Governments love universities that make a niche for themselves.  “How delightful“, governments say.  “Oh, we’re so proud of you for not following the herd and trying to be just another big multi-versity.  You go, girl”.

They say all of this, of course, until it comes time to actually fund them, at which point governments effectively flip small, niche universities the bird.  In practice, governments behave as though they hate small universities with a passion.

There are two separate problems here.  The first has to do with the difficulties governments have with “small”.  Funding formulas tend to push institutions towards “average” costs.  But since most universities in Canada are big, “average” costs usually means the costs that large institutions with major economies of scale can achieve.  Small universities have to survive on the same amount, but without the economies of scale.

At one level, maybe that’s OK.  Smaller institutions probably do less research, and because of that they can pay their staff somewhat less.  And maybe there’s an argument to be made that it’s more important to run higher education systems efficiently than to have well-funded small institutions available to those students who would thrive in them.  But then why not let them charge more for their services?  But of course, no government will go that extra simple step.

The second problem has to do with niches.  These sound great, until you realize that niches, by definition, are unstable.  Change just one or two external parameters and suddenly a species can no longer exist .  So, all those institutions that bet heavily on education over the last decade, with the encouragement of lots of government funding?  Now they’re getting hammered by governments that no longer think their niche is worth funding (Law is in a similar situation, different only in that it was privately, rather than publicly, funded).

Now, imagine you’ve been trying to be both a small university and a niche university over the last few years.  The government won’t pay properly for your non-niche programs, and suddenly decides it dislikes the niche you’ve chosen (or, alternatively, the market for that niche suddenly disappears).  You’re screwed, basically.

This is why most small universities become medium or even large universities: in our system, size = more secure income streams.  Utilitarians might say “so what – what’s wrong with scale?”  But the problem for most of these institutions is that their Unique Value Proposition is being small.  Small doesn’t scale.  When you force these institutions to grow, there’s a real danger that you force them to be something they were never intended to be.  And that’s a loss of diversity to the whole system.

What’s really weird is that after all this, governments still wonder why there’s such skepticism about differentiation.  But on that, more tomorrow.