Generally, I have no beef with his argument. He makes a number of important points regarding the salary of 'entry-level' professors (also generally known as assistant professors) and the percentage of universities' budget devoted to professors. However, he does make one statement that irked me a bit.
If big universities spent half as much time and sustained effort trying to improve undergraduate teaching as they do searching for more research money, they, the students and the country might be better off.I think that larger universities do tend to take their undergrads for granted, there is a sense of 'you will come regardless of how we treat you' that pervades the university, but its not so strong that it repels potential students. However, I don't believe that improving undergraduate teaching is as easy as just spending more money or time on it.
The reason is because undergraduate education has changed over the last generation and the expectations now are far different than they used to be. In the past, university education was seen as something of a luxury, today it is seen as practically an extension of high school. Almost everyone today who graduates from high school goes on to get some form of higher education, usually university.
Figure 1: Percentage of Canadians over 15 by Education Level. [Source: Statistics Canada]
The problem is that this leads to a large number of students who act like university is just like high school. Its a maturity problem. Universities still behave like 'institutions of higher learning' when a large number of their students are less interested in learning, and more interested in partying.
I can recall when I was a student representative in my department committees, looking at the professor 'report cards' that there was an emphasis on looking at how the 'high achieving' students felt about the professor (A+, A, A-, B+). Students with low grades will always blame the professor for their low grades rather than blaming themselves, but students with high grades, it was felt, would give a more objective report on the professors. So there were a number of professors who were absolutely hated by many students, but the 'high achieving' students thought well of them. So there is a general cultural sense of appealing to a certain group of students rather than trying to make everyone happy.
One could argue that this is a good thing, since it weeds out those students that are serious about their education from those who are not. But it also means that the universities have a tendency to go cheap on their first and second year students and focus on their graduate students and upper year undergraduates. Money won't solve that problem.