Prognosticating is a fool’s game particularly when the subject is education, but there are obvious indicators that the American higher education system has moved into a bubble mode. One indicator is that young people are paying far more for their educations than a simple supply and demand situation would demand. Supposedly the goal of a higher education is to learn skills that will better enable the graduate to provide services that the public needs. If there was a true demand for the skills of the college graduates the present graduates would be finding jobs easy to get and be paid well. However, the situation seems quite different at the moment, as the jobs are scarce and the salaries offered are dropping.
Another indicator of the higher education bubble is that the government hasn’t been successful at creating jobs here in America, because foreign labor is cheaper and transportation of products to American markets is small. To make the job statistics not appear so bleak, the labor market has been artificially shrunk by sending young people to school. We now have about 20.3 million students in higher education, every one of whom could have a paying job and own a very modest house in a few years. Instead these people have a trillion dollar debt and poor prospects for getting the jobs they have educated themselves for when they do graduate. When they do graduate they will not own a home and will be forced to rent which will be difficult because they don’t have a job. We may soon be seeing multitudes of homeless graduates and PhDs with no prospects and no hope.
If it is true that 20 million new graduates will be available over the next four years one must assume there will be 20 million new jobs available that require graduates. Minus of course retirements and deaths, etc. but the point holds; there will be a staggeringly greater number of educated job seekers than job opportunities for their level of education. It will become increasingly difficult for the existing graduates as more colleges keep spewing out more graduates.
Education is a fine thing for a person, just like owning a large new house is a fine thing, but if these are purchased with potential future earnings and those earnings become impossible to obtain then their years spent on getting that education becomes a disaster. A house can be sold and the debt cleared, but an education can’t be sold so the huge debt remains, a higher degree becomes the proverbial albatross around the graduate’s neck. Because the number of people involved is so very great the bursting of the education bubble will be worse and cause more suffering than the bursting of the housing bubble. The debt will be impossible to clear if there are no jobs.
A couple of years ago I wrote a blog post – You can’t cure stupid especially Detroit stupid. – It was based on the idea of Detroit insisting on building powerful cars instead of reliable economy cars. Making cheap reliable cars was the motivation of Henry Ford and his Model T’s and Model A’s, and those are the ideas and motivations that made Detroit an economic wonder of the world. But then the rich American children convinced themselves that bigger, more powerful, more luxurious cars were better for everyone. Look what that ideology has brought to Detroit. The most productive city in the world was turned into a disaster in a single lifetime. We are presently seeing the Detroitification of America and especially its educational system because of the misapplication of a good idea. Something very positive, higher education, has been warped so far out of fulfilling the original needs and the continuing needs of America’s populace that it is bringing to fruition its own collapse.
This post starts with the question of when this collapse will happen, making the seemingly outrageous claim that our education system is in trouble. If there are jobs for these graduates then everything is just wonderful, but if there are few jobs then we are headed into a bursting education bubble mode. A degree from Harvard and a few other top universities will still garner a top job because of the social contact benefits acquired while there; but for the so called 99% owning a house in 2020 instead of a degree may prove to be a better 20 20 hindsight.
There is a desperate need for a new course to be taught in colleges, to every student; it is how to create new jobs and new things which are unknown at present but which when discovered we will all need. We need a class, a major, a PhD program designed to learn how to create an abundance of new jobs. We need to learn how to create new Gordon Moore’s, Bill Gates’s, Steve Jobs’s and Craig Venter’s. Those are people who created whole new industries out of thin air as did Henry Ford a century earlier. If we can’t create new industries there won’t be any new jobs for our new graduates. Clearly the old industries are not supplying what is needed and we need a new paradigm for what education really means and what our country really needs.
Without new industries the education bubble will soon burst.