The student loan crisis is really an underemployment catastrophe • Hacker News Board

Re: The student loan crisis is really an underemployment catastrophe

#261

Post by andrewflnr » Tue, Jun 18, 2019, 2:38 AM UTC

JamesBarney wrote: post #217

derefr wrote: post #208

Earlier quoted context omitted.

In this case, though, the "product that [was] being sold" that made these students originally go to school, is employment—or rather, a proxy signal for employability that the consumers of the product hope will get them employment. People consume education when they can't find a job, in the hopes that they'll become more employable, even though this makes the problem of their unemployment more dire rather than less (b…

I guess we have to decide whether the it's "We have a problem with too many snake oil salesman!" or "We have a snake oil effectiveness problem".

Ague and toothaches are developing resistance to snake oil. We must take drastic action.

Re: The student loan crisis is really an underemployment catastrophe

#262

Post by randomdata » Tue, Jun 18, 2019, 2:48 AM UTC

OJFord wrote: post #181

alexhutcheson wrote: post #161

Earlier quoted context omitted.

Is it common for modern used cars to not last 8 years? I know lots of people driving cars that are 10-15 years old at this point.

Is it common for houses not to last centuries? I know lots of people living in very old houses. Perhaps mortgages should have longer terms too?

I think you would be very lucky to get a few decades without the need for any major repairs or upgrades. It too know people who live in houses that have some features that are centuries old, but none of them are living in the exact house that was constructed centuries ago.

The distinction is meaningful as the comments earlier in the thread are talking about how long a new car will last before it needs work (beyond your basic oil changes, etc.). If you are willing to put money into major repairs and upgrades, there is no real reason why a vehicle cannot last centuries as well, as classic car enthusiasts can attest.

Re: The student loan crisis is really an underemployment catastrophe

#263

Post by randyrand » Tue, Jun 18, 2019, 2:48 AM UTC

asabjorn wrote: post #202

This is a bit like saying "People buying luxury cars is just a problem with people not having high-paying jobs". It seems more fruitful to focus on what product is being sold through state-subsidized loans and if they provide the necessary value. Bloated administrations is largely to blame for the increased cost, and a middle class student getting a student loan they can't default on for a degree without earning pote…

here’s another thing to think about:

- people want to go to name brand/Well known schools

- The maximum number of schools that humans can remember in their brain is largely fixed

- The population is increasing

- Schools largely Don’t increase their enrollment size due to space and notoriety concerns

you combine all the factors above and you should expect the price of top-tier schools go up dramatically with population size

Re: The student loan crisis is really an underemployment catastrophe

#264

Post by sanderjd » Tue, Jun 18, 2019, 2:55 AM UTC

lkrubner wrote: post #238

TheOtherHobbes wrote: post #228

Earlier quoted context omitted.

Using a graph that shows soaring productivity to argue that soaring productivity isn't happening seems a little counterintuitive to me. But I'm not a prize-winning economist, so perhaps I'm missing something. The US economy can't be fixed by educating more plumbers. The core problem is that the US has turned itself into a peacetime rationing economy. Essential services - healthcare, education, housing, financial supp…

Productivity growth collapsed in 1973 and it has not recovered yet. There were a few good years in the 1990s, but nothing like the reliable productivity growth that the USA saw for the century before the 1970s.

My gut reaction to this claim is always that it seems wrong; that the metric we're using to measure productivity must be missing a big part of the story. Why is that reaction wrong?

Re: The student loan crisis is really an underemployment catastrophe

#265

Post by jdlshore » Tue, Jun 18, 2019, 2:59 AM UTC

icelancer wrote: post #253

jseliger wrote: post #138

Earlier quoted context omitted.

There are two books that cover this subject well: The Case Against Education : https://jakeseliger.com/2018/03/12/the-case-against-educatio... , which argues that most "education" is really signaling, not human capital acquisition, and Paying for the Party : https://jakeseliger.com/2014/04/27/paying-for-the-party-eliz... , which argues that many schools have evolved some substantive majors and some non-substantive ma…

>> Then we'd see soaring productivity, which we don't see: https://twitter.com/paulkrugman/status/1140259227908411392 This is like using a total number for "inflation" to assume that costs have not gone up. And yet... https://ritholtz.com/wp-content/uploads/2018/02/pricechanges... Childcare, hospital services, college textbooks, college tuition, childcare, and medical services way overindex the average inflation. TVs…

That is exactly the argument of the paper the OP is promoting [1]: that the cost of education is due to the "Baumol Effect:" it is an industry dominated by the cost of human contact (the teacher's time) and human contact is not subject to productivity gains in the same way other goods are.

In other words, it isn't that education isn't unusually expensive, it's that everything else is unusually cheap. From the paper's conclusion:

"The Baumol effect is the best explanation for rising prices in education, healthcare, and other service sectors. In that sense, and only in that sense, is there something “wrong” with the service sector—namely, that it’s hard to increase productivity in services. Or we could equally well say that what’s right with the goods-producing sector is that it’s easier to increase productivity in goods. Whatever the explanation for this difference in productivity growth, however, it’s a difference, like the difficulty of domesticating huckleberries, that cannot be traced back to policy. We should neither ignore this difference nor make too much of it."

That's the paper's perspective. I'm not promoting it myself, but I did find it to be a sensible argument.

[1] https://www.mercatus.org/system/files/helland-tabarrok_why-a...

Re: The student loan crisis is really an underemployment catastrophe

#266

Post by jackcosgrove » Tue, Jun 18, 2019, 3:06 AM UTC

graeme wrote: post #249

ineedasername wrote: post #64

I'm not sure the author's suggestion that potential students be diverted to trades/coding bootcampts etc., will solve too much, and instead may simply shift the problem into those trade industries as well. Somewhere in the ballpark of 2,000,000 students earn a bachelors degree each year. Let's say 25% of students should be diverted into trade schools instead. That will mean an additional 500,000 student per year ente…

This is potentially the lump of labour fallacy. There isn't a set amount of work to be done. If we have a mass of students learning no useful skills and divert them into useful fields, then the overall productivity of the economy will go up. Obviously if everyone floods into a single field there's some limit: you can't productively employ 10x the plumbers without a matching increase in buildings. But in general, bett…

Germany has been better managing its human capital for generations with its apprenticeships, trade schools, and cheap universities. There are problems of course with switching lanes and with second tier universities, but on the whole it seems to work better.

Re: The student loan crisis is really an underemployment catastrophe

#267

Post by godelski » Tue, Jun 18, 2019, 3:26 AM UTC

barry-cotter wrote: post #232

jessriedel wrote: post #230

Earlier quoted context omitted.

Agree with most of this, but there are good reasons to think education costs are not driver by bloated administration. https://marginalrevolution.com/marginalrevolution/2019/05/bl...

> More importantly, the data reject the bloat theory. Figure 8 shows spending shares in higher education. Contrary to the bloat theory, the administrative share of spending has not increased much in over thirty years. The research share, where you might expect to find higher lab costs, has fluctuated a little but also hasn’t risen much. The plant share which is where you might expect to find lazy rivers has even gone…

Both of these are ludicrous. The salaries for my school are public, they are for all public schools (that I've looked at at least).

I can tell you from the data from my school the administrative costs have gone up substantially. Both from number of administrators increasing significantly. The average administrative staff wage is over 250k (I know that's not a lot in tech salaries, but that is HUGE where I am. Cost of living calculator says $663,545 compared to SF). Our president makes 700k (just under 2m equiv) and gets 60k/yr salary increase.

I'm sorry, I just don't buy it. 60k/yr is more than the average lecturer at my uni makes. A lecturer! Not a professor. Even the CS Professors only make like $120k/yr (highest I see is 220k, which are the heads and are Full professors). So you are telling me that half the admins are worth at least twice as much as the CS professors (ones that are required to bring in money? And a substantial amount I might add). All our STEM professors are paid about that (CS is on the higher side) and all of them are required to bring in money and as far as I'm aware are paying for themselves (with equipment) and their students (all our masters get funded because all the PhDs are filling research positions).

I can understand lab costs going up but I think putting all the blame, or even the majority, on the professors is ludicrous.

And you also need to consider that hiring more professors doens't always equate to less income. You hire more professors to get more students (who pay a significant amount). I'll buy the argument of hiring professors in subjects that don't draw in enough students to justify their cost, but that's a different argument and I would argue is definitely not the lion's share.

Re: The student loan crisis is really an underemployment catastrophe

#268

Post by asfgjkladmxvn » Tue, Jun 18, 2019, 3:26 AM UTC

JamesBarney wrote: post #223

wwweston wrote: post #154

Earlier quoted context omitted.

Krugman's point is not uncontested: http://www.scottsantens.com/our-paradoxical-economy-courtesy... Additionally, even if we're not peering around the metrics for dynamics hiding behind them, there's the question of how much of the by-Krugman's-metric still rising (if not "soaring") productivity it would take to soften the labor market. I'd like to think he knows the answer to that question, but it isn't clear.

His central argument is that IT is only increasing productivity in open source software and does not cause any productivity improvements in businesses, which is a strange argument. But low demand also explains everything he talks about. When you hear hoof beats think horses not zebras.

> When you hear hoof beats think horses not zebras.

It depends where you are of course...

Re: The student loan crisis is really an underemployment catastrophe

#269

Post by nichos » Tue, Jun 18, 2019, 3:26 AM UTC

drak0n1c wrote: post #98

luisaguimaraes wrote: post #83

It's such a shame that the state can't support the education system financially, so that 20-year old people wouldn't have to take loans to study. It works in other countries, so why not in the US?

Federally guaranteed student loans exceed $120 billion every year. That is a massive subsidy, and it may be increasing costs for more people than it helps. The glut of admissions being able to pay artificially high tuitions is emboldening administrators to add more dormitories every year, expand the administrative class, and build rec centers -- raising tuition even further. > Last year, FSA provided more than $120 b…

And a result, schools are building things like lazy rivers and rock climbing walls to attract students....and the federal money.

Best solution would be to not back student loans.

Re: The student loan crisis is really an underemployment catastrophe

#270

Post by asfgjkladmxvn » Tue, Jun 18, 2019, 3:28 AM UTC

vageli wrote: post #258

rossdavidh wrote: post #191

Earlier quoted context omitted.

1) if it does turn out to be true that we need "fewer workers", that's great, we just move to a 30-hour work week (or 20, or whatever). We once had 6-day work weeks, or sometimes even 7, and it was productivity gains that allowed us to move to 5. We can move again. 2) But, I'm not sure it's even true. We mostly got to where we are by having all the manufacturing done in 3rd world countries for pennies. It's not that…

> 1) if it does turn out to be true that we need "fewer workers", that's great, we just move to a 30-hour work week (or 20, or whatever). We once had 6-day work weeks, or sometimes even 7, and it was productivity gains that allowed us to move to 5. We can move again. Shorten the work week and it is hourly workers getting screwed. Unless we think, for some reason, corporations will take it upon themselves to pay more…

> Shorten the work week and it is hourly workers getting screwed.

Funny this is exactly one argument that was used against the 40 hour working week!