site banner
greyenlightenment  investments: META/FBL, TSLA, TQQQ, TECL, MSFT ...  1yr ago (greyenlightenment.com)   2801 thread views

Why the college bubble won’t pop

greyenlightenment.com
12
Top Bottom Old Controversial Comments
Jump in the discussion.

No email address required.

In this post I argue that the main driver of higher tuition and demand is the ever-widening college wage premium. It holds for almost all degrees and schools, even low-ranked schools and 'useless' degree. Additionally, college grads have much lower unemployment rates, about half the national average.

An MBA grad today out of college can expect to earn $70-100k/year, compared to $50k in 1975 (in 2021 dollars). This is a huge increase even after adjusting for student loan debt.

Part of this is wage inflation/premium, in my opinion, is attributable to growing size, profits, and influence of multinationals, even adjusted for GDP and since the '80s and especially since 2009, when the financial crisis ended. The past decade has seen the explosion of giant, hugely-profitable firms--companies that were worth $10 billion a decade ago being being worth $100+ billion today (like Broadcom, Salesforce, Visa/Mastercard, Google, Facebook, etc.); start-ups going from $0 valuation to $10+ billion (like Uber, Doordash) or Figma (founded in 2012, acquired by Adobe for $20 billion!) Bigger companies means higher stakes and hence much higher salaries for white collar talent.

Credentialism is still possibly an effective , unbiased (and hence disparate-impact safe), semi-automated filtering/screening method. College, despite supposedly dumbed-down courses, has better-resisted the trend towards grade inflation seen elsewhere (high school 90-100% of high school students graduate).

Covid and remote learning , as well as the 'anti-college movement' online, has not put a dent in the wage premium or demand. Or put a debt in the prestige of top 20 institutions. Admissions for top colleges is more competitive than ever, and I don't see any reason for this to change.

Finally, I'm not a fan of college alternatives (assuming you are capable of graduating), such as coding bootcamps, online learning (like Khan Academy), tutorials (like on YouTube) ,etc. Often, these alternatives are not rigorous enough to confer mastery, or have poor job prospects, or are also as expensive as college (like for bootcamps). Same for various 'hustles' as alternatives or shortcuts to the standard college-to-career route. Crypto is down 70-90% over the past year, stocks down 30+%, etc. ..these was so much hype I remember a year or two ago about those things...people were hoping to retire from crypto or stock speculation, and it all went up in smoke. This sort of stuff happens all the time....some overhyped surefire path to riches suddenly implodes or stops working. There are not enough new people entering to pay off the earlier people for these various hustles or wealth-creation schemes...investments and markets get saturated fast. Society is too competitive and difficult for there to be enough seats on the shortcut lifeboat. If someone figures out that they can arbitrage with Amazon and Alibaba, this may work if only a few people do it, but as soon as word gets out, it stops working as well or at all. College has resisted this unsustainability or saturation seen elsewhere.

It seems like there is a growing opportunity for some bright entrepreneur who can figure out a legal way to sort employees cheaply, and hire good people directly from high school (splitting the college premium with them). I wonder how big it would have to get before someone decides to try to exploit it.

that would be something like the wonderlic test . Unfortunately, despite the widespread use of the test, it has not been enough to disrupt the 4-year degree hegemony.

What is this place?

This website is a place for people who want to move past shady thinking and test their ideas in a court of people who don't all share the same biases. Our goal is to optimize for light, not heat; this is a group effort, and all commentators are asked to do their part.

The weekly Culture War threads host the most controversial topics and are the most visible aspect of The Motte. However, many other topics are appropriate here. We encourage people to post anything related to science, politics, or philosophy; if in doubt, post!

Check out The Vault for an archive of old quality posts. You are encouraged to crosspost these elsewhere.


Why are you called The Motte?

A motte is a stone keep on a raised earthwork common in early medieval fortifications. More pertinently, it's an element in a rhetorical move called a "Motte-and-Bailey", originally identified by philosopher Nicholas Shackel. It describes the tendency in discourse for people to move from a controversial but high value claim to a defensible but less exciting one upon any resistance to the former. He likens this to the medieval fortification, where a desirable land (the bailey) is abandoned when in danger for the more easily defended motte. In Shackel's words, "The Motte represents the defensible but undesired propositions to which one retreats when hard pressed."

On The Motte, always attempt to remain inside your defensible territory, even if you are not being pressed.


New post guidelines

If you're posting something that isn't related to the culture war, we encourage you to post a thread for it. A submission statement is highly appreciated, but isn't necessary for text posts or links to largely-text posts such as blogs or news articles; if we're unsure of the value of your post, we might remove it until you add a submission statement. A submission statement is required for non-text sources (videos, podcasts, images).

Culture war posts go in the culture war thread; all links must either include a submission statement or significant commentary. Bare links without those will be removed.

If in doubt, please post it!


Rules


Recommended Posts And Communities

Recommended Realtime Chats