear a lot about how technology improves education, just thinking now about how it makes it worse. The internet makes it very easy for us(I’m a student) to cheat on homework, with the result that lots of us sail through classes with only a vague idea of what it is we’re supposed to be learning.

127 Mars Colon Cancer in 5 years October 28, 2015 at 3:54 pm

Oh, oh, I know! They should build a university from the ground up on Mars!

Now wouldn’t that be a great PR thing to do?

128 Ian Rhett October 28, 2015 at 4:08 pm

Apple IS the University of its age. When I was hired onto Apple’s Interactive Music Group in 1995, I had just finished project managing one of the biggest internet events of the summer of 1995, wiring 15 nightclubs up to the internet and delivering live streaming content from most of them. I had an abundance of choice and opportunity, and my hiring manager at Apple closed me with this thought: “Working at Apple is like going to business school. You work here for 2-3 years with the smartest technologists, and you build relationships that last a lifetime because it’s such a unique place to work and learn.” Or something like that.

The University system we know today was born of a time when academic study and research was one of the leading sources of cultural innovation. That’s not so true anymore. It’s also true that modern post-secondary education is nothing if not a big business. The lines between industry and the academy are blurred, at best.

This is why I think Apple (and Google and Space X and Genentech, etc.) ARE the modern day University.

129 Ricardo October 29, 2015 at 4:29 am

Yet Apple depends heavily on the products of research that happened in universities or in governments. Multi-touch technology came mostly out of university research centers. GPS, of course, was developed by the U.S. government. Historically there have been firms such as IBM and Bell Labs that had top-notch scientists doing path-breaking work. Apple doesn’t seem to be the least bit interested in imitating this model considering that its R&D spending is quite small compared to annual revenue.

130 Nigel October 28, 2015 at 4:22 pm

Don’t you need to declare an interest ?

🙂

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133 curmudgeonly troll October 28, 2015 at 6:12 pm

There are a number of awesome MOOCs that don’t get leveraged for apparent lack of resources.

Andrew Ng did an increadible Machine Learning class. You can still audit it, but there is no way to take it with the graded problem sets, TA support, and a community working through it together.

There is also no canonical centralized directory of MOOCs where you can find the best of the best. I was trying to refresh/relearn linear algebra and stumbled on http://www.ulaff.net/ by Robert van de Geijn and Maggie Myers at UT-Austin …also phenomenal, also not offered right now… mentioned to others who were in the same boat and they had never heard of it despite looking.

I think universities don’t seem set up and incentivized to maintain these resources. Instead of starting an university, Apple should build or buy a MOOC platform, integrate it into all their devices, fund a centralized directory, and invent a proper reputation manger for both courses and students.

That would be the university of the future.

134 curmudgeonly troll October 28, 2015 at 6:16 pm

sorry for typos… TL; DR

– fund the best of the best MOOCs properly
– proper discovery system for best in class MOOCs
– proper reputation management w/verification that you did the work via the fingerprint and camera etc., transcript recordkeeping and eventual proper degree programs

135 Tom October 29, 2015 at 5:29 am

Reputation management? Verification via finger prints? While it may be suitable for low-grade vocational or engineering schools, your proposal doesn’t sound very Ivy League, my dear fellow.

136 Ryan October 28, 2015 at 6:26 pm
137 Tom October 29, 2015 at 5:32 am

Let us trust but verify that their school is properly diverse. I hear good things about East Palo Alto.

138 msgkings October 29, 2015 at 12:00 pm

Brown people suck, amirite?

139 GRA November 22, 2015 at 11:40 pm

Are you a child? Unless Tom has a history of dismissing ethnic diversity – just because – your comment is laughable and shows your pathetic, defensive and infantile maturation as a person.

140 JK Brown October 28, 2015 at 7:33 pm

You do realize the difference between a stockholder-owned corporation and individuals who used their personal fortunes to found universities? Exactly how would this be an appropriate use in the interest of of the owners and provide a decent return on there capital?

141 Peter October 29, 2015 at 8:42 am

It would help if you actually read the post.

142 Dave October 28, 2015 at 7:43 pm

If the company still follows the footsteps of its founder, then it won’t happen. Steve Jobs looked at philanthropy as a waste of time and a weakness. People need to stop glorifying this company.

143 Art Deco October 28, 2015 at 10:08 pm

Steve Jobs looked at philanthropy as a waste of time and a weakness.

He went to considerable lengths to not give one thin dime to Chrisann Brennan, including subornation of perjury. Another person putatively abandoned on the roadside was his sister Patty and her son. Livin’ the Ayn Rand life.

144 Tom October 29, 2015 at 5:34 am

Philanthropy is, as usual, better done by the company owners than by company bureaucrats.

145 Tony October 29, 2015 at 12:08 am

So you think that a company that makes its money off of Chinese slave labour should spend it’s money on universities to educate its primary consumers. You are the definition of brainwashed. They could.. You know…. Spend the money making sure these people are paid fairly..

146 Tom October 29, 2015 at 5:22 am

This episode writes itself.

147 Tom October 29, 2015 at 5:51 am

Fantastic idea. But should Apple U be located in Shanghai or Mumbai? Or maybe both?

148 John October 29, 2015 at 9:21 am

They could easily take what they are doing with the Doctoral cohort at Lamar University and transform the university so every degree and every course is taught using Challenge Based Learning (https://challengebasedlearning.org/pages/about-cbl). It really could be an awesome way to revolutionize higher education, and they have the Apple Distinguished Educator clan with Higher Ed members who I am sure would flock to be able to teach at the Apple University. Here’s the info on the Doctorate at Lamar that is using Challenge Based Learning for every class: http://www.lamar.edu/apple-distinguished-educator/_files/documents/ADE%20Cohort%20Flyer%202015.pdf

149 Joel Emmett October 29, 2015 at 11:58 am

No, they shouldn’t buy one. They should reinvent one. Preferably one that isn’t dependent upon 13th century notions of what education should entail.

150 Carolyn Tabarrok October 29, 2015 at 7:11 pm

Whether or not Alex is being a ” troll” or supporting his own career by having more universities you must admit it touched a nerve. I can’t remember the last subject raise such opinions and varied ideas. Incidetntlly I think Apple should fund a technical school , not a university

151 Master Chief October 31, 2015 at 2:32 am

Apple should buy a university? Great idea! They should buy 10 or more of them to indoctrinate as many young people as they can into the Apple Cult. They will worship everything Apple until they die.

152 Brett Champion November 2, 2015 at 8:02 pm

One way of making a university pay would be for Apple to enter into labor contracts with their professors that any patents/businesses that are developed as a direct result of funding received for “university” research would partly be the property of Apple, (say, 25%) and that Apple would have the right of first refusal if the other party to the agreement sought to sell his or her interest in the patent/business.

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