Global Strategies: "The notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking."

I think there is a probable “bubble” in higher ed, that current costs have far outrun value, and that less costly forms of education and training may soon burst that bubble, such that Oregon should be cautious about making traditional investments in higher ed. The changes taking place run deep.

Paul Krugman has a recent NY Times op-ed noting that computers are now replacing highly educated, high skill workers, not just low-wage, unskilled workers (here):

Computers, it turns out, can quickly analyze millions of documents, cheaply performing a task that used to require armies of lawyers and paralegals. In this case, then, technological progress is actually reducing the demand for highly educated workers.

And legal research isn’t an isolated example. As the article points out, software has also been replacing engineers in such tasks as chip design. More broadly, the idea that modern technology eliminates only menial jobs, that well-educated workers are clear winners, may dominate popular discussion, but it’s actually decades out of date.

And, as for education, he says:

But there are things education can’t do. In particular, the notion that putting more kids through college can restore the middle-class society we used to have is wishful thinking. It’s no longer true that having a college degree guarantees that you’ll get a good job, and it’s becoming less true with each passing decade.

So if we want a society of broadly shared prosperity, education isn’t the answer — we’ll have to go about building that society directly.

Walter Russell Mead in his blog post “Paul Krugman gets it half right” partially agrees (here):

First, here’s what Krugman gets right: the hopes of our intellectuals that shoveling ever more money into our faltering higher educational system will raise American living standards are delusional. Citing the recent New York Times article on the devastating consequences of automation for the future employment of American lawyers, Krugman points out that many high-pay white collar occupations are vulnerable to automation.

He also gets something else: that many professional jobs are vulnerable to outsourcing. Citing research from fellow Princeton profs, Krugman tells us (again, correctly in my view) that in the next stage globalization is going to be slicing into job opportunities and wages at the high end of the labor market.

But Mead goes further, seeing much more fundamental and far-reaching changes needed:

Or look at education. Moving from “time-served” processes of certification (four year BA degrees, three years in law or divinity school) to certification based on achievement can make education dramatically cheaper. It is sheer madness that most students spend 12 years in school, and another four in college. Why exactly should all kids the same age be in the same grade? One size does not fit all; why shouldn’t high school kids go free when they can pass the equivalent of a GED? And for that matter, shouldn’t school districts encourage and reward teachers and schools that are able to graduate students faster? Among other things, this would allow some of the resources not spent on babysitting high-achieving kids to go to kids who really need the help. How “right wing” is that?

The same goes for college. Oxford and Cambridge graduate their students in three years — yet few people think British college grads are less accomplished than their American peers. What is sacred about the four year BA? Wouldn’t a shift to an exam based system (students who make qualifying scores on the appropriate exams would be certified as graduates) allow more people to advance farther at less cost? And there’s an element of social justice here: the kid from a no-name school who scores high on the exam will have an edge on the Ivy League kid who partied through college and just scraped by.

I don’t claim to have all the answers to how America’s professions should be restructured. Those answers will be discovered bit by bit as millions of people work to do things faster, cheaper, smarter. But the aggressive use of computers and innovation to increase the productivity and reduce the costs of “frictional” activities like government, the legal system, the financial system, health care and education will allow Americans to pay less in taxes and fees for services that they truly need even as the quality of government services improves. That is what productivity is all about.

For many people this sounds like a systemic assault on the few good jobs left in the United States. But this process of creative destruction is not a Scrooge-like endeavor to squeeze the honest workers for the benefit of fat cats. It is clearing the field for new enterprises and new professions. If education, government and other important services become cheaper and better in quality, and as inflation in other sectors like health care is better controlled, it will be easier and cheaper than ever to start new businesses.