For Whom Do Colleges Exist?

On Book TV last weekend I saw a discussion of the terrific-sounding new book You Can Hear Me Now by Nicholas Sullivan, about how an ex-banker named Iqbal Quadir started GrameenPhone, which helps poor people in Bangladesh get cell phones. From the discussion:

Someone from the UN: I hear that the UN should spend $100 in a million places rather $100 million in one place. But what else?

Iqbal Quadir: The UN should empower the people, not empower their governments. And if they cannot empower the people they can just shut it off. My point is that helping the wrong side is harmful. So if they cannot help the right side they should at least not help the wrong side. I'm not trying to say anything radical here, frankly. The governments belong to their people. You must make sure you don't disturb that relationship. If you change the incentive for the government, you are disturbing the emergence of democracy.

I had never heard it put so clearly. We can ask if governments exist: 1. To improve the lives of the governed. 2. To employ the governors. 3. To help other governments. Similarly, we can ask if colleges exist: 1. To teach the students. 2. To employ the teachers. 3. To help businesses who will eventually employ the students (the signaling function of college).

Suppose we believe that the main function of colleges is to teach the students. How, then, should we improve colleges? By giving mini-grants to teachers (as is done at UC Berkeley, where I teach)? By giving awards to the best teachers (as is done at UC Berkeley)? Or by doing something quite different?