What Does Education Do?

I know you mentioned that you thought the accreditation cartel will be difficult to break (see Will the University Survive?), however as you mention above, what are the pool of economically-viable alternatives? Is there a market for a podcast + OpenCourseWare mash-up? I think: yes.

Note: Abolishing AT&T's State-granted cartel did not destroy communications. Nor will the same occur if the State is removed from certifying "knowledge" and "education."

Arnold writes:

"If education is nothing but a signal, then it would pay an entrepreneur to come up with a more efficient signalling mechanism."

The use of the most obvious alternative signalling method -- IQ testing to find diamonds in the rough -- was made quite onerous to employers by the Supreme Court's Griggs v. Duke Power decision in 1972.

Regarding IQ testing for employment: the high tech industry is almost doing this now. After a cursory review of the CV, interviews often involve "puzzles" that the candidate must solve and talk through on the spot. Sometimes the puzzles are related to job tasks, much of the time they are not. The test simultaneously measure intelligence and communication skills, which is what the employer is looking for.

One thing that some tech companies do to get an edge is hire away students with high skill at (relatively) high salaries before they graduate. This cuts out some of the possible "overhead" of the signalling mechanism.

I am sketchy as to why signaling and the human capital model can't be complements. The degree is a signal of acquisition of human capital, thus reducing the informational asymmetry of the hiring process.

If education is nothing but a signal, then it would pay an entrepreneur to come up with a more efficient signalling mechanism.

*efficient markets fallacy alert* The public hasn't had time to absorb be education-as-signaling thesis. This is an untapped opportunity. An entrepreneur could start up a school that screens for IQ, and basically puts students through hell -- difficult topics involving critical thinking, research, and teamwork, without any grade inflation. It would be cheaper because you wouldn't necessarily need well-educated professors. That would be extremely powerful signaling, and if it failed, so does the signaling thesis. This is actually something I've wanted to try out and would if I could get investment.

However, if someone tried that, I think we all know what would happen: it would go unaccredited and, if not shut down by the education cartel, would be vilified by a compliant media demonizing the commercialization and "unprofessionalism" of this cheaper alternative.

Arnold writes:
"If education is nothing but a signal, then it would pay an entrepreneur to come up with a more efficient signalling mechanism."

Isn't that the purpose of professional exams, such as the Chartered Financial Analysts (CFA(R))?