Latest posts by David Russell (see all)
- College: Great for Sharpening Beer Pong Skills, Not Always a Good Financial Bet - October 25, 2012
- Slackers: The real employment problem - October 10, 2012
- Why Does Obama Seem Apathetic About His Own Re-election? He Didn’t Build That - October 8, 2012
In my last post, I showed that young Americans have increasingly chosen not to work over the last 35 years. The crazy thing is that this took place in the 1980s and 1990s, when more jobs were plentiful and unemployment was low. How to explain this anomaly?
In my view, many forces are at work, but they all revolve around education. Kids were increasingly told that they needed to go to college, and that they shouldn’t waste their time stocking shelves, doing construction or flipping burgers. Real jobs that paid real money were disparaged in favor of wasting time in classrooms and running up student debt. And the effects upon our economy are now increasingly obvious as our country develops a structural unemployment problem akin to Europe’s, with millions of people incapable of gainful employment.
It’s no secret to followers of The Heartland Institute that our educational system has become a corrupt industry unto itself, more concerned with paying teachers and administrators than helping kids. Poor minorities have been the biggest victims of this exploitation, but I think the problem is even bigger, and has inflicted damage at almost every level of our society.
Consider the anecdotal case of “Vinnie,” who I knew back in Newark, New Jersey. He’s in his late 60s, and owns an Italian bakery that’s been in business at the same location since 1904. It survived the crash of 1907, the crash of 1929, the Great Depression, riots in the 1960s, blight in the 1970s and the 2008 subprime mortgage implosion. But it won’t probably won’t survive another five years thanks to our “education” system.
Vinnie took it over from his father, who inherited it from his father before him, stretching back to the presidency of Theodore Roosevelt. He has a steady base of restaurants and locals as customers. He also has savings to invest and clear ideas of how to grow the business.
The problem is that Vinnie’s own son has no desire to take it over. Instead, he wants to go college.
Consider what that really means. A young man has the ability to earn a living right now in an established venture with growth potential. He can learn everything from his father, eventually taking over the building and living upstairs where he grew up. Instead he chooses not to work, and to take on debt with no assurances of a job after graduation. And, judging by what Vinnie said, his son isn’t a prodigy pianist or a budding brain surgeon, who really should pursue higher education. He’s just an ordinary kid who will probably go to a middle-rate college and drift around for a few semesters before even settling on a major.
This is a microcasm of what’s been slowly happening in America for years: Not only do businesses die, but growth never occurs. In the case of Vinnie and his son, there will be less work for his suppliers and drivers. The government will lose tax dollars and a storefront will soon be vacant. A young man with skills of dubious value and thousands of dollars in student loans will also be looking for a job.
Four words sums it up: More debt, less work.
Contrast this with the our countrymen in the late 1800s, when the American economy emerged as the envy of the world. What, for example, did John D. Rockefeller, Cornelius Vanderbilt, George Eastman, Henry Clay Frick, J.P. Morgan, and Andrew Carnegie have in common — aside from being rich titans of industry? Answer: None of them graduated from college.
What they did do was work, with most of them starting in their mid-teens. And it’s a good thing, too, because colleges didn’t teach how to build an oil company, operate a railroad, or make cameras. Steelmaking wasn’t in the course catalog, nor was international finance. These men built their industries with hard work and their own determination.
Bookkeeping was the one thing that most of them studied in some form. They knew how to keep track of expenses and spend money wisely. None of them were foolish enough to skip a real job, while borrowing several years worth of income on the vague hope of a job down the road.
Yet this is precisely what Americans have done at an alarming pace in recent decades. Since 2005 alone, the amount of student debt has almost tripled to $902 billion. In my next post, I will explain how this resembles an inflationary bubble similar to what happened with houses.
Today, the point is to stress that the unemployment crisis in our country cannot be separated from the growth of academia. Colleges have become a place where people go to avoid working. It’s a corrupt refuge from the laws of economic reality, and the bigger this monstrosity grows, the less economic our economy becomes.
Everyone knows that the cost of education has gone up faster than the rate of inflation (more on that next time as well). So, when you roll back the clock five to 10 years, kids were still getting lousy educations but it was simply cheaper. In other words, this trend has been a problem for decades but it’s only becoming really obvious in the debt numbers now.
The results go far beyond runaway student loans. Staffing company Manpower, for instance, issues a report every year detailing the the large numbers of vacant jobs in skilled trades, engineering and IT. The Labor Departement also says that more than three million positons are available but candidates cannot be found.
Filling those jobs would not only lower the unemployment rate directly. It would have obvious multiplier effects because new workers would have higher incomes and spend money, creating new business opportunities elsewhere in the economy.
It’s also interesting that many of these positions are the sort of thing people learn by doing, rather than by studying. No one needs to go to college to learn IT work or to run machinery. No one needs to borrow $100,000 and spend four years playing beer pong to be a driver or a sales representative.
No, they need something more important. They need a work ethic and a desire to learn. They need the humility to know that the world doesn’t exist to serve them, but they must learn how to serve the world. In a free society, this process is accomplished with private enterprise, employment and individual liberty. Running away to academia accomplishes little except encouraging idleness.
The worst thing is that the cult of education has become a self-fulfilling prophecy. Jobs that a few decades ago were done by high-school graduates now increasingly require college degrees — things like running a restaurant or being a police officer. (Who ever heard of “criminal justice” as a course of study until about 20 years ago?)
On one hand, they need more education because they learn less in high school. But there is also a process of natural inflation, where a critical mass of candidates have degrees. So recruiting managers automatically exclude any candidates without one. That forces everyone to attend college, which, in turn, means more debt and less work, once again.
Like any inflationary spiral, it becomes hard to separate cause from effect. Prices go up, so they print more money, and then that causes prices to go higher yet again. Everyone has a wheelbarrow full of cash that buys less and less.
Of course, we don’t have to look too far beneath the surface to find that the state is the real culprit. Who else, after all, runs the schools and pays the guidance counselors that channel kids into higher “education?” Who else subsidizes loans and encourages excessive credentialing for teachers and even police officers? Who else incessantly spends more and more of our money on failing schools, and then acts like they’re doing us a favor? Government, government, government.
Of course, in none of this do I mean to imply that college is always bad because it isn’t. The problem is that people have forsaken rational economic thinking when it comes to education. Schooling is accepted always and everywhere an a priori good. Like all bubbles, this has caused prices to soar, quality to plunge and wrought havoc on real human beings. More on that next time.