An excellent article: Three Misconceptions About the Economy That Should Die
“We should stop saying that college tuition has increased at three times the rate of inflation.”
According to the College Board, the annual sticker price of attending a private four-year college increased from $17,040 in 1992 to $29,060 in 2012, adjusted for overall inflation. But grants and scholarships more than doubled during that period. On net, the median annual cost of attending private college went from $10,010 in 1992 to $13,380 in 2012, meaning the amount students actually paid grew half as fast as the sticker price suggests.
According to the author, when you factor in grants and other payment plans, students today are paying much less than 3x the rate of inflation. Since 2008 or so, the left has been waging war on higher education, blaming student loan companies, colleges and employers for failing to guarantee graduates good-paying jobs and saddling them with debt, while calling college a ‘bubble’ in the same way they call stocks a bubble. The left doesn’t want to hear this, but college is still a good value if you attend a prestigious institution, major in a high a paying field and, most importantly, finish. I tacitly make a distinction, yet again, between the welfare liberals who tend to be anti-college and the neo liberals.
The author is also right about inflation, which to the dismay and frustration of the zerohedge losers, still remains tame. The great moderation has become a greater moderation. As emerging markets struggle with sluggish growth an high inflation, there’s still huge demand for low yielding US debt thanks to American exceptionalism.
Not sure how this is a surprise since it would seem logical to assume work ethic from college would transfer in some degree to the real world.
“Considered as a whole, 53 percent of the college graduates who were not re-enrolled full-time in school were unemployed, employed part-time, or employed in full-time jobs that paid less than $30,000 annually,”
“Emerging into one of the worst job markets of the postwar period hit them like a bucket of ice water.”
This ‘worst job market’ is not some temporary state. It’s a permanent feature of the post-2008 hyper-competitive, super-efficient economy where the meritocracy rules. You have to be the best among a huge pool of candidates for even entry level positions of employment. To quote Tyler Cowen, average is over.
To quote James Altucher, they, the employers, used the events of 2008 as an excuse to automate, outsource or eliminate millions of overpaid, redundant jobs.
On the other hand, the libs want everyone to have a job, provided it’s under their terms. Then when companies respond by outsourcing and automating, they complain the economy is weak because no one is hiring. Well no kidding no one is hiring. Regulation and excessively high wages makes labor too expensive, which eats into profits and makes alternatives to labor such as automation more attractive.
Ultimately, the inexorable trend towards lower inflation adjusted wages and automation is attributable to autonomous economic forces. For those without exceptional talents/high-IQs, there are few good solutions to this problem. Learn to code. Learn to freelance on sites like Task Rabbit. Find ways to create value or make yourself more valuable to employers.
An interesting article from Kevin Williamson The Real New Year’s Day
The final sentence stood out:
“My advice is to take Latin and physics rather than Spanish and biology,and to read the great books while you’re still young enough to really enjoy them, but it’s up to you — all of it, really, is up to you.”
Agree take lots of math and physics classes. Maybe some coding, too. Those are the skills most sought after in the post 2008 economy with the highest pay. All the cool kids in school are now the guys filling up your coffee, unable to find good jobs, but putting those extraversion skills to good use.
Collapse? Not in America, that’s for sure.
How do the doom and gloomers explain the blowout profits & earnings for 24 consecutive quarters (since 2008), record high consumer spending, record exports, and record stock prices ? If you’re looking for collapse, look to Europe, which is teetering on recession. People have been making predictions of collapse forever and they are only right a handful of times purely by coincidence.
Slow growth is not a problem. Studies have shown that slower growing economies are more stable than economies that become overheated and, furthermore, stock markets perform better. As we explain there are many more factors for assessing economic strength or lack thereof than GDP.
A common retort is that America is Rome 2.0 and on the verge of collapse. We’re in a post-empire world. Countries are more interested in trade, living standards, and technology than conquering each other. America is more like the Ottoman Empire, with it’s diversity, than Rome. When the Ottoman Empire ‘collapsed’ it became a republic; it’s not like everything died and vanished. Steven Pinker’s hypothesis that the world is becoming less violent is true. Globalization makes countries interdependent, so they have no incentive to conquer each other
Even though I’m a libertarian conservative, I agree completely that the debt binge is still sustainable. Thanks to safe haven status and huge inflows from institutions and foreign governments, The US has historically low borrowing costs. Inflation as measured by CPI and bond yields has barely budged, despite the record debt and the pronouncements of hyperinflation from the doom and gloomers.