 Thanks for showing up early in the morning for the first talk after breakfast and at least I'm not between you and lunch today. This is the talk where I have to be very careful because I'm sort of biting the hand that feeds me. But it is my favorite talk that I'm giving this Mises you. And it's one that I think would be of interest to pretty much everybody here because you're all in the middle of this higher ed thing or you're about to be. Some of you are about to graduate from high school or thinking about college and university and so forth or grad school. And so it's an interesting time in higher ed. A lot of changes going on, not all for the better. Some for the good. I think there's some interesting and hopeful things going on as well. If you take a look at the slide here. So you'll notice all the red lines here, which are the categories of goods and services that have gone up faster than general inflation over the last 22 years. And what do you notice about the ones that are highlighted here? What do they have in common? Yeah. So we've got housing. We've got childcare, nursery school, medical care services, college textbooks and college tuition and hospital services. So these are all goods and services that government has heavily subsidized or otherwise involved itself heavily in compared to the goods that have gotten relatively cheaper, things like cell phone services, household furnishings, clothing and computer software, toys, that sort of thing. So I talked yesterday about medical care and I mentioned some of the problems with government involvement in medical care. And here we have another case where government has involved itself very heavily, ostensibly to help students by making education cheaper. That's the narrative. We'll see we're going to help students out by subsidizing higher ed, make it easier for people to go to college. And then what do we have? Higher costs. And so these are the three crises that I'd like to talk about briefly here today. First of all, college does not do what it advertises. You're told everybody needs to go to college because it will put you in a better position to get a good job. And in fact, we see that college often does not do that. Second, the government subsidies, which are massive, are backfiring. And then third, we have a problem of stifled academic discourse, which you're probably personally aware of. So let's look at the first one first. So what is it that college does? I mean, when I went into higher education, I had this idea that what I was doing is I was instilling knowledge in the heads of students that was going to make them better off when they eventually went on to careers and that they would remember everything that I had said and that they would use this to great effect in their lives. And I guess I still think that to some extent, but being a little older and more jaded and cynical, I guess, I'm starting to investigate some other possibilities. And by the time I retire, the timing will be just about right where I'll be so fully cynical that I'll be ready to leave. But what is it that college is doing? Is it instilling human capital, as we refer to this knowledge and skill, or is it maybe a signal of the student's work ethic or their disposition toward higher order thinking? Or is it just basically an opportunity to party for four years or five or six years? Is it a consumption good for people who are higher or middle income, who can afford to go to school for that period of time, often on the taxpayer dime or their parents or some other source of funds, not usually paying for it immediately. Maybe they borrow a lot of money with student loans and they use this to enjoy life for a while. So the narrative that has been used to advertise for college education for a long time is that if you get a college degree, then you're going to be, you're going to have the ticket to at least a middle class income, if not better, and if you look at the probability of being in an educational group for a given income level, it does seem that that's what's going on. I mean, if you have an income of $150,000 or more, then the chances are that you are a college graduate. The vast majority of people with those incomes do have college degrees. And then many of the rest have some college, at least, under their belt, whereas lower incomes on the left end are much more likely to have only a high school diploma or maybe not have even graduated from high school. And so this is the story. You need to go to college because that'll put you in a higher income group and that's what we would like to have, most of us. And so that's the story. Unfortunately, what this is doing, this kind of statistic, is it's lumping in people who went to college way back when with students who are alumni who have just graduated in the last few years. And it's just possible that college has changed over that period of time. So again, this, by the way, this chart or table as well as some of the other data that I'll show you are from Richard Vedder's excellent recent book, Restoring the Promise, which is an analysis of the problems with higher ed. And I recently wrote a review of Vedder's book in the quarterly journal of Austrian economics, which you can take a look at if you want to know more about what he's been saying. And he's been saying this for decades. But basically, if you look at the median income by educational attainment, you can say, well, if you've got a bachelor's degree or master's doctor's professional degree, then you're going to be middle income at least. And if you've got, say, just a high school diploma, median income is going to be a lot lower. So again, that's the story. And it looks, again, if you look at the entire range of college graduates, it looks like the return on investment is high. I mean, associate's degrees, bachelor's degrees seem to do better than the stock market seem to do better than a lot of other alternative investments. However, we are seeing some disturbing developments in the last one or two decades, at least, one of which is that the education requirements of the jobs that people are actually doing often are less than the educational attainment that the person actually has. So in other words, you've got people with college degrees that are doing jobs that don't really require a college degree. You've got people with four-year degrees that are waiting tables or they're baristas or whatever, and did you really need a college degree in order to figure out how to make a latte? And so in a sense, we're over-investing in college education, preparing people for careers that didn't really require that. Now, why is that happening? If you're hiring for Starbucks and you're looking at a variety of applications and you see some people that didn't finish high school and other people that have a four-year degree, you're going to use that information as a way to kind of gauge the level of, I don't know, competence or the drive that that person has. It takes a lot to finish a four-year degree, and so you figure, well, I've got multiple applications in front of me. Maybe I'll pick the person that is evidently the one with the most drive here. So that's partly what's driving this. But we've got a lot of people who are college graduates who are taking jobs that they're really over-qualified in terms of their formal education. So you've got, for example, this is comparing 1970 to 2010, you have taxi drivers and chauffeurs who in 1970 very rarely had a college degree. And by 2010, 15% of taxi drivers and chauffeurs had a college degree. Obviously not one of those occupations where, in respect to taxi drivers, I mean, I'm very glad we have people to do that, but you don't need a four-year degree to do it. Same thing with a lot of other occupations like shipping and receiving clerks, carpenters, bank tellers, firefighters, and so forth. So what is it that college education is really doing? Is it the instilling of knowledge that's desperately needed for the job that you're going to wind up doing later on? Maybe not. So let's think about college education as a signaling process. So you've got the population here, and you've got people who are blue types and people who are red types, and I don't mean Democrat-Republican, I just mean people who have motivation, perseverance, and intelligence. I suppose the blue dots are people with a lot of motivation, perseverance, and intelligence, and the red dots are people that don't have a lot of those characteristics. So you've got that general population, and we've created this kind of filter called a university, and you can take yourself through that filter, and the filter will filter out people who don't have motivation, perseverance, and intelligence. And so if you pass the filter, then you're able to say to an employer, look, I've got this sheepskin here that says I'm motivated, persevering, and intelligent. It almost doesn't matter what the degree is. If you've got that degree, it shows that you've got those underlying characteristics. Now, it may matter to some extent. If you get a four-year degree in chemical engineering, you're probably demonstrating more motivation, perseverance, and intelligence than if you get a degree in, I'm going to say out of trouble, something else. But as an employer, you recognize this. Now, this is why Wall Street firms like to hire physics majors, not because physics is particularly relevant to the financial industry, but because if you've got a physics degree, everybody knows that's tough. And you must have a lot of motivation, perseverance, and intelligence. You succeed in getting a physics degree, especially if you get a decent GPA on your transcript. So you've passed the filter. And then there are people who drop out. Was it Bill Gates or was it Steve Jobs? I can't remember which one dropped out of Harvard. So dropping out is not necessarily a bad thing to do, right? If you've got better opportunities, by all means. Take advantage of those opportunities. But you've got some people that fail or drop out and others that just say, I'm not going to even go through the filter. And so you get a mix of people who did not go to college who either didn't have motivation, perseverance, and intelligence or they do, but they decided not to put themselves through that filter process, save themselves a lot of student loans and so forth. There are plenty of motivated, persevering, and intelligent people who decide not to go to college. But if you're the employer and you're looking at these two groups of people, some of which graduated, others who did not, you're more likely to get somebody who's motivated, persevering, and intelligent if they've passed the filter. So it's just a probabilities thing. Now, what happens if you get government involved in this filtering process and government says, well, we're going to tax the general population, then we're going to subsidize people who decide to go through the filter? Well, now you get a lot of people who want to go through the filter because it looks relatively less expensive. And so you get the filter expands. I mean, you get bigger universities, bigger colleges. They shove a lot more students through because each student arriving or each potential student arriving in the admissions office applying to the college now has a suitcase full of government cash associated with them. The only way the college or university can get that cash is by accepting the student and keeping the student there retention, keeping the student there through four years to collect the maximum amount of cash from the taxpayer. And so the motivations of the college or university are such that they want to expand this process and the filter becomes, as you might think, more porous. More people are passing through because the college or university has an incentive to pass them through the filter. So Brian Kaplan wrote a book recently called Case Against Education where he made a point similar to this. So he says, once workers have been ranked, giving everyone extra years of education is socially wasteful. Furthermore, since the status quo supported by hundreds of billions of dollars of subsidies, we're probably underusing alternative certification methods like apprenticeships, testing, boot camps, and so forth. Signaling explains why students are far more concerned about grades than actual learning. So again, if you've got a four-year degree, you're saying, I'm signaling, I've got motivation, perseverance, and intelligence. That's a less effective signal today because, as I said, the filters become more porous and it's passing people through because the university can collect cash along the way from these government subsidies. And so you get a number of people who've passed the filter who actually aren't motivated in persevering in intelligence. I should come up with an acronym, MPI or something. Anyway, so what does the student want? They want an easy A. They want to pass the filter. They don't really care about gathering knowledge along the way. They want to pass the filter. They want the A. They don't want professors necessarily who teach a lot of job skills, explains why cheating. Kaplan says explains why cheating pays because if you're a cheater, you're going to pass the filter and you're going to look just like anyone else who is motivated, persevering, and intelligent. And he says, signaling explains why students readily forget course material the day after the final exam. Once you've got the good signal in your transcript, you can usually safely forget whatever you learned. And so he makes this argument, I won't go through all of this, but he says basically we need to have less education because we have dumped a lot of people into this filtering process that personally would be better off if we didn't have so many people trying to get through the filter. So this is part of the problem that we have so heavily subsidized education that we are getting a lot of students going through the process that are uninterested in the knowledge that college ostensibly can transfer to students. I think it also helps us understand why we get a lot of plagiarism. There is an epidemic of plagiarism in the United States, and I think in some other countries as well. It's a manifestation of that incentive to cheat. You're trying to mimic someone else who actually did the work. And I've seen enough of this kind of problem grading papers that it, and I've been teaching for 24, 25 years, and it's more of a problem than it used to be. Part of that is because it's easier to cheat in some ways. You've got a lot more stuff that's available. I mean, there's dozens of websites that are like cheating assistance sites, and it's easy for students to buy a paper and submit it. It's also easier for professors to catch that with tools like Turnitin and that kind of thing, but it's still a massive problem. And so what's the incentive for administrators at a college or university? They have the incentive to just vigorously prosecute plagiarism cases, knowing that if they really do take this seriously and impose all the penalties that are in the book, the student handbook or whatever, on cheating that that might mean that the student leaves and takes their government subsidies with them, maybe goes to some other college or university. I mean, is that really what an administrator wants to do? I mean, they're going to talk a good game a lot of times. They're going to say, well, we're going to root out cheating and we're going to make sure everybody prosecutes this to the fullest extent and so forth, and we're going to talk to professors about how they need to root out cheating. But when the rubber meets the road, is that what they're really going to do? And furthermore, the faculty member recognizes that if they see cheating, it's going to be a hard slog through the bureaucratic process to make sure that they don't get themselves in trouble from some kind of false accusation or get the university in trouble and have some dean upset with them. I mean, it's the incentive for a faculty member is to just turn a blind eye and say, well, I didn't really see that and I'm just not going to bother with it. It's just too much trouble. It's going to take me hours to deal with the cheating case and it'll take me just a few minutes if I ignore it. And so really one of the driving factors, I mean, speaking for myself, one of the driving factors is just a sense of justice that I hate to see people mimicking hardworking students and getting credit for something they didn't do, but there are faculty that don't have that kind of, maybe they're more jaded than I am and they don't see the necessity of going after those cases. And if you're a graduate teaching assistant, if you're a graduate student who's teaching a class or so on the side to help earn your keep as a graduate student, you've got even less incentive to root out cheating because your focus is on your dissertation and you're thinking about how to get your first job and you're not really, I mean, you do want to get a high teaching evaluation from students so that you can then go to your first job with a great teaching evaluation to show your future employer. You're not going to get that by just rigorously going after cheating and ticking off students who maybe have been passed through class after class having engaged in this cheating time and again and now all of a sudden they run up against this person that's going to go after it with a vengeance. That's not the way for a graduate teaching assistant to get any points that they care about. So, Jonathan Newman wrote a great little piece for Mises Weyer several years ago called Four Reasons Why College Degrees Are Becoming Useless. It's a great little article recommended highly and he says that some of the most prestigious flagship universities test results indicate the average graduate shows little or no improvement in critical thinking over four years. I have to say that's not surprising. At Yale College where 62% of grades are in the A range, proposals to curb grade inflation are in doubt following student protests and faculty concern. This is not from Newman's article, this is from another one on the massive problem we've got with grade inflation. Again, this is an incentive issue, right? So, the faculty member knows with any class if I give a student an A, that student's not going to complain. If I give a student something less than an A, then there's the potential that I'm going to get some blowback. There's something that maybe I get a complaint. Maybe I get a bad teaching evaluation. Maybe whatever the problem might be and it's easier for a faculty member to just say I'm just going to give that student an A and not have to worry about any kind of problem. I know that I'm not going to get a complaint. So, we get grade inflation, especially in an environment where students seem to have an increasing propensity to complain about faculty. I'll maybe get to that later. So, we see a lot of this kind of grade inflation. One national survey showed that 41% of students had grade point averages of A minus or higher in 2009 compared to just 7% in 1969. Another study from this year says that the increase in graduation rates over the last three decades is driven by grade inflation. Why is it that we see college completion rates improving? Is it because students are getting better? Is it because admissions departments are being better at kind of filtering out the students that would not succeed all the way through four years? Is that why we're seeing improving graduation rates? Or is it simply because faculty are giving more and more A's even though the student performance is not commensurate with those high grades? And that appeared actually in an AEA journal. It's gotten quite a bit of press as far as I could tell. This is from 1940 to 2012. Notice the red, that is the percentage of A's. Notice the F's haven't changed all that much. What has changed is the number of C's and to a lesser extent B's and D's. So we've got a lot of students who are getting A's who otherwise would have gotten a lower grade in previous decades. And students are spending less time on their work. So it's not like they're getting higher grades because they're working harder and they're learning more and so they're doing better on the test. No, actually they're spending less time studying. They're spending less time devoted to their education. So this study shows that from 1961 to 2003 the number of hours per week that an average student spent on studying on their academic work fell from about 40 hours to under 30 hours a week. And I'd suggest that since 2003 that has probably fallen further. I would be shocked if some of my students were spending 37 hours a week on their academic work based on what I'm seeing. Alright, second crisis, government subsidies are backfiring. As we know, we've got a lot of student loan debt. $1.75 trillion in student loan debt, an average of about $29,000 per borrower. 92% of that is federal, the remainder is private. There's a perception that a lot of student debt is held by people who are lower income. And there is proportional income that may be that there's a lot of student debt held by lower income individuals. But a lot of it is held by higher income people. I mean think about somebody who goes to law school, med school, dental school or whatever and they've got a higher income maybe, but they've also got a lot of student debt not only from their undergraduate education but from their graduate education. So 60% of student loan debt is actually held by people in the top 40% of household income. What impact has this had on colleges? Well, increasing subsidies and I mean, subsidies of student loans that make it easier for people to borrow for a college have led to higher tuition. So we're seeing colleges basically raising tuition in lockstep with the availability of funds for students. So is it really the students that are benefitting from these subsidized student loans or is it the colleges and universities who are now raking in more cash and able to raise their tuition because of these kinds of programs? This is a ratio of average tuition and fees for all four-year degree granting institutions compared to median household income. And I think Vedder's got something along these lines in his book as well but this shows basically that college has become more expensive relative to household income over time, especially in the last couple of decades. College is, if anything, less affordable even though governments have poured more and more money into education or maybe because governments have poured more and more money into education. And at the same time, we've got students that are graduating with loads of student debt and it has become a serious problem for a lot of people. Now a lot of the problems are for people that maybe borrowed money for two or three years of college and for whatever reason they dropped out of college and they don't have the college degree that signals I'm hardworking, persevering, and intelligent but they do have two to three years' worth of student loan debt that now will need to be repaid. So you don't have the income boost but you do have the student loan debt. And this is a pretty serious problem where you get some delinquencies on student loan debt and you can see the, let's see, it's the red line there that starts at about, what is that, about 6% or 7% here in 2004 and is up to, looks like about 12% or so by 2017. The single largest delinquent type of loan by 2017 whereas other types of loans have had declined and their delinquency rates in the wake of the 2008-2009 recession student loans jumped afterward. So the Bennett hypothesis named for William Bennett says that increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions. And I cut out a lot of the slides that I had here with the data on the studies that have basically backed up the Bennett hypothesis over the years. I can share those sources later if you're interested but basically this is what we're seeing. And where is the money going? Is it going to improve the academic experience for students? Well, not exactly. Princeton University spent $136 million on a student dorm with leaded glass windows and a cavernous oak dining hall with a cost of about $300,000 per bed, okay? That's where your money's going. Since 2000, this is from Richard Vedder's book, actually from Wall Street Journal article from Vedder. Since 2000, NYU has provided $90 million in loans, many of them zero interest and forgivable to administrators and faculty to buy houses and summer homes on Fire Island in the Hamptons. I need to go teach at NYU. Former Ohio State President Gordon Geirn earned nearly $2 million in compensation last year while living in a 9600 square foot Tudor mansion. The Columbus Camelot includes $673,000 in art decor and a $532 shower curtain in a guest bathroom. Ohio State also paid roughly $23,000 per month for his soirees and half a million for him to travel the country on a private jet. The University of California system employs about 2,358 administrative staff only in the president's office. Vedder says 30% of the adult population has college degrees. The Department of Labor tells us that only 20% or so jobs are requiring college degrees and went through some of this before, but basically we're making college less affordable as you see with that ratio between tuition and household income. And the money is flowing toward the colleges and universities and some of this is to provide expensive dorms, some of this is for recreational facilities for students, some of this is for an administrative staff that is expanding dramatically. I mean, again, I've been in higher ed for about 25 years and middle management in higher ed has just exploded. I mean, the deanlets and the administrators and the vice assistant backup dean or something. I mean, it's just crazy how many... I know they're doing something. I mean, they go to their offices and they appear to be working, but somehow higher education managed to get more work out of students before a lot of this was the norm. All right, final crisis. Stifled academic discourse. So you may have heard of a few of these cases and more seem to be occurring all the time. Evergreen State College in Washington student protests hijacked classrooms and administration. Protesters took over the administration offices last month and have disrupted classes as well. The chaos at Evergreen resulted in anonymous threats of mass murder resulting in the campus being closed for three days. This is from Neumann's article, Jonathan Neumann's article that I mentioned earlier. A 2017 study of college students says that students, some students say, shouting down speakers and using violence is sometimes acceptable. We heard some of this from Tom DiLorenzo's talk. I think it was yesterday where he was discussing the other forms of socialism and he mentioned one of these cases. So what happens if you want to bring an alternative viewpoint in front of your students and have them think about it and say, okay, well, there's this view, but then there's also this one and this one and this one. We want you to be able to evaluate them and think about them. Even if you are predisposed to disagree and even if you come away from the discussion still disagreeing, you at least know more about what that other side thinks and that's generally helpful. You need to know what different views are saying. And yet the increasing tendency seems to be, well, if you even allow this other viewpoint to be heard, you're committing some kind of injustice. So many students who may have a more mature viewpoint and say, well, I can tolerate hearing something I disagree with if I can learn a little more about that point of view and be able to maybe argue more effectively against it next time, these students are squelched. They keep their thoughts to themselves. Maybe we're losing that healthy self-evaluation sometimes. If you hear an alternative viewpoint, maybe you were predisposed against it, but you hear the argument from someone who espouses that view and your mind has changed. Does it really do our society good when people are not confronted with views they disagree with and they're allowed to some erroneous thought to just fester in their heads and then maybe they act on that and do something that's socially quite damaging because they've never had to think through the view to its fullest extent. So we're getting this stifling of academic discourse. In one study of 1,500 U.S. undergraduates, fewer than half of the respondents believed that the First Amendment protects hate speech and hate speech has become a larger and larger category, it seems. A public university invites a very controversial speaker to an on-campus event. The speaker is known for making offensive and hurtful statements. A student group opposed to the speaker uses violence to prevent the speaker from speaking. Do you agree or disagree that the student group's actions are acceptable? 19% of the respondents stated that they agreed with the student group's actions. Now if I walk into a classroom and I'm thinking, should I mention something controversial today and I'm thinking one out of five students sitting there in front of me believes it's okay to use violence to stop views that they disagree with, that's gonna stifle academic discourse to some extent. You gotta be a really unusual sort of person to say, yeah, I'm willing to have students beat up on me after class or something, that's fine. I even have to be careful who I invite to campus. If I invite someone to campus who's got an opposing view, then I can be subjected to repercussions. So you've seen some of these things before. They're not unusual stories, unfortunately. This is something that I saw just last month. A study from a group called, let's see, the Chally Institute for Global Innovation and Growth. If a professor says something that students find offensive, should that professor be reported to the university? Now I'm less concerned here about the fact that there seems to be a disparity between what left-leaning students think about this and what right-leaning students think about this. I'm more concerned with the fact that pretty much everybody here is saying a majority of conservative students or conservative-leaning students are saying, yeah, we should report the faculty member to the administration for saying something that students find offensive. And what students are offended by is a longer and longer list. And I don't even know everything that's on the list. I'm trying to keep up, but it's harder to keep up with what students may find offensive. And so that, again, will cause faculty to self-censor. Maybe they're thinking about bringing up something in class that might be an interesting point for debate, but they play it safe. I like my job. I don't really want to rock the boat here. I don't want to wind up in the provost's office having to explain why I said X or Y or Z or what, you know. So, again, a lot of faculty will just behave that way. University bureaucracies are becoming more and more powerful and able to make life miserable for faculty, and they will sometimes take advantage of that. Part of this is because they've got a certain group of students that will say, you know, yeah, go get them. You know, fire that professor because that professor said something I disagree with. And even if the accusations are baseless, even if they're absurd on their face, they can still put the faculty member through long and stressful, traumatic kinds of experiences. I had a colleague of mine years ago who was put through something that she ended up with major medical problems as a result of this. Even though, you know, she ended up keeping her job and she was exonerated and so forth, but it was still such a stressful process that it damaged her health. So you've seen recent cases. Peter Bacassian, Jordan Peterson, Ilya Shapiro, even though in some cases like Shapiro was told, yeah, you can keep your job just, you know, be aware that you can't say certain things or you're going to wind up in trouble. And so sometimes even just the threat of sitting under the sword of Damocles of, you know, when's this going to come down on my head is squelching of academic debate. Murray Rothbard said some great things in ethics of liberty about free speech and I think they're worth paying attention to. He said, look, basically it's not like an absolute right of free speech. If I'm standing here and I'm speaking to you, it's because the Mises Institute said, yeah, we want you to stand here and give this talk. If I stood up here and I said, terrible things about Austrian economics, they'd say, well, you know, that's not really why we brought you here. We wanted you to explain what Austrian economics is about and not go on some Keynesian rant or something. I would expect that I would not be invited back. I haven't lost my right to free speech because of that. You know, I've got the right to decide who speaks at my dining room table. I can't have, somebody can't walk in off the street through my front door, sit down at my dining room table and start to pontificate about something and say, well, you know, my right to free speech is being squelched if you kicked me out of your house. So Rothbard says there's no such thing as a separate right to free speech. There is a property right. I have a property right to my dining room table. Any institution that's got a podium and a lectern has a property right to this space and they can use it however they want. But if a university says we're giving faculty the right to free speech, we're allowing faculty to say whatever they see is appropriate in their classroom and then the university says, well, we didn't mean that. Then there are some, you know, we're seeing a constriction of what was once a broader range of thought that could be taught from classrooms. And I don't think this serves students well. I don't think it serves our society well. I've got some, well, yeah, I can share these with you later. I don't expect you to write all this down right now. But some of the stuff that I've said, I've got some resources I can share with you later if you're interested. I think I'm out of time, though. Thank you very much. I appreciate it.