Professor Scott seems to be attributing this perceived loss of public responsibility to the need for not-for-profit universities to compete with for-profit institutions. However, universities have been competing with each other, and with other for-profit educational and research organizations, for hundreds of years.
Universities can't avoid being "entrepreneurial", as they are in the business of organizing and operating educational and research activities. Unless Professor Scott is proposing that education and research should only be carried out by independently wealthy individuals, then someone, somehow has to pay for these activities. Education and research can be paid for by the state, by public donations, by students, by licensing intellectual property, or more likely, by a mix of these. Someone, somehow has to decide which institutions get how much money. This can be decided by fiat, through some rule based process (by a bureaucracy), through market forces, or more likely a mix of these.
If Professor Scott doesn't like the way his university is run, then as a professor he has the opportunity to seek to have his institution change its ways. A university with less bureaucracy, an emphasis on education for broad social benefit and long term society benefit certainly sounds attractive. Perhaps Professor Scott needs to look to what other institutions, in other countries are doing. He will find there are universities which look to long term social benefit and try to minimize bureaucracy.
UCL is contributing to new and interesting educational initiatives. One of these is UCL Australia, which shares a building in Adelaide with Carnegie Mellon University Australia and Torrens University Australia (part of Laureate International Universities). Australian rules for the registration of universities makes it difficult to establish a flexible on-line institution. UCL, CMU and Laureate appear to have found a way through these regulations, which will hopefully be to the benefit of Australian higher education.
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