The "End of Work" and the Coming Revolution in Education   (June 7, 2011)

College education has joined the ranks of cartels feeding at the trough of the Finance Capital-Central State. The "end of work" will force a revolution within the education cartel.

I have addressed the "end of work" and the related transformation of education and industry for years:

End of Work, End of Affluence I: Cascading Job Losses (December 8, 2008)

The End of (Paying) Work (January 21, 2009)

Is Our Education System Based on a Factory Metaphor? (November 15, 2005)

Education: Replacing the Factory With The Workshop (December 7, 2005)

The Future of Manufacturing in the U.S. (February 5, 2010)

The key take-aways:

  • The "end of work" is driven by global trends including web-enabled business and work, automation and robotics.
  • Work, education, finance, governance and cultural norms and values are inextricably bound together: there is no way to transform one without transforming all.
  • "Centralized factory" models for education, government, finance, energy and production have run their course and are now counter-productive.
  • Education in the U.S. has been financialized along with everything else, burdening "customers" with huge debt loads in exchange for dubious future promises of value (just as housing never goes down, a college degree is a must, etc.).
  • The education "industry" is now just another cartel in bed with finance that has captured the regulatory and governance processes via massive lobbying and campaign donations.

  • Future opportunities are all on the other end of the spectrum from centralized concentrations of capital and political power, in localized, decentralized, self-organizing networks of industry, education and production.
  • As noted yesterday, what we really have in the U.S. is a corporate-colonial economy ruled by financial oligarchies and their minions in the Central State. Look no further than student loans which cannot be discharged in bankruptcy to dispel any doubts you may entertain about this.

    The domestic populace is indentured colonial labor to the Central State, Finance, Corporate America and the Education "industry." Want a "good job" in the government or Corporate America? Then you need that four-year university degree credential, and that of course is gonna cost you.

    Outside of Corporate America and the State, employers are interested in what you know how to do and your collaborative and learning skills, not your credentials, which are so easily gamed nowadays (from correspondent Bernie B.):

    The Shadow Scholar--student cheating on the graduate level is rampant:

    While the deficient student will generally not know how to ask for what he wants until he doesn't get it, the lazy rich student will know exactly what he wants. He is poised for a life of paying others and telling them what to do. Indeed, he is acquiring all the skills he needs to stay on top.

    As for the first two types of students—the ESL and the hopelessly deficient—colleges are utterly failing them. Students who come to American universities from other countries find that their efforts to learn a new language are confounded not only by cultural difficulties but also by the pressures of grading. The focus on evaluation rather than education means that those who haven't mastered English must do so quickly or suffer the consequences.

    As government implodes under its own corrupt, bloated excesses and Corporate America hires new workers overseas near their new markets, research and development and production facilities, then the value of costly college credentials will decline. If what you can actually do in the real world is more important than credentials, then the "career value" of credentials will revert to professions that have erected high barriers to entry and State-controlled professional guilds (license to practice, etc): doctors, nurses, attorneys, architects, etc.

    The closer you get to entrepreneural Nirvana, i.e. Silicon Valley, the less valuable credentials become, with the exception of patent attorneys and other specialists.

    Here is an excellent, skeptical look at the supposed value of credentials and the bureaucracy of issuing them: On Credentials (Paul Graham)

    Let's think about what credentials are for. What they are, functionally, is a way of predicting performance. If you could measure actual performance, you wouldn't need them.

    So why did they even evolve? Why haven't we just been measuring actual performance? Think about where credentialism first appeared: in selecting candidates for large organizations. Individual performance is hard to measure in large organizations, and the harder performance is to measure, the more important it is to predict it. If an organization could immediately and cheaply measure the performance of recruits, they wouldn't need to examine their credentials. They could take everyone and keep just the good ones.

    Large organizations can't do this. But a bunch of small organizations in a market can come close. A market takes every organization and keeps just the good ones. As organizations get smaller, this approaches taking every person and keeping just the good ones. So all other things being equal, a society consisting of more, smaller organizations will care less about credentials.

    So is forming an independent citizenry the purpose of college, or is it just glorified job training for the Central State and Corporate America? We can't seem to make up our minds: Live and Learn: Why we have college (from correspondent D.S.):

    “Academically Adrift” (Chicago; $25) was written by two sociologists, Richard Arum (N.Y.U.) and Josipa Roksa (University of Virginia). It is not a diatribe based on anecdote and personal history and supported by some convenient data, which is what books critical of American higher education often are. It’s a social-scientific attempt to determine whether students are learning what colleges claim to be teaching them—specifically, “to think critically, reason analytically, solve problems, and communicate clearly.”

    According to this article, the book concludes many students are not learning these skills in college.

    As many readers have pointed out over the years, the real value in an Ivy League education is the opportunities to network with wealthy, well-connected students and their parents, a point made in this excellent article: What Really Keeps Poor People Poor.

    Are there innovative ways to replace increasingly useless and costly credentialing and enable the growth of "value" in tapping networks? There are a number of ideas bubbling away which are worth pondering, for example:

    Learning Graph + Reputation Graph = Massive Disruption in Higher Ed?

    Education, especially at the post-secondary level provides a strong filtering and sorting mechanism for society. There’s a reason why some companies will only hire Ivy League graduates. And it’s a big part of why the top schools have incredible pricing power. But what if you could develop an alternative signaling mechanism that rivaled or even eclipsed what schools currently do? I think that’s precisely what the reputation graph could become. It’s still way early but I could see the reputation graph ultimately playing a very important role in decision-making about people.

    Big universities might not like it but they might not have a choice. I feel that a lot of education companies are similar to where the record labels where a decade ago. They're trying to pretend that the world isn't changing fast or that the dynamics of change won't affect them. They'll likely continue to do this until it's too late to make meaningful shifts in strategy. And just as companies like Apple have usurped most of the power in the music biz, my guess is that the powerful companies in education in the coming decades will look very little like the ones in power today.

    Rick Davis of the excellent Consumer Metrics Institute recently published an extended commentary on the costs (and valuations) of education, which I excerpt below:

    It is an article of cultural faith that a good college education is the surest and most universal path to the "American Dream" -- and by virtue of that cultural dogma any debt incurred while acquiring higher education is irrefutably good debt.

    We're not so sure. We could argue that in the early 21st century -- regardless of the U.S. cultural memory dating from the implementation of the first G.I. Bill through the 1980s -- the growth of student loans may be a major drag on the potential growth of the economy for at least two reasons:

    -- The crippling effect that the enormous personal debts are having on the spending potential of a whole generation of consumers;

    -- The cost effectiveness of the education being so dearly bought.

    Or, in a politically incorrect nutshell, are we creating a whole generation of hopeless debtors by foisting on them an exorbitantly priced education that will be of marginal value when they graduate?

    Granddad -vs- Junior

    Granddad may have benefited greatly from an education acquired under the G.I. Bill. Dad and Mom may have benefited from taxpayer subsidized in-state tuitions during the 1970s and 1980s. But is Junior's $150,000 Bachelor of Arts from a private college going to benefit him similarly? And more importantly to our concerns here, is it going to add growth to the economy?

    There are two critical economic differences between the educations received by Granddad and Junior:

    -- Subsidies -vs- Loans: For the most part, the educational components of the various generations of "G.I." bills have been stipends or matching grants, not loans. For the class of 2009 the Project on Student Debt estimated that the average student graduated with $24,000 in student loan debt -- and at one private school the average student loan debt was over $61,000.

    -- Relative Cost: According to the Trends in College Pricing 2010 report published by The College Board, a four year in-state education at a public institution is now priced at an average of $64,560 -- while the same four years at a private institution averages $147,972. In that same publication The College Board reported that the real price of tuition and fees at public four year institutions (i.e., net of CPI inflation rates) had grown to be over three and a half times as expensive as in 1980. Over that same time span median real personal income grew by less than 30% -- meaning that since 1980 the real price of tuition and fees at a public university has grown over eight times more than median personal income.

    The parallels to the housing bubble are unmistakable to Malcolm Harris, who also quotes Marc Bousquet on the current sad state of classroom instruction:

    "If you're enrolled in four college classes right now, you have a pretty good chance that one of the four will be taught by someone who has earned a doctorate and whose teaching, scholarship, and service to the profession has undergone the intensive peer scrutiny associated with the tenure system. In your other three classes, however, you are likely to be taught by someone who has started a degree but not finished it; was hired by a manager, not professional peers; may never publish in the field she is teaching; got into the pool of persons being considered for the job because she was willing to work for wages around the official poverty line (often under the delusion that she could 'work her way into' a tenurable position); and does not plan to be working at your institution three years from now."

    So, why have the costs in tuition and fees grown eight-fold relative to median incomes since 1980 -- when tenured professors likely taught three of every four classes? Easy credit (and the cultural prestige of a college education) turned higher education into yet another "asset" bubble -- but secured in this case only by the garnishing powers of the lenders.

    And it could also be argued that recently those increased costs have begun to yield diminished returns: salaries for 2010 graduates with majors in the liberal arts majors fell 8.9% nominally year-over-year, to $33,540 -- roughly 9% less than the average U.S. per capita disposable income (which, incidentally, had actually grown 2.2% nominally on the same year-over-year basis).

    Instructional Parallels

    The two economic issues are causally related: absent the exorbitant rise in tuitions and fees the debt levels would be more sustainable. Conversely, the availability of subsidized and securitized (and Federally guaranteed) loans -- coupled with politically expedient reductions in underwriting standards (to spread the benefits of higher education to the economically disadvantaged) -- empowered the rapid rise in tuitions and fees.

    The parallels to the housing bubble can also be instructional. The solutions may have to be similar, and the higher education "industry" may experience the same kinds of pain as the housing industry has faced for the past several years. Among the plausible options might be:

    -- Rescind the student loan provisions in the 2005 Bankruptcy Law. Hopelessly bad debts have to be cleared, and the court system is the best way to apportion debt forgiveness and lending haircuts to all parties -- according to their complicity in creating the mess in the first place.

    -- Stop the lending madness. It simply isn't working if 65% of the 2005 cohort of students can't carry the debt. Among the "unthinkable" options are:

    - Stop the securitization of student loans;

    - Put the institutions at risk for non-performing loans by requiring that a substantial and progressive portion of loan values (perhaps 5% for the smallest loans and 50% for the largest loans) be secured by institutional assets. This would presumably encourage real underwriting;

    - Cap the tuition cost per credit hour that can be supported by student loans;

    -- Provide consumer protection to students and their families by requiring clear disclosure of the quality of the ingredients in the educational package. For example, there could be differential pricing of classes based on the credentials of the instructors and the class size, thereby avoiding the defacto "bait and switch" instruction quoted above. This could also allow students (including those who just don't fit a four-year degree program) a chance to engineer a "budget" educational experience.

    -- Consumers are also harmed by institutional indifference to the number of years typically required to get a degree. Perhaps indifference is too kind a word; in fact the institutions have strong incentives to extend the educational "experience" as long as possible. A report from the U.S. Department of Education has found that only 34% of entering freshmen manage to get a degree from that same school in four years, with another 21% completing the task by the sixth year and yet another 7% still working on that degree beyond year six. Taking all transfers and sabbaticals into account, the chairman of the Spellings Commission observed that "the median time to a bachelor's degree is closer to six years than four years." The remedy could be as simple as putting the educational experience on a contractual basis, with a fixed maximum cost (tuition and fees) clearly stated for a prudently pursued degree program -- and with the institution contractually obligated to provide a reasonable opportunity and environment for students to accomplish the task in four years or less.

    -- Make only the monies spent in direct classroom instruction exempt from institutional taxation. The annual tuition and fees for two-year public institutions in the western U.S. are only about 22% of the annual tuition and fees for four-year public institutions in the same region, and a mere 5% of the annual tuition and fees of four-year private institutions in New England. Although some of this can be attributed to differences in the quality of the faculties, a larger portion is administrative bloat. Encourage greater efficiency by taxing that bloat -- and other non-classroom funding revenues. If it walks like a sports franchise and quacks like a sports franchise, maybe it should be taxed like a sports franchise.

    -- Create a national clearing-house for credit-hour transfers between all accredited institutions, with "real-time" balances of hours earned at each contributing institution. In time the hours-earned metric might largely replace the make-or-break "degree" hurdle for students not headed to graduate school -- enabling some sort of continuous measurement for higher education accomplishments. Plus, there is no better way to keep costs down than to provide consumers with plentiful and easily executed options for their spending.

    -- Make the cost efficiency of an institution's degree programs a major criteria while awarding Federal research grants.

    Are we really turning out independent, skeptical, curious and adaptable citizens? Critics have had their doubts for decades, for example:

    From 7 Lessons Public School Teaches by John Taylor Gatto, New Society Publishers:

    Students learn to accept:

    1. Confusion as your destiny.
    2. Hierarchy: You must stay in class where you belong.
    3. Indifference: Not to care about anything too much.
    4. Emotional dependency: Surrender your will/rights to the predestined chain of command who can withdraw your rights.
    5. Intellectual dependency: Curiosity has no important place, only conformity.
    6. Good people wait for an expert to tell them what to do.
    7. Provisional self-esteem: Your self-respect should depend on expert opinion-- children should not trust themselves or their parents, but need to rely on the evaluation of certified officials.
    8. Controlled society: Constant surveillance and denial of privacy--no one can be trusted, that privacy is not legitimate.

    I will be extending this discussion of education later this week. As a worthy end note, consider this:

    "The supreme end of education is expert discernment in all things--the power to tell the good from the bad, the genuine from the counterfeit, and to prefer the good and the genuine to the bad and the counterfeit." (Samuel Johnson)

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