Academia is Business!

Academia is business. It's not your average American business. But more like an average Soviet business. It's big. It's usually state owned (or controlled). It's oligopolistic: schools use accreditation, strict licensing requirements for employees, etc. to keep others out the industry. Nevertheless, its business.

You, as a PhD student, is an employee of that business. Obviously, because it's a very inefficient business (mainly because it operates in the absence of free market) it cannot pay a PhD student what a personal of his or her qualifications would demand in the real world. So what is school's marketing strategy to attract PhD students?

First, academia creates this exclusivity aura around PhD. Their marketing message is that having a PhD is like having a Rolls-Royce. It's a sign of exclusivity. The reality is that you don't really need a Rolls-Royce. Hey, if Warren Buffet can get around in a Lincoln, so does everyone else. Pragmatically, the only reason to have a Rolls-Royce is to impress someone, to have that feeling of exclusivity. Similarly, the only reason to have a PhD is to have the privilege to be a professor.

Academia also promises you "eternal life" of a tenure professor. This will mean high pay for little work until you die. The trick here is that this offer is as alluring as a lottery prize. Very valuable, yet you are not likely to get it.

Very often this marketing message doesn't work well and schools have problems attracting PhD students. In this case, there's another source of PhD students: international students. For an international student PhD can be a valuable platform for immigration. Also they don't sacrifice as much financially. In countries like India, China, or Russia, 20,000K per year is really a salary of young professional. That's why there are so many international students in U.S. PhD programs. However, as the standard of living is rising in BRIC countries, there will be a dry-out in the stream of international PhD students (I think there are already signs of the dry-out).