I was once listening to Peter Schiff‘s radio program, back when he had one, and he had on a gal from one of those foundations set up by some dead multi-millionaire to award academic scholarships to young people who want to go to college or university right out of high school. It seemed to me that she’d never listened to the program before, and wasn’t very familiar with Schiff or his antics. So he asks her all the standard questions, like “what are the criteria you use in a awarding the scholarship?” and “how can the young people in my audience apply for this scholarship?” and she’s happily answering them… and at some point she says something pretty standard, cliche even, along the lines that “absolutely getting a higher education is essential for success.” And Schiff’s reaction is something like “Well, hang on, that’s not… you don’t actually believe that, do you?”
The poor woman was caught completely off guard. And, of course, Schiff wouldn’t let it go, pointing out to her that some of the most successful men in U.S. history were guys who never got degrees, and asking questions to the effect of “well, what if a high school student wants to get a degree that’s functionally useless, would you still pay their tuition? Like what if they want to get a philosophy degree? Would you support them in such a foolish decision?”
I felt bad for the poor lady. But I laughed harder than I had in a while.
Suppose that, next year, somebody comes up with an extremely valuable invention that revolutionizes the way people live and everybody wants to buy, but a bunch of the components won’t work particularly well unless they’re made from tungsten. Then all the tungsten in the country will suddenly count much more heavily towards our aggregate wealth. But if, the year after that, Israel discovers a huge tungsten vein and starts flooding the market with cheap tungsten, or scientists discover a way to cheaply fabricate pure tungsten out of dryer lint, then all our tungsten’ll count for a good deal less in our national portfolio. If the whole world ran out of crude oil, all our automobiles and car factories would suddenly be worthless. ‘Til we retooled the cars to run on ethyl alcohol, and then they’d be valuable again.
In either case an observer should have no need to guess at the real value of a lump of tungsten or an automobile. The market would respond almost synaptically, and the shifting values would be reflected by shifting market prices.
But, especially with products whose utility isn’t immediately qualifiable, markets can be tricked. I once read that one of the earliest known examples of artificial price inflation was the result of a rumor about certain coins having been found at the end of a rainbow. I don’t know whether that story is true, but it’s at least believable enough to illustrate something that is true, of a certainty: What we think of as market behavior is just the myriad purchasing decisions of individual people. And individual people are wont to make some piss-poor decisions.
The cabbie who takes you from the airport to your hotel, the girl who waits on your table, and the “admin” who first picks up the receiver when you phone a friend at their office are all people who are as likely as not to have degrees. Maybe that wasn’t true back in the days when multi-millionaires were establishing philanthropic scholarship-awarding foundations in their wills, but it surely is today. My parents and grandparents grew up in a world where higher education was both more affordable and more utile. Well, the obvious corollary is that in the years which followed getting a degree has become both less useful and more expensive. What kind of market sense does that make?
There’re a few obvious reasons we can point to for how higher education became the millennial generation’s coins from the end of the rainbow. One is the tremendous inertia of culture; for many millennials I talk to going to college or university is simply what’s expected of them, a heretofore efficacious family tradition. Another is the market-perverting influence of federally underwritten student loan programs. But for those of us who’ve perceived how much less than its market value is the real value of a sheepskin, what’s more important, in the immediate term, than identifying the reasons why we came to where we are is figuring out where we go from here.
Here’s my speculative advice:
If you’re a high school student and you aren’t sure why you ought to go to a college or university after you graduate, then don’t. Ask yourself what you see yourself doing in 5 years. Only if it’s something that certainly requires you to get a higher education should you jump right into getting one. Otherwise, why not try just try today to break into the line of work you see yourself doing tomorrow? You might very well have the fortune of being able to bypass college altogether, and whether you can or can’t it’ll only cost you a little time and effort to find out. Maybe you want to go to school just to generally better yourself, or “for the experience.” Alright then, but make sure you can pay for it, without accruing any debt. Can’t afford to? Then the school you picked is too expensive and/or you need to get a better side job.
If you’re currently a college student, and you aren’t in a STEM field, then you’d better think pretty hard about the practicality of whatever else it is you’re studying. The days when you could study whatever esoteric or academic matter most tickled your fancy and still expect to find good work after graduating are gone. Actually, beyond a fleeting instant, they were never really here, as even many later Gen-Xers discovered.
And if you’re a professor, administrator, dean, or president at a college or university, my advice is to understand that the party you’re enjoying now can’t last much longer. Sooner or later your customer base is bound to wise up. Focus on structuring your institution to provide students with a verifiable ROI, and you’ll be in a better position to stick things out when the education bubble collapses.