Saturday, August 24, 2013

College and Some More Poor Ideas

I read a piece in the WSJ regarding the costs of colleges. Now the dumbest statement I have ever read, in my opinion, is in this article, by of all people, an academic. It states:

A better idea, Mr. Vedder suggests, would be to implement a national exam like the GRE (Graduate Record Examination) to measure how much students learn in college. This is not on Mr. Obama's list. 

Now imagine MIT EECS students being judged by a GRE exam! They learn hardware, software, mathematics, AI, networks, neuro-nets, and none of that would be on any GRE fit for all. Would we have to make certain the bio majors did the same as EECS, as History. It is clear that this individual has no clue as to the breath of the undergraduate curricula. Once one hears that statement one rejects all else coming from that neurocortex.

The reasons for escalating college costs are simple:

1. Government pays whatever is asked. Thus there is no real supply and demand. It is like public education and health care. But with a slight twist. In this case the student is stuck with the bill, sooner or later. And that bill becomes a drag on the total economy.

2. Buildings. This is the bane of higher Ed. They build again and again and for every dollar of capital spent there is $0.10 per year spent on maintenance, or even more. Thus if you have spent $1B in new buildings you face $100 million or more on just plain feeding the dragon you created. No one seems to figure that in.

3. More Government demands means more Deans and VPs. This has exploded over the past three decades. Behind each new Dean is an army of staff and they get paid, get benefits, get pensions. Worse they get more buildings, and the death spiral continues.

4. Salaries for Administrative folks is obscene. Take MIT. The new President I gather is paid almost $1.25 million. Now I can see someone getting a good salary but parity may have to be considered. Is this position, not person, worth that amount, and what are the conditions for getting rid of them? No one seems to consider that factor.

It is a systemic problem. It is not a GRE issue or an issue of graduates getting good jobs. It is that we have allowed and even supported expansive and expensive growth. The Government has been at the core of this.

Now the article continues:

Nor is the president addressing what Mr. Vedder believes is a fundamental problem: too many kids going to college. "Thirty-percent of the adult population has college degrees," he notes. "The Department of Labor tells us that only 20% or so of jobs require college degrees. We have 115,520 janitors in the United States with bachelor's degrees or more. Why are we encouraging more kids to go to college?" 

Mr. Vedder sees similarities between the government's higher education and housing policies, which created a bubble and precipitated the last financial crisis. "In housing, we had artificially low interest rates. The government encouraged people with low qualifications to buy a house. Today, we have low interest rates on student loans. The government is encouraging kids to go to school who are unqualified just as it encouraged people to buy a home who are unqualified."

Yes indeed we have too many people going to colleges for degrees they will never use. We need plumbers, carpenters, electricians, but we have few places to train them and we have unions that make certain that they are NOT employed. And the Government supports that as well.

Yes there is a bubble, but unlike the housing bubble that broke and spewed forth its debris, this one unfortunately will become a chronic festering burden on our economy for decades. The Government funds degrees in Fine Arts and Classic music and there frankly are few jobs. Even Oceanography has just so many openings.