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Friday, September 10, 2010

The Other Bubble

The Price of Admission:

Imagine that you have a product whose price tag for decades has risen faster than inflation. But people keep buying it because they’re told that it will make them wealthier in the long run. Then, suddenly, they find it doesn’t. Prices fall sharply, bankruptcies ensue, great institutions disappear.

Sound like the housing market? Yes, but it also sounds like what Glenn Reynolds, creator of instapundit.com, writing in the Washington Examiner, has called “the higher education bubble.”

Government-subsidized loans have injected money into higher education, as they did into housing, causing prices to balloon. But at some point people figure out they’re not getting their money’s worth, and the bubble bursts.

Some think this would be a good thing. My American Enterprise Institute colleague Charles Murray has called for the abolition of college for almost all students. Save it for genuine scholars, he says, and let others qualify for jobs by standardized national tests, as accountants already do.

Best way to sell short in this market? Vocational training. Get a skill, hone it and hopefully love it. 

Posted by Richard Anderson on September 10, 2010 | Permalink


Actually, Publius, the current higher-education situation was largely a product of the 1960s, when overwhelming demand from hippies who wanted to avoid work (and, in the case of the US, military service) for as long as possible transformed universities from elite academies into the overpopulated frat houses they are today.

That said, I'm in complete agreement with your sentiment. Teachers don't need a master's degree; they need two years of teaching college. Doctors and lawyers don't need four years in an unrelated faculty; they need medical school and law school. The situation at present is phenomenally wasteful, both of money and of years of a student's life. Those years could be spent working and paying taxes instead of racking up enough debt to buy Porsche, or in some parts of the country, a house.

University was originally supposed to be for scholars and a select few learned professions, not a party zone where goonish teenagers could immerse themselves in such socially relevant disciplines as the History of Western Belching, the Monological Imperatives of Dick and Jane, or Obscure Practices of 14th-Century Lesbians. It is time it went back to what it was designed to do.

Posted by: Shane Matthews | 2010-09-10 6:55:48 AM

One of the consequences of the subsidization of higher education is that the market is unable to allocate resources efficiently to steer students into fields where they are truly needed.

Instead, our politically directed funding system continues to pour money into liberal arts faculties where job prospects are slim while many trades are starved of students, instructors and facilities even though their earnings potential is substantially better.

Posted by: Dennis | 2010-09-10 7:42:16 AM

I do not know about the CA exam, but I do know about the doctor licensing exam by the Royal College of Canada: it requires years of training in a University pre-approved by them. So no, one cannot get a medical license without paying for college.

Other than that, I totally agree with that post: this higher education thing looks like a big racket.

For the record, after 17 years of full time university education, I got a BSc, a PhD, an MD and a specialty license with my name on it. But I've never lost sight of where real valor comes from: I totally respect a meticulous carpenter or janitor but I despise the typical University professor who sounds very intelligent but does not accept to have his neat theories contaminated by facts.

Posted by: Manny | 2010-09-12 6:36:06 AM

"Government-subsidized loans have injected money into higher education, as they did into housing..."

For the same reason, to transfer money from whites to people of color.

"A book by two Princeton sociologists, Thomas Espenshade and Alexandria Walton Radford found that low-income whites were three times less likely to be admitted to elite colleges than white students of the upper middle class. The authors, who detailed the preferences that blacks and Hispanics received by contrast, speculated that colleges preferred to direct their financial aid to minorities.

Asian Americans generally have to score much higher in the SAT to have the same chance as an African American to be admitted to an elite college, Espenshade and Radford found. Even so, Asian Americans account for 45 percent of the students in the entering class at UC Berkeley. In Berkeley’s freshman class, students of color are the majority, by about 2 to 1."

Posted by: Jim | 2010-09-12 8:38:54 PM

I do not know about the CA exam, but I do know about the doctor licensing exam by the Royal College of Canada: it requires years of training in a University pre-approved by them. So no, one cannot get a medical license without paying for college.

Precisely my point, Manny. The system is structured so that you are required to take four largely unnecessary years of university before you can even consider law or medical school. That is wasteful of time, resources, years of one's life, and years of potential tax income.

In the case of a medical doctor, taking those four years anyway, simply to get the preliminary information necessary, will in practice make sense for most people, but if you have got the knowledge otherwise, they shouldn't be a requirement. And I fail to see how four years of poli sci makes for a better lawyer.

Posted by: Shane Matthews | 2010-09-16 11:32:21 AM

I have heard recently the argument that since the educational and the political elite believe in statism or big government and since the state has the biggest monopoly on education they want to gear the education of our young primarily to train them with the goal for them to be administrators. They want this so that the country will have a generation of people with the expertise so to speak needed to run this country in a vast bureaucratic top down micro-managing every aspect of life fashion. So the primary employer the nation will have in the distant future will be the government bureaucrat. That is education's long term goal.

Posted by: StanleyR | 2010-09-16 7:43:19 PM

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