Readers of this blog will have noticed that it takes almost nothing at all to get me started writing. Back in early October, "Luke's Mother" asked briefly how one ought to study society, and that idle question provoked a twelve-part answer from me that might easily have become a monograph. Now, a reader newly come to this blog has sent me an email wondering whether I might say something "on the subject of the ever increasing cost of education past high school and how it impacts the various levels of American society." Since this is another subject to which I have given a good deal of thought over the past half century, I will be happy to oblige. This will not run on to many segments, I shouldn't think, but it may require more than a single blog post.
I need to talk about some other matters before addressing this question directly, but it might be useful to put down just a few facts at the outset, to create a context for what follows. I spent some time this morning surfing the web with the aid of Google, and I was not able to come up with what I really wanted, which was a table showing year by year increases over the past half century, in nominal dollars and in dollars adjusted for inflation, for both public and private tertiary institutions I am sure such tables exist, and if anyone reading this can point me to one, I would be most grateful.
I did, however, come up with the following information, which can serve as a substitute for a fuller and more detailed data set. Between 1978 and 2008, the cost of living rose roughly 330% [including some hairy years in the late 70's and early 80's when annual inflation was running near or above ten percent]. Over the same thirty years, tuition and fees at four year colleges rose about 980%. By way of comparison, during that three decades long stretch, medical costs, which of course have been soaring, rose a bit less than 600%. Thus, although medical costs rose somewhat less than twice as fast as inflation, tuition and fees at four year colleges actually rose three times as fast as inflation. Clearly, there is something here that needs explaining, even before we come to talk about the impact of this rapid rise on students, families, and the society as a whole.
But first, let me talk about the widely held belief that higher education for all is the key to moderating the increasingly severe income inequality that shames and blights American society. Everyone seems to have embraced this notion, from politicians, newspaper columnists, and bloggers to Nobel laureate economists. And it yet it is rather obviously false. What is going on here is a pandemic commission of what we in Philosophy call "the fallacy of composition." The Fallacy of Composition is the mistake of going from the premise that something is true of each of the members of a group to the conclusion that it is true of all the members of the group. A simple example should make this all clear. When an audience leaves a concert hall at the end of the performance, it is true of each person in the audience that he or she can be the first person to leave the hall. But assuming that the exit is a normal doorway, it is not therefore true that all of the members of the audience can be the first person to leave the hall, not even if we allow for ties. Indeed, if the entire audience tries to be first through the door [which happens, typically, only after someone has yelled "fire"], the likely result is that there will be a jam at the door and no one will leave at all.
Familiar statistics, many times repeated, show that individuals with tertiary degrees are less likely to be unemployed and also enjoy, over their working lives, markedly higher incomes. From these facts, everyone draws the conclusion that if we can only dramatically increase the average number of years of education successfully completed in the workforce as a whole, unemployment will drop and average lifetime earnings will increase. This, as I say, is an example of the Fallacy of Composition.
To see why the conclusion does not follow from the premise, we need simply imagine a company that has, let us suppose, one thousand employees. Assume that ten of these are senior management, fifty are middle management, eight hundred are production or service workers who actually make the product or provide the service that the company sells, and the remaining one hundred forty have low end jobs as cleaners, janitors, loading dock workers and such. Let us also make three further assumptions that correspond pretty closely, I would think, to reality:
First, we will assume that wages, salaries, benefits, and fringe perks improve as we move up the ladder from the one hundred forty low end workers, through the eight hundred production or service workers, into middle management and then to upper management. We need not put numbers to these levels of employment, but I am going to suppose that the differences between those at the top and those in the middle are dramatic -- sufficient to support totally different lifestyles -- while the differences between the middle group and those at the bottom are certainly not trivial.
Second, we will assume that level of educational attainment correlates pretty closely with level of employment, at least in this sense: All of the top and middle managers have college degrees, and at least some of the top managers have MBAs. Keeping in mind that only 25% of adult Americans have college degrees, we will also assume that having or not having a college degree correlates in some measure with where in that great middle group of eight hundred one sits, although length of employment may also be an important factor here as well.
Finally -- and this is in fact the most important and often overlooked element of the entire situation -- I am going to assume that the wages, salaries, fringe benefits, and perks attach to the jobs, not to the people. What I mean is this. The company has a fixed number of jobs of various sorts that it must fill to carry out its business plan. When a top manager retires or leaves, the company either promotes someone into that job or recruits someone for it from the outside. The job carries a salary and associated benefits, which are offered to whomever they select to fill the job. If a middle manager is promoted, she gets a raise, and perhaps an office of her own. Should the company be restructured, so that a top manager is demoted to middle management level, he does not carry his top management salary with him. That went with the job, and he must accept a lower salary and fewer perks if he wants to stay at the company.
Now, let us suppose that a bright young woman in one of the service departments reads a Paul Krugman column about the importance of educational attainments, and by sint of great effort manages to earn a college degree. Will she improve her chances of promotion? You bet. If her company does not have any slots open higher up on the food chain, she will start reading the Help Wanted pages of the local newspaper and, with her diploma in hand, will stand a better chance of snagging a job that is a step up.
So, what happens if EVERYONE in the company reads the same column and goes to night school, earning college degrees. Does the company respond to this extraordinary upgrading of the educational credentials of its employees by totally eliminating the lowest level jobs and reclassifying all one thousand as managers, with appropriate salary raises and perks? Alas, no. Who will actually make the products or deliver the services if every employee in the company is a manager? And who will clean the offices of the newly promoted managers and haul away the trash they generate in those new offices? Indeed, where are they going to find the space for so many managerial offices?
We all know what actually happens. It has been happening in America for more than a century. The boss redefines the criteria for the various levels of employment. It now takes a Ph. D. as well as an MBA to be a senior manager. MBAs bag middle management jobs. Graduates of good private colleges get production or service jobs, and holders of diplomas from state colleges get to work on the loading dock. High school graduates need not apply.
But, you say, surely these thousand college graduates will fan out across America and find better jobs somewhere? True, true. Unless, heaven forbid, everybody in America takes to reading Paul Krugman, and they all earn college degrees. Then, the Fallacy of Composition kicks in with a vengeance. Only in Lake Wobegon are all the children above average.
Well, this is enough to get us started. I shall continue tomorrow or the next day.