Via Greg Mankiw's rave, I see David Ignatius has column in the Washington Post talking about the global power of American Universities:

America's great universities are in fact becoming global. They are the brand names for excellence -- drawing in the brightest students and faculty and giving them unparalleled opportunities. This is where the openness and freewheeling diversity of American life provide us a huge advantage over tighter, more homogeneous cultures. We give people the freedom to think and create -- and prosper from those activities -- in ways that no other country can match.

This "education power" may be the best long-term hope for dealing with U.S. troubles abroad. Global polls show that after the Iraq debacle, the rest of the world mistrusts America and its values. But there is one striking exception to this anti-Americanism, and that is education. American-style universities, colleges and schools are sprouting up around the world....

What worries... university presidents is that at a time when the world's best and brightest are still hungry for an American education, U.S. immigration regulations are making it too hard for students to come here. That's shooting ourselves in the foot.

Pentagon generals are always bragging about their "smart bombs," which sometimes go wide of the target. American education is a smart bomb that actually works. When we think about the foreign outreach efforts by these university presidents and dozens of others, we should recognize that they are a national security asset -- making the world safer, as well as wiser.

Since the end of World War II, the United States has been recognized as the world leader in higher education. It has more colleges and universities, enrolls and graduates more students, and spends more on advanced education and research than any other nation. Each year, more than half a million foreigners come to the United States to study. A widely cited article written by researchers at Shanghai Jiao Tong University that looked at the academic ranking of universities worldwide based on faculty quality and research output found that more than half of the top 100 universities in the world -- and 17 of the top 20 -- were in the United States.

It would also seem that higher education is a market ripe for globalization and that U.S. universities -- by right of their acknowledged achievements, outstanding reputations, and considerable advantages in size and wealth -- are predestined to take on the world in the way that Boeing, IBM, Intel, and Microsoft have done within their respective industries. But as the president of a U.S. university that has operated one campus in China for two decades and another campus in Italy for more than half a century, I can say that consolidating U.S. dominance in international education will not be as easy or as likely as it seems....

The loosening of the affiliation between faculty and universities is an inevitable consequence of the globalization of knowledge. In the quantum physics model, faculty obey a kind of uncertainty principle: you may know where a professor is at any given time or you may know his institutional affiliation. But the more you try to ascertain the former, the less sure you may be about the latter, and vice versa. This phenomenon prompted the former president of Boston University, John Silber, to actually propose taking roll call to see whether faculty members were on campus. But such a measure would go against the grain of how knowledge is generated and diffused in today's information-sharing environment, and Silber's proposal unsurprisingly has come to nothing.

One consequence of these changes is that the relationship between faculty and universities has become more and more one-sided. Tenure provides a lifetime, no-cut contract for faculty. But professors' and researchers' allegiance is linked to their research, and they have no requirement to stay until retirement with the university that granted them tenure. At the same time, faculty whose field of study becomes obsolete or is no longer within the primary purview of the university's mission cannot be removed. This is a potential Achilles' heel for world-class universities bent on remaining relevant in an environment that places a premium on research and development and evolves at a rapid pace....

Drucker, Friedman, and others may have observed that the power of the nation-state has withered, but by no means has it disappeared. Universities and the nations they call home exist in an extremely close and elaborately constructed symbiosis. Every nation in one way or another makes significant financial contributions to its resident universities and demands considerable returns in exchange -- both in numbers of qualified graduates and in terms of the economic benefits that the education and research carried out by the universities provide. Also, credentialing -- always a vitally important part of the educational process -- is exclusively defined and controlled by the host nation, and it would behoove the soothsayers to remember that few nations are willing to adopt a laissez-faire attitude toward the teaching, beliefs, and activities on their campuses.

Finally, as is so often the case, the advent of the Global U really comes down to a question of money. Plato would not have had his Academy but for the generosity of friends who helped him buy the land it was built on. It was supported, according to a medieval account, by rich men who "from time to time bequeathed in their wills, to the members of the school, the means of living a life of philosophic leisure." That model of the university survives to this day. The only thing that may have changed is the question of degree. Ancient and medieval universities were expensive hobbies of the rich and the royal; today's modern research universities are several orders of magnitude more costly to run and sustain. Virtually every great university today depends on government funding, student tuitions (each of which covers only a portion of the cost of an education), alumni support, and the outstanding generosity of philanthropists to make ends meet. Even so, financing is always a struggle, and the price of a university education in the United States has marched determinedly ahead of the rate of inflation for decades now. To be successful -- and even to stay in business -- a global university would somehow have to garner consistent and dependable financial support from many different nations simultaneously.