 Welcome to Free Thoughts from Libertarianism.org and the Cato Institute. I'm Trevor Burrus, a research fellow at the Cato Institute Center for Constitutional Studies. I'm Aaron Ross Powell, editor of Libertarianism.org and a research fellow here at the Cato Institute. Joining us is Glen Harlan Reynolds, the Bochamp Brogan Distinguished Professor of Law at the University of Tennessee. He also blogs at the Instapundant site. Among other books, he is the author of The Education Apocalypse, How It Happened and How to Survive it. Welcome to Free Thoughts, Glen. Hi, thanks for having me. I guess your book is about both K-12 and higher education, so it makes sense to start at the K-12, but there's of course a connection there. But I guess the first question is, in the very broad sense, K-12 education is not doing too well, so what's going on there? Well, you know, it's not doing too well because we're in this sort of situation where, at the risk of sounding like Bernie Sanders, you know, you can go into a drug store and you can find 50 different kinds of deodorant, and yet when you go looking for public schools, they're basically all built on the same model. And one of the interesting things, you know, I talk about in the book is that public education in America was very consciously styled after the model of 19th century pressure. A Horace Mann, who was a major figure in it, was a great admirer of the Prussians. And it was specifically designed, and again, quite explicitly, it wasn't any sort of conspiracy, or at least underhanded conspiracy. It was specifically designed to turn out obedient factory workers and soldiers and things like that. And you know, the school was kind of built on an industrial revolution line. I mean, you have all the desks lined up in rows, kind of like machines in a factory, and you know, when you actually go from one class to another in a school, you're kind of like being on an assembly line, being moved on down to the next station. And it was designed on that industrial model, and to be fair, it was a great success in its time. I mean, it elevated the lower class of the working class into the middle class, and it did in fact produce good factory workers and good soldiers, which was very useful in World War II. But it's kind of a dated model now. And what's worse, it's not even that the schools have sort of stayed the same. They've actually gotten worse. They're simply not as rigorous as they were 50 or 100 years ago. So you're actually learning less while you're still quite constrained by this approach. And the other side of it is, there are now just a lot of alternatives. I mean, one reason why you put all the kids in a room with a teacher 100 years ago was because there was no other way to do it. Now we have online schools, and they're quite useful. My daughter actually switched, as I mentioned in the book, from a regular public high school to online school. And that allowed her to graduate a year early, which allowed her to start college a year early. And she thought it was pretty good, and it was much more flexible. I mean, you don't realize how under the thumb you are of the public schools, even to such things just like when you get up in the morning and when you have dinner and when you can go on vacation, until you're not under the thumb of the public schools anymore. And then it's like awesome. But there have always been alternative methods of education. I mean, my wife was until recently a public school teacher and also taught in private schools. And she's talked about some of the odd, like there were the schools with no walls where all the students were just kind of in one big room. But those didn't seem to work very well. And so maybe, I mean, couldn't the alternative narrative of this is we figured out what works, and we know it seems to be what works because even most private schools operate on this model, right? I mean, most private schools, even the very good ones, the very prestigious ones are still, you know, students in their desks and going from class to class. And so education is this big, important thing that we don't want to mess up. And so we'll let people innovate on the sides. But so far, they haven't really found anything that works better. Well, I don't know if that's really true, found anything that works better. I mean, the current system is quite unsatisfactory to a lot of people. And, you know, the reason why I use the term of the book of the K-12 implosion is that what you're seeing in a lot of large public schools right now is such an exodus of students that they're literally imploding. So layoff teachers, they're closing school buildings, and those people who could go to public school for free, I mean, I'm trying to put the word free in quotes because of course it's free in the sense that somebody else pays for it. But still, from an out-of-pocket basis, these parents could go for free and they're still paying to put their kids into private schools because they're unhappy with what the public schools have to offer. Well, sure. But you mentioned, so you said there are kind of two ways, two things going on here. There's the, you know, atrophying of the model that we're stuck with this model from Prussia. But then there's also the declining quality. And those are two, I mean, we could imagine, you know, the model might work very well if it had high quality teachers giving rigorous lessons. More money. More money. It might work or it might, you know, so it might be the model's problem or the model might be just fine. It's that the quality of the education being taught via that model is going downhill. So can we, you know, can we tease those two out? Well, actually, there are basically three things going on. I mean, problem number one is, you know, that we have the Prussian model, but it worked better when it was run by Prussians and we don't have any of those. You had your Prussian teachers who were full of authority and self-confidence and your Prussian students who knew they were supposed to listen to the teachers. And then even when we ported it over to the United States in the 19th century, we had, you know, teachers had a lot of authority, parents pressured children to do well in school and to behave well in school. Children knew that was expected of them. And so, you know, you had all that going for it. And now, you know, the quality has declined. So that's one problem. And then, you know, even as the quality is declining, the barriers to exiting the public system have really gone down. You know, as recently as 20 years ago in most towns in America outside of big city, you didn't have a lot of alternatives. You had a public school system and then typically you would have, you know, a private school that sort of at least pretended to be sort of a Tony prep school, whether it really was Tony or not. And then you had a Catholic school and those were your choices. And though it also seems like the sort of old model and also the existence of 18 and then you bring in the higher education level. It's also maybe constrained our view of what childhood and adolescence is supposed to be like and what you're supposed to be doing in terms of work or school at different ages and then continuing that into the higher education. We have a very, very kind of, I guess, stilted idea of what growing up is like partially because of the school system. Well, I think that's right. And you know, it's very interesting because if you look, if you look at history, you know, we tended to treat adolescents as sort of junior adults and we didn't. Teenager dumb is a fairly recent invention. And in fact, we didn't really start talking about teenagers until we had kids in school and we took kids who used to hang out with adults in adult settings, doing adult tasks where if you wanted to be respected, which everybody does, you were going to be respected by adults for being good at doing adult things. And then we took all those kids and instead we segregated them into schools where they were around a bunch of other teenagers. And you still want to be respected by the crowd you're part of, but now your crowd is all people your own age, so you do the stuff that impresses people your own age. And the problem with that is teenagers are idiots, but the stuff that impresses teenagers is usually idiotic. So instead of being really good at, you know, bailing hay or fixing a plow or something like that that you might have done 100 years before, you want to be good at drinking or, you know, dating or playing football or other things that are fundamentally more trivial but that appeal to your peer group. Is that, I mean, so that doing the stupid stuff is bad and, you know, systems that encourage teenagers to behave even stupider than teenagers often behave is bad. But it seems like this is the result of positive trends, right? So on the one hand, part of the reason that we can send our kids to school through those teenage years as opposed to putting them to work on the farm is because we're all wealthier. And so we don't need them earning an income in order to feed the family and education is good. I mean, most of us think, you know, the more education you can have, granted it can take time from other things, but by and large education is a good thing to have. And at the same time, you know, our economy is shifting such that, sure, you could, as a 13-year-old, you could go right to work in, you know, in the blacksmith's shop or on the farm or whatever, but our economy has changed so that now more education, more knowledge, more skill is necessary to pull off the kinds of jobs that give us this enriched world. Aaron's just tried to defend the fact that he had blue hair when he was a teenager. That's what he's trying to defend here. That was in college. But that's, I mean, that we've extended teenagerhood well into undergrad at this point. But so is that, you know, is the teenagers hanging out with teenagers and so doing more stuff just kind of an unfortunate price we have to pay for the glories of a richer society? Well, I mean, there are a couple of assumptions buried in it. I mean, at one level, it's certainly true. We're a lot richer than we used to be. And, you know, 100 years ago, as I say in the book, teenagers provided about a third of family income in a typical household. And so you really needed them. And now they don't. So, and, you know, we're richer, so that's okay. But the couple of assumptions buried in that are number one, that the stuff that teenagers are doing in school is actually making them more valuable and more high functioning as adults. And that's not entirely clear. Well, and I'll tell you a story slightly sanitized. But since this is podcasts, not radio, I don't have to sanitize it. The FCC does not apply here. Yes. There you go. Of course not. So when my daughter was looking at switching from high school to online school, one of the things I said to her was, I said, well, aren't you worried that you're going to miss the socialization in high school? And she said, okay, let me tell you about socialization. On my way to math class today, I walked by the band building and I saw, and I won't name the female friend, giving a blow job to a male friend out behind the band. And she said, that's what I'm missing. How do you feel about that? And I was like, okay. So, you know, the truth is, when you put a bunch of teenagers together in that setting, the damage that's done by cramming them together may exceed whatever benefit they get educationally. And the truth is you don't learn that much in high school. I'm sorry, but I just don't believe that American high schools today turn out people who are really super well-fitted for the marketplace or for a democracy. And the studies of what they know when they get out of high school suggest that they're not learning much. And for that matter, I'm sure you've done a show on academically adrift and the studies of what people learn in college. But a lot of kids, interestingly enough, actually come out of college knowing less than when they went in. So, you know, yes, in theory, if you have a rich society, you can afford the capital investment of making your kids smarter and more knowledgeable and more competent and more capable, even at the cost of keeping them out of the workforce for an extra 10 or more years. But the fact is, it's not so clear. That's what we're actually doing. Shouldn't we be just spending more, though? Better teachers, you know, making sure we have the right studies about how kids can learn the best and then put that into place with better teachers and more money and then we can fix this problem? Well, we've certainly tried the better teachers and money approach for the last 50 or 60 years. And the results suggest that it's not producing. In the sense that we are spending more now? Yeah, I've got a chart. Charts don't translate very well on radio. But I've got a chart in the book that shows that what kids learn in school is basically flat and what we spend on them has increased exponentially over the last several decades. And indeed, we are, you know, almost at the top of the OECD in spending per student, whereas we are most definitely not anywhere near the top of the OECD in results. So it's, that's on page, these charts are on page 74, 73 and 74, the book if anybody wants to look them up. So it's not simply a case of shoveling money in. And of course, there's always the answer sort of like communism, you know, it hasn't worked before, but that's just because we haven't done it right. And, you know, in principle, that is unanswerable. But in practice, if you've tried it that many times, you haven't done it right. Maybe you need to try something different. Now, what about teachers unions? Are they not helping either? I imagine teachers unions certainly don't help. You know, I mean, I'm a big fan of public choice economics. So it's my belief that unions are no unions. Institutions are run mostly in the interest of the people who run them as opposed to their essential mission. But teachers unions certainly make that worse. And, you know, one of the things you do sort of find is that they're just some good teachers and some bad teachers. And it's actually pretty hard to turn a bad teacher into a good teacher. So what you really want to do when you run a public or any school system is basically to get rid of the bad teachers and replace them with good teachers. And the harder it is to replace people, the harder it is to do that. You discussed some of the possibilities of reform, which I think is one of the things you say is that you're not, that when you unleash the forces of innovation, there are many things you can't really predict about what will happen. But you bring up some interesting things that could happen through 12 education to make us change this Prussian model. One of them is gamification, which as someone who plays video games, I thought was particularly attractive. Can you talk a little bit about that? Well, it's interesting because one thing, you know, people say is that teenagers are just stupid and you just can't teach them things because they just aren't any good at learning things. And so, you know, as I say in the book, there is a whole industry that's really good at getting teenagers to learn all sorts of arcane information and really master it and be able to apply it successfully. And that's the video game industry. And if you play a video game and you get further and further into it, you learn all kinds of things and you hone your skills and you come out much, much better at what you do than when you went in. And that approach, you know, it's a huge multi-billion dollar industry that makes more money than Hollywood. But it isn't used very much in education. It's used some. There are some sort of lame educational games using K-12. Some of them aren't too bad. The Army actually has some games that it uses for training in combat. They're actually pretty good. And, you know, there's a lot of room left to be done there. And I think you could do a lot of teaching that way. The problem is that the people who are in charge of education don't think much like the people who design video games. And the people who design video games don't think much like the people who are in charge of education. And the two cultures don't seem to have merged very well. Something I've always wondered about gamification because I guess you could put me in the somewhat of a skeptics camp. Yeah, but you don't put out any video games. But no, that's actually, it's related to that is that, so yes, teenagers and kids are very good at picking up all of this really obscure information and learning it when it comes in the form of video games. But we also, they're also very good at doing that for non-video game stuff. Like kids get super into Harry Potter, right? They read these books. They pour over these 700-page novels and learn the ins and outs of all of the characters. We have huge communities around Star Trek where the knowledge of obscure things is astonishing. You have the same with Star Wars. I was wondering if you were going to say Star Wars. I wonder if you're going to give an excuse because Aaron loves Star Wars. Yeah, my knowledge of Star Wars is larger than is healthy. But the thing that all of these seem to have in common is not the gamification, right? Because these are all, there's documentary films and there's large history books and there's technical manuals that you could be learning stuff from that aren't all that different from these things that kids are memorizing. But the difference is that the knowledge in those things is, I guess for lack of a word, imaginary or pretend. And so what I wonder is that it seems like kids, teenagers, whatever, love soaking up knowledge about fake stuff. But if you were to gamify a book or a game about the American Civil War, I'm convinced it would have just as little of an impact as if you were to say, hey, you really like this Harry Potter. Well, why don't you read this 700-page book about the... The Pride and Fall of the Roman Empire. Or the British schooling system and learn those same sorts of details. Kids just aren't going to be into it. Well, you know, actually, when I was in high school, I played war games which back in those anti-Diluvian days were all done with paper and little pieces of cardboard you pushed around. But I learned a lot about the Civil War and World War II and some other wars from playing those. So I wouldn't rule that out completely. But one of the reasons, I think, why kids get into Harry Potter or whatever, which goes again to my earlier thesis, is that their friends care about it too. And by working on that stuff, they get some degree of peer respect, or at least they hope they will. I'm not sure Mastery of Star Trek trivia ever got anybody laid. But it's the hope that matters, not the actuality. So I think one of the things those fictional worlds do is they give people a place to go that doesn't seem like something that's done to them. And the truth is an awful lot of kids think that school feels like jail. And if you have the experience, as I've had, of just driving through towns and driving past schools and driving past prisons, they really often look a lot alike. School is, from the perspective of most kids, not something that you do. It is something that is done to you. And I think the reason why they are more excited about things like Harry Potter or whatever is that they feel like that's something that they do. If you have a teaching approach that makes students feel like they're doing something that they do, they'll learn a lot more. Now, of course, some people are just lazy lumps or no matter what. And the best thing for them may well be to shove them through a Prussian education factory where at least a modicum of basic knowledge gets drummed into their head whether they like it or not. But once again, we live in Bernie Sanders world where there are 50 different kinds of deodorants and people should be able to pick the approach that is most likely to work best for them and for their kids. Now, we don't have 50 different types of schools or 50 different types of a deodorant thing in the public education context, but we take these children, put them through this Prussian model, and then the next thing is college. And we're going to send them into higher education and create jobs so they can learn about jobs of the future and become great citizens and quote, Plato and Quip and Latin and all these great things, which of course, obviously, our college educated people are doing when they come out of college, correct? Oh, yeah, they all learn Latin. I mean, that's sort of what, you know, one of the things, you know, it's libertarians, you undoubtedly encounter this, where when you start talking about shrinking government, even a little bit, the response is always, oh, you want to get rid of roads and the police. You know, and it's sort of telling, I think, that when people want to defend government, they pick like these really sort of modest things the government has done forever as examples, rather than, you know, the Department of Education or something. The same thing is true. If you suggest that college is, you know, not really teaching people what they need to know, people often say, well, you just hate a liberal arts education. You don't want people studying Plato and learning Latin. And, you know, again, the response is, well, most of them aren't doing that now. I mean, if you're, if the purpose of college is to make sure that when students come out, they can conjugate Latin verbs, translate Caesar's commentaries and talk about Plato's dialogues. You know what? It's a failure already, because they're not doing that for the most part. Well, have we figured out then what college is for? That seems to be a subtext of the section on the higher ed in your book and a lot of people discussing. I used to think that what college was for was actually to give people a place to drink a lot and have sex, but now they're even doing away with that. So it's really hard to say. Well, it could be, but sometimes people say it's the human capital element or the signaling element, which is college, if it's not teaching people, then what is it doing? Well, there are basically three kinds of things that you can get from going to college. One of them is you can actually learn useful skills that will make you a bigger contributor to the economy and the nation and thus able to make more money. So for example, if you go in not knowing anything about electrical engineering and you come out with a degree in electrical engineering, your value has been increased substantially. So that's one thing you can get from college and plenty of people do get that and not just people who graduate in electrical engineering. Things that produce a useful major, even art history, which President Obama was making fun of, actually turns out people with a pretty good skill set who frequently wound up getting pretty good jobs. But the second thing people go to college for is signaling, which is to say even if you go to college and you in fact learn nothing useful, which happens to a surprisingly large number of people according to some of the assessment tests. Even then, just by getting in and surviving and graduating, you've actually told an employer some useful things. You've said that you're able to show up on time at least enough to get along with other people at least well enough that you weren't expelled and generally sort of to function in middle and upper middle class of American milieus. And the third thing you might get is networking where you make friends in college, you get to know people and that provides you with opportunities in the future. That's probably truer if you're going to an elite school, but not necessarily. If you go to Eastern Kentucky University and you stay in Eastern Kentucky, then that's probably a pretty good network for you too. The problem with these three things is from the standpoint of the larger society only the first one creates any actual wealth. The signaling to employers or the networking, they just determine who gets benefits. They don't actually create any new wealth for society. They're just moving it around. If you want to help society with higher education, you should focus on increasing people's value of their human capital. And yet if you look at what colleges actually do, that doesn't seem to be their primary goal. Has this changed a lot in the last 30 years or so? Would you say? College in general and what people are working for? Well, yeah, I mean a couple of things have happened. We had a huge run up in capacity in the higher education industry after World War II because of the GI Bill. And you can understand an awful lot of what's going on in higher education ever since as basically trying to find ways to soak up that excess capacity once it was there. Because the GIs came in, we hired a lot of professors, built a lot of new buildings and dorms, expanded capacity substantially. And then as that started to taper off, we got draft deferments during Vietnam which encouraged a lot of people who otherwise wouldn't have gone to college to go to college. And then about the time the Vietnam War winds down in the 70s, you get Pell Grants, they used to be called BEOG, Basic Educational Opportunity. Pell Grants, you got guaranteed student loans, you got a lot of subsidies that sort of kept the warm bodies flowing into higher education so that it wouldn't have to retrench. And now what we're doing is we're kind of at a stage where we're starting to run out of other people's money. We sort of reached their load of how much money they were willing to subsidize directly. We covered the gap for a number of years with student loans and exactly what you would expect to happen to happen. Colleges raised tuition to absorb the subsidy as student loans were expanded for a while. When you said exactly what you expect to happen would happen. I've had conversations with people where they didn't understand why you would expect that to happen. Can you explain how the student loan system helped increase the price of college? Sure. I mean, I guess people don't expect it because they don't think it through. But if you think it through, it's pretty obvious. If I tell you you can only go to college with the money you can earn working, waiting tables, and over the summer, then colleges have a problem. They've either got to have tuition that people like that can afford or they won't have very many students. If I tell you you can borrow $10,000 a year to go to college, then the colleges are immediately going to say, well, we can raise our tuition by $10,000 a year because he can borrow the money and come. And then if I say you can borrow $50,000 a year to go to college, a lot of colleges are going to say, well, we can raise our tuition $50,000 a year. And that's pretty much a short version of exactly what's happened over the last several decades. The amount of money you could borrow under federal student loan programs was increased and as it went up and there's been a fair amount of actual empirical research on this to demonstrate that every time it went up, the college tuition went up with it. It just follows pure economic truth. And so what we have now is, would you call it a bubble? Well, I do call it a bubble and I think it is. And it's a bubble that I think is beginning to show signs of bursting. For the last couple of years what we've seen are actually having trouble filling seats which never happened much before. We've seen price resistance from parents and students because yes, you can borrow the money and for a while financial advisors used to tell people oh, student loan debt isn't bad debt, it's good debt. But as tuition continued to rise while the payoff in terms of wages after graduation stayed pretty flat people eventually started to notice that you have all these college graduates who are deep in debt and can't find a job or if they can find a job it's not a job sufficient to service the colossal debt they've got. And so there's a good deal now of buyer resistance and the Obama administration is now talking about helping people with student loans who feel like they were lured into their higher education on false premises and they're not limiting that to some of the for-profit schools that have closed although that's how it's being couched and in my own field of legal education we've seen a number of applicants drop by about 50% and there are law schools closing and merging and rolling back faculty salaries for exactly the same reason the tuitions have really gone up the job prospects have actually gotten worse and students have noticed. I'm curious how this all plays in with the signaling model of education that we talked about earlier because if part of what needs to happen and it sounds like you're saying this is what needs to happen is these alternative models need to come to the fore, right? We need to be more willing to embrace alternate ways to get an education alternate models that if you couple that with the signaling thing though it seems to raise kind of a first mover problem. So this take the law schools, I mean both Trevor and I attended law school, I am convinced that law school is particularly ineffective way of learning to become an attorney that at best the first year of law school is valuable but the second and third year should likely be replaced with an apprenticeship and that most of what's taught in the first year could be taught, could be learned on your own but if I actually want to become an attorney there is no way that I'm going to follow through on that. There's no way I'm going to go to a law school that say correspondence based and then apprentice based because there's no way I'll get a job because every single employer is saying look you know in order to become an attorney you need to have gone through this first this particular model of legal education and this is the same for you know graduate school for certain kinds of jobs or certain kinds of training for other sorts of jobs it's you know someone's got to be the first one to embrace these alternatives and that person is going to be unemployed. Well that is an issue and you know in law and I should plug my colleague Ben Barton has got a great book out on the legal profession from Oxford University Press called Glass Half Full where he talks about a lot of exactly these issues and you know the the problem you have in law is the guilds have taken over I mean it's an interesting matter of history that the requirement that you attend law school and later the requirement that law school be a full three years and the limitation on how much outside work you can do while you're in law school were all things that were put in in the first couple of decades of the 20th century pretty explicitly at the time to keep the Jews out that was their goal there was a big flood of educated East European immigrants who are mostly Jewish who are getting into law and the powers that we didn't like that so they tried to make it as expensive and time consuming to get through and become a lawyer as they could so as to limit their numbers and it worked for a while they did a great job making sure there are no Jewish lawyers you never see Jewish lawyers around absolutely I guess back there yes it held back the tide for a couple of decades and you know for a couple of decades it doesn't seem like a long time but for people who are being spared the competition I think it was a plus so I think that if you wanted to improve education one of the things you want to do is to approach the employer side and we're actually in law we're not seeing that yet although we are actually just beginning to see it lawyers are having their lunch eaten sort of at two ends at the lower end things like rocket lawyer and legal zoom are killing them for a lot of low-end clients who just want to organize an LLC or write a will so what do those services do basically they're just interactive legal forms but if you go to the legal zoom or rocket lawyer site and you answer some questions and at the end you print out some papers inside them and you've got a Nevada LLC or you've written a will that's valid in your state and you know lawyers make fun of those things but the truth is as Ben Barton says in his book he says every lawyer knows a lawyer who does worse work than those online services do so they're not better than the best lawyers they're better than the worst lawyers and they're usually probably good enough and they're a lot cheaper at the high end big law firms used to make a lot of their money by having first and second year associates who didn't really know how to be lawyers very much yet but were smart who would be build out at high rates for going through huge boxes of documents as part of discovery and litigation and things like that and that has been heavily automated now using databases and OCRs and keywords and such like that so that one associate can do the work of 10 and that's really hurt their bottom lines so the practice of law is being eaten up from either end by automation and also by some paraprofessional paralegals and such who are in some areas beginning to be licensed to come in but perhaps the story with law school if we go back because I think this is a continuous story starting with K through 12 education which creates a model that probably doesn't give enough job skills give enough opportunities for students to do different things everyone thinks they have to go to college you have a huge bubble being with the subsidies on the debt everyone goes to college or a lot of people go to college that's the only possible way they get English majors and they get psychology majors and other types I was a philosophy major and of course all the philosophy factories had shut down when I got out of undergrad they come out of undergrad and they say everyone went to I don't have as much separation now between me and other employable people because everyone went to college so now I need to choose a graduate program and we have the same type of bubble occurring there and law school was chosen by many people who couldn't cut it in med school let's say to try and figure out how to go forward and make it in the world so it's a bubble that goes back to the K through 12 world one of the smartest things law schools did in the late 80s actually was they took math off the LSAT there used to be a math section on the LSAT and then the brilliant marketers at the law schools all said there's a lot of people who are afraid of math so all these college seniors who aren't sure what they want to do and start looking around they're going to say well GMAT too much math MCAT way too much math GRE that's got math LSAT no math that's what I'm going to do so voila we've reached a situation where a college degree today is what a high school diploma used to be which is sort of your basic punched entry ticket into the world of employment and a graduate degree like a law degree or MBA say is sort of the equivalent of a liberal arts BA from some decades ago which is to say it now says you're a little above the herd and that maybe you don't have a lot of super special skills but you're at least smarter than the average bear but the problem is that the market for JD's or MBA's just isn't what it used to be well does that mean that is this a bad thing or is this just a function of the increasing knowledge heavy economy has the is this a product of government intervention in a program to not allow us to adjust well enough to a changing world well I think I think the latter is the answer yes it's a bad thing if we had a knowledge heavy economy that said to get a good job you have to go through this much schooling and then when you got out you got a good job that would be one thing what we have however is we do have a knowledge heavy economy but we also have people going to school running up a lot of debt and then not getting a good job when they get out you know the old joke is you know the difference between a Starbucks barista and a Starbucks barista who went to college is 100 grand in student loan debt that's not a reason to go to college and yes I think the rigidities and sort of perverse incentives that sort of all this government money sloshing around coupled with a lot of rules on who can enter professions and employers fear of using IQ tests and things like that for selecting employees has led to a lot of malinvestment and you know people invest a lot of money in a college education that ultimately doesn't really produce value for them or for society the people who clean up are people like me I mean you know the universities are like the lenders in the subprime bubble they get their money up front and then if somebody winds up stuck with a lot of debt they can't pay off it's the federal government and the tax payers ultimately who wind up coming in to pick up the tab and of course the borrower gets screwed even worse into student loans because unlike a subprime mortgage you can't bankrupt your way out of them is there a real possibility of a collapse along the lines of the subprime mortgage collapse happening in the student loan debt market? Yes I mean there are some signs now I mean you know Sweet Briar College which is a fancy college in Virginia where rich women have gone forever is closing and that's partly because it was single sacks but it was also partly because it turned out liberal arts grads who just didn't see it as a good investment and it's not the only place in three or four liberal arts colleges in Virginia that closed just in the past couple of years and you see similar stuff elsewhere I think that all these universities are built on the assumption that there will be more customers coming along and that they can continue to raise tuition and some of them have run up a lot of debt in that expectation and if people just quit buying they're going to be in trouble and indeed as I say seeing signs of that in higher ed generally and in the legal education world it's no longer something that's possibly happening everybody agrees our bubble has burst and the only question is whether it's going to be as catastrophic as the collapse of dental schools back in the 80s. What would you say to suggestions that the government should bail out student loan debt or forgive it in some way or do other things to ameliorate the student loan problem? Well I think it's it creates a sort of perverse incentive I mean the truth is a lot of people with a lot of student loan debt are kind of victims schools flat out lie and I don't mean they paint a rosy picture I mean they flat out lie about the employment of their graduates and what their graduates tend to earn and things like that so that you can make a pretty good argument that a lot of students were basically defrauded into investing money in education that was never going to pay off. I also don't see any good excuse for having student loans not be dischargeable in bankruptcy and indeed what I would suggest and interestingly it's some Democrats in the senate mostly pushing this not Republicans I think that the institutions that issue the degrees should have some skin in the game and should be on the hook for some of that debt so if you get your student loan debt discharge the university should be on the hook for some percentage of it as an incentive not to take people's money and send them out with degrees that won't make it possible for them to pay off their loans. Well what can we do in terms of making this more of a free market system because it seems like the government has heavily skewed this away from reality and when my parents went to college in the 60s they could pay it out of pocket essentially or with a summer job and but how would this work in a free market system if we got some of the government control out how would people get their knowledge and pay for it? If you got rid of government subsidies you would find that schools would have to lower tuition or go out of business for the most part I mean a few places you know Harvard would still be Harvard because Harvard has enough money in its endowment that it really doesn't need to charge anybody tuition if it doesn't want to of course it wants to because they like the money because Harvard is Harvard but most schools would face a tough economic choice and they would have administrators they would have to get rid of fancy or at least cease building fancy student unions with rock climbing walls which now everybody has and things like that and college would have actually ultimately go back to looking a lot like college looked 50 years ago which would be a somewhat more spartan environment and somewhat lower pay for faculty and a lot fewer administrators on campus because that's actually where the bulk of the excess money is gone is into flocks of administrators who eat up our substance and that's what college would look like college where tuition is you know revenues are 50% in real terms what they are now would look a lot more like a college of several decades ago when revenues were 50% in real terms what they are now How much slack is there in the college budgeting I mean we so we could if we didn't have the loans then the amount that students would be willing to pay we didn't have the subsidies the amount students would be willing to pay would go down dramatically so most colleges would not be able to get away with charging 30, 40, 50 thousand dollars a year in tuition how many of them could make do without that money if tuition dropped to more reasonable levels because I mean there's this dream right of like every child should have the opportunity to go to college but if we suddenly have far fewer colleges there's going to be it's going to be harder to get in right no matter what the price is there's going to be longer lines waiting lists they'll raise the standards necessary for entrance so is there is there really room there I mean we see colleges cutting costs all the time with things like you know hiring more adjunct professors who you know course hour for course hour make a tiny fraction of what tenured professors make you notice they never hire adjunct administrators but the purpose of a college is supposed to be teaching and yet and even research and yet when they come to cut budgets they don't cut out administrators they cut out faculty and they take faculty replace them with low paid adjuncts who don't do research first you know nobody ever said well you know our budgets got to be cut so our deputy assistant director of student life is going to be farmed out for two thousand dollars a year to an adjunct they just don't and there was a pretty interesting study recently by the Goldwater Institute that said about sixty five percent of the increase in college tuition over the last several decades went into administration which just for somebody who walks around a college campus and sees all the buildings full of administrators seems about right to me now how much slack is there how much could they cut it I really you know that's a tough question because university accounting is on a par with Hollywood accounting but Bob who's with the University of California has got a new book out he's I don't agree with his solution he thinks public education higher education should be free and government subsidized but he goes through a long discussion of how much it really costs schools to educate students versus how much they claim it costs them and suggest that in fact schools are spending a lot less money on actually teaching students and a lot more money on other stuff than they let on and that too seems right to me just based on my impressions would this help students when they approach going to college when they're eighteen look at it as a human capital thing because that's what I would see as opposed to a consumption good you have a great line in your book where you say a six figure consumption item is well beyond the resources of college students nobody would advise an eighteen year old to purchase a Ferrari on borrowed money after all but if college education is a consumption item not an investment then that's basically what they're doing and these colleges with rock climbing walls and amazing dorms and all these things that is a consumption good element and if we got students to look more at it as a human capital element maybe would be better off in terms of participating in the increasingly dynamic world marketplace of ideas would you agree with that no I mean I think that's right I think that college should be looked at as a human capital issue first and foremost it should not be looked at as four to six years of recreation because honestly at age 18 you really can't afford to spend four to six years unproductive stuff that's an important part of your life and the other side of it is it's not just whether you go to college or not I mean we often hear numbers like oh college graduates make a million dollars more than people who don't go to college those numbers are kind of deceptive for two reasons one of them is that colleges aren't just making you more valuable they're also sorting and the fact is people who graduate high school and go to college would make more money on average than people who graduate high school and don't go to college even if they never went to college they're just smarter and more disciplined the second thing is that and there was actually just an interesting study on this that came out last week that your choice of major makes a bigger difference in your lifetime earning than whether you go to college or not and that makes sense when you think about it I mean if you major in I keep saying electrical engineering but that's a hard one if you major in that you're definitely going to make a lot more money than if you major in say women's studies which may actually reduce your employability because if I'm an employer and I see somebody's got a degree in women's studies I say well they didn't learn anything and they'll probably sue me so they're not a very attractive employee so if you think of it as a human capital thing you really need to say what am I you know 18 year old applicant going to get out of my time at college that is going to make it worth all this money now 18 year olds aren't prone to thinking that way and colleges and their literature and the whole way the system is set up are designed to try to discourage them from thinking that way too much so what should we do should we tell them all not to go to college and go and get a tech degree or at least dissuade them how do we shift the stuff over too many people go to college and so if we change this we got rid of government subsidies and fewer people with the college I don't think that would be so terrible you know in the pre expansion days you know the assumption in the 50s and 60s was that you had to be about one standard deviation above the mean and IQ to really benefit from college and that was about one six of the population that was how many people should go to college now we say everybody should go to college and it's just not clear that that's true if you go to college and you spend four frequently six years and you don't get anything out of it even if it's free in the sense that somebody else is paid for it and six years of your life you don't have that many years of your life and that's a lot of them to throw away on something that's fundamentally not productive and sure you may have fun in college but you know you're in your early 20s you're probably going to have fun whatever you're doing let me bring this reform discussion back again full circle then to K through 12 because if you know there's a lot of people are going to college who probably shouldn't not just because they're not going to succeed at it but in not succeeding they're doing a disservice to themselves in terms of debt or years of their life that could have been spent building up a career whatever that the reforms that we often talk about for K through 12 this you know using different models teaching kids different sorts of things focusing on stuff that's going to build up human capital we're going to have to sort people into who should go to college and who shouldn't when they graduated 18 and are making decisions about what to do for the next year make those same sorts of decisions for kids and you talk about how 18 year olds are maybe not best equipped to think about this sort of long term planning and they get lured into the glossy college brochures but a lot of parents maybe because presumably they're the ones who are making the choice about what track to put their kids in aren't necessarily well equipped to decide if my child when he or she is 5 and getting ready to enter the schooling system is going to be Yale bound or a technical degree bound or should just have a high school diploma so how do we all the reform starts at the beginning education starts at the beginning and so how do we fix all this how do we let the market fix all this without ending up in a situation where from a very early age we're precluding opportunities well that's a real concern and of course that's you know one of the things that people who say we should just have free higher education in the United States they often point to systems like Germany's and Germany in fact does track people pretty early on a college track or a vocational track and you know both of their tracks are really good but once you're on one of those tracks it's pretty hard to switch to the other one and I'm not in favor of that kind of of rigidity I mean my own approach is first of all people say what should we do about this is first do no harm an awful lot of the problems that we face in these areas are the result of government distortion so the first thing to do is to get rid of the government distortions and the second thing to do is to make sure that people have a lot of choices and then I think the market will tend to take care of it now people will still make bad choices because that's what people do but I think that overall if you've got lots of different educational alternatives they'll compete with one another and people will find ways to figure out which one looks best for their kid when you've got lots of job opportunities that perhaps require a certification exam or evidence of competence rather than just a college degree a lot of people are going to say you know rather than spending six figures going to, it's a six figure class even go to a public university for four years you know I'll instead get my Microsoft certification or whatever it is and take a job that way and I think that would be better and I would like to see things move in that direction rather than requiring people to go to college just because we sort of fetishized this idea of college as a class marker rather than any sort of actual value Thank you for listening if you have any questions you can find us on twitter at Free Thoughts Pod that's Free Thoughts P-O-D Free Thoughts is produced by Evan Banks and Mark McDaniel. To learn more find us on the web at www.libertarianism.org