I think at this point in the history of the American academy, folks in the liberal arts might benefit from old-school privatization. I don't mean the neo-liberal kind, where you replace state funding with funding from multi-national corporations who fund research that they think will be profitable for them, but the kind embodied in the old German word Privatdozent (I recognize that is pretty low down in the old academic totem pole, but that's just a sign of where the academy is today).
What if liberal arts professors ran their own classes and "bid" to have them fulfill requirements in the course catalog? In my current position, I make about $100-200 a student a course. When I taught adjunct at an Ivy League school it was somewhere nearer to $250 a student a course. But students at my current institution only pay about $1000 a course (so I make a little over 10% of what they pay) whereas they pay a hell of lot more than that at the Ivies (let's lowball it at $6000 which would mean I was making less than 5% of the tuition take). If folks with tenure calculated their rate, it would be better, but adjuncts and T.A.'s would be even worse off.
I wager that I could put together my own support and bid on a license and still do better. If departments banded together (putting together faculties that cover needed courses, replacing a competitive approach with a collaborative one, getting health insurance, providing a at certain degree of security/stability, negotiating a package license with universities), they could do better still. In fact,when departments are functional, this is essentially what they do. Instead, we in the "service" departments teach lots of classes, put lots of asses in lots of seats, and get paid a fraction of what professors in other departments make. But we're still told that we need to trim back, because we aren't bringing in big research dollars.
It's true, we're not, but I'd wager that we're bringing in more than enough to cover ourselves. What we can't cover is huge overhead, much of which just so happens to be eaten up by administrative salaries. For the record, administrators don't teach too many classes (that's not their job --- I know). Originally they were hired to "administer" the business end of teaching so that could teachers could, well, teach. Now, they run teaching as a business. Faculty are their employees, and whether they support themselves or not is less important than whether they are operating as cheaply as possible. Now, to their credit, since most universities are not-for-profit, administrators only make inflated salaries, and not obscene salaries. So they have to do what people at any non-profit do.
Spend the money on the raison-d'etre of the institution!
Haha, I'm just kidding. They do what any non-profit does. Spend it on crap and perks for themselves that nobody really needs!
If teacher's can't keep up the tremendous amount of capital it takes administrations to run themselves comfortably, perhaps they should declare their independence.
That, or the guillotine.