George Will heartily endorses the central idea of "The Higher Education Bubble" by law professor Glenn Harlan Reynolds. Says George Will, "this bubble exists for the same reasons the housing bubble did." Will then carefully makes half his case, and lets the other half float gently away in the breeze of his intellect.
A bubble, as it is generally understood, is an artificial inflation of market value. It feeds upon itself. It grows in value because of the expectation that it will grow in value. It is the undeclared inefficiency of the marketplace, the aspect of economic theory that Adam Smith didn't quite cover. It isn't supposed to happen.
Continuity is a part of the human experience. Cataclysms are notable because of their rarity. Man bites dog is news because it seldom happens. The human expectation is that the future usually resembles the past.
The bubble part of the housing bubble went up because everyone pretty much expected that housing prices would keep going up. It seemed like a safe bet. So lots of folks continued to bet. And sure enough, housing prices continued to climb. The expectation was self-generating. People expected a continuation of expectation. Eventually so many bets accumulated that more and more depended on the bet to continue to be seen as safe. The safe bet became increasingly backed by deception, which grew into massive fraud. A few became wealthy by disguising the truth from others.
The bubble eventually burst because the rise began to falter. Once the inevitability of increasing prices become questionable, the very basis for the continued expectation vanished. Once the rise in market value began to decelerate, the expectation of continued expectation evaporated faster than a Romney position.
It was a demonstration of the dark underside of the free market, the uncharted part of supply and demand, the invisible hand with a palsy quiver. When supply becomes distorted by hoarding, when demand becomes twisted by anticipation of future anticipation, bubbles come to dominate. It's always temporary, a sort of naturally occurring Ponzi phenomenon.
George Will documents, and documents well, some of the symptoms of a bubble. College costs are rising. Student loan debt is going up as a consequence. Lots of students accrue debts and then don't complete college. He gives an example of an actual student who regrets her college career. She majored in women's studies and religion. Adam Smith is tortured.
Will points to reduced college budgets as a prime culprit. Those costs are largely produced by a fall off of government support. He then predicts that increasing government help, in the form of reduced cost of student loans, will fuel the cost inflation. The bubble will continue until...
The until is largely undefined, except that it includes "'pop!' goes the bubble."
The problem with analogies is that, when followed too literally, they often become absurd. Mr. Will artfully engraves an invitation to follow his analogy with precision. So let's dot some "i"s, shall we?
When the bubble goes 'pop' "for the same reasons the housing bubble did", graduates will no longer be able to sell their degrees to each other at the same remarkable return. The cost of a degree will drop as the bottom falls out of the market. Distress sales of graduations will further depress the market. Anyone will be able to purchase a degree, since so many previously owned degrees will be for sale. Before they finally hit bottom, they are likely to become dirt cheap. The irrational exuberance fueling the demand for degrees will make their resale value a problem. Once you get a degree, you'll be stuck with it.
Okay. Here's why the prognostications of George Will fall down like London Bridge. (Not literally, so don't take it too far.) Once you have an education, you really are stuck with it. It's yours. You can't resell it. If you profit from it, it will be by applying it within the real world.
Bubble or not, you can't get rid of the knowledge you get from education.
Unless you watch Fox News.
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Even if I disagreed with your claims, I would be tempted to read your articles just for aesthetic appreciation.
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