Tag Archives: college

Is college a big waste of time and money? It depends

Interesting article: Everything Wrong with College

And that’s how you end up with doctors being forced to endure 14 years of schooling. Hard to open a little family practice and provide cheap care when you’re 160 thousand dollars in debt.

It’s become pretty fashionable these days , both for the ‘left’ and the ‘right’ to bash college. For the ‘left’, college burdens students with too much debt; for the ‘right’, there is too much political indoctrination and brainwashing. Both sides have valid points. My take is: although the higher-ed system is broken, the alternatives often aren’t much better. Due to economic factors, becoming an entrepreneur has never been harder, and a degree, despite the debt and indoctrination, may still be the past path out of poverty.

Doctors get into a lot of debt–but they make a lot of money and have long careers, which makes it worthwhile in the end. Often, the debt can be paid in small installments. The problem is when someone gets into $150k debt to major in liberal arts and instead of making $400k a year, makes only $40k a year. Doctors don’t need to open a private practice; hospitals recruit them .

Even $30k for a college degree may seem like a a lot, but it’s about the same price as a new car, and unlike a car it doesn’t lose half its value after you drive it off the lot, and college grads still have better job prospects than dropouts, yet no one is protesting car ownership. Considering that since 2008, especially, inflation-adjusted wages for non-graduates have stagnated behind graduates, a college degree is also a good hedge against stagnant inflation-adjusted wages. And graduates in STEM (especially computer science, math, physics, and finance) do well. So it’s not all bad.

I think the tuition ‘crisis’ and bubble is exaggerated–the debt is real, but often the figures cited are incorrect (some sources cite $200k/debt per student, when the actual figure is closer to $20-30k). Also, after adjusting for generous scholarships, federal aid, deferments, and other programs, the rate of growth of tuition as measured by the amount actually paid by the student (not the sticker price) is much closer to inflation.

A common argument is that college self-selects for high-IQ, thus people who graduate succeed because they are smart, not because of the degree. This is some truth to this, from Much Needed IQ Realism in the Anti and Pro College Movements:

Being qualified to get into an elite school signifies high-intelligence; such high intelligence carries benefits throughout life regardless if one actually attends the school. Those in the top 1% of IQ, such as Bill Gates, James Altucher and Steve Jobs, for example, have the capacity to excel regardless if they chose to go to college or not. Ultimately, we believe that independent of higher education, IQ is the ultimate determinant of success or failure, especially in the post-2008 economy.

Success may have more to do with IQ than the degree itself, but all else being equal, someone with a degree will be hired over one who doesn’t. For some jobs, human resource departments will automatically filter out resumes that don’t list degrees. A common argument is that skipping college allows one to ‘build experience’ during those four years. But the problem is, even for internships, due to the competitiveness of the labor market, non-grads will still be competing with grads for non-paid positions–yes, that’s how bad things have gotten, and degree holders still have an edge, all else being equal. Even if the job for a degree holder pays poorly, some employment is better than none, and this is factored into the lifetime earnings of grads vs. non-grads. I don’t think the opportunity cost is that high considering the degree only takes 3-4 years to attain and the potential payoff lasts for decades.

But, yes, in an ideal world there would be no need for young people to go thousands of dollars into debt and allot four years of their most productive years for a piece of paper that signals to employers ‘baseline competence’, which is why this blog for years has recommended replacing costly, time-consuming college diplomas with simple IQ-like tests. But a certain political party is opposed to this, citing, as usual, ‘racism’ and ‘discrimination’ because some groups score higher than others on these tests, but I guess the left’s ‘logic’ is that it’s better for everyone to suffer equally with crushing student loan debt than to have to admit reality that not everyone is not equal.

Despite indoctrination, a college degree may still be the best path out of poverty

From Washington Post: Poor kids who do everything right don’t do better than rich kids who do everything wrong

I had to double-check because the chart seems to contradicts the author’s thesis that the American meritocracy is dead and that upward mobility is impossible.

It doesn’t look so bad when you consider that 67% of poor college grads are at least 50-percentile in wealth compared to 49% of rich high school dropouts. It’s even better when you compare poor high school dropouts vs. poor college graduates, which is why a college degree may still be worth the money and the best pathway out of poverty, especially if you major in STEM.

This is why, despite being on the ‘right’–and how colleges have become like ‘West Point’, but instead of producing lieutenants they are producing SJWs–I’m not so quick to join the anti-college bandwagon, because the evidence still suggests that a college degree is worthwhile, especially for STEM. Yes, there is a a lot of student loan debt, but also a ton of financial aid, too, for students of all socioeconomic levels. There is almost no excuse for someone of a reasonably high IQ to not take advantage of these generous financial aid programs to major in STEM.

Some of the most common arguments against college are as follows:

‘I have a degree and all I can find are crappy jobs. Therefore, college is useless.’ This is a legitimate grievance, and I have empathy for millennials who have degrees and are unable to find decent jobs, but this not necessarily proof that college is worthless. For every story of indebtedness and bad jobs prospects, there are other stories, especially on Reddit, of 20 and 30-something graduates in fields such as accounting, STEM, or finance who have solid six-figure jobs, a home, and are paying off their student loan debt. In the case of grads who have bad jobs, consider that getting the degree may have been necessary to get the job in the first place, and despite the low pay, is better than having no job.

‘Look how rich and successful I became (in a field outside of my college degree); the degree is useless, because I became successful in a field that is not applicable to the degree.’ You see this a lot – college grads who major in finance or computer science who become rich and successful in fields outside of computer computer science or finance, and so it would seem like the degree was not necessary. But when you look closer, often these people leveraged their degree early in life, and after amassing financial and social capital (thanks to the early job opportunities and connections afforded by the degree), were later able to parlay these resources to an unrelated endeavor.

‘I became really rich and successful without a degree and or after dropping out.’ Examples include Steve Jobs and Bill Gates, although to their credit neither boasted like this and were more humble. There’s a major survivorship bias here. 80-95% of small businesses fail within a decade, and failures never get as much media attention as successes, giving the false impression that most small businesses succeed. Then you have post-2008 economic trends that favor big, successful companies, that can leverage cheap credit, economies of scale, and networking effects, to keep growing and crowding out smaller businesses. As I explain in Pencil Pushers, success in entrepreneurship requires top-5 percent talent, whereas most day jobs require maybe only top-50 percent talent, to make less money. Bill Gates, Michael Dell, Mark Zuckerberg, and Steve Jobs were able to leverage their superior IQs (as well as connections, family wealth, luck & timing, and other factors) to succeed wildly without a college diploma, which is not applicable to the vast majority of college dropouts who try to follow in their lead, and fail.

Look at all the failed efforts since 2011 or so to create a viable competitor to Facebook (remember Ello, which I correctly predicted would fail), Instagram, Snapchat, or Twitter, just like tons of money was wasted trying to create a competitor to Google (Bing anyone? There’s a joke that the only reason Bing has market share is because everyone who buys a PC must first use Bing to install Chrome) or the iPod and iPhone (Zune anyone?). The money could have been better spent on Facebook stock (which has surged from $30 to $132 in just four years, and keeps going up to no end), Google stock (up 1100% since 2005), Amazon stock (up 150% since 2014), the S&P 500 (which has nearly doubled since 2011), or on Bay Area real estate (which also has doubled since 2011) than starting an actual company. That’s how easy wealth is created…by piggybacking on existing successes, not trying to create one from the ground up. Sometimes the path of least resistance is the best one.

Contrary to the $200,000 figure cited by James Altucher and others, the average debt per graduate is only around $25,000 – or about the cost of a new car. But unlike a car new, which loses 30-50% of its value after the first year, a degree creates wealth both in terms of higher lifetime earnings and as an inflation hedge. This is because wages for non-graduates have lagged the CPI, and college graduates have seen the most wage growth since the 2009 recovery. This makes a degree a good hedge against inflation and wage deflation.

It doesn’t bear repeating that the higher education system is broken, that too many students are taking on debt to major in low-ROI subjects, and that there is a lot of indoctrination, but as bad as it is, a college degree may still be the best shot for reasonably intelligent people to enter the middle class.

Solving the Student Loan/Debt Crisis: A Plan That Can Work

On sites like Reddit, 4chan, and College Confidential, stories of college graduates saddled with piles of debt and poor job prospects, are becoming commonplace:

Many on the ‘left’ (and I say ‘left’ because it’s mainly democrats who raise this issue) complain about student loan debt being too high, as well as poor job prospects for new graduates, who are either unable to find a job, or if they get a job, the job isn’t commensurate with their credentials (for example, anthropology majors waiting tables).

But what if there were a way to break the student loan debt cycle, or at least put a dent in it.

As I said before, the higher education system is broken, due to ‘good intentions’ gone wrong, and many entities shoulder the blame: students, politicians, guidance counselors, culture and society, and parents.

In the case of high school graduates, they have one of three options:

- skip college and enter the workforce
- go to college and major in a liberal arts subject
- major in STEM

The first choice results in no debt but also the worst job prospects of all. The second may result in a lot of debt and mediocre job prospects. The third choice may also result in debt but also has the best job prospects. As a caveat, those who graduate from elite colleges can typically major in anything and still have decent job prospects, but they are of the minority. Most students are aware that STEM pays more and has better job opportunities, but they choose the liberal arts anyway. That’s their choice, but they should not be surprised if they are unable to find good job afterwards – they were warned.

Most graduates (such as the example from Reddit above) are reasonably intelligent. According to research by Charles Murray, the typical college graduate has an IQ of around 115, which is one standard deviation above average. Thus to some extent a college degree (even for non-STEM majors) signals above-average intelligence, which could explain why many employers, particularly for higher-paying jobs, require a college degree, or ceteris paribus will choose a candidate who has a degree over one who doesn’t. Studies have shown that IQ and job performance are correlated, probably because smarter employees learn faster and are better able to anticipate the needs of customers and their employers.

Another issue is debt. Working as a barista for Starbucks may suck, but it’s even worse if you have a lot of debt. There’s no reason why anyone should have to spend tens of thousands of dollars (or even hundreds of thousands), and four to seven years of their life, to get a piece of paper that signals ‘merely above-average intelligence’. Worse yet, most jobs are completely unrelated to the degree. Very few literature, anthropology, and history majors actually get jobs pertaining to literature, anthropology, or history.

Grade inflation and credentalism are related. Because of grade inflation, increasingly advanced degrees are required signal competence and ‘stand out’:

This means more debt and more years of college to acquire these advanced degrees, including but not limited to PHDs and Masters Degrees – money and time that could otherwise be spent on ‘life’, not education. High school degrees don’t get much mileage as they did decades ago, because if everyone is getting a 4.0 GPA and ‘honors’ due to dumbed-down courses, what good is it. Another cause of credentalism is that the labor pool has swelled, which is not just limited to the United States but also includes many emerging economies. The problem is the skills that are taught in collage and high school have become commoditized and are no longer ‘special’. Employers can easily outsource workers, filling jobs that decades ago would have gone to high school or even college graduates, because basic skills (like reading and writing) have become so common. And then there is also technology, which may result in low-skill jobs being automated. Either the courses are dumbed-down or too many people are completing school – it’s probably both.

Although some students go to college for the ‘experience’ and the ‘pursuit of knowledge’, many attend in the hope of landing a good-paying job when they graduate. If making money is goal, and for most students it is, there is an alternative to the current dysfunctional system. Because in the eyes of employers a college degree signals above-average intellect and competence, the obvious solution is to give employers carte blanche to screen prospective employees for intelligence using cheap, easy-to-administer IQ-type tests. This would help both employers and students. It helps employers because IQ tests (as well as related tests like the SAT and the Wonderlic) may provide a cheaper, more reliable means of assessing the intelligence and competence of potential employees than college degrees, which have been devalued by grade inflation. For students and job seekers the benefits are even more obvious: no more debt and years spent acquiring increasingly advanced degrees in the hope merely of being qualified, let alone getting a job. Even if high-scoring students are unable to find good-paying jobs (due to the economy and other factors), not accumulating a bunch of debt for that same crummy job would be a success for the program.

For this solution to be implemented, disparate impact laws (Griggs v. Duke Power) would need to be overturned. Although some large companies (like Proctor and Gamble) use these tests, they also have the financial resources and case study data to fend off litigation, which small business cannot. Not to make this too political, if the ‘left’ cared about students a much as Sanders or Hillary say they do, they would make a push to overturn disparate impact laws.

In the unlikely event Griggs is annulled, private (or maybe publicly run) mass testing centers can be established, independent from employers. Anyone can register to have their intelligence tested on one of multiple tests, in order of increasing complexity and administrative costs: Wonderlic, SAT, or Wais. The Wonderlic is a 50-question multiple choice test of general competence (basic numeracy, vocab, etc.), and takes 12 minutes to complete. The SAT is more comprehensive and takes much longer to administer, and like the Wonderlic only tests mostly math and verbal skills. The Wais the most comprehensive of all, and tests a wide range of abilities, such as spatial intelligence, which the other two tests don’t. Upon registering an account (req. govt. ID) and obtaining scores on one or multiple tests, this information can be provided who employers, who will have the ability to enter a code to verify the score on an online database.

Some may be surprised to learn that anyone who wants to enlist in the US military must score in the 33rd percentile or better on the AFQT, a test administered to all enlistees that measures ‘general skills, which is related to IQ (although in times when cannon fodder is needed the bar may be lowered), so why can’t such a testing system be adopted for the general public, for use by employers?

A common criticism is that the less intelligent would be discriminated by such a system, but the unintelligent often drop out of college (the result being debt and no degree) at a very high rate, so by not going to college and instead being tested, they would save money, which is especially helpful considering the lifetime incomes of the less intelligent isn’t very high, so they are hurt the most by having student loan debt. It’s not like the unintelligent are being deprived of their opportunity to work for NASA by being tested. Second, the likely economic tailwind from reducing student loan debt, getting young people into the workforce earlier, and boosting employer productivity would create more total jobs, benefiting job seekers of all intelligence levels.

Fixing the Student Loan Debt Crisis and Reforming Edcuation

From Demos: Why Education Does Not Fix Poverty

The author lists some reasons why poverty has not fallen in spite of the US population becoming more educated:

First, handing out more high school and college diplomas doesn’t magically create more good-paying jobs. When more credentials are chasing the same number of decent jobs, what you get is credential inflation: jobs that used to require a high school degree now require a college degree; jobs that used to require an Associate degee now require a Bachelor’s degreee; and so on. Obviously the supply of good-paying jobs is not a fixed constant of nature, but there is no reason to think that the supply will automatically go up to match the number of people with the necessary credentials. The types of jobs available in a society, and their level of compensation, is determined by many factors (demand, worker power, technology, global competition, natural resources, etc.) that have little to do with the number of degrees that society is minting.

This is compounded by the fact that even after adjusting for inflation, student loan debt is surging:

Student loan debt exceeds credit card debt:

And to add insult to injury, the rate of debt exceeds gains in wages. Debt is up 35% and median annual wages are flat:

Too much debt compounded by poor job prospects – a bad combination. Regarding debt, the system is broken, and the very people who are trying to ‘save’ the poor with ‘good intentions’ are making things worse, by continuing the college/debt cycle in perpetuity. A better solution is to replace costly, time-consuming diplomas with cheap, easy to administer IQ-like tests like the Wonderlic, as well as the SAT, which is also a good proxy for IQ and signaling competence and learning ability. Yeah, there is disparate impact, I know, but these tests would save a lot of time and money, sparing millions of students, particularly low-income students, of decades of debt. Employers want employees who can learn quickly, make inferences, adjust to changes, and anticipate needs – all skills linked to IQ.

Regarding the mismatch of skills and unemployment, another problem is that we’re perhaps in an era of ‘peak school‘, and instead of more education for the sake of education, we need ‘targeted education’ to teach young people the skills employers are directly seeking, sorta like vocational schools. More intelligent students can either undergo a comprehensive formal, liberal arts education or learn high-paying skills like coding while in high school instead of spending tens of thousands of dollars or more to learn it in college and frittering many valuable years. Britain has a program similar to this, Eleven-Plus exam, as I explain in an earlier post Birth ‘Lottery’ Does Not Preclude Meritocracy:

The politically correct approach to education of trying to bring everyone to the same level is flawed; we need to use cognitive screening to ascertain individuals’ strengths and weaknesses, and then create curriculum optimized around this. Beyond the basics like reading and math, higher IQ kids, for example, should be encouraged to learn high-paying skills like STEM at an early age, as well as pursuing other cognitive creative endeavors; lower-IQ kids should learn service work since that’s where the most opportunities, if there any, will be. Britain had a system similar to this, the Eleven Plus exam, which tested kids at the age of 10 for future educational placement, with lower-IQ kids learning vocational work, average-IQ kids continuing with their education, and high-IQ kids going to special schools.

And from Scott Adams How to Get a Real Education:

I understand why the top students in America study physics, chemistry, calculus and classic literature. The kids in this brainy group are the future professors, scientists, thinkers and engineers who will propel civilization forward. But why do we make B students sit through these same classes? That’s like trying to train your cat to do your taxes—a waste of time and money. Wouldn’t it make more sense to teach B students something useful, like entrepreneurship?

He’s right. What we have is a misapplication of resources and ability. Rather then a cold dose of reality that, no, Jimmy with an IQ of 90 should not go to college, teachers would rather (or at least they are forced to) lie to parents and students, sending them down a path of debt that is worsened by a high college dropout rate.

Related:

IQ and SAT Scores as a Solution to the Student Loan Crisis
Breaking the Tuition Feedback Loop
Disparate Impact Litigation Hurts Job Seekers, Students, and Employers
Some Ideas to Reform Higher Education
The Student Loan Charade
An Indebted Generation

The Daily View: Math Resurgence, Economic Growth, Student Loans

The Math Revolution:The number of American teens who excel at advanced math has surged.

This agree with earlier posts I have written countering the commonly held belief that America is ‘dumbing down’, when in fact it may not be. It also agrees with posts about the rise of ‘nerd culture’, and how STEM skills are increasingly valued both culturally and economically in our new economy. It’s the tyranny of the bookish, of smart people pulling ahead as everyone else struggles with a perpetually anemic labor market, stagnant home prices, and falling real wages. Math and code are the new ‘scriptures’ of modern society and economy, with mathematicians, philosophers, physicists, and economists the new ‘priesthood’. More and more young people are studying code and symbols, much like Bible readings, as a way to salvation, except not an intangible one, but one measured by higher wages and more respect.

Interestingly, on Reddit and 4chan, English, History, and Philosophy majors are also respected, too, as they sacrifice monetary gains to pursue a ‘higher’ calling. Such degrees, even though they may not pay very well or have immediate real-world applications, are a solace of intellectual purity, patience, and understanding in a society spoiled by instant gratification, ostentatious materialism, low-information pandering, and sensationalism. Both STEM and some liberal arts (not the useless ones like child development or gender studies) combine authenticity, sufficient intellectual rigor, introspection, and abstractions. For the math major such abstractions include axioms, postulates and theorems; for the literature major, it’s words and grammar; for philosophy, it’s ontology and epistemology. ‘Low-information’ means not circuitous enough, too obvious.

Related: The Writer and the Coder

However, the article notes that in certain aptitude tests America scores low compared to foreign countries:

Only 40 percent of fourth-graders and 33 percent of eighth-graders are considered at least “proficient.” On an internationally administered test in 2012, just 9 percent of 15-year-olds in the United States were rated “high scorers” in math, compared with 16 percent in Canada, 17 percent in Germany, 21 percent in Switzerland, 31 percent in South Korea, and 40 percent in Singapore.

The problem is these studies lump Americans, who are ethnically and culturally diverse group, with homogeneous countries. It would be more accurate to compare Singapore-American students to native Singaporeans, German-Americans to Germans, or Korean-Americans to native Koreans.

The Next Big Idea in Economic Growth

Yet corporate profits, stock prices, & earnings are still at or near historic highs. It would seem like the private sector has adjusted just fine to anemic GDP growth, and investors are not too concerned.

This story is going viral: Arrested for student loan debt

Believe it or not, the US Marshals Service in Houston is arresting people for not paying their outstanding federal student loans.

Paul Aker says he was arrested at his home last week for a $1500 federal student loan he received in 1987.

He says seven deputy US Marshals showed up at his home with guns and took him to federal court where he had to sign a payment plan for the 29-year-old school loan.

But fed. student loans are still at taxpayer expense and students should bear some responsibility for majoring in low-ROI subjects, taking on too much debt, or not understanding the terms and conditions of the loans. There so so many forgiveness and deferral programs that student loans are seldom paid in full, anyway. It’s often dragged out forever as in the case of Paul Aker, who had the ability to pay but refused to. Harsher penalties, including but not limited to jail time, are necessary for a system that is broken mainly against taxpayers.

Credentialism is another problem, as well as too many low-IQ and immature student being encouraged to enroll in college despite the high drop-out rate. Another problem is the perpetually anemic labor market.

Vox asks, if banks got bailed-out, why not students? The problem here is that student loan debt (at over $1 trillion) already exceeds the bank bailouts, and debt forgiveness will only add to the problem. There is no systemic risk in having some students default, but there is potential systemic risk if key financial institutions fail. As recently as 2011, TARP was paid in full and as of 2014 posted a profit of $15 billion, making it one of the most successful government programs, even if the most despised.

I support financial aid for students who have the cognitive aptitude to complete college (without dropping out), as well as majoring in a high-ROI subjects, but the system we have now just throws money out indiscriminately to students who shouldn’t be going to college, who will dropout with nothing to show for it but debt.

Related:

Some Ideas to Reform Higher Education
Improving Obama’s Community College Plan

#Nationaloffendacollegestudentday

#Nationaloffendacollegestudentday is going viral on Imgur and Twitter.

These tweets are great; here are some:

As part of the post-2013 SJW backlash, smart millennials on Reddit, Imgur, 4chan and elsewhere are disabusing the leftist lies told to them by their parents, teachers, and clergy. No, you’re not special. Quantifiable results matter. Some people are better than others. Genes affect socioeconomic outcomes. People are ‘special’ for their accomplishments, not for merely existing. Incentives matter, not ‘good’ intentions (increasing unemployment benefits discourages working, for example). And stop complaining about the student loans that you under your own volition took out, although there is some empathy for those who majored in respectable fields but are unable to find work due to the perpetually anemic labor market. If you majored in, say, gender-queer studies or child development, tough shit.

However, it’s always useful to read the comments:

As a college student, I too hate these mythical college students who believe those things you are bashing. I’ll let you know if I find any

Going to college doesn’t necessarily make one a welfare liberal, and as part of the SJW-backlash I imagine there are many college students who agree with the tweets instead of being offended, so we must not generalize all college students as being brainwashed.

But anyway liberals, you’re losing.

The Daily View: Elite Colleges Should Abolish Tuition; Apprenticeships

From Unz:Our Elite Colleges Should Abolish Tuition

Although Harvard is widely known as one of America’s oldest and most prestigious colleges, that public image is outdated. Over the last couple of decades, the university has transformed itself into one of the world’s largest hedge-funds, with the huge profits of its aggressively managed $36 billion portfolio shielded from taxes because of the educational…

I agree, but members of a certain political party would prefer make college cheap for those least intellectually qualified to benefit, for the worst of colleges. The tuition at Harvard, for example, while high, is seldom paid in full, and the high-IQ students with their connections quickly get good jobs anyway. Maybe another idea is to make tuition free and then have students pay it back later, with terms much more lenient than a typical student loan. That’s kinda how alma mater donations works. If you can fill Harvard and the other top schools with the best minds in the world who will create the future Googles, Apples, Teslas, and Facebooks, the schools will reap more in donations than they will ever collect in tuition.

But then the problem arises of too many smart people and not enough slots for these elite schools, which is why a better solution is to just do-away with credentialism and use IQ and SAT scores as a proxy for intelligence and competence instead of expensive, time consuming degrees. This is discussed further in the blog archives.

On a somewhat related note, Henry Dampier from http://www.socialmatter.net/ ponders why the apprenticeship system cannot be revived:

Billionaires like Nassim Taleb and Peter Thiel have both advocated something like a return to the apprenticeship system which was ubiquitous up until the early modern era. These suggestions are also often echoed by bloggers and others who know vaguely about what they want, but aren’t quite clear on what the old apprenticeship system was and why it ultimately faded.

This article will attempt to clear out some of the confusion and obfuscation around the issue.

One company that attempted to revive the apprenticeship concept for high tech companies just shut down earlier this month. In the closing letter, the founders cited some failed matches and high expenses for managing the relationships between ‘apprentices’ and mentors. Their ambition was to create a national apprenticeship network, but the model couldn’t scale.

Perhaps a hurdle is the issue of disparate impact. For a tech apprenticeship (or any apprenticeship), teachers want apprentices who can learn quickly, which would require an IQ-like test of some sort to ascertain learning and critical thinking ability, but this opens the window to litigation and other problems. After all, training is at the company’s dime, so companies want the best trainees that they can find who won’t take too much time grasping the necessary knowledge to begin profitable work. Perhaps a notable example is Google, which says they no longer use GPAs for hiring. They obviously have other methods for screening employees. But training is a different matter; Google expects its coders to be proficient in coding upon applying. Testing for necessary skills that are directly applicable for the job removes the disparate impact risk, but then you don’t have an apprenticeship.

Breaking the Tuition Feedback Loop

From Aaron Clarey:

On Reddit, 4chan, the blogospehre, and on Youtube, there are three ‘great debates’ that have been raging since 2013:

SJWs/Gawker vs. Redpill/PUA/MRA/Gamergate, the largest most heated of the three, is an internet version of the age-old left vs. right schism, but the battle is waged on Twitter, Tumblr, Reddit, and blogs instead of traditional media. Pretty much every everyone with a Twitter or Youtube account is in some way engaged, exchanging barbs back and forth.

The second debate is about automation/the rise of robots, and how individuals, society, and the economy will adapt. The debate is divided among those who argue that the ‘Luddite Fallacy’ will remain a fallacy and that economy will always adapt to automation by creating new jobs; others argue that there will be a large unemployed underclass, necessitating radical social programs like a universal basic income.

The third debate is about college, specifically about whether or not it’s worth attending. The debate is dividend between those who argue against going to college and those who say it’s still worthwhile.

The above video concerns the third debate topic, college.

I agree that tax payer money should not be used to fund low-ROI courses, but that doesn’t mean we need to throw the baby out with the bathwater. And the entire situation is quite convoluted, involving employers, the government, lawyers, and students.

We’re in a feedback loop of financial aid leading to higher tuition, and employers requiring degrees, which leads to higher college attendance, which means more loans, and, hence, higher tuition.

The value of the overpriced liberal arts degree is not in the subject itself, but to signal to employers baseline competence. All else being equal, in the eyes of an employer, a person with a History or Philosophy degree is more valuable than someone without a degree. A degree in one of the more ‘rigorous’ liberal arts subjects (History, philosophy, or English, for example) signals above-average literacy, concentration, and critical thinking skills, all of which are valuable for on-site training. A person who is smarter can learn faster, even if the job is unrelated to the degree. So, the degree acts like an IQ or competency test, albeit an overpriced and poorly designed one. The reason why employers use degrees instead easy-to-administer IQ tests is because of the threat of disparate impact litigation, which is very costly and difficult to fight. Typically, only large companies, like Proctor and Gamble, have the resources to fight these lawsuits, and hence can administer these tests.

There are some solutions:

Overturn Griggs v. Duke Power Co. Without fear of litigation, let companies develop their own criteria for screening for competence.

Replace costly diplomas with SAT scores, IQ scores, or an acceptance letter from a prestigious university. Being accepted to Harvard, Caltech, or MIT signals intellect that is in the top 5% of the population.

No more taxpayer subsided financial aid for non-STEM majors and or low-IQ students. This would guarantee a higher ROI for financial aid and hence lower tuition for everyone. Too bad there is zero likelihood of this happening, particularly making financial aid contingent on having a sufficiently high IQ.

The left complains incessantly about tuition, yet on the grounds of political correctness oppose the solutions that would break the cycle. In the liberal world, it’s better that everyone suffer high tuition fees than to face the reality that maybe not everyone is intellectually cut out for higher education. Instead of confronting the reality that some people are smarter than others, make everyone pay more, to avoid this inconvenient truth. And of course, as Aaron says, shrinking the college industrial complex will mean a lot of unemployed liberal professors.

We’re Making Life Too Hard for Millennials

From Steven Rattner of the NY Times: We’re Making Life Too Hard for Millennials

TO some, millennials — those urban-dwelling, ride-sharing indefatigable social networkers — are engaged, upbeat and open to change. To others, they are narcissistic, lazy and self-centered.

Saddled with debt and thin paychecks, millennials are delaying purchasing cars and new homes, low mortgage rates notwithstanding. By June of this year, homeownership among Americans under 35 fell to 34.8 percent, down from a high of 43.6 percent in 2004.

Agree. Maybe millennials appear conceited and narcissistic to older generations, but the new economic rules of the post-2008 era means millennials have to adapt, such as by living with parents longer and delaying family formation.

They are faced with a slow economy, high unemployment, stagnant wages and student loans that constrict their ability both to maintain a reasonable lifestyle and to save for the future.

The first problem is credentialism; second, students going to college who are not smart enough or mature enough graduate, taking on debt and then dropping out; third, federal student aid driving up tuition costs; fourth, students majoring in subjects that pay poorly instead of STEM. As I explain in an earlier article Countering Flawed Arguments of the Anti-College Movement:

Telling the truth, especially as it pertains to biology-based cognitive differences between individuals, often means losing your job. Teachers can no longer tell a parent his or her child his slow; now, it’s called ‘differently abled’, or whatever has become the latest iteration of the euphemism treadmill. A guidance counselor cannot flat-out tell a dull student he or she isn’t smart enough to benefit from higher education, so the student goes to college, takes on debt, drops-out, and the cycle continues…

Students who, a generation or two ago, would not have gone to college are being prodded into going, often dropping out with debt. ‘Some college’ provides very little benefit over only having a high school degree.

As shown below, the nice thing about a STEM degree is that it tends to be fungible, meaning that a STEM degree at a less prestigious, high-admittance school has the same ROI as a STEM degree from a prestigious school.

As the NYT journalist roster would suggest, a liberal arts degree from a prestigious college can payoff, but all too many students are getting low-ROI degrees from expensive, no-name private schools – a deadly combination.

And from the WSJ article, Federal Aid’s Role in Driving Up Tuitions Gains Credence, government student aid is boosting prices:

‘Well intentioned’ people are selling shovels to millennials to dig their financial graves.

Longer term, rising federal debt payments and increased spending on Social Security and Medicare will inflict a tremendous financial burden on them, threatening their own prospect of receiving promised retirement benefits.

It was a liberal, FDR, who signed the Social Security Act and Lyndon B. Johnson who in 1965 signed the Social Security Amendments (Medicare and Medicaid) into law, and now liberals like Steven Rattner are complaining about its costs? The left also complains about the weak job market, apparently oblivious to the fact Obamacare is a contributing factor, although the post-2008 obsession with profits and productivity is another.

Part of the reason why millennials are so obsessed with personal finance is because they understand that these social safety net programs are unsustainable and not may be available when they, the millennials, get older.

That’s a daunting challenge that would require revamping federal outlays to emphasize areas like education, infrastructure and research and development. Spending more on these areas would require higher taxes on my generation, which is getting a lot more from government than we are paying into it.

To spend money indiscriminately on broad programs like ‘more education’ and ‘more infrastructure’ is the wrong approach. If debt and spending is a concern, as it apparently is to the author, spending should be allocated and targeted in such a way that it provides the highest ROI possible. When you allocate money to the best and the brightest, some of those people create companies and technologies, which creates jobs and boosts the economy, and this may be enough to even create a post-scarcity society.

But of course there are a lot of unknowns. What if the Luddite Fallacy stops being a fallacy? Due to automation and other factors, the cognitive demands for middle-income work may rise beyond a certain threshold, requiring that even average-IQ people, who are not smart enough to find good-paying work, go on welfare, a situation that could be occurring today but could be much worse decades from now. People will rationalize that it’s cheaper to drop out and collect a government check than toil in low-paying service work. Or immigration? Or how the effect of Baby Boomers working longer, refusing to retire?

While the total labour participation rate has fallen from a peak of 67.3% in 2000 to 62.6% in June, the labour participation rate for Americans aged 65 or above has risen from 12.5% to 18.8% over the same period (see Figure 12).

As for older people, GREED & fear’s view is simple. Many elderly people who can afford to retire do not want to. While in many instances those who do want to retire cannot afford to. The Japanese style collapse in interest income in America since the implementation of zero rates is clearly one issue here. Thus, interest income accounted for only 8.3% of total personal income in May, down from 11.5% in 2007 (see Figure 13). While in absolute terms, total personal interest income has declined by 9% since peaking in September 2007

Overall, it’s not that anyone is conspiring to make life harder for millennials – these are autonomous economic forces at work, forces that converged and accelerated since 2008 and show no signs of slowing. In the new era we find ourselves in, perhaps more unemployment and a weaker job market is a necessary but unavoidable byproduct of the transition to a type-1 civilization, with high-IQ millennials in STEM faring better than lower IQ ones. But liberalism as it pertains to job-destroying regulation, rent control, zoning laws, and the rise of credentialism is also to blame.

Countering Flawed Arguments of the Anti-College Movement

There are good arguments against going to college, namely the leftist bias and the possibility of accumulating a lot of debt for a degree that has little earning power, but there are two dubious premises perpetuated by anti-college movement:

1. That a college degree is worthless

2. That going college holds back people from achieving their ‘full’ potential

This is countered by:

1. People with college degrees earn more money, especially for advanced degrees and STEM:

This is just empirical reality based on many studies. It doesn’t mean that students should choose a major indiscriminately or go into a lot of debt if such debt can be avoided, but the data doesn’t lie. The reason for this is because in many instances employers require the degree to signal for baseline competence; without the degree you simply won’t be considered for the job, let alone hired. A degree in STEM (including finance and economics) offers the best possibility of employment.

But what about the trades? Some people have success with that, but the trades may not be as great as they seem. There’s a of regulation, compliance, nepotism, competition, and potentially dangerous working conditions. It’s not just as simple as deciding you want to be an electrician – it takes years of training.

2. Number two is more important because this misunderstanding is so prevalent.

What percentage of college-dropouts with an IQs less than 95 become successful, versus drop-outs with IQs greater than 120? I imagine in the former it’s much smaller than the later, with the low-IQ drop-outs almost always stuck in dead-end, low-paying jobs or unemployment for the remainder of their lives, but with also the added burden of college debt.

Low IQs hold people back, not college. Ultimately, it’s IQ, not completion of college, that is the determinant of individual success or failure at life, which I discuss further here. That’s how some of the biggest drop-out successes, from Mark Zuckerberg to Bill Gates, became successful – not because they had a couple extra years ‘head start’ from not graduating (as is commonly believed), but because they are really smart (the correct but neglected explanation).

The ‘rich family’ explanation, which is popular among the left as a way to dismiss the role of biology, doesn’t account for high-IQ immigrants who have succeeded in technology; with the exception of Bill Gates, the majority of these technology success stories came from modest means.

All of the biggest advocates against going to college all have degrees, often in technical subjects from prestigious colleges, and are extremely smart – far smarter than your typical college drop-out. The aforementioned individuals succeeded because they are brilliant, with ‘Person A’ (to avoid name dropping), for example, taking the SAT at 13 and scoring well enough to go to a special program; ‘Person B’ went to UC Berkeley (a notoriously difficult school) and he says he’s smart enough to get into Mensa, which I don’t dispute; ‘Person C’ graduated from Stanford; ‘Person D’ went to a prestigious college-prep private school and later Princeton. These people tell you college is easy or ‘dumbed-down’, having breezed through college coursework and only failing because they stopped trying, not because they found the work too hard, which is to be expected when your IQ is many standard deviations above average. In reality, the drop-out rate is 50% for those allegedly easy college courses.

These college bashers will tell you that they didn’t use their degree in becoming rich and successful, but this is a red herring. Obtaining the computer science degree at the prestigious school is indicative of superior cognitive ability (memorization, critical thinking) which, through skills-transference, is applied with great success to intellectual endeavors not directly related to the degree, a notable example being Andy Weir’s huge success as a fiction author despite being a programmer by trade. The IQ of 140 that allows you to breeze through a degree in Chinese history also makes it easy to pickup on coding (assuming this hypothetical person wants to learn how to code), despite coding having nothing to do with Chinese history. Many people assume, mistakenly, that individuals are ‘born’ to do different things (math people, verbal people, or the multiple-intelligences), but all of this can be distilled to a single factor – g.

These misunderstandings arise because political correctness means we have to lie to ourselves and others to avoid the consequences of potentially offending people with the truth. Telling the truth, especially as it pertains to biology-based cognitive differences between individuals, often means losing your job. Teachers can no longer tell a parent his or her child his slow; now, it’s called ‘differently abled’, or whatever has become the latest iteration of the euphemism treadmill. A guidance counselor cannot flat-out tell a dull student he or she isn’t smart enough to benefit from higher education, so the student goes to college, takes on debt, drops-out, and the cycle continues…

Many of the anti-college pundits usually have ulterior motives – to sell books, to get ad dollars through click-bait ‘Don’t go to college!!!’ type articles, to sell ‘get rich quick/sign up here’ type courses, or to spread false hope like Malcom Gladwell does – or while their intentions are good, they are simply wrong. Even if you think going to college is a waste of time and money, it’s better to formulate an argument that is intellectually honest rather than resorting to wishful thinking, misleading data (in which an article from time.com does good job disabusing the anti-college mythology), and cherry-picked examples of high-IQ people who succeeded wildly without graduating college or in fields unrelated to their degree.

Having a high-IQ will greatly improve your odds of success if you choose to not go to college but, nonetheless, for the majority of people, who only have average or above-average intelligence and are smart enough to complete college, the data suggests having a degree is better than not having one. People with below-average IQs should not go to college, and that is the best reason, and often the most ignored reason, to not go to college.