Thursday, April 14, 2011

Question of the Day: Is There An Education Bubble?

It’s something about the scarcity and the status. In education your value depends on other people failing. Whenever Darwinism is invoked it’s usually a justification for doing something mean. It’s a way to ignore that people are falling through the cracks, because you pretend that if they could just go to Harvard, they’d be fine. Maybe that’s not true.-Peter Thiel

A friend, a very big wheel indeed in finance, tells me that the higher ed bubble is about to pop, and about time, too, since federal interference in education has led only to vastly higher prices and a humongous administrative-faculty nomenklatura living high on the hog for not much effort. “I worked my way through school,” he said. “That’s impossible now, thanks to all the ‘aid’ to students. And while it’s true that outfits like the University of Phoenix have a market aspect to them, virtually all their profits come from saddling students with federal loans they can never pay back.” The future of education is in independent institutions like the Mises Institute and maybe LRC, not state and para-state universities and colleges which offer, with few exceptions, a rip-off.-Lew Rockwell: The Next Big Bubble

Peter Thiel, co-founder of PayPal, weighs in:

...for Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.-Peter Thiel: We’re in a Bubble and It’s Not the Internet. It’s Higher Education.

Thiel is attacked for telling the truth:

Thiel's point is that we shouldn't require college degrees—and ask students to go into such significant debt—for jobs that don't take advantage of that education.


But Thiel's program isn't just a little hypocritical, it's also irresponsible. As he must know, the romantic story of the dropout who makes it big is an exception.-PayPal Billionaire Peter Thiel Should Stop Telling College Students to Drop Out

Which misses the point, but what else do you expect from the "educated".

1 comment:

  1. Yes, there is a huge education bubble. But just as the housing bubble didn't mean the end of home ownership, the outcome of the education bubble will likely be a drop in the cost of education coupled with people who are out of college now being saddled with huge debt (luckily not me).


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