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Beyond the Education Bubble

Article by Kevin Carson.
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Peter Thiel’s contrarian approach to higher education, as you might expect, has provoked considerable squealing from the usual suspects. Thiel believes higher education has become a speculative bubble, and that the price of a college education is vastly overvalued compared to its lifetime payoff. There are more college graduates than there are jobs that call for their qualifications, which means that for many unemployed or underemployed graduates a student loan is the equivalent of an underwater mortgage.

The education bubble, like the finance bubble, is fueled by excess money looking for an outlet and unscrupulous promoters looking for suckers. Just as shady bankers lured people into mortgages that were beyond their means, the higher education industrial complex — through its affiliated high school counselors — lures kids into obtaining what seems to be easy money through Sallie Mae with the promise of higher lifetime incomes. Meanwhile, the availability of this third-party money fuels an educational culture based on high-overhead and cost-plus markup — the same culture that gave us the Pentagon’s $600 toilet seats — and tuition increasing at more than four times the rate of inflation.

To challenge the college mystique, Thiel is in process of selecting the twenty most promising candidates under age 20 to drop out, in return for $100,000 over two years to start a business. Hence the above-mentioned squeals of outrage.

Of course the idea that the educational panacea is overrated isn’t a new one. The late Joe Bageant pointed out that the “economic growth by sending everyone to college” meme was a fallacy of composition. The Empire, he said, only needed about 25% of its population in administrative-technical positions. Sending more than that to college just resulted in burger-flippers and floor-moppers with bachelor’s degrees.

There are some serious difficulties with Thiel’s position, in an economy organized on the kind of hyper-capitalist corporate model he seems to assume. In such an economy, as plenty of critics have pointed out, higher education — even if overpriced — will be indispensible to people seeking certain kinds of professional employment. It will continue to perform a signaling function, simply because HR departments will naturally desire some bureaucratic S.O.P. for processing human raw material without having to deal with a lot of special cases on an ad hoc basis. And I’ve seen more than one person argue that Thiel probably hires college educated people; if American higher education implodes, he’ll just hire cheaper credentialed Chinese tech workers.

John Robb, of Global Guerrillas blog, wants to go further than Thiel and challenge the existing state capitalist model of how employment itself generates demand for credentials (“The Education Bubble,” April 13).

The idea is not to eliminate higher education, but to eliminate the mass-production model by which it is organized: Transporting people to a central location with expensive physical plant and a bloated administrative bureaucracy in order to process them into human resources. Network technology, with its ability to move information cheaply rather than moving people, offers the potential of an alternative that “creates its own educational modules if needed (from scratch using modern tools and techniques).”

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