Oh I know, this third installment of my trilogy about Higher Learning, is not going to make me a bunch of friends. By contrast I expect to be severely flogged for the following observations, especially from a good number of friends and acquaintances proudly parading their graduating offspring on Facebook. Graduation has become a sort of Rite of Passage to include fun, partying and a little bit of nostalgic reflection of a childhood that is now over. In essence the tender formative years of the graduating child are supposedly over and life’s reality comes at you with the speed of a bullet.
I know, I’ve been there; did the expected, High School, College all the way up to post doctorate. In the much more sober culture of my tender years (Dutch), commencement speeches were unknown. Coming across the pond almost 35 years ago, I was invited to the graduation of my business partner’s son and taken by surprise by the whole circus that surrounds a graduation. Hearing my first commencement speech was a bit like watching a cactus field turn into a rose garden, slightly boring and loaded with false hopes for the future.
There are slightly under 4,500 colleges and universities in the US. Using this approximate count, there were at least 4,500 commencement speeches in recent days and weeks in front of several million kids on the verge of entering an overwhelming reality, at least that’s what we like to think. With regards to High School Graduations, this speech is not about you, but directed at you as well, as it does concern your potential decision to step into Higher Education, whether you elect a 2-, or 4 year stint or the All the Way program.
Please consider this a warning, not an advice, directed at those who have elected to continue their professional education at an institute of higher learning.
And before I try to shed some light on entering the real world, I’d like to share a couple of noteworthy statistics to look back or forward to, regarding your time spent in college.
• The typical student is in school at most 30 weeks a year with on average 30 hours of attendance, that means she or he ideally is spending about 900 hours on curriculum studies. A good case can be made that college is increasingly sort of a country club with elaborate recreational and living facilities but also with a curious mix of academics and hedonistic excesses, where booze, drugs, and sex claim at least equal time with academic studies.
• Many students these days, consider the job market and decide to engage in credential inflation, by going to school for even more years, simply to get a chance at jobs for which much of that education is useless.
• Read TWELVE INCONVENIENT TRUTHS ABOUT HIGHER EDUCATION, an 18 page Policy Paper written by Professor Richard Vedder, Distinguished Professor of Economics at Ohio University, Director of the Center for College Affordability and Productivity and an adjunct scholar at the American Enterprise Institute.
Dear Class of 2014
Many of you are already in debt or are on the verge of committing to a $100,000 plus investment in higher education. The banks/government lend you money so you can pass it along to the education industry. Where did they get the money? And how come it’s so expensive to go to college that you have to borrow heavily to afford it? Hey, didn’t they teach you anything in college? Allow me to enlighten you on how your economy works these days and why is it so expensive to go to college here in the US?
It’s a long and intricate story. But the short version is that the economy has been rigged by collusion between industry and government. This collusion started about 100 years ago when the roots of the Federal Reserve were firmly established and dollar manipulation became a favorite pastime for DC.
I insist that anyone who isn’t a saint or a mental defective wants more status, more money and more power. The easiest way to get these things is to rig the economy in your favor. Who can rig the economy and get away with it?
Yep the government, of course. But the story doesn’t end there because government is just a means to a goal; the objective being to deceive people into thinking they have control
So following the thread of manipulation the next question is: “Who can get the government to do what it wants?”
The oligarchs who control it with their lobbyists… their campaign contributions… and their voting blocks.
Why Cheap Money was Created
When the Dollar Became FIAT (paper) Money, no longer backed by gold, American productivity ended up on a long downward slide.
Even in the immediate aftermath of uncoupling gold and the dollar, up until the early 1980s, Americans made things and sold them to the rest of the world.
You didn’t need a college degree to make things. And you didn’t have to make campaign contributions. You just had to learn… and work hard… and sell things at a profit. Then you could earn a decent living and live a decent life. Made in America stood for something and the US Dollar was backed by the universal currency that was gold. That all changed in August of 1971.
Actually in February 1968, Democratic President Johnson asked Congress to end the requirement that dollars be backed by gold. He needed money to continue the war in Vietnam and depleting gold reserves where standing in his way of borrowing what he needed.
Well in August 1971, Republican President Nixon stopped honoring commitments to settle foreign accounts in gold. Then the feds started replacing money with credit and the economy started to change. Slow at first but then much more quickly.
Gold had limited the amount of money and credit in the economy. But Tricky Dicky’s new money was unlimited, thanks to the magic of printing presses and the inference that the US Government could be trusted for its debts. It made it easier and cheaper to buy things made by other people than it was to make them ourselves. Since 1980, the US spent nearly $10 trillion more overseas than it received from overseas sales of products Made in America.
Gradually, making things in the US became less and less profitable. So, if you wanted to earn a good salary, manufacturing was not the way. You had to go somewhere else. Finance, administration, accounting, law, education or health care. Services without a direct contribution to value or GDP. But also service industries in which the good jobs required a college education. That’s why you’re here at yet another year’s commencement speech, with a diploma that is supposed to catapult you into a bright future.
The Effects of Easy Money
Of course there’s more to the story. For example unlimited and easy credit also made it easier to support a growing group of parasites. To be fair I call them parasites because they don’t produce anything worthwhile, with no tradable value at all; they just suck the blood out of the other parts of the economy – reduce output and add costs. But in a democracy even parasites are entitled to a vote, which makes them prime targets for politicians who buy votes from democratic sub-contractors: voters who need to be bought off to maintain social peace and the illusion of fairness from villages to metropoles.
Government connived with industry to create quasi-monopolies… cartels… subsidies… guarantees and price supports. And the feds could add bureaucracy… controls… rules… and regulations all they wanted. It’s where many jobs went.
But for a concerned insider it’s nothing new that the education industry added few teachers, but lots of “educators” and policy coordinators. The health-care industry added relatively few doctors – but a boatload of paper-pushing insurance workers and ambulance-chasing tort lawyers. A drive down to Jacksonville on I-95 will expose you to multiple billboards for at least 10 law offices offering to sue someone for you, as well as at least half a dozen billboards advertising hospitals and medical services.
The whole system is rigged against you, yet it is done in such a way that you have no choice but to follow the yellow brick road.
And on that road, college is a major stop. Did you ever wonder why you went to college? And why it was so expensive? You pay an average of $30,000 a year, plus another $10,000 for room and board! You look to the future with anticipation and expectation but did you realize
that 90% of the population, real wages have been flat since 1968. The other 10% had jobs that were mostly for college graduates – specifically in finance and administration. That’s why you did this whole higher learning thing: You wanted to be in that small group of Americans with rising incomes.
The last four years should have been the best years of your life. You were as alert, energetic and strong as you ever will be. And what did you really get for it? Did you learn more in school than you would have learned in real life? I doubt it, (again this comes from someone with post graduate education) who still has to unschool himself almost daily, 40 years later!!
Real life is tough. Infinitely complex. Treacherous in its subtlety and ambiguity.
You never know when you’ll be tested in real life… and you never know what the test will cover or if you were prepared for it. So you have to be on your toes. In college you can get through courses with CliffsNotes and cram sessions. In real life, you have to use the agility of your brain to survive and stay ahead.
In college, life is stripped down, simplified to the point of multiple choice. People are translated into one dimensional entities. History, politics, sociology, psychology, government, economics – all are reduced to simple narratives that can be taught, studied and learned.
An infinite variety of facts and nuances must be distilled into just a few, usually at the discretion of the going flavor in the college halls of wisdom. The flesh must be boiled off the bone. What you end up with is bare – with 10% useful insights… and 90% hogwash. And we don’t even need to mention literature, art, and gender studies.
Now that you’re graduating, you must think you know something. But unless you’re in the factual sciences or engineering, what you know is probably not worth knowing. It’s not how real life works. And the longer you spend in school studying this artificial world, the less able you are to function in today’s real world.
Most of history’s successful contributors spent little time in formal education. Alexander the Great, Julius Caesar, Aristotle, Hannibal, Abraham Lincoln, Cornelius Vanderbilt, Henry Ford, Charles Dickens. And thousands of others. Steve Jobs, Bill Gates and Mark Zuckerberg dropped out of college. Yet today, big employers want you to have a college degree. Especially the biggest employer of all: the government. The requirement is a weird effort for self preservation, as it turns out that hundreds of thousands of college graduates perform jobs that can easily be done by High School graduates.
Heck, today Jesus of Nazareth could apply for a job as a social worker in any town in the US. He wouldn’t get it. He didn’t have a diploma. Socrates could offer to teach a class in philosophy; almost every university would turn him down. “Where’s your PhD?” they’d ask. Archimedes, the greatest engineering genius of all time, wouldn’t be allowed to design a county storm drain. What kind of a system wastes strong backs and ignores strong minds?
What you learn in college is the way things are “supposed” to work. But few things in real life are as simple as they’re “supposed” to be. Our government is not run by the people for the people. Government is merely a way one group of people – the insiders – take advantage of other people – the outsiders. The proliferation of that system is becoming exceedingly clear in these times.
You can call it democracy or dictatorship; it hardly matters. It can be gentle and broadly tolerable… or brutal and widely detested. What makes it a government is, that it has a legally enforceable monopoly on the use of violence; ultimately, the insiders use it to get what they want and examples of this have littered the course of history.
As for the economy, you have learned about our capitalist system. You have been told to accept that it needs regulation by the SEC, the Fed, the Department of Justice, the FDA, the FTC and other agencies to keep the capitalists honest. You have been lied to.
It’s not a capitalist system; the feds took the capital out 40 years ago. Now, it depends on cronies and credit. It’s a corrupt system – the product of collusion between industry and the agencies meant to regulate them. Its real purpose is to transfer more wealth and power to the insiders.
Economist William Baumol understood.
He observed that goods-producing businesses – such as an automaker or a maker of a widget – could achieve high productivity growth, thanks to labor-saving automation and supply-chain efficiencies. He also noticed that productivity stayed more or less static in service-sector jobs, such as nursing and teaching. (Basically, a nurse needed to spend just as much time with a sick patient… and a teacher needed to spend as much time with a student.)
Despite this simple observation, wage increases in service-sector industries – education, healthcare and government – tended to keep pace with wage increases in industries where rising wage growth was justified by growing productivity. In contrast, the service industries started requiring college diplomas in an effort to protect their status.
That’s part of the reason your TVs are cheap… but your health care has become so expensive. Not only is health care largely protected from competition and grossly distorted by third parties who pay the bills, including the government and insurance companies, but also wages for health-care workers rise, even though productivity stays more or less static: a nurse today does essentially the same type of job as 40 or even 100 years ago.
This also helps explain why a university education is eight times more costly than it was in 1978… even though you’re still getting more or less the same education. And yes, college was optional to a decent income in the 1970s. Now, it’s almost obligatory. Did I say almost? It is obligatory if you want a job.
When everything is rigged, the riggers have the money and the power. Lobbyists, lawyers, accountants, administrators: Whether you want to take a business public… or just build a house… you come face to face with someone who can stop you, with paperwork, legal razzmatazz and nauseating administration. Now that you’re a pawn in the game too, you are left with no choice but to play the game. You $100,000 student debt will make sure of that.
I’m going to leave you with Sean “Puff Daddy” Combs’ closing remark when he gave his commencement speech a month ago, while receiving his Honorary Doctorate from Howard University, where he dropped out of in the late 1980s to make a career in Rap Music.
Before ending his speech, Puff Daddy, aka P.Diddy said “I can’t wait for you to live in a world that you are about to create. I can’t wait to witness the crazy dreams that you’re gonna make real. I can’t wait to watch you change the world.”
Publisher’s Warning: Keep in mind that Dr.Combs dropped out of college to follow his passion in the real world, but is now part of the inner circle, where any type of change is seriously frowned upon.