To make this point more clearly [wait for it, Wallyverr, I will get to the point you raised in a moment], imagine that the entire U.S. economy is one enormous corporation, producing all the goods and services aggregated in the Gross Domestic Product, employing all those who earn wages or salaries fulltime or part time, providing all the governmental services, and so forth. if the entire American work force were now to earn higher degrees [quite a boon for young doctoral students hoping to find entry level tenure track teaching positions!], would this vast corporation forthwith transform all the low wage burger-flipping jobs into high wage IT jobs? Would the women who clean my hotel room when I travel and stay overnight in a Courtyard Marriott now be medical technicians in the local hospitals? Who would clean the rooms? Would they continue to clean the rooms but earn medical tech wages? These questions answer themselves, and in each case the answer is no.
Ah, you say [or rather, as Wallyverr says], but with a better educated workforce, companies would be able to switch to different techniques for the producing of goods and services, techniques more capital intensive [if we treat education as human capital] and less labor intensive [where labor here means unskilled or general semi-skilled labor of the sort required for current low wage jobs]. This would fundamentally transform the nature of the economy in such a fashion that the steep pyramid of jobs, determined in the first instance by differential educational attainments, would steadily flatten over time, leading to a less stratified society in which fewer and fewer workers earn low wages and perform low-skill jobs.
There is obviously some truth to this argument. Modern IT hi-tech companies could not exist if there were not plenty of well-educated potential employees around. But for a number of reasons, in my judgment, the argument fails to show what it is intended to show, which is that education is the key to flattening the income pyramid and raising the entire workforce to a better compensated, more satisfying level.
Let me start with facts. Over the past century and more, the American workforce has undergone an astonishing educational upgrade. When my father was a young man, in the very early nineteen twenties, a high school diploma was a rarity, a college degree even rarer. My first father-in-law did not finish high school, and yet ended up the Vice-President of Sears, Roebuck for Public Affairs. Today, almost all workers have high school diplomas, and a quarter of American adults have college degrees. There has, over this period of time, been a steady increase in real GPD per person, with the result that Americans are genuinely better off than they were a century ago. But the shape of the income pyramid has not changed, save to become steeper in the past thirty years, in part as the result of deliberate union busting and anti-labor policies by the Federal Government.
Some modes of production have undergone dramatic transformations, resulting in much greater productivity, but labor intensive services, such as medical services, cleaning services, and so forth have not. What HAS happened, of course, is the globalization of capitalism, one consequence of which is that the lowest levels of the worldwide income pyramid are now occupied by Asians and Latin Americans and Africans rather than by Americans. One of the reasons for our present disastrously high unemployment is that with a world of cheap labor to draw on, capital simply does not need millions of Americans as workers. In good times and bad, they will be consigned to unemployment or underemployment. To be sure, a dramatic educational upgrading of any segment of that world labor pool will advantage that segment, to the consequent disadvantage of the rest, but just as it is impossible for all the workers in our imaginary company to end up as managers in that company, so it is impossible for everyone in the world to have an above average job.
I end these introductory remarks by concluding that education cannot be, for everyone at the same time, a path to the middle class. If we all have jobs that send us on junkets to cities where we stay in hotels, someone in those hotels will make the beds and clean the rooms and serve us in the restaurants. They may not speak English, but they really are people, and they count too.
Which brings me to the question that launched these remarks: Why has higher education become so expensive, and what implications does that fact have for society?
Why higher education has become so expensive is genuinely puzzling. When even medical costs have increased at "only" twice the rate of inflation, why on earth has higher education increased at THREE TIMES the rate of inflation, over the last thirty years?
Let us first observe that although higher education may indeed be the gateway to high wage high tech jobs, it is itself a labor-intensive low tech industry, in which there is virtually no technological innovation. One story may point the moral. In the Spring of 1953, I took C. I. Lewis' legendary course at Harvard, Philosophy 130, on Kant's CRITIQUE OF PURE REASON. Lewis, who retired that semester after a lifetime of teaching at Harvard, used an incredibly rigorous, time-consuming, and life-changing system of written assignments referred to as "Kant Summaries" [I won't bother you with the details.] In the Spring of 1960, as a young Instructor in Philosophy and General Education at Harvard, I actually was given the opportunity to teach Philosophy 130, in the same room, from the same podium on which Lewis had sat. It was, needless to say, the greatest teaching experience of my life, a fact I had the wit to realize at the time. [Small side note; I taught the same course the next Spring, and among my students was a young graduate student, Thomas Nagel. Needless to say, Tom did brilliantly.] I wrote to Lewis, who was living in retirement in Menlo Park, California, to tell him that I was using his system of Kant Summaries. He wrote back a nice note and said that it was not his system. He had learned it from his teacher at Harvard [who must have been Josiah Royce or George Santayana!]. I have taught Kant's FIRST CRITIQUE perhaps seventeen times in my fifty year career, at Harvard, Chicago, Columbia, UMass, and CCNY, and always I have used the system of Kant Summaries, even though it condemns me to grading 20 or more seven page papers each week, every week of the semester. I consider the chore a holy labor.
As must surely be obvious, I am inordinately proud of having kept the system of Kant Summaries alive, and I have not the slightest doubt that those have been the best courses I taught in my entire career. But think for a moment about what I am saying, from an economic perspective. I am saying that the technique of "producing" knowledge of Kant's philosophy has not changed in virtually one hundred years! And I am saying this not apologetically, ruefully, with embarrassment, but proudly, triumphantly. Even the Roman Catholic Church finally got around to revising its technique for producing a High Mass, for heaven's sake!
Higher education has two techniques for delivering its service, neither of which has changed in the slightest in three generations or more: the large lecture, and the small discussion class, both accompanied by written examinations and assigned essays [the Brits have a third technique - the individual tutorial, but it has never caught on in the States.] And that is it. Television has not changed this; the internet has not changed this; IPhones, IPads, laptops, and all the other paraphernalia of the clued in ramped up young person have not altered higher education's technique of production in any significant fashion.
Because higher education has been untouched and unchanged by technological advances, it has not become more efficient and productive. Hence, one would expect the real costs of higher education to track the Consumer Price Index pretty closely. Furthermore, although room and board were not figured into the statistics with which I began this entire discussion, food is food and a bed is a bed, so the cost of providing that to students ought also to keep pace pretty closely with the CPI.
So why in heaven's name has the cost of higher education gone up at THREE TIMES the rate of inflation? That is the puzzle we must try to solve, and I warn you that I do not have any neat, nifty answers. Still and all, I have some ideas, and tomorrow, I shall set them forth, for better or worse.