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The Education Bubble

Flip through enough of the 99 percent signs and you realize that the majority of that demographic aren't complaining about the lack of financial regulation or income inequalities, so much as they're upset that they took on loans to pay for college degrees to get jobs that don't actually exist.

The fault here isn't Wall Street's, it's a policymaking apparatus that decided the way to deal with the loss of manufacturing jobs was to get as many college graduates out there as possible to create the industries of tomorrow.

This was Clinton's platform and it's Obama's "Winning the Future" platform, pump enough money into education and the jobs will create themselves. The Dot Com boom in the nineties seemed to back up that policy with entirely new companies springing to life with valuations in the hundreds of millions and twenty somethings at the helm. But a good deal of those companies were nothing more than the foam on another bubble-- and more problematically the cream of the tech companies were created by college dropouts. Even more problematically, the tech companies liked to save money by importing Chinese and Pakistani employees on H1-B visas as cheap labor, while their lobbies insisted that this would protect "American" innovation.

But the real problem was that swapping manufacturing for college degree jobs solved nothing. American companies that manufacture anything become the tip of an outsourced iceberg. All the companies with the shiny logos depend on Chinese manufacturing and raw materials. They can't create anything that the People's Republic of China can't take away from them when the time is right.

American companies aren't outsourcing labor to China, China is outsourcing design and marketing to them and allowing them to serve as middlemen between Chinese manufacturers and American consumers, until a Chinese company decides to buy their product unit or its reverse engineered copies of their products are good enough that they invest the money in a marketing campaign to establish their own trusted brand.

And yet the tech industry is the closest to a college degree success story that we have. The failures are legion.

The problem with the "college degrees for everyone" approach is that creating more college graduates does not proportionally create more jobs, it creates more unemployed college graduates and devalues the worth of a college diploma. Too many college graduates mean that employers will look for higher degree levels. High school diplomas used to be a certificate of competence, then that was devalued through promotion in a system where teachers were expected to move students up to the next class no matter what. When college became the new high school, it was devalued in the same way. There are city and state colleges with students who are barely literate, not in the "kids these days use too many abbreviations" way, but in the "functionally illiterate" way.

If the goal is to move everyone to the highest level of education possible, the result will not be a more educated population, but an educational system with lower standards and a population that is less educated than ever because actual education becomes more inaccessible as the standards are lowered.

Make sure that everyone can "afford" to take out college loans and the marketplace will compete for students with traditional universities offering a large buffet of "educational choices", most of which are not educational or represent any kind of career path outside academia, and private colleges offering useful sounding degrees that no employer will look twice at.

For the liberal politicians it's a triple score. Money pours into academia which they can use as their own think tanks. The educational system gets four years or more to process students through more sophisticated indoctrination mechanisms. And then the students who can't find jobs join the ranks of the usefully disaffected because somebody must be to blame... and it can't possibly be the people pulling the strings of the people shouting at them through megaphones.

Clinton told working class voters that the manufacturing jobs were gone, but their kids would all have college degrees. Obama went one better by telling working class voters that they would be retrained to hold down "Green Jobs", even as they're falling faster than the Green companies and their sweetheart government pork. Those lies are what make the class warfare rhetoric out of DC so doubly despicable.

Politicians have never honestly talked to voters about what happened to the American economy, instead they fell back on the same mantra of opening up new markets through globalization and creating new jobs through education./

None of this is new. The country with the highest degree rate in the world is Russia. The USSR ran its citizens through its educational system at a rate that Elizabeth Warren could only gasp in awe at. But what was its education actually worth? About as much as American degrees are becoming worth. If you throw enough money and manpower at the educational system, you will have a really big educational system. What you will not have is anything of worth to go with it.

Only one country that has a higher degree rate than the United States has a higher per capita income and that country has its own oil industry. The usual handwringing that liberal pundits and politicians engage in over how the American educational system is failing compared to countries with higher degree ratios is wasted noise.These same statistics are trotted out to justify dumping more money into the black hole of an educational system under the pretext of job creation. But do the statistics even matter?

According to the OECD (another useless globalization organization wrapped around a WW2 fossil) the Israeli educational system is a hopeless failure. In its 2009 evaluation claimed that Israeli students were behind Turkey, Dubai and Russia in math and science. Yet peculiarly enough Israel keeps collecting Nobel prizes and turning out minor things like instant messaging, drones and Kinect. When reality contradicts statistics, it's wise to go with reality. That's a skill most politicians haven't learned, but it's a rather valuable one.

The universalization of education is not about remaining competitive in a global marketplace or any of that other nonsense piously repeated by politicians with their hands in more pockets than a thieving octopus-- it's about promoting the homogeneity of ideas across a population. Which is why the importance placed on universal education increases as a country becomes more culturally diverse or internally divided.

The original Department of Education was created two years after the Civil War. The Kalamazoo School Case, which set the precedent for forcing taxpayers to fund public education and created the entire system of property tax school robbery we live under today, took place during the same period. As was the National Education Association whose Committee of Ten played a key role in the standardization of the national curriculum.

A better name for universal education is federalized education, and there is very little difference between the two in the United States. The growing federal control of education is a mechanism for maintaining control of increasingly divided populations. It may be a failed mechanism, but like the rest of the government's boondoggles, it long ago created a class of people who depend on the system and have a vested interest in its expansion.

When this is understood, the failure of innovation in the system is also obvious. The educational system is not a means of empowering thinkers, but of standardizing a static consensus of ideas. It's a great way to learn liberal dogma, but an inefficient way of learning anything else. The expansion of the system is not about remaining competitive with China, just as funding more "Green Jobs" is not about "Winning the Future", it's about shaping the voters of tomorrow.

We're not falling behind due to a lack of college graduates, but because we're smothered by a system of stifling bureaucratic conformity that is far more concerned with its grip on power than with jobs or income. The resemblance to the USSR is not at all accidental.

The system would rather have 10,000 subsidized jobs that it creates than 10,000,000 jobs in the free market. It would rather have a middle class of 5 million college graduates, (40 percent of them government employees), than have a free market middle class of a 100 million, (only 30 percent of them college graduates and less than 0.5 percent of them government employees.) And it would rather have an angry mob camped out near Wall Street, than have a viable economy.

The educational bubble isn't creating a new Middle Class that will keep social security viable, it is creating dissatisfied people who feel that they are entitled to better and don't know who to blame. Like the rest of the government, the education bubble is too big to fail, which means that by the time it fails, so will the whole country.


  1. Anonymous31/10/11

    The problem is that its harder and harder to get hired for almost anything without a college degree.

  2. Yep and so the cycles continues.

  3. And many of these grads find, like one of my daughters, that they have to get another form of education in a trade, just to make a living.

  4. Daniel, you never cease to amaze me, and you always provide the most interesting food for thought on such a wide variety of important issues. This has given me much to think about regarding my own child and her rebellion against the education system in this country. She is a far wiser fifteen year old than I have given her credit for up to now. I will be looking at her education in a much more reasoned manner. Thank you.

  5. Anonymous1/11/11

    Hey Sultan long time reader first time commenter,
    Your blog reminds me of what my father went through. He did his MA in education at BU (the plan was to do a PHD) and his master's thesis was about how college isnt for everyone and how it would be way more benificial for 11th and 12th grades to be some sort of trade school for large parts of the population. This master's thesis was not appreciated (as you can imagine) by faculty at the University and he wasnt accepted to the PHD program. He ended up becoming a lawyer.

  6. Public education is functioning exactly as it was intended. See John Taylor Gatto's books:

    _Dumbing Us Down_
    _The Underground History of American Education_

    you will be sickened at the details.

  7. As a 1973 grad with degree in English/Political Science, I have spent 85% of my adult life in construction and maintenance. With three grown offspring who managed to get diplomas from revered universities, I see a lot of truth in your analysis, Mr. Knish.

  8. Japan should and could have served as a perfect example for the USA and if Washington would have taken the trouble to look at what happened in that country during economic decline of the late 80 - 90ies and would not have tried to re-invent the wheel, they could have seen what happens with too many graduates and too few jobs.
    One country that did benefit from the Russian college graduates was, when many of these Russians with/without a Jewish background emigrated: Israel. They started being over qualified for most of the jobs they could get there but gradually many of them found employment in their discipline and the country benefitted enormously from these that came educated but not with the burden of the cost for that education.

  9. I don't regret getting an eduction in the least. Being educated is its own reward.

    Still, what Jewel wrote is absolutely right.

  10. Jewell, yep not uncommon

    American Genie, once we're out of school we tend to forget what it's like, not that she doesn't need an education as an economic strategy

    Anon, yes heresy is rarely appreciated

  11. WalkingHorse, yes worthwhile reads

    Carey, and you're one of the lucky ones

    mindrider, yes but then they would have to rethink their entire worldview

    K.A. indeed a good education is

  12. Ciccio1/11/11

    How many unemployed master plumbers do you know? I was the brainy one in the family and had to go to university, my parents quite rightly decided my younger brother was not academic material and found him an apprenticeship as an instrument maker with Zeiss. It was tougher than getting into University and it cost them almost as much but guess which on of us is in the Carribean on his yacht. So much for education.

  13. DAVE C1/11/11

    Great column. The idea that "higher education" is necessary to achieve greater economic innovation and prosperity has always been dubious.

    This myth has been perpetuated for years. When I have pointed this out, many people look at me blankly.
    They do not have a clue what I am talking about.

    They just keep drinking the Kool Aid.

  14. Bruce1/11/11

    My wife, who holds two degrees,a PhD in chemistry and is employed as a science teacher, refers to it as "creeping credentialism".

    I suspect that the "creep" has turned into a "gallop".

  15. My college (private, religious) emphasized critical thinking. I can't begin to count how many times I heard that phrase in four years.

    Instead of critical thinking most colleges now (at least secular ones) are all about indoctrination.

    But has for eduction and employment, my brother took a different path--he joined the National Guard and became a recruiting supervisor and made close to six digits a year.

    He only has a high school diploma but as a kid was a great BS artist. There's a spark of creativity in such people.

    He's honest! But like father like son--a success without a college degree. Or in my dad's case, without even a grammar school education.

    We need educated people in the world, but we also need the creative, hard working people.

    Critical thinking, creativity, and old fashioned elbow grease are what these kids on Wall Street need.

    I can't imagine a worse way to get a job than to sit outside for hours and getting arrested if a protest turns violent and you get arrested.

  16. Anonymous2/11/11

    It's also a matter of poor management of expectations - which starts in grade school. Witness the music degree holders who can't get jobs in the 'rock industry', graphic arts grads who are pissed that they can't get a job at a 'cool' company, etc.

  17. Anonymous2/11/11

    Great as usual...especially the part about Russian degrees. I have a joke: A Russian (FSU) immigrant to the the west gets work as a window washer. After 1 month, he complains, " I don't like job! I am just window washer. Back home, in former Soviet Union, I have good job! I vas level 2 hi-rise window techNIcian!"

  18. And also a program of deliberately misleading students about their job prospects.


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