

Winds of Change Blow Away College Degree - mvs
http://www.bloomberg.com/news/2011-11-09/winds-of-economic-change-blow-away-college-degree-peter-orszag.html

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tokenadult
It looks like this newly submitted article is reasonably thoughtful and
informed. The distinction between job categories vulnerable to globalization
and those less vulnerable is interesting, and points out that some college-
degree-requiring jobs may be increasingly outsourced.

But degree-seekers decide whether or not to get degrees at the individual
level, and sometimes after already deciding on a career. I've not posted in
some of the other recent threads about the supposed uselessness of college
degrees, and I want to provide a different perspective on the issue. While
reading about IQ testing research, specifically directed to the issue of IQ
tests as qualifications for being hired for full-time employment, I saw the
striking statement that at ALL levels of IQ, an engineer will enjoy better
career prospects than a technician. In many business corporations and
government agencies (perhaps there are some exceptions), the distinction
between being hired as a "technician" and being hired as an "engineer" is
mostly determined by the absence or presence of a college degree. The lifetime
earnings difference (remember, this is for persons with the same IQ) between a
technician and an engineer is more than enough to justify investing in getting
a college degree in engineering.

I do not claim this generalizes to the difference between an "office
assistant" and an "office manager" (which perhaps is also defined mostly by
higher education credentials) but that would be an empirical issue to look at.
If college study has signaling value in the job market, and perhaps also
provides some practical training for being in one job category rather than
another, whoever you are, however smart you are, you may be well advised to
seek a college degree.

For the more college-skeptical view of Charles Murray, see "Down with the
Four-Year College Degree!":

[http://www.cato-unbound.org/2008/10/06/charles-
murray/down-w...](http://www.cato-unbound.org/2008/10/06/charles-murray/down-
with-the-four-year-college-degree/)

~~~
asolove
The real question is whether this earnings difference is justified (the
college degree adds enough value to the employee to put them on an entirely
separate tier) or a "bubble" (perceived by hiring managers to be that
important, but not actually).

If the latter, many companies are making expensive mistakes by not hiring
less-educated but intelligent workers. The costs of training would be far
lower than the salary savings .

My sense is that most employers today have no interest in serious training and
career advancement for their employees. They hire technicians, engineers, and
managers, rather than hiring technicians and letting them work their way to
being engineers and managers. As a result, individual workers have far less
space to grow within the company, loyalty is lower, the management has no
personal experience of the day-to-day operations of the company.

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motherwell
I wonder if the solution to this whole issue is a proper market, and true
innovation, in student lending.

A competitive financing market, where college hopefuls compete for access to
lenders' funds, and lenders compete to get quality students, could work well.

It seems that private lenders, if they could make interesting loan agreements,
would be the best equipped to provide substantive loans to whomever, and we
wouldn't see ridiculous degrees and subjects surviving, as students are
incentivised into more productive areas.

~~~
Newgy
Actually the key is to get rid of government loan subsidies. They just bid up
tuition and get capitalized into non-essentials like sparkling student
centers.

It's no coincidence that college prices have risen as the government has
increased their loan subsidies.

~~~
JoeAltmaier
Cart before the horse! Any evidence of cause-and-effect here? Its also true
that "government loan subsidies have increased to offset rising college
prices".

~~~
jonhohle
If you agree with Austrian economics, this follows the typical business cycle.
Cheap money, inflated prices, credit contraction, bust.

In the last 5 years we've seen this happen at least three times:

    
    
      * housing
      * solar
      * equities
    

the insidious thing about student loans is that the borrower has little to no
credit history and cannot default on the debt. A large portion of this money
(40% iirc) is going to for profit institutions which have policies in place to
keep a student enrolled (when any respected school would kick the the student
out for low academic performance or issues of ethical conduct).

~~~
Locke1689
_If you agree with Austrian economics,_

Big if.

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savramescu
I feel this is only a symptom of a social change. We don't value hard work
anymore. Everyone pushing for college degree has watered down the meaning of
college graduate. For every one that actually wanted to earn it and learn
there lots more interested in just the diploma, without no real understanding
of their field of choice. This resonates with the fact that the society
promotes shows about Kim Kardashian and they've become so central.

It's just so easy to become complacent and mediocre when that's what's really
the mentality they're trained to have. It's starting to feel more and more
like Atlas Shrugged.

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ctdonath
Change happens. Cope.

My parents graduated with a solid grasp of vacuum-tube electronics - and
walked straight into a world of transistors. Change happened. They coped.

Pick your field of study with care, recognizing what the degree can (and
can't) do for you out there. Realize there is no guarantee, no social
contract, no assurance that your degree will in fact do anything for you. Find
a suitable balance between cost of education and subsequent salability
(engineering degrees paid in cash have good payback; advanced degrees in
obscure studies piling enormous debts don't), and look for creative solutions
(don't just go "I want" and swipe a card with no idea how it will be paid).

Realize the price tag is the result of supply-and-demand: so long as students
are willing to incur massive debt for misguided or aimless degrees, prices
will go up. And realize there are more options than list price, if you will
dig and inquire (my wife & I have 5 degrees, total cumulative cost ~$100k with
the last degree paying us to go there).

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nodata
“Since the distinction between personal services (likely to remain in rich
countries) and impersonal services (likely to go) does not correspond to the
traditional distinction between high-skilled and low-skilled work, simply
providing more education cannot be the whole answer.”

What are personal services exactly?

~~~
motherwell
Waiter, boot polisher, hair dresser... anything you need to be there in person
to do. For everything else, there is outsourcing :)

~~~
JoeAltmaier
And Americans don't like those jobs - so my Vietnamese neighbors will prosper
while my American neighbors will go on the dole and complain about
immigration.

America has split in two: the land of opportunity is still there, but now
alongside an entitled class of nth generation unwilling to put in the same
effort as immigrants to succeed.

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zotz
It's rather insulting for a vice chairman of Citigroup and a member of that
elite club that helped topple Iceland's economy to lecture people on the
further ruin that he, by his very occupation, assists in actualizing.

~~~
philwelch
Citigroup profits from the higher education bubble as much as anyone. And it
is always naive to blame a small group of elites for structural economic
problems.

~~~
zotz
The small group of elites that have a monopoly on the issuing of credit and
currency ARE the structural economic problem. It's their baby. We just get to
pay for it.

It's far more naive to discount a monopoly. Always.

