The American Ant Tribe

In a post reacting to an NYT piece on young people and higher education, Bill MacBride makes the following observation:

But in the long run, more education is a positive for the economy – and Rampell’s article suggests the kids (well, young adults) are alright!

I really wish he’d show his work on this. It concerns me that this may be more an article of faith than a provable fact.

The difference in the unemployment rate for those with college degrees or better and those without is widely published. I don’t think this means what those touting it seem to think. If the credentials race is a zero-sum game in which those with PhDs out-compete those with MAs who out-compete those with BAs who out-compete those with AAs who out-compete those with high school degrees who out-compete those who didn’t graduate from high school in an environment like today’s in which the number of new jobs created barely keeps up with the natural increase or, worse, fails to do so, where’s the positive? Since those who’ve pursued further credentials are undertaking greater consumer debt to do so, pursuing higher credentials the better to compete for the few jobs that are materializing doesn’t make the economy more vibrant, it merely exacerbates existing social problems. As I’ve documented here before the rate of on-time high school graduation rate in major urban areas has remained persistently high for generations.

There are other reasons to believe we’re not creating jobs that require ever-higher levels of education but requiring ever-higher levels of education as credentials for jobs that don’t require them. For example, the length and number of post-docs in physics, chemistry, and the other sciences have been increasing over the last decade. That doesn’t suggest a robust demand for science PhDs so much as a lack of better jobs for science PhDs.

There are exceptions to this. Healthcare, for example. But since healthcare is so heavily subsidized the question becomes does whatever additional economic activity is produced outweigh the deadweight loss? I don’t know the answer to that but I have my suspicions. I don’t think the answer is self-evident.

The experience of other countries, e.g. Germany, China, and Japan, also provides counter-evidence of the assertion. All three have lower rates of graduation from university than the U. S. and lower rates of unemployment. Clearly, there is no straight-line connection between the two factors.

Additionally, in recent years China has seen something similar to what’s been seen here: increasing numbers of young people with university degrees who must take factory jobs in which the skills they’ve presumably acquired at university are wasted and who are, understandably, dissatisfied. They call them “the ant tribe”.

8 comments… add one
  • Ben Wolf

    @Dave Schuler

    Get with the program: shibboleths and faith are way easier than fact and empiricism, and don’t require stupid things like reading or challenging one’s own pre-conceptions. It’s like you think people should pursue due dilligence and do their best to present logic, learning and wisdom in support of their arguments rather than just assuming facts not in evidence.

    What’s next, you’ll tell us people shouldn’t lie to advance their personal and tribal interests?

  • My view is that we’ve had roughly 20 years of this pabulum. First the Clinton Administration then the Bush 43 Administration then the Obama Administration. It’s about time somebody started telling the hard truth which is that a) higher education is no panacea; b) we’d get more bang for the buck by subsidizing vocational training than with what we’re doing; c) what we’re doing just ignores too many people.

    I might add that I think that the rise of the J-schools has made this story (that higher education is the key to a bright future) into the prevailing wisdom. Reporters with college degrees don’t make better reporters but they do make reporters with a vested interest in promoting the value of higher education.

  • michael reynolds

    What Ben said. People love them some formulas. This + That = Happy!

  • PD Shaw

    I think education is a mixture of positional good, and skill enhancer (either directly or indirectly as improving teachability). I think the mix differs at different levels and programs (and countries), but in extreme situations its just providing social cover for elitism.

    This study suggests 35% of people value education as a positinal good. Essentially, they were asked which scenario they preferred:

    A: You have 12 years of education (high school); others have 8.
    B: You have 16 years of education (college); others have 20 (graduate degree).

    35% preferred A; 64% preferred B

  • That raises two questions for me. Should we be subsidizing positional goods? Should we be subsidizing positional goods with regressive taxes? (as is most certainly the case in Illinois)

  • PD Shaw

    I don’t think we should subsidize pure positional goods; I don’t think education is a pure positional good. Law degrees might be close, to the extent that I don’t see any reason a law degree couldn’t be a type of bachelor’s degree. I don’t think we should be subsidizing law degrees.

    On taxing, I really don’t know the answer. If we lived in a state that paid for school through a statewide progressive income tax and distributed it equally on a per student basis (with COLA perhaps), I still see parents self-selecting to live where there are better schools and teachers trying to follow them. More state control might help in reigning in local inequalities; I would like to see a law that allowed the state to void union contract provisions that are not in the best interest of the students.

    I think vouchers are a particularly bad idea from a positional goods standpoint unless they have hard caps that prevent them from supplementing private income sources.

  • Icepick

    c) what we’re doing just ignores too many people.

    change IGNORES to EXPLOITS and you’ve got something. Lots and lots of people go to college for at least a little while, and where does all that student loan money go?

  • Thomas Wells

    Education and schooling are not the same thing.

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