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Thursday, May 21, 2009

Higher Education in America: Individualism or Central Planning?

In education individual decisions are determinative. Each person (for children, with the assistance of parents) is able to choose the best kind and the ideal duration of education. That is why it’s foolish to talk about the “national education level” as too low or too high. There is no “national level.” If any individual should decide that he would benefit from more education, he will act accordingly. There is no more need for government action here than on the “national fitness level” or “national artistic level.”

America’s higher education establishment, however, loves to think in aggregate terms. Two recent initiatives show its penchant for central planning rather than individualism.

Falling Behind

First, the College Board released a study, “Coming to Our Senses: Education and the American Future,” last year that advances the notion that unless the United States increases the percentage of young people with college degrees to 55 percent (currently 34 percent) by 2025, we will “fall behind” other nations, including Canada and Japan, where a higher percentage of young people are getting college degrees. If we attain this goal, we’re told, the United States will be able to “to maintain the educational underpinnings of American democracy, improve the quality of American life, meet national workforce needs in a global economy, and re-establish the United States among international leaders in postsecondary education.”

Second, last December the Carnegie Corporation released an “open letter”  signed by more than 40 education establishment dignitaries who pleaded for a 5 percent cut of any federal “economic stimulus” spending—around $50 billion—to be spent on campus construction projects. (In good Keynesian fashion, they assume that adding to construction demand in some college towns will “stimulate the economy.” Of course, there is no mention of the opportunity cost of steering more money and resources into the pet projects of these education officials.)

What’s most interesting about the letter is the justification it gives for this new federal spending:“For the first time in our history the cohort of Americans ages 25 to 34 is less well educated than the older cohorts that preceded it.” And we had better worry about that: “We cannot accept such dangerous signs that our future prosperity and security will be weaker than in the past.”

Again we see the central-planning mentality at work. We’re falling behind our educational targets! Bad things will happen unless we produce more college graduates!

But how could anyone—even a group of “education experts”—know the right number or percentage of people with college degrees? It’s simply impossible because the necessary information is dispersed, residing in the minds of individuals. That point is one of F. A. Hayek’s greatest contributions to social understanding, but it’s doubtful that any of the experts who think they know how many college graduates we need has ever read “The Use of Knowledge in Society.” The optimal number of college graduates, like the optimal number of auto mechanics, painters, plastic surgeons and so on, depends on evaluations that only individuals can make regarding the costs and benefits of the choices they confront. 

Is College Always a Good Idea?

Should Bill, a high school senior, go to college? That decision has nothing to do with any education statistics, national competitiveness, the underpinnings of democracy, or other airy considerations. It has to do only with the pros and cons of Bill (and his family) spending a large amount of time and money on college studies. If he’s a sharp student with an aptitude for analytical thinking, it probably makes sense for him to enroll in a college or university that’s a good fit for him. On the other hand, if he’s an indifferent student, averse to academic pursuits, then it would most likely be a bad decision for him to go to college. (To go right after high school, anyway; many Americans figure out that some postsecondary education would be valuable after they have had more time to mature and have spent a few years in the labor force.)

That brings me back to the alleged problem that the United States is “under-producing” college graduates. Why is a smaller percentage of young Americans graduating from college than in the recent past? 

Naturally, there is no single answer, but I strongly suspect that in many instances it’s because of kitchen-table discussions that go something like this:

Mom and Dad: Bill, as you know, your sister graduated from XYZ State three years ago and since then she has been working as an aerobics instructor making $24,000 per year. You’re no better a student than she was. Let’s face it: you get by with as little studying as possible. We know that several of your best friends are going to XYZ State, but before we decide to do that, and further deplete our savings, how about considering something else—electrical work, maybe.

Bill: Those are good points. College would be fun, but I know there’s good, steady money for electricians.

You Want Fries With That?

Despite the talk about the need for a workforce capable of competing in the global economy, the truth is that substantial numbers of Americans who earn college degrees now end up doing jobs that call for no academic preparation whatever. We find many college graduates now employed as travel agents, retail-sales supervisors, and the like. More and more people are finding out that one of the main sales pitches for higher education—that it means a big boost in lifetime earnings—isn’t necessarily true. 

For decades, the federal and state governments have been subsidizing higher education through loans, grants, and low tuition rates. As a result, the labor market is glutted with people who have college degrees. Because of that glut, many employers now use college credentials as a rough screening mechanism, requiring that applicants have a college degree to be considered. They usually aren’t looking for particular skills or knowledge, but just don’t want to bother with individuals who have lesser educational credentials. Observing that trend, Professors James Engell and Anthony Dangerfield write in their book Saving Higher Education in the Age of Money, “[T]he United States has become the most rigidly credentialized society in the world. A B.A. is required for jobs that by no stretch of imagination need two years of full-time training, let alone four.”

And yet, the higher-education establishment solemnly proclaims that it’s imperative we put more people through college to raise our “national educational level.”

Nonsense. If individuals conclude that they would benefit from additional formal education, they can enroll and take courses. If employers conclude that they need more workers with certain abilities that call for postsecondary education, they can (and already do) encourage people to go into certain fields of study. We can rely on individualism and the invisible hand of the free market to find the optimal level of education. Central planning will end up benefiting only the education establishment.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.