PayPal co-founder Peter Thiel says the big remaining bubble is over-priced and over-revered education.
Instead, 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.”
The education bubble is built upon the (still very strongly embraced) Blank Slate fantasy of human nature. The faith or elites profess in this fantasy represents a combination of many myth into one big super-myth. The Horatio Alger self-made man myth is one of the foundations for the super-myth. The idea that with a sort of will-to-power we can make ourselves into anything fits well with the idea that given sufficient training anyone can do anything, that the possibilities for achievement are limitless.
The faith in education is also built upon a modern version of a belief in natural human equality of ability and ambition. Whereas in a previous era our equality was seen as a result of our all having souls and all having equal standing in the eyes of god today belief in god is out of favor. So the equality myth needs a new foundation. Today our equal standing is seen by secular believers in equality as the product of the environment. Educational institutions have sold this modification of one of America's founding myths because this newer myth so serves the interests of colleges and universities. They can keep raising their prices, building new buildings, and raising their salaries. What's not to like?
This bubble, like all bubbles will come to an end. Thiel thinks college graduates, going back to live with parents while saddled with debts (that can't be dumped in bankruptcy court - college debt is like serfdom), are sending a message to society at large that the myth is exaggerated. Thiel is offering money to a small group of talented people to drop out of college and start businesses. I appreciate the symbolism. But people are still going to want to get skills. Also, Thiel's recruitment of only the very best for his scheme still leaves what he's promoting as an elite phenomenon. The biggest problem isn't elite kids going to Ivy Leagues (though that is a lot of money wasted). No, the biggest problem comes from all the kids of less than top ability trying to copy the smartest by going to very expensive colleges for 4 years to learn skills that do not do enough (or anything in most cases) to raise their productivity.
While rapidly rising college tuition prices are well known it still amazes me to find that the cost of higher education in the United States has doubled since the year 2000. Only energy has gone up faster. The energy cost problem looks pretty hard to solve. By contrast the education bubble can be popped with sufficient political will to shift toward an educational system that replaces most labor in schools with automation.
Cut out most of the labor costs using online delivery of cheap pre-recorded lectures on basic subjects, online tests to check your skills, proctored tests for certified knowledge on specific topics. Break up schooling into many pieces where lectures, course material, tutorials, and tests are all available for purchase separately. Use computer automation to greatly reduce the labor needed to deliver courses. Labor is the biggest cost in education. So automate most of what humans now do. The result will be higher quality and lower costs.
|Share |||By Randall Parker at 2011 April 15 09:55 PM Education Incentives|