There’s an education bubble, which is, like the others, psychosocial. There’s a wide public buy-in that leads to a product being overvalued because it’s linked to future expectations that are unrealistic. Education is similar to the tech bubble of the late 1990s, which assumed crazy growth in businesses that didn’t pan out . The education bubble is predicated on the idea that the education provided is incredibly valuable. In many cases that’s just not true.
Here and elsewhere people have avoided facing the fact of stagnation by telling themselves stories about familiar things leading to progress. One fake vector of progress is credentialing—first the undergraduate degree, then more advanced degrees. Like the others, it’s an avoidance mechanism. The bias I had five years ago was that my foundation should start a new university and just do everything better. I looked into it in great detail, examining all the new universities that have been started throughout the world in the past ten years, and found that very little has worked. It has been a huge misallocation of capital, and donor intent got lost on all sorts of levels.
I started out wondering how you could allocate money for the improvement of education and concluded that there was no way to do it. This relates to the problem I mentioned earlier with taking a statistical, unplanned approach to the future: A student doesn’t know what to do, so he learns stuff. When I taught at Stanford Law School last year, I asked students what they planned to do with their lives. Most were headed to big law firms but didn’t expect to become partners and didn’t know the next step after that. They didn’t have long-term plans about what they wanted to achieve in their lives. I think the educational system has become a major factor stopping people from thinking about the future. It’s far from equilibrium. There is something like $1 trillion in student debt. A cynical view is that that represents $1 trillion worth of lies told about the value of higher education. There are incredible incentives to exaggerate its value, and the counter-narrative has been shaky but is coming to the fore.
Bubbles end when people stop believing the false narrative and start thinking for themselves. So many students are not getting the jobs they need to repay their debts, are moving back in with their parents, and the contract both parties signed up for is being revealed as false."