Arnold Kling  

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Interviewed by Nick Schulz.


there is plenty of risk in sending a kid to college! Forty percent of students don't graduate within six years (and probably never will), many more graduate with degrees that won't help them much in the labor force, and even the ones that do graduate often do so with student debt that will follow them for decades. Moreover, even when college pays for kids is it paying for society? A lot of schooling is just signaling, not the true building of human capital. There is an argument for subsidizing science, technology, engineering, and math fields, but should we really be subsidizing anthropology, sociology, and English lit students?

Read the whole thing. Of course, if STEM fields enjoy high incomes, it is not clear that there is such a gap between private and social benefits that a subsidy if warranted.

My favorite paragraph:


Michael Heller's The Gridlock Economy is a brilliant book and a great read. Heller coined the term the tragedy of the anticommons. The better-known tragedy of the commons is the tendency for an unowned and hence nonexcludable resource to be overused. The tragedy of the anticommons is the tendency for a resource with many owners, each of whom can exclude the others, to be underused. I draw on Heller's work to talk about patents. Basically, it's hard to get an agreement to innovate when a product builds on four patents and each owner wants 30 percent of the profits. It's almost impossible to innovate when a product builds on 100 patents and each owner wants 10 percent of the profits.



COMMENTS (5 to date)
Glen Smith writes:

All I can say is that the final two years of my undergrad STEM degree were a waste as far as building my human capital as most everything I learned could also have been learned on my own (and, in fact, much was) but the most important part as far as signalling goes. The most important thing in building my human capital was actually doing the work while my butt was on the line.

Mike Rulle writes:

Complex issue.

The Government guarantees high interest loans, creating enormous over supply from the financial sector. In private schools, predominantly, wealthier parents subsidize less wealthy parents. Culturally, among the college bound class (kids and parents alike), there is enormous peer pressure to attend the most prestigious schools---even if just to major in photography.

It is very difficult to be kicked out of any school---for obvious economic reasons---thus incentivizing weak academic performance. But ultimately, the signaling concept prevails; and that is a free market adaptation.

Objectively, Community College Courses and online courses can provide virtually as high quality an education for the first 2 years compared to any school if effort is applied----for about 10% of the cost. Then transfer to a signaling school.

I do not like any of these subsidies and incentives---but the most corrupting is the low bar for academic expulsion.

Glen Smith writes:

Mike,

Had the exact opposite experience. As far as human capital goes, my first two years at an away college could not really be replaced at a CC or on-line but my last two years very easily could.

Becky Hargrove writes:

Heller also gave telling examples how the tragedy of the anticommons negatively affected people at local levels. It's hard to think the same after reading his book; one becomes convinced that the legal system really needs to find better ways to distinguish ownership towards individual survival and actual usability of assets and property. People destroy one another on a daily basis over property that is co-owned. When ownership is not clear, the incentive to maintain and maximize property of all kinds is lost.

But activism in this regard is not easy. After reading Gridlock Economy three years ago, I wrote letters to several state representatives and the Governor in Arkansas, pleading with them to reconsider laws that create gridlock. While the state representatives responded, the secretary to the Governor threw the letter in the trash and told me I had no business sending it to him.

SWH writes:

"It's almost impossible to innovate when a product builds on 100 patents and each owner wants 10 percent of the profits."

As a patent attorney, it has been my experience that a technology tied up in patents is the greatest spur to true innovation. That's when those on the edge have to make the great leaps forward, and are motivated to do so.

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