Right Reason

College and the Hireless Recovery

 

From Michael Schrage’s “The Hireless Recovery” on the HBR Blog Network:

The self-service ethos of ATMs, hotel check-ins, and Zipcar rentals is another market signal thatcompanies would rather invest in integrated systems than hire people. What could be more minimum wage than a supermarket checkout cashier? But growing numbers of retailers now bet thatexpensive self-checkout machines represent both a better business investment and customer experience than low-paid humans-in- the-loop. Wal-Mart is by far America’s largest employer with roughly 2.5 million employees worldwide. It’s made enormous investments in innovative technology. Amazon has roughly 25,000 employees. It’s made enormous investments in innovative technology, too. A decade of slower growth hence, where in the employment middle might you expect them to meet? What do you think their new hires will have in common?

That’s why this painfully slow hireless recovery represents a structural rather a cyclical shift. It’s not that certain jobs have disappeared or vanished forever (although that’s undeniably true for many job categories). What’s structurally changed is not the job but why people get hired. In other words, is hiring someone really essential to getting the job done? Just as important, as we look at employment costs, risks and uncertainties over the next five years, is hiring someone the most cost-effective way to get the job done?

A decade ago, the answer was usually “yes.” Today, the answer is usually, “We’re not sure.” Increasingly, the answer will be “Not really, unless they’re really, really good.”

 

A matter of there being no jobs out there, or a matter of businesses not wanting to take on new employees? The jobless recovery, that is. That both options can be seen as saying the same thing is testament to how important it is to frame questions properly. After all, looking at the problem from the point of view of  

One important factor that I don’t think has gotten the influence it deserves, even though we all know it to be true, is that teenagers preparing to enter the labor markets are being cheated by the mass delusion that a college education is anywhere and everywhere a good thing. 

 

A serious problem with the current system of college education impedes that entrepreneurial process of discovery. The college system, because everyone For people to discover the best means of preparing the youth for entering the labor market, there has to be experimentation, and variation. The ethos that every high schooler must go to college squashes variation. It supposes that a college education is the way that everyone becomes productive. That claim is clearly false, and yet so many go on parroting it. 

The attitude that a bachelor’s degree is necessary for someone to make something of themselves in society needs to die. Since people naturally desire the approbation of those around them, what is praised in society greatly influences what people make of themselves. Praising higher education while not giving other options like apprenticeships their due is absurd. Even worse, even as the value of a bachelor’s degree erodes away, so its costs skyrocket, as showed by The Economist in “Higher Education: Not what it used to be”:

 

 

 

For clarity, the point here is not about what an eighteen-year old who desires to find a reliable job with good earnings should do right now.  For that question, see a  study from Georgetown University, “Hard Times: Not All College Majors are Created Equal” by Anthony P. Carnevale, Ban Cheah, and Jeff Strohl. It found that found that “a college degree is still worth it,” and that “a Bachelor’s degree is still the best weapons a job seeker can wield in the right for employment and earnings.” Both claims are certainly true given the situation that eighteen-year olds are facing.  

The point I have been discussing above should not be confused with conflicting with the advice in “Hard Times.” The question that I am discussing is whether the institutions are set up right to encourage the best choices, not what are the best choices considering the given institutions. If we are to think about the eighteen-year old’s choice as a game, “Hard Times” is arguing that they should pick go to college, I am arguing that we need to discover other options. What are those options? I don’t know, and that’s why we need entrepreneurs in education. Certainly, under the conditions that eighteen-year olds are faced by now, getting a bachelor’s degree is, by and large, their Nash equilibrium. The question that I find more interesting is whether the choice to get a bachelor's degree should be the Nash equilibrium. 

Even the way that the question is framed betrays problems behind the current model of higher college. That we could even think of the vast majority of college seniors, irrespective of their own personalities, talents, and situation, to be faced by the same choice (go to college, or don’t) is absurd. The current institutions are pretty horrid, especially from the point of view of someone who would be better off abstaining from a bachelor’s degree, and so people need to be encouraged to find new solutions to the problem of preparing young adults for the labor markets.  

 

Is a bachelor’s degree valuable? Depends on the person, and education is now failing those who should answer no to that question. The current hireless recovery should make us think ever more serious about that claim. 

Education is Cheap, It's Schooling That's Expensive

 

"Never let your schooling interfere with your education."

-Mark Twain

As the above graph shows, the costs of tuition has been increasing over the past decade at a much higher rate than the CPI (Consumer Price Index for the uninitiated into the econ). However, it would be a great error to call this the cost of education, as thankfully the data does not. It would be far more accurate to call this the cost of schooling. After all, one can sit through all classes from high school through senior year of college without actually learning much of value; this is especially true with the declining standards of education in the United States. Even a doctorate is no guarantee that one is educated in any meaningful term of the word.

To equivocate education and schooling is thus to mix two heterogeneous phenomena, sitting in class and actually being familiar with the material, assume by definition that the former always leads to the latter. Indeed, there is no reason why one has to even sit a minute in a classroom to have a deep appreciation of the authors that the word “Education” has been associated with in its most classical sense: Plato and Aristotle. Indeed, within the modern university, which rewards novelty and originality at the expense of truth, one can get through an entire undergraduate education centered around the humanities without opening a text from those two giants of human thought. And those subjects that the institution of the modern university has a comparative advantage in, where the publish-or-die selection process selects the best ideas rather than nonsense and where it pays dividends, to be at a centralized campus, the STEM fields, are not where most students go.

 

Now thing to yourself: What of those fields is there an actual comparative advantage in having a degree.

 

As the cost of schooling rises, what seems to escape most commentators is just how low the costs of getting an actual education has become. Indeed, one can buy almost an entire library of great texts with the average cost of a single semester of schooling at a public education. In addition, the internet has lead to a rapid proliferation of online lectures and seminars that put most university lectures to shame. When MIT puts its lectures by professors at the top of their field on iTunes, when Salman Khan does an on-line one-on-one on topics like calculus and physics on the Khan Academy, when Tyler Cowen and Alex Taborrak will be hosting free lectures online, why should a student go to a mediocre lecture given by an incompetent grad student or a professor more interested in his own writing than preparing a lecture? In addition, the opportunity cost of those media are just the time to watch them. Not a dollar required in payment.

In the modern world that we live in, where knowledge is available cheap on amazon.com or costless at the click of a button, education has become dirt-cheap. The costs of education have not risen! To the contrary, they have plummeted to lows never seen in human history! Yet, so many are so bewitched by the equivocation between education and schooling that they are unable to see it. Of why that is so I shall make no comment here; however, the winds of change are already in the air and gone will soon be the days when a student will get into tens of thousands of dollars of debt to be schooled.