US academic institutions are dominant because they have more money (largely because of historical government policy), not because of any monopoly position enjoyed over the students. I can certainly see European or Asian institutions taking over this lead, but certainly not because students want to attend "MOOCs". If you want a top-tier university go and buy one.
If that happened, California could take the money they aren't spending on the UC system anymore, and decide just to fund research directly, setting up a state research institution that isn't a university. Maybe they will; I have no idea.
I think you and the grandparent both seem to be arguing that "removing the undergraduates and sending them to MOOCs" will somehow change the character of the way "academia" works, and that's what I just don't see. Undergraduates are a side project at these schools -- as mentioned, they don't provide meaningful funding (tuition breaks even at best). And at most, they provide a cheap labor pool for the research programs. Take them away and you'd never notice the difference.
You mean like this? http://en.wikipedia.org/wiki/King_Abdullah_University_of_Sci...
$10 billion endowment: http://www.npr.org/templates/story/story.php?storyId=1204482....
Obviously details matter. A university in Riyadh is going to be disadvantaged vs. one in Palo Alto, but the idea that professors can be encouraged to move by big paychecks shouldn't be controversial.
Of course, if this comes to pass, then the same would be true for every country with ubiquitous access to the internet. In such a case, the proverbial rising tide would lift all boats equally :)
It's possible something else could replace those physics labs. Maybe Microsoft Research and similar non-academic labs will get larger, and expand out of computer science, more like the old Bell Labs? The U.S. could decide, alternately, that funding research is a priority, but doing it via hybrid educational/research institutions (the classic "research university") isn't going to work anymore, and choose to fund research-only institutions, e.g. bring the national labs back to the forefront. That's plausible, but I'm not sure there's political support for it.
My point is that with our current culture surrounding education, I don't believe that MOOCS will be powerful enough to topple academia. People just simply don't care enough about their education in America. I think that MOOCs would probably be much more effective in other countries, where education is not taken for granted.
However as time passes, and the culture around education shifts in the US, perhaps people would be more inclined to use MOOCS to their fullest potential.
> If MOOCs deliver on the promise of delivering more
> education to more people
At least the best Stanford MOOCs, Machine Learning and Databases, were taught much better, and the material and exercises were much more carefully planned, than most of what I'd expect at least in any university in Finland.
Now, I hear Coursera has also some bad quality MOOCs, but as long as the very best courses by the very best lecturers can be offered to the whole world as MOOCs, their better quality should be a strong reason the prefer them over some mediocre course in a local uni.
As least in Scandinavia, we don't feel MOOCs are a huge threat to us, because there is no tuition, so there is no real financial reason for students to prefer MOOCs. Maybe some will out of personal preference, and some might take some extra MOOC courses as enrichment, but it seems unlikely that most students will choose to forgo a university degree. Therefore they will probably damage U.S. academia but not ours.
If so, is this an opening for Europe to take over world leadership in academic research, through a mixture of internal cultivation and hiring away distressed American faculty? The recent addition of English-language degree programs (and increasing internal use of English) removes some of the practical problems that used to be in the way of doing so.