Tuesday, November 02, 2010

The Education Bubble Continues

This is a brilliant analogy between the alchemist's paradox and today's educational system.

More education simply dilutes the value of education.

Ergo why I focus on statistics such as MBA graduates as a percent of the population and put more and more emphasis on the trades and 2 year programs than a bachelors degree in (well) pretty much anything.

People on the left constantly clamor for more education spending. Well, they got it. Tons of it. So much to the point that having an education is pretty much worthless and is nothing special. Education is now the new sausage party. You now need a masters degree. And if not that a doctorate. And oh, guess what? By the time you got your doctorate you not only have $100,000 in debt, you have no better job prospects because everybody else did what you did. And hey, by the way, how's that hope and change and stimulus coming along? Any of you recent Obamanaut 20 somethings fresh out of college employed? Yeah, how is that economy coming along? Too bad the republicans only took over the house. Stalemate from here on out my friends and at a 9% unemployment rate to boot.

Imagine though if you had just got yourself a trade or tangible skill such as roofing, or plumbing or programming, you would have spent only 2 years in school, a fraction of the cost, and would have been working for the past 10 years earning money instead of pissing it away on a progressively worthless sheepskin.

You can already start to see how similar the education bubble is to its housing bubble sister. I'm just wondering if (similar to the people who bought at the peak of the housing bubble) people with their masters in (fill in liberal arts degree name here) __________ are going to deny reality and "wait for the market to turn."

It won't kiddies. It simply won't. You want to know why? Because no matter what the aging hippie boomers taught you in "academia," in the real world (where the adults live), no economy progresses unless there is genuine economic production. And by "genuine economic production" we mean "you produce something people want."

Not "well roundedness."

Not "raising awareness."

Not "campaigning against the clubbing of seals skills."

Your doctorate in philosophy, women's studies or whatever worthless tripe you decided to avoid reality with and play "make believe I'm an adult" degree is now about as common as a TV reality show. It produces nothing of value and therefore you HAVE NOTHING OF VALUE (economically) to offer society. Your economic value is 0.

But don't listen to me. What do I know. I'm just an economic genius that's predicted every major and mediocre economic event since I was 20.

Go back to your lives people. Nothing to see here.


Unknown said...

I have a son-in-law who is a plumber and is underemployed.So much for having a skill...

semiquaver said...

wrong. People are obviously willing to pay for Womens Studies classes (and books as well) - it may be a competitive business, but it is a business none the less, and its economic value is not '0'.

learning - even 'soft' literary or philosophical subjects - has value to all but the most shallow I would think, and its provision is certainly a 'real' and 'grown-up' activity - economically as well as otherwise...

My Perfect Essay (But his) said...

This is my first time on your page. You said that you've predicted every economic problem. Can you cite these events and then show time dated proof that verifies this?

I'm curious.

Captain Capitalism said...

Perfect Essay - If I could pull my reports from Wells Fargo from 1996 you could see me predict the collapse of the Indonesian economy and the jettisoning of Suharto as well as the triggering of the Asian currency crisis.

Dotcom Mania, nothing really I could point to.

Housing bubble, plenty. Just go back and read some of the posts.

Slow decline of the US (that one is still pending)

Captain Capitalism said...

Semi-quaver, yes books written do have an economic value, but I would like to subtract all the government money spent that subsidizes women studies departments (or philosophy, or cocmmunitications, etc.) on account that is actually a cash outflow. In short if you wanted to measure say "production per hour" or "GDP per hour" it would be near zero.

Maureen Matthew said...

semiquaver - are people really willing to pay or are they willing to take out a student loan to pay it (and I find that few students really understand the cost of a student loan particularly if it is what is supporting eight years of post-secondary education - one or two years is fine, but anything beyond that is just people avoiding reality).

Willingness to pay is a tricky concept - but if it is someone elses' money that you are using, the willingness factor disappears.

John said...

It is a fallacy, but one which is disseminated by business schools, that MBAs and B.Comms know much about business. They do learn administration, they may learn something about marketing, but they are taught nothing about finance. Business math courses, which can be challenging, are usually taught by Math departments. And yet a grasp finance (oh Hell, it's mostly variations on compound interest) is what distinguishes a successful business man from a bankrupt.

Anonymous said...

Ooch! I have a Masters degree in Philosophy and and 2 undergraduate degrees and I make less than $30K because the credentials I have don't match the economic market I live in. So I am sympathetic with this view. Well-rounded, liberal arts education is a privilege of the upper-middle classes. I love the fact that I have a rich inner mental life but it does not put food on the table.

Gemfinder said...

You can show using public data that <a href="http://nostradoofus.com/2009/10/19/has-college-become-a-bad-investment/index.html>investing in a private college degree usually delivers negative financial return</a>.

The system is wildly inefficient. Private college costs about $100 per lecture hour, PER STUDENT. Outrageously expensive, yet the teaching is not well matched to the labor market.

A useful solution would be for the Dept of Labor to publish the labor market info. Which positions make how much money? Which positions are most in need? Then let individuals act on that info.

In the U.S., nursing is well-paid, yet we have such a shortage of nurses that there is a special visa program to import them. I'll bet many people who could qualify for nursing school are simply unaware of the shortage. If the Dept of Labor published such data, it would be a big step toward labor market efficiency.

Alaska Jones said...

Almost paid off my student loans and work with 8 liberal arts degree folks in their 20s who are living the dream. I know aircraft machinists who haven't had a steady job in 10 years. Any Chinese slave labor that would replace me has to move here first.

Alear said...

Quick about me: 1981 BS chemistry, BA English, graduate work English Lit, graduate work Education. Currently IT, where I've resisted moving to management and remain on the tech side. I have sat in on scores of interviews for techs, and upon reflection, it's incredible how little I care about one's education. I look at resumes as nothing more than boring fiction. Talk with me for 30 minutes, I'll know if you can do the job.

PS: I do look at resumes: we hire contractors, which I look as a job in training. Our FTE's almost exclusively come from current contractors. If you have a history of 3-month contracts, that is so suspicious that I get back to HR wondering how you ever showed up in my office in the first place.

When your name does come up in consideration for FTE, we talk with everyone you've ever worked with in our shop. Noone else. What have you done with your time here, and screw your sheepskin.

PSS: An anecdote: I asked one interviewee, who I already knew wasn't getting a job with us, how good his PERL was (I asked because out of pity at his pitifulness I accidentally glanced at his resume and it was on the front page. BTW, stop with the 8-page resumes, please.) He quite clearly thought I was referring to something that comes from an oyster. I suggested that his next interview, he may at least want to read his own resume before expecting me to read it.

Anonymous said...

Hello Mr. Captain Capitalism. I came here through a link from another website which I respect. I have never heard of you before, so you have about 15 seconds of my attention to convince me that you are intelligent and interesting enough to merit a return visit. Oops, time's up. Bye bye!

Anonymous said...

it certainly does not change the economic value of a good or service if it is usually paid for with borrowed money! Consider airplanes, or buildings - these are *always* financed - nothing phony about their contribution to GDP.

Likewise government support does not make the GDP dollar less real (should we discount Lockheed's contibution to GDP?)

A good many humanities students furthermore are wealthy - for many people high class education is a luxury good and status symbol - no sillier than designer clothing.

In short these are all false distinctions - scholarship, aside from whatever real human value it may have - is absolutely economically productive. In fact I would bet that it has a positive effect on the balance of trade from all the foreign students that come to our best schools...

Anonymous said...

I agree with some of what you are saying, but I don't agree with you conclusion.

Universities used to teach people how to think. It was common for someone to graduate in one field and have a career in something completely unrelated - because they knew how to think - and the economic value of that is NOT ZERO! If you know how to use your brain, learning different skills is fairly easy. Jack Welch had a PHD in chemistry - yet he was the CEO of GE - he didn't need a MBA!

The article you reference specifically says: "Educating people for economic advantage diminishes the economic advantage of education."

That's the problem - educating them for economic advantage, and not teaching them how to think and use their brain.

I suggest anyone really interested in this watch the video:


Anonymous said...

It would be the difference between real scholarship and false scholarship.

Also, the amount of direct and indirect government subsidy must be subtracted to find out what the real value would be.

Justin said...

Go to trade school for programming? I think most well paid software developers have a degree in Computer Science, or Computer Engineering, or Electrical Engineering, or Software Engineering, none of which are 2 year degrees.

Anonymous said...

This is the kind of rant you get when you value economic growth strictly in terms of dollars and cents and totally disregard quality of life as a factor. Maybe not everyone puts as much emphasis on making stuff versus just enjoying the time they have.

And if everyone went to school for business and engineering/science, then everyone would graduate expecting to be in a management position, and you'd still have the same level of unemployment due to people's unwillingness to settle and the same level of people getting advanced degrees in order to differentiate themselves.

Baron Metzengerstein said...

Hrmmmmm, the more education I get the more I get to thinking there's reason to esteem only the most technical of degrees, because you can teach yourself pretty much everything else.

Which isn't to say that such knowledge isn't valuable...it's more along the lines that you're a sucker to pay $30K and up for a degree that grants as much knowledge in 4 years as you could have gotten by yourself in a few months; and that without worrying about due dates, homework assignments, and so on.

What's perhaps as concerning is that many of these 'degrees' don't even teach you wide knowledge on a given subject. For instance, I've talked to English majors who'd never even heard of Chaucer or Spenser or Lord Byron... History majors who didn't know the thirty years' war from the hundred years' war, etc... It's sad.