A Wall Street Journal Op Ed recently quoted Peter Thiel, a successful investor and Libertarian leaning thinker, as saying we’re in a “higher education bubble.” “University administrators are the equivalent of subprime mortgage brokers,” he says, “selling you a story that you should go into debt massively, that it’s not a consumption decision, it’s an investment decision. Actually, no, it’s a bad consumption decision. Most colleges are four-year parties.” It reminded me of some comments by Dr. Peter Morici in a recent CNBC Op Ed, in which he said:
Politicians have deluded themselves into believing an education system that encourages young people to “find themselves,” instead of “finding something productive” will give society enough scientists and engineers to solve the tough problems needed to perpetuate growth.
They have deluded themselves into thinking that professors spending six hours a week or less teaching and the rest thinking great thoughts, or verbally pistol whipping the society that supports them, is somehow wealth creating. . . .
Most national leaders have been educated in squeaky clean environs like Harvard, Oxford and the University of Tokyo believe anything created by hand, other than an exquisite meal or with a computer keystroke, is somehow unworthy of western post-industrial society.
Ouch! So are we in a higher education “bubble?” Well, most people don’t see the bubble until it bursts. And I’m not sure this one is going to burst (at least not quickly), because society has become more and more conditioned to sending young men and women to college. Still, incurring the costs of a bachelor’s degree seems less and less worth it these days. Our university system is churning out more and more college graduates per year, and the cost of educating those graduates continues to increase every year. So the value of the degree is degraded as more and more people have it, yet the cost keeps going up.
Have you heard that “30 is the new 20” and “40 is the new 30?” Well that is, in part, because college is the new high school and graduate school is the new college. “Getting ahead” no longer happens with a 4 year university degree. The only problem is college costs a whole lot more than high school, not just in tuition but in the 4 (or 5) productive working years it subtracts from a career. Politicians have long pushed higher education as a cure for our ills (President Obama—“A country that out-educates us will out compete us”), but we can’t be a nation of leaders with no followers. Pushing everyone to get a college degree isn’t obviously a good idea. After all, many young people choose to pay a six figure sum to party their way through college with a degree in Classics or Art History only to find their job prospects rather dim upon graduation.
Even if you assume that all students are hard working and dedicated, you have to question the wisdom of trying to send every breathing body into the university system. As Judge Posner notes, “[t]here probably are diminishing returns to providing higher education, because IQ provides a ceiling beyond which educational effort is wasted on students. . . . Many colleges offer what amounts to a remedial high school education, postponing the students’ entry into the work force. . . . With ever-increasing specialization of the workforce, there is an argument for making education increasingly vocational.”
It is considered blasphemy in some places to question the wisdom of higher education for all, but we don’t need to be armed with statistics to know that the rapidly rising cost of education cannot go on forever as its value continues to decrease (the more degrees, the less value those degrees have). A university system run by and for professors, and a political class that is increasingly enamored by (and that caters to) the university elite, means we will not see this “bubble” burst for some time. Still, it can’t go on indefinitely. Pretty soon college tuition will simply be an entry tax on workers because there will be no decent jobs available to anyone without a college degree. That’s white collar welfare for historians, sociologists, psychologists, and professors of ethnic studies, but it is a heavy burden to place on the human capital of an economy. At some point the system will need to be reconfigured.
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