2011 April 15 Friday
Peter Thiel: The Faith-Based Education Bubble

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

James Bowery said at April 16, 2011 6:53 AM:

Gee, what a great idea! Actually, the real story behind PLATO's demise wasn't as Norris thought, nor as Bitzer thought. I hired onto the system staff with an explicit verbal agreement from Mike Pavlov that I could work on bringing PLATO to the mass market. A group of us demonstrated a system, including cable as well as telephone head ends, that would amortize in 5 years based on a touch panel terminal with 515*512 bitmapped graphics (and programmable Z80 processor), email, blogs, usenet-like capabilities, online 3d first person shooter games AND the courseware developed at the University of Illinois -- all for $40/month including terminal rental.

When we presented it to middle management, the response was a big *yawn*.

Basically middle managers are herd animals driven more by fashion than anything else. They had been reading in the east coast business press how much of a loon Norris was and they responded with *baaaaa*. Norris and Cray were a kind of surviving remnant of the midwestern culture the financial idiots were destroying fairly successfully. They went to PTA meetings and hung out in parking lots of engineering companies selling stock to middle class folks.

The Wikipedia article claims there was an "attempt" to go mass market with PLATO in 1980. If you call what our little crew of grunts did an "attempt by CDC to bring PLATO to the mass market" then it is accurate.

no i don't said at April 18, 2011 1:09 PM:

U.S. Education? O V E R R A T E D

More than that. It is EN$$$LAVING

Sorry about the caps, just wanted to raise my voice and say it aloud. -Since I'm no longer able to shout anywhere nowadays- Not even when TSA molesters are touching my little daughter's crotch at the airport.



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