Value of Higher Education

The Value of Higher Education

Author note: This is a follow up and continuation (and in some parts reiteration of my article The Future of Education… published 9/30/13…~Chris

In the past year and half, I’ve been sharing a different perspective on the value of higher education than most people are familiar with. Let me use Charles Hugh Smith’s quote to sum up my feelings:

“More education” of the current sort is not a panacea to wealth inequality, as the widening gaps in education, employment and income are all reflections of a much largerset of forces at work. The solution is The Nearly Free University.

~Charles Hugh Smith – Of Two Minds

Already you must be hitting me with questions. What is he talking about?

He’s talking about the era of the expensive 4 year university where people graduate with ambiguously useful degrees coming to an end.

Why did you start talking about this for only the past year and a half?

because it took me a while to formulate my idea and see the proof in the marketplace (i.e. number of currently unemployed 20 somethings being just one example)

If a college degree won’t do it, what will?

This is NOT nearly free education; source: FRED via

We will get to that but 4 year degrees are almost as ubiquitous as high school diplomas.

What is “nearly free” education? 

We will get to that but my definition would include real work experience, online learning, life skills, internships etc.

What is causing this shift in “the way things were?”

Smith says this:

There are a number of causal factors driving income/wealth disparity, including capture of the processes of governance by super-wealthy financial and corporate Elites, globalization, a “winner takes all” cultural mindset, heightened competition coupled with a surplus of labor, and “financialization”, to name just the top few.

My thinking is simply that we can get a lot more done with fewer people now than we could before. Coupled with wealth concentration allowing fewer people to spend more, creates a barbell economy with rich achievers on one end, and the many service professionals they can afford and hire on the other end. Think the high earner with: a physical trainer, massage therapist, chiropractor, nutritionist, housecleaner, nanny, etc. When you stop and think about it, that is a large number of service professionals that all serve ONE person – they may have multiple clients but in 2013, the fact that someone who earns a good income, say 200,000 USD annually, can afford all of these people in their life at the same time is amazing!

One can also start a company with very few human labor needs. Think how we can go online or virtually in some way to have someone answer our phone, store our files, conduct video conferences, do accounting – as well as the mass market democratization of what were before, skilled professional jobs like the above said accounting, or how about something like Legalzoom replacing your lawyer? Cloud companies replaced IT managers and various accounting software packages replace your bookkeeper and lower your tax prep expenses.

And it is true that it seems today, everyone has a 4 year degree. Again we turn to Smith:

Statistically, the connection between getting a college degree and higher incomes isweakening as those with college degrees are now in surplus. In effect, a 4-year college degree is becoming the entry-level minimum, replacing the high school diploma. Further up the food chain, Masters degrees are also in surplus, pushing many ambitious youth into PhD programs, in the hope that a PhD will guarantee a high-paying job.

Charles Hugh Smith

Alas, there is a growing surplus of people with PhDs, at least in some fields. Some claim the unemployment rate for PhDs is very low, but these surveys do not measure under-employment, i.e. did the PhD take a position where a Masters Degree was all that was required? (The Ph.D Bust: America’s Awful Market for Young Scientists—in 7 Charts).

Granting more advanced degrees does not magically create positions for those holding freshly issued diplomas. Instead, it seems degree inflation is at work: what once required a high school diploma now requires a bachelor’s degree, what once required a bachelor’s degree now requires a Master’s degree, and so on. 

This is a good point and can easily be seen by this question – how many people do you know who went back to school because they couldn’t find a job? Colleges love this and won’t tell you if it is not a financially savvy move. They’ll just get you the government-backed financing and cycle you through. And how many people do you know had to move back with their parents after graduating because they couldn’t find a job? FYI – they call them “boomerangs.”

Rising Costs – for What???

And speaking of loans – the tuition rates are ridiculous. Why are college costs allowed to increase so rapidly – at a much higher rate than general cost increases? Because the subsidized government loan industry allows this to happen. We have broken the world down to payments, not principal. if someone can afford the payments ($500/mo for 30 years? why not) then they often don’t think about (or try to anyway) the loan balance!

source: via











So what is the alternative to blowing $250,000 on an English degree from some foo foo school in the middle of the woods with the long history?

Smith says this:

The real solution is nearly free instruction and accreditation of the individual, not the institution: a solution I flesh out in my new book The Nearly Free University and The Emerging Economy.

One of the key points of the book is that higher education must teach students how to acquire human and social capital, and the values that are essential to success in the emerging economy. The current system assumes students will acquire the necessary values by some sort of magic. This explains much of the failure of the current system to prepare students to prosper in the emerging economy. 

Yes I plugged his book – haven’t read it but seems interesting. Anyway, he seems to use the same terms -human and social capital – that we use at the Retirement Income Industry Association (RIIA) when planning for retirement income and using the household balance sheet. But that is another story for another time.

My opinion is that kids should learn – in a fun natural way – life skills to help them succeed in a rapidly variable economy. These skills provide a base to learn other things in life with the correct frame of mind. I list the following skills as fun things a kid can learn which teach valuable lessons such as teamwork, how not to be fooled emotionally, and proper strategizing:

Life Skills I Want My Kids to Learn

  • a second (and third) language – very important for Americans who often slack in this department. The world is growing smaller and the ability to understand other cultures and appreciate them, and do business in them is enhanced by exposure to another language. Learning the language opens the mind. Easy method – enroll your child in a language day care when young or a hire bilingual babysitter who will speak only that language to your child.
  • learning chess – chess could teach strategy and patience. Doesn’t every organization need a leader with a strategic view and patience? A bunch of bickering but talented employees can often benefit from a solid leader, even if the leader doesn’t have the team’s skill set.
  • Learning poker – in life aren’t there many situations, both big and small, that require negotiation? Poker can teach how to negotiate, to be patient, wait for a good opportunity, and how to keep a “poker face” when making a deal.
  • Computers – coding is a language that seems to be more universal than English. Even if one does not become a programmer, understanding the language can help in business as we will all use virtual electronic means to communicate.
  • Arts and music – another universal language. Learning music and art requires tremendous patience and attention to detail. I think that patience when attending to details can be improved for everyone. It also gives the child a possible outlet for feelings.
  • Sports – teamwork, dealing with adversity, and working directly against someone who wants to defeat you are excellent life lessons if handled correctly.
  • Statistics – do you know how many people blow this question – “if I flip a coin 9 times and it comes up heads every time, what are the chances the 10th flip comes up tails?” if you don’t know the answer email me. We need to learn to think rationally, not emotionally and statistics helps with that.

These are all skills that can be taught naturally and in a fun way. Of course go with your child’s interests but expose them to these lessons at the appropriate age. As a parent you can help your kids learn how to learn and become a student of life. On top of this, learning classical education topics like math and history, could be learned much more cheaply from various online course sources like:

And many more exist than this – including sources like Harvard, Yale and Stanford.  just search for free online courses and you will be inundated. The idea is that in the near future, more people will complete their basic requirements online and maybe – maybe only need to spend big money for specialties and concentrations (and specialized graduate programs) – where they might want in person teaching and small group in person working groups.

Again it’s up to us parents to get kids the foundation they need to handle themselves in the future. Then it’s up to them. I’ll end of with Smith’s words:

We can conclude that a nearly free system of higher education that focused on “learning how to learn” and the other values-based skills needed to build human and social capitaland accredited each student directly (as opposed to accrediting institutions) would offer precisely the sort of higher education that would make opportunities to learn and thus to earn universally available.

Such a system would not necessarily close the income gap, but it would certainly closethe opportunity gap.

Any system that depends on debt-serfdom for its existence deserves to expire as quickly as possible. 


Featured Image photo credit – Dave Dugdale: Senior Portrait 1- Sara