Asymmetrical Information: Hope Scholarships for Everyone

November 14, 2002

From the desk of Jane Galt:

Hope Scholarships for Everyone

Dwight Meredith proposes a National Hope Scholarship program, modeled after Georgia's but funded by repealing the cuts in the estate tax:

We propose a Federal Hope Scholarship Program modeled after the Georgia Hope Scholarship. Any child who maintains a B average in high school and gains admission to an accredited university would receive a scholarship equal to 100% of the tuition at his or her state university as long as the student maintained good grades in college.

We propose to pay for that program by repealing the portion of the Bush tax cut that benefits the top 1% of income earners (as well as repealing the elimination of the Estate Tax). We frankly have not done the work to accurately calculate the cost of such a program. We suspect that there are 5,000,000 to 7,000,000 college students with B averages. The tuition at the University of Georgia is roughly $3,500.00 per year. If those numbers are accurate (and the number of students is only a guess) then the yearly cost of the program would be $17.5 billion to $21 billion per year, less the savings from eliminating duplicative programs.

The Bush tax cut was more than $1.3 trillion dollars over ten years. The top one percent received approximately 40% of that amount. Repealing that tax cut would generate about $500 billion over the ten-year period. At $17-21 billion per year, the National Hope Scholarship program would be affordable. . .

Ok, so what is wrong with that proposal?

Well, since you asked. . .

The first problem is that its cost assumptions are naive. They're using what's known as a static-line model, which is fancy economic speak for saying that it assumes that if you change one variable in a model, everything else will stay the same. But this is not true. If you make it free to go to college, more people are going to go to college.

On the one hand, it assumes that the supply of kids with B averages in high school/college won't increase, which is unlikely. If a B- kid has a choice between losing his scholarship and pulling up his average, he'll probably pull up his average. This isn't necessarily a bad thing, of course.

More disturbingly, it would probably cause colleges to inflate grades. Remember, 80% of colleges in the United States are non-selective, meaning they admit 2/3 or more of the people who apply. Especially at those colleges, but really at any public college, you're going to see tremendous pressure on teachers to inflate grades to keep the money flowing. You've seen this already with college athletes, many of whom don't belong in college, and don't do the work to stay there, but are passed along because the financial incentives are there for the college to do so. I suspect that granting a full ride to everyone who has a B average would mean that effectively, almost no one would ever get less than a B. It's common to refer to this as grade inflation, but what it really is is grade compression: all the grades are forced into a narrow band between B and A.

Compressing the grades people get into an ever-narrower band isn't good for the students, who lose feedback on how they're doing and incentive to excel, and it isn't good for their prospective employers, who lose valuable information about the students.

The same would be even more true of high schools, one imagines, if they could earn their kids a free ride for four years merely by assuring that they got a B average.

Which brings up the question of where you're going to put all those extra students, and who will teach them.

Will you force kids to go to school in their own state, or will you let them attend any state institution? Out-of-state tuition at top schools can run into the $20-25K range.

Also, in-state tuition may be $3,500 per year in Georgia, but that's not what it costs to educate a student. Increasing the supply of students will increase the cost by much more than in-state tuition. That's an unfunded mandate, which the Feds are not allowed to issue -- which means you'll have to find money not just for tuition, but for covering all the (currently subsidized) costs of the extra students you've put into the system.

You'll also be segregating the middle class students at state colleges from the rich at private colleges much more than you do now, since currently private schools offer competitive financial aid packages, but couldn't compete against a 100% free ride, as I think you'll find Georgia has discovered.

But the most important question is: would the program be effective? Programs to make sure that everyone goes to college mean well, but I feel that proponents usually aren't examining the link between what they're trying to achieve, and the means they're proposing to achieve it.

What are we trying to achieve by sending everyone to college? I assume that most of us want to better their economic opportunity.

Here's the problem: most college doesn't train people in economically useful skills. Oh, we'd probably all be better off if we sent more kids to engineering programs or medical school, but that's not what these programs propose to do: they propose to give kids a free ride for 4 years no matter what they study. And I think it's safe to say that most of our future engineers and medical students are already going to college. I think what we're talking about is more English and Art History majors and such.

I was an English major, which was an enriching experience. I enjoyed the subject greatly. But the only economically useful skill I learned was typing 80 wpm. Oh, later my writing skills came in handy, since I was in a technical field where very few people can write. But for the majority of English majors, it's safe to say that their ability to deconstruct a sonnet has not proven to be renumerative. Ditto almost any humanities course for almost any student. Even economics students are usually being rewarded more for their conformity and willingness to tolerate boredom than their ability to draw pretty supply curves.

I have no doubt that someone is, even now, mentally composing the email telling me how enriching humanities courses are. Indeed they are. But I misdoubt that anyone's fellow citizens wants to toss them upwards of $25,000 to go get enriched. Your fellow citizens want to see you support yourself and contribute something to the common weal; that's the rational behind giving you money for college. Or they want to give everyone middle class opportunities. Mental enrichment is something we expect people to pay for out of their own pocket.

But people who want to send everyone to college to ensure they have middle class opportunities have cause and effect reversed. College does not provide one the tools to make a living. For most people it is what economists call a signalling mechanism: something not intrinsically valuable, but only as a signal that the applicant has something else employers value. Which is to say, employers do not value your college degree because they value what you learned; they value it because it shows that you have sufficiently internalized middle class values to get through four years at school, whether through being born into the middle class, or having sufficient gumption to get yourself through college.

But sending everyone to college will not avail them all of the benefits of the signalling mechanism; rather, it will render the signalling mechanism useless. You're not going to magically transform every extra person you send to college into someone who earns college wages; college is the gatekeeper to a limited number of such jobs, not a producers of said jobs. While normally I am skeptical of people who claim that there is a limited number of good jobs to go around, and therefore we need to redistribute them so that no class gets to hog more than their fair share, in this case I am hard pressed to explain how sending someone to study Medieval Philosophy or Lesser Poets of the 19th Century is going to magically produce a high paying job for them. The areas where jobs are going begging are the areas we don't expect to get a lot of extra students, such as engineering. I have no doubt that there are, somewhere on the American continent, some potentially gifted engineers with the requisite math preparation who are not attending college because they can't afford it. But I can't imagine there are many.

Now, perhaps we would be fine with embarking on this program if by destroying the gatekeeper it served to level the opportunity between the children of the poor, the middle class, and the rich. After all, this is America; we want people to get what they deserve, not what their parents bequeathed them. But is that really how it would work? Since the fact of the college diploma will mean less, and grade compression is likely to remove the other valuable signal that a college education can provide, won't employers be more likely to look only at children from relatively privileged backgrounds? For one thing, employers are likely to rely more heavily on referrals from people they know, which is to say, from privileged parents finding opportunities for their privileged kids. And for another, privileged kids are more likely to have internships and such to signal that they are capable of the work that employers want them to perform. If you're a poor kid who had to work at the Stop and Shop for rent, you may be hard-working, but an accounting firm has no way of knowing whether you can build a balance sheet -- and since we've taken your degree and grades out of the equation, no way of finding out.

I also suspect that middle class families will set up alternate signalling mechanisms which serve to ensure that their children maintain the pipeline to success. Indeed, I would argue that it has already happened to some degree, as student loans have democratized the college degree and worn off some of its cachet. I grew up in a very privileged milieu: the New York City private school system. A positively astonishing number of my high school classmates, something like 2/3, are possessed of master's or professional degrees, or doctorates, and not because my classmates were noticeably smarter or harder working than the population at large.

As more people got college degrees, the pipeline to very high paying jobs, such as white-shoe law firms and investment banks, has come to rely on gilt-edged degrees from both an Ivy, or Ivy-Equivalent undergrad, and a top professional school. For example, the top tier investment banks recruit almost exclusively at 5-10 business schools, most of whose graduates come from privileged backgrounds, and virtually all of whom attended elite undergraduate programs. More interestingly, as the value of the college degree as a signalling mechanism has declined, business schools have come to require more work experience from applicants -- from no years in the 60's, to 5+ years today -- in order to better differentiate those likely to succeed. Business school itself is an enormous signalling mechanism, as most people's coursework bears little resemblance to what they do in their careers. But the mere fact that you survived an arduous application process and two years of school gives employers greater confidence in hiring you.

In short, while you can confer upon everyone a college degree, you cannot thereby confer upon them what the college degree currently gives those who hold it: a ticket to a higher paying job. You can only force companies to seek alternative signalling mechanisms, ones which I argue would have more to do with class and "people like us" than the current ones do, and segregate the children of the rich in private schools with the children of the poor and middle class funneled into the less prestigious, because less exclusive, state system. Not, I think, a recipe for a more equal society.

Posted by Jane Galt at November 14, 2002 04:57 PM | TrackBack | Technorati inbound links

Comments

Good read, but this new text style is harder to follow IMO.

Posted by: anony-mouse on November 14, 2002 09:53 PM

That is a devastaing critique of a proposal that was not made. If someone advocates sending everyone to college, we will know that it is a bad idea. Fortunately, I never advocated such a policy.

If my proposal results in more kids going to college, that is a good thing. Do you think that a more educated population is bad for the country?

Your point concerning grade inflation at the high school and college level, however, is well taken. We have not seen the effects of grade inflation with Georgia's experience yet but we may in the future. Perhaps a better proposal would be to tie the scholarship to a specific class rank so that "above average" will always remain "above average" (except, of course, in Lake Woebegone).

The issue concerning the additional costs of private schools and the costs other than tuition misunderstand the proposal. The proposal is for a scholarship in a given dollar amount. That amount is set by the tuition of the state university. We can set it at the average tuition at all state universities without doing violence to the proposal. Students would have to meet other costs in other ways just as they do now.

No unfunded mandate exists as States and localities would not be required to do anything whatsoever.

Private college financial aid would not be effected. Students could choose state schools or private schools (even religious schools) as they wish and use their scholarship at whatever school they chose.

Nice critique. Now what is wrong with the proposal I actually made?

Posted by: dwight meredith on November 14, 2002 10:47 PM

I was speaking to your proposal, though I did broaden it to include Clinton's "Everyone a college education". But every critique I made was directed at the idea of broad hope scholarships. Taking your points one at a time:

If my proposal results in more kids going to college, that is a good thing. Do you think that a more educated population is bad for the country?

The question is, educated in what? Are Americans willing to pay for every kid in the country to get a degree in art history or folklore, when such a degree won't improve their earning power, or their economic contribution to society? I doubt it.

Your point concerning grade inflation at the high school and college level, however, is well taken. We have not seen the effects of grade inflation with Georgia's experience yet but we may in the future. Perhaps a better proposal would be to tie the scholarship to a specific class rank so that "above average" will always remain "above average" (except, of course, in Lake Woebegone).

Perhaps.

The issue concerning the additional costs of private schools and the costs other than tuition misunderstand the proposal. The proposal is for a scholarship in a given dollar amount. That amount is set by the tuition of the state university. We can set it at the average tuition at all state universities without doing violence to the proposal. Students would have to meet other costs in other ways just as they do now.
No unfunded mandate exists as States and localities would not be required to do anything whatsoever.

But that's not the Georgia plan. The Georgia plan, as I understand it, combines guaranteed admission. If you tell everyone in the state that they can go to state college if they get above a B, and thus increase the supply of B students, and require the state college system to put them somewhere, which will cost the system much more than the tuition you are paying, that is an unfunded mandate.

Private college financial aid would not be effected. Students could choose state schools or private schools (even religious schools) as they wish and use their scholarship at whatever school they chose.

If you simply guarantee the amount that their state college charges, and allow them to take it anywhere, guess what's going to rise extremely rapidly? The state colleges will raise their tuition to push as much as possible of their cost off onto the federal government. The private colleges will also push off their current financial aid burden.

It's also probably not legal, since it gives different sized scholarships to people in different states.

Nice critique. Now what is wrong with the proposal I actually made?

Well, the biggest problem is the one you didn't really address: what are you trying to do? Equalize opportunity? Or simply achieve the psychic benefits of sending everyone to college? I would argue that your proposal would lessen equality of opportunity, at great expense. Simply asking "what's wrong with educating people" isn't a sufficient response to that concern.

Posted by: Jane Galt on November 14, 2002 11:04 PM

Also, you've misread me slightly on financial aid. My point was that students decide to attend the school they can attend for free, rather than a partial-financial-aid solution at a private school, when Hope scholarships are thrown into the mix. That's going to put even more price-sensitive lower-and-middle-class kids safely away from the rich kids. $3,500 isn't going to get you very far at Williams.

Posted by: Jane Galt on November 14, 2002 11:11 PM

There is no guaranteed admission to a state university under either the Georgia Hope Scholarship Program or the plan that I propose. I wrote that in order to qualify for the scholarship one would have to attain admission. I thought that was clear but perhaps could have better expressed the thought.

I certainly do not propose to send everyone to college. I propose a federal scholarship for kids who work hard and do well in high school and maintain that achievement in college. Does that sound like every kid you know?

The point of the proposal is to assist kids in paying for college. I hope that that assistance allows some talented student who would otherwise be unable to attend to further his or her education.

I would also hope that the scholarship would assist some who would go to college anyway to do so while incurring less debt.

I would hope that the scholarship would ease the financial burden to some extent on families that want their kids to go to college.

The hope is that by offering a reward for socially beneficial personal conduct (study hard) we would increase the supply. If students worked harder at their education because of the prospect of earning a scholarship, I think that is to the good.

It is true that by subsidizing education, schools might try to raise the price. By setting the scholarship amount at a set price, however, the competition from other schools will limit that effect.

The proposal is not some grand idea to revolutionize the world and establish utopia on earth. I just want to help poor, working class and middle class families send their kids to college while setting up an incentive structure that might get high school and college students to take their classes more seriously.

Is that really so hard to understand?

Posted by: dwight meredith on November 14, 2002 11:56 PM

If my proposal results in more kids going to college, that is a good thing.

Ah, another bold proposition without any support. Merely increased college attendance is not necessarily a "good thing". It may actually end up being a complete waste of resources. And I'm awaiting someone actually proving that people who want to go to college cannot because of the lack of financial resources - note that just because someone claims that they can't afford college doesn't mean that they cannot. It may mean that they don't wish to make the sacrifices - i.e., they make an economic choice based on the value of a college education to them.

This kind of fuzzy-headed bumper sticker ideology just annoys me.

Posted by: Robin Roberts on November 15, 2002 12:44 AM

Hey, hey, hey, no busting on Humanities and Liberal Arts majors. Here in Seattle, I'm darn glad the University of Washington pumps out so many Humanities/Liberal Arts graduates each year. After all, where else are we going to get our espresso cart workers from?

Posted by: Dave Crawford on November 15, 2002 03:17 AM

Ms. McArdle makes a point in the post above.....

"Out-of-state tuition at top schools can run into the $20-25K range."

Which state? Which school?

I'm presently attending the Ohio State University. If I take a full course load I get hit with a whopping $5,000.00 per quarter in tuition and fees. This doesn't include books (average of $400.00/quarter) or parking ($350.00/quarter). Then there's little extras, such as lab fees and general supplies.

Tell me where I can go out of state and attend class for $20K!

James

Posted by: James R. Rummel on November 15, 2002 03:38 AM

Dwight, if you increase the number of people who are going to college, it will increase the cost of your program, and because it won't increase the supply of jobs for humanities majors, it will not increase economic opportunity. You say"I just want to help kids go to college -- is that so bad", and of course it isn't, but that's not a useful question. College is a means, not an end, so we must ask why we want to send them there. In my case, and I think in the case of most Americans, support would derive from the idea of helping kids who need it to avail themselves of the economic benefits of education. Something which I submit that merely broadening the number of humanities majors will not do. I don't think that national Hope scholarships are likely to be an effective means to the ends on which they would be publicly sold, while the costs, both monetary and non-monetary, are likely to be high. It would no doubt help a few people -- but upwards of $25 billion is a lot of money to spend to reach a few people.

Posted by: Jane Galt on November 15, 2002 07:47 AM

Dwight also doesn't quite understand how the Hope Scholarships affect the admissions process in Georgia for in state students. Sure, a B average isn't going to guarantee admission into the Aerospace Engineering School at Georgia Tech. A 3.9 average might, with good Math SATs. But it will guarantee you entry into DeKalb Community College which is a direct feeder into GA Tech, provided you keep your grades up in the engineering prep courses, Calc, and Chemistry. I took two quarters at GA State U. in order to transfer into GA Tech's Mech Eng School, although I wasn't involved in the Hope Scholarship program, and this way of transferring into the better in state schools is quite frequently used, and has a great deal of impact on the way your proposal to widen access to all college would affect admissions to the better schools.

Incidently, is it curious how in most states the Hope Scholarship Program and its brethren are usually funded by gambling taxes or lottery proceeds? Dwight's proposal for soaking the rich to accomplish his educational engineering goals is more commendable than the regressive way that the states tax the more credible (and often intellectually challenged) segments of society in order to fund these programs. But in proposing reversing estate tax termination, I don't think that he has considered at all why that regressive tax is being ended in the first instance. A better proposal would be to raise higher bracket income tax rates, but that is a proposal which Dwight didn't make, and so I'll not force it into his argument for him.

Posted by: Tom Roberts on November 15, 2002 08:26 AM

Jane - I agree that most Americans would support sending more kids to college if it would offer them better economic opportunities. I also think many of us would support sending more kids to school if it would help them be better citizens. But few of us think that four years in college is likely to produce someone with a greater appreciation for the values upon which our country was based.

Posted by: David Walser on November 15, 2002 09:01 AM

Practically speaking, if your college major will aid society (as a member of a economically desirable profession) you already have scholarship money available. As a senior high school science teacher, NONE of my deserving students has found it impossible to attend a first rate college.

What do I mean by deserving? Some pupil who has the ability (hi there, math SAT), the industry (does not fool around in class, does homework, etc.), and the inclination for college level REAL work.

Alas, these students are in the minority. Less than 30% of those I see. The rest - they'll clutter up college campuses, if they get that far. The worse things is that they don't realize this fact.

College is not for everyone. I hate to say it, but you can be a valued member of society without college.

And exposure to culture and education does not mean a student becomes either educated or cultured. Sometimes the transformation is to a stylish lout.

Posted by: Charles G on November 15, 2002 09:17 AM

Why do you hate to say that you can be a valued member of society without college? I think the middle class fixation on making sure every child gets a white collar job is ridiculous. There were kids I went to school with who, by virtue of their money, went to top schools, but who by virtue of ability didn't belong in college at all. Those kids will be lousy stockbrokers instead of good auto mechanics.

Posted by: Jane Galt on November 15, 2002 09:28 AM

Excellent commentary, Jane, and your 9:28am post is also right on.

One observation that needs to be made more often is that job training programs for skilled blue-collar jobs are experiencing constant shortages of qualified applicants. These blue-collar jobs -- such as construction, plumbing, skilled repairmen -- pay very well, require commitment and skills and often allow the workers to start their own businesses. (Oh, and you get paid to learn the skills.) Instead, too many qualified applicants are sent off to college to major in the liberal arts Jane so rightly criticizes only to find sharply limited career prospects on graduation. And Dwight's proposal will only serve to worsen the situation!

One other criticism of the proposal needs to be made: this is yet another subsidy to the higher education establishment, an establishment that has been hiking tuition faster than inflation for about 30 years now. They have refused to reign in their costs and are now looking for yet another subsidy to do so. Heinous.

Posted by: JT on November 15, 2002 09:51 AM

I'd like to add one or two things.

First, making a gift of an endeavor formerly requiring some amount of volition and work to gather resources tends to diminish the subjective value of said endeavor. Anyone not sufficiently motivated to borrow or earn enough money to get through a state university is probably not sufficiently motivated to maintain an acceptable GPA.

Second, what the universities would do in response to this is rather predictable; when admissions exceed downstream capacity, they emplace weedout courses to thin the ranks at freshman level. The result of this would be massive amount of taxpayer dollars funnelled into providing one or two semesters of college fun for most of the recipients.

Posted by: David Perron on November 15, 2002 10:02 AM

1. Restoring estate taxes will just continue to hurt the moderately wealthy business owners who try to bequeath their businesses to their families, forcing them to dismantle them to pay the estate taxes. I've read several articles on estate taxes pointing out that the very rich don't pay them (they hide their money in trusts) and the very poor don't pay them (no money), but the middle end up paying them, often because of sudden income received because of the death (insurance payments, sale of houses, etc...).

2. I would be much more interested in funding tuition at vocational schools and 2-year colleges for those who qualify. Teaching trades to mid-range students would be much more useful than teaching them art-history.

Bolie IV

Posted by: Bolie Williams IV on November 15, 2002 10:21 AM

There is always the GI Bill for a motivated student who can't find the money for college. I know it means that students would have to work for the money and commit to 6 years of service instead of just getting handouts, but I think society would benefit more from that approach.

Posted by: scantyman on November 15, 2002 10:39 AM

At my freshman orientation 12 years ago, they pointed out that about 25% of the people in the room were not going to be there the following year. The college knew that one out of every four people they admitted would not be there for more than one year under the current admission guidelines. So 1000 people sucking up scarce resources just because they weren't bearing any economic costs at the present time, with their deferred loans and grants. Christ, they were making more money on student aid than they could get working. This half-baked proposal will only increase the number of students that will show up, but we have no realistic expectation of them graduating. They will be the people that weren't interested in going to begin with, and only find it worthwhile because it is free.

Of course, my perfect world financial aid would be no federal aid until a person reaches junior status, then everything is free for 4 semesters. Reward the students that are going to graduate, but don't let them sit in college forever on the government's dime. We reduce the turnover through sacrifice in the short-term while limiting free-rider problems. Under this proposal, what incentive do I have to limit the number of shitty degrees I get? I can just sit around and collect 6 or 7 worthless majors instead of the one I planned on.

Posted by: Joe on November 15, 2002 10:52 AM

What's the compelling reason for making this a federal program? Isn't it obviously possible for any state to follow Georgia's example if the people of said state so desired? If Georgia can do this without help from the federal government, so could Texas, for example. If Texas doesn't have such a program, isn't that a pretty good indication that the people of Texas don't want one? And isn't that then a good enough reason to not foist one on them from above?

Posted by: Mike Couvillion on November 15, 2002 10:54 AM

I couldn't agree more on the comments regarding blue collar jobs. I'm a chartered accountant but most of my friends are tradesmen and they don't make a heck of a lot less than I do - with OT some make more. And more than one wasted a year or two of university straight out of high school before realizing it wasn't for them. Letting them go for free wouldn't have done anyone any good, including them.

I've always favoured enhanced student loan programs over reduced or free tution. It's easier to target to students who really need it and, as David Perron points out, giving something away reduces its perceived value. At least with a loan students realize they'll need to pay it back someday and have some incentive to work harder and also to choose programs with some future economic potential.

Posted by: Sean E on November 15, 2002 10:56 AM

I have personally known too many people who came from truly dirt-poor backgrounds and managed to get a college degree to believe that the motivated are unable to do so, and if one is not motivated, providing subsidies is a complete waste of time and money. Also, the successful entrepreneur without a college degree can be a bit of a cliche', but like all cliches', it contains a very large kernal of truth; I know many, many, very successful entrepreneurs, and a large percentage of them do not have degrees, and many of them never spent a day in college. This even holds true for the younger ones, in a generation where attending college was far more commonplace. The point being that it is an inaccurate perception that not having a degree means a life of low income, or that lack of degree means that one will be managed by degree holders. Sure, a MBA from Harvard is a sure-fire ticket to a high-paying job, but these subsidies won't provide that, and as Jane points out, an art history degree does not guarantee any more unusual utility to others (which, in the final analysis, is what determines income, albeit imperfectly) than the willingness to pick up a telephone and call 50 prospective clients every morning. In fact, the willingness to do the latter well, day after grinding day, is a far better guarantor of utilty to others than the willingness to get a B in many colleges. Finally, if one does not believe that providing something without cost to the consumer affects behavior in an often unanticipated negative fashion, you've never paid attention to what happens at a large wedding reception when the liquor is being poured without a charge.

Posted by: Will Allen on November 15, 2002 11:21 AM

Excellent analysis. I'd like to chime in on a couple of points:
I'm in rural Georgia, where the Hope scholarship is the best chance most of these folks have of going off to college, and it's rather amazing how many get it. I don't know that the local schools inflate grades so that the kids around here can qualify, but let's just say the numbers look disproportionate to what one would expect of the downslope of the bell curve.
Mr. Roberts is also right: Most of the folks around here don't feed directly into Georgia or Georgia Tech; most feed into local state colleges and universities, then transfer in. The net effect is to essentially fund a two-year college prep program for Georgia residents. I'd say that wasn't the point of the whole thing, but then again, until recently, the Legislature was all-Democrat.
Oh, and I was a British Literature (18th Century all the way, baby!) major, and I can tell you precisely what it taught me: That I needed to go to some sort of graduate school to earn a living. I did, and I am; however, I would argue that while a humanities education does enhance your ability to think rationally and critically, those skills are only useful within an economically useful field.
Like I said, excellent points.

Posted by: Chris on November 15, 2002 11:37 AM

Jane,

Your argument that increasing the number of humanities graduates won't increase opportunity for those graduates looks to me to run afoul of the same "static-line model" problem you sniff out in Meredith's notion. You have no idea what ultimate response there would be to a greater supply of better educated, but not vocationally traded, individuals in the economy. You clearly think you have it all figured out, but where is the evidence?

You seem to have a strong prejudice regarding the benefits of a liberal education - you think there are none. Funny thing is, I keep talking to people who don't think any form of education creates the kind of particular skills they want in employees - not MBAs, not math degrees, not engineering degrees - and they don't necessarily want them to. They want a broadly educated applicant, willing to learn, because the requirements of any job are generally so narrow that the ability to adapt, to use generalized skills to learn particular skills, is the key to being a good applicant. I once earned a living as a graduate studen teaching accounting students to write, because accounting firms told the department to stop turning out illiterates.

Your views of the value of education are not only just your views, but they have a pretty high hill of correlation to climb before they can even enjoy the benefit of the doubt. The US has, if not the highest concentration of college educated individuals, at least among the highest, anywhere. The US also has among the highest levels of productivity and living standards. Many of those college educated boys and girls have liberal arts degrees. Is it just a signaling device? Then why haven't other societies constructed signaling devices that work equally well?

I keep hearing that the path for the US and other high-cost countries has to be to stay on the edge of development, to avoid losing their productive base to lower cost countries. How, if not through education? You don't think education gets us much except a hearty appetite for Chaucer and his ilk, but where's your evidence?

The grade inflation argument might be true, but Harvard grads still seem to pull down good salaries, and Mr Summers seems pretty convinced there is a grade inflation problem. Beyond that, grades are a sideshow. I though education was about learning, not about ranking. You've reduced the whole notion of education to producing little cogs that fit neatly into a dismal sort of mind-set in a dismal sort of economy. How'd we get where we are if its all just signaling, grabbing up a few vocational skills and then marching off toward retirement?

Posted by: K Harris on November 15, 2002 12:19 PM

few comments: almost everyone with a b average doesn't belong in college.. they just don't have the skills to get through

I was in a program where you needed (mandatory) a 4.0... they failed a couple of people, but no weed outs, cause they just forced a distribution out of very minimal differences... just like harvard doesn't fail very many people, as their kids are qualified

these hope scholarships are idiotic... but anyways...

as for k harris: just pulling a ba won't get you anything... you need to demonstrate that you actually have skill or interest so that someone will hire you... engineering generally doesn't produce perfect employees, but almost everyone gets hired, cause they know what they're doing, except for some bad habits/current practice... it's not like you're going to get hired to design circuits with an English degree... also you don't really understand economics...

english major: skills include diagramming sentences, writing (hopefully, but maybe not depending on campus fashion)

electrical engineer: skills include physics (including quantum), chemistry, electronics, and a hole hell of a lot of math

english major: jobs include teacher, prof, writer...

elec: jobs include teacher (sci and math..), prof, electrical engineer, accountant, investment banker, yada yada yada.. you'd be surprised how much higher math skills are valued, and how much an elec with a 2.0 can contribute (especially at a competitive school... lots of elecs with 2.0 eng GPA and a 4.0 arts elective gpa...)

Posted by: Libertarian Uber Alles on November 15, 2002 01:48 PM

kharris: 1) Jane doesn't assume a static model. She argues that increasing the quantity of liberal arts garduates will depress their wages and the value of their degrees.

2) You establish a correlation between a high number of college grads & high pay and productivity. Why not argue for a correlation between a high number of technical (eg engineering) grads & high pay and productivity? Oh, and correlation doesn't equal cause. An unconvincing analysis.

3) Employers want well-rounded grads: well, actually, employers want well-rounded grads who also have the technical skills needed for a given profession. The argument here is a non sequitur: employers want applicants who can write English & do things other than the technical skill; therefore, a liberal arts degree is good. Not convincing.

Posted by: JT on November 15, 2002 02:11 PM

I was a not-quite-dirt-poor kid who worked my way through college. Then went to law school where I worked about 5 hours a week, but paid for school through student loans.

When I interviewed for jobs, was I commended for my industriousness in having put myself through undergrad? No, that fact was never noticed (it was on my resume). But I was asked repeatedly why I hadn't been in a sorority. Now tell me how the hell you answer that question in a way that will satisfy an interviewer who obviously was a Greek. The simple truth is (i) I couldn't afford to be in a sorority and (ii) I don't have the temperament for that brand of conformity. I never did come up with an answer that made the interviewer understand that we were from the same planet.

My point? Even if deserving kids find a way to pay for their own college, don't think for a minute this levels the playing field with kids born into privilege. Having a free ride wouldn't either. All else being equal, the sons of privilege will always want to hire from their own ranks.

I agree the proposal is unworkable based on grade inflation/compression and other economic factors discussed, but I don't think the children of privilege should question the work ethic of people who say they can't afford college. Most of the daddy-boughts at state schools all around the country wouldn't be there if they had to work for it.

Posted by: denise on November 15, 2002 02:18 PM

Wow, someone's heard of Williams! Go Ephs!

My prediction if this program were to go through: Colleges hike their tuition by the amount of the scholarship. Then they avoid the extra students problem and get a HUGE pile of money courtesy of Uncle Sam. To avoid this, the Feds would need to get into a big price-fixing regime, and we can easily guess what a raging success THAT would be. I took ECON 101--can you say "rent seeking"?

Hey, as a Williams grad, I HAVE to be in favor of broad, liberal-arts education. And I am--it was wonderful for me and it made me a better man (plus, I got a wife out of my 4-year tour in the Purple Valley). On the other hand, there were plenty of people who drank hard for 4 years and got a high-paying job as a consultant--no mind-expansion required. Even if those guys had loans, they could pay them off in a couple of months, they way they're paid.

I have to agree with Jane here--personal growth is best paid for with personal funds. Then if you waste your time, you're not wasting someone else's money.

Posted by: Rob Lyman on November 15, 2002 02:48 PM

Grade inflation is hard to prove, but there have been accusations of it for the past couple of years here in GA. When I went to www.ajc.com and searched their archives for "grade inflation" I matched articles beginning in 1999 which begin with things like

"61 percent of students lose HOPE Life's lessons: Low retention rate of state-funded scholarship blamed on poor study skills and immaturity."

"Altering HOPE dicy, say lawmakers As critics claim program suffers from inflated grades, politicians wary of changing requirements for scholarships".

So I think some of the above criticisms of the proposed national HOPE scholarships are echoing the actual criticisms of Georgia's implementation. Me? I don't care...I don't have to pay the idiot tax that funds it (State Lottery).

Then you notice the following match:

"Lottery: Racism is not the problem. So some critics say the HOPE scholarship is not fair because many middle- to upper-middle-class whites are receiving financial aid, while some black students with fewer resources who didn't keep their grades up...". Hmmm.

Posted by: Mark Turner on November 15, 2002 04:54 PM

K Harris:

Your point about employers not caring what students learned is an echo of my point: college doesn't have any intrinsic value. It's a signalling mechanism. Flooding the market with more college grads won't raise their pay; it will depress the value of the signalling mechanism.

I would, however, point out that most people with an engineering degree do, in fact, get jobs as engineers, for which such a degree is a prerequisite.

It is certainly possible that creating a huge pool of new humanities majors would create some economic growth. However, it's also possible that it wouldn't. Since I can think of no mechanism by which increasing the number of anthropology BA's would spur economic growth, and it seems unlikely that it would do so, I'm betting that it won't. And it's a hell of an expensive experiment to run: $25 billion on tuition, plus the extra costs to the states for tuition, plus the lost economic activity from pulling those students out of the labor force, plus all the other costs I discussed above. With the payoff so unlikely, does the American public really want to gamble?

Posted by: Jane Galt on November 15, 2002 05:06 PM

Megan,

I agree with most of your article, but I don't think prospective employers usually have access to grades. My recollection from college was that grades were much more important for those going on to grad school than for those of us heading for the real world.

I suspect the "cum laude" degrees were a sort of signal to employers (ie, "this applicant not only got a degree from us, but also had high grades"). But when I went to Williams, they offered summa/magna/plain laude, and also "with honors" and "with highest honors". The Latin meant you had various ranges of good grades, the English meant you'd written a thesis of some sort. I managed a "with honors", but I don't expect employers to know that I wrote a paper on Social Security. (Not that that keeps me from mentioning the "with honors" on my resume, of course!)

BTW, good luck in the Foreign Service. I guess that DC trip went well.

Posted by: PJ/Maryland on November 15, 2002 05:40 PM

Being the Blogger communities token Blue-Collared Slob, I'd like to point out that college is not for everyone, doesn't make people much more smarter or educated then what they were before they went off to college.

My Step Brother went off for four years of Uni, and came back with nothing he couldn't have taught himself or go to a technical school for(how to do webpages and use Flash), and some stuff where he *shouldn't* have learned. "Hey, Germany has a higher living standard then the US!" "If we can put a man on the moon we can do xyz" Or, my favorite: "Man this economy sucks because of Bush's tax cut"

Yes, he said all of the above. And yes, he came back a Greenie. I feel so sorry for my stepmom, he wasted all that money on him for that...

Posted by: Nick M. (Arrogant Rants) on November 15, 2002 06:08 PM

The skilled trades can definitely make good money. My father was a skilled auto mechanic running a garage before he went to college (GI bill), majored in Biology and became a professor. He figures that, accounting for inflation, it took 20 years of seniority before his salary equalled his annual share of the profits in the garage. And the college education took more time than working his way up to the top as a mechanic had. On the other hand, he loved teaching, and you don't get a whole lot of human interaction from underneath a car...

Yes, there are star science students who can step from a groundbreaking PHD thesus to a major university salary twice what Dad ever made, and MBA grads who'll be millionaires in three years - but I rather suspect those guys would rise to the top with any reasonable system of financial aid. Or with no financial aid at all ... I personally know a successful entrepreneuer with only an 8th grad education, and Thomas Edison had considerably less than that.

Posted by: markm on November 15, 2002 09:27 PM

An English major could have substantial intrinsic value - if it implied that the graduate was able to write clearly, about things that mattered to the bottom line, and pitch it to be understood by varied audiences. Clear communications is more important to the success of most businesses than technical knowledge. I have often commented that the most valuable course I took in 7 years at various colleges, switching between Math, Physics, and Electrical Engineering majors, was English composition. An engineer who can't write can be an important cog buried somewhere inside a big company, where he need only talk to other engineers. I've had much more fun in a small company where sometimes I was the whole engineering department, dealing with everyone from management to assembly workers. Writing so $7.00/hour assembly workers can understand it is hard, and writing for managers who haven't got time for long reports is even harder. Learning how to do that allowed me to spend 12 years at the same employer without going stale in a narrow job because the job changes all the time, it allowed me to raise my family in a healthy rural environment, and it has made me close to layoff-proof. (I'm not 100% secure in the present economic conditions - but I think the only way they'd dare lose me now is if the general manager is padlocking the plant as I leave...)

But as far as I can tell, most college "English" programs include rather too little English and far too much navel-gazing and writing stuff that only six people in the world can understand.

Posted by: markm on November 15, 2002 09:48 PM

Did some checking. It seems that out of the 800 largest companies in the US, only 13% of CEOs graduated from one of the top 50 schools in the US. Of the 13% who did, the percentage whose father/grandfather was also the CEO was suspiciously high.

Your average Ivy League grad, for some reason, doesn't seem to end up at the top. They tend to end up serving as the consultants, physicians, legal counsel, etc. to those at the top.

I'd be interested to hear thoughts on why that might be?

Best,

John

Posted by: John on November 16, 2002 02:14 AM

I majored in English and Creative Writing, and I got a job -- thanks to my journalism experience.

I'd like to see us get much more serious about teaching students in K-12, so they'll be prepared to take advantage of higher ed or get into an apprenticeship program. If they're not prepared -- and a B doesn't mean much these days -- then they're wasting their time in college. And they'll be wasting a lot of time outside college.

I did a story a few years ago: The building trades union was desperate for apprentices. Most kids thought blue-collar was low-class and those who did apply inevitably flunked the math test (and usually the reading test too). They had set up a pre-apprenticeship proram to teach math and reading. The machine shops were turning to Vietnamese immigrants. They couldn't speak much English, but at least they knew math, and they always showed up for work on time. I interviewed a man who was hiring college grads for an entry-level customer service job that required basic listening and writing skills. The job should have been doable by a high school graduate, but even workers with two years of community college had proven unable to take a coherent message.

Posted by: Joanne Jacobs on November 16, 2002 03:52 AM

We could accomplish the same thing much cheaper.

Just print a bunch of "MBA, Wharton" sheepskins and hand them out to HS grads. I suspect it won't significantly change the outcomes between the brainy and the not-so-smart any more than mass-installing seatwarmers in lecture halls.

The tikes will have more "self-esteem", and we could get the whole thing done for $5/child.

Posted by: Stewart Vardaman on November 16, 2002 06:03 AM

I want to point out that there seems to be a misconception among some about skilled labor and tradesman pay*. Unlike some White collared jobs, you need to *constantly* produce the work to justify whatever your pay is, and those just starting out untrained get the equivalent of Mcdonalds or Burger King Fry flipper pay for the first few months until they can hold their own. Doing everything legal and on the books, every worker on the average in the field needs to produce a minimum of twice their pay, just to keep the buisness from losing money (on average). And since prices for new construction labor hasn't risen much over the past few decades (What a Siding or Roofing mechanic made 20 years ago, is close to what they make today, not a joke sadly), and no benefits that a non-union buisness can afford, Being a field worker isn't as money making as some people think, unless you can produce good quality quickly, consistently with the same buisness, and a foreman then you can maybe pull in 45k a year (175 bucks a day, before taxes)

*None of this applies to Union workers or Automobile/machinery mechanics. A Horse of a different color, and they, on average, make about 50% better then one of my guys of comparable skill and hierarchy..

Posted by: Nick M.(Arrogant rants) on November 16, 2002 10:44 AM

Yikes! Man did I put in some run on sentences. Damn thats bad...Bad Nick! BAD!

Posted by: Nick M.(Arrogant rants) on November 16, 2002 10:45 AM

John, an answer to your question, in the form of a pure, wild-assed, guess: Perhaps people who attend a top 50 school are less inclined to be risk-takers. Having gained access to an education which virtually guarantees a very comfortable existence at a relatively young age, they are less inclined to take the personal and professional risks needed to attain the very highest levels. Behavior similar to this can be seen in other endeavors. Tiger Woods aside, who seems to have been raised by a father who is a freakishly good amateur behavioral scientist, many of the best professional golfers have come from very, very , modest backgrounds, considering that golf is largely a sport of the materially comfortable. Lee Trevino famously answered, when asked if a 3 foot putt for a 1st place prize, worth a couple hundred thousand dollars, was pressure-packed, answered that pressure was more evident when attempting to make a conclusive putt on a $100 wager when one only had $5 to one's name. People who are forced to be risk takers to achieve great success often bypass those who can attain a high level of success without such risk-taking.

Posted by: Will Allen on November 16, 2002 11:24 AM

For Bolie and Matthew: Bolie is right, it most hurts small businesses, especially farms, where the "estate value" is in land. If one inherits liquid assets, it is not a big deal to sell off some to pay a tax. But if one inherits a farm, it is far more difficult to sell off a portion (and how many farmers have the cash to pay without selling the land?)

Matthew, I don't know how the housing is in your area, but in the SF bay area it is VERY easy for an estate to be in excess of the cutoff limit in house alone.

But the bottom line is: What is the justification for such a tax? It is tax on "money" that has already been taxed as income, and in the case of land, has been taxed and retaxed as property. This is especially so if, as I have read (and if anyone knows the correct numbers I would love to hear it), the estate tax costs more to collect than it brings in.

Posted by: Ken Summers on November 16, 2002 12:02 PM

Short followup to last post: The exclusion limit on the Estate Tax has been increased, but as far as I can tell the brackets have not been adjusted for inflation in years. This means that any tax is at a higher rate than for comparable estates in the past.

Posted by: Ken Summers on November 16, 2002 02:52 PM

Jane, perhaps you can clarify for us, but I thought I had read that the estate tax was actually a net loser for the treasury, that it cost more to collect and imposed enough of a drag on the economy that it was a net loss. If this is so, how can you fund anything by saving it from repeal?

Posted by: T. Hartin on November 20, 2002 07:40 AM

That's a very, very hard proposition to prove. Personally, I think the estate tax is certainly a net destroyer of economic value, and probably a net destroyer of tax revenue, but it's hard to prove definitively.

Posted by: Jane Galt on November 21, 2002 10:41 AM

I have a simple question about the origional proposal. Under what authority does anyone have to take what someone has earned away from them by some suposed authority and give it to someone else?

When a person takes your posessions by force or deception, we call that a crime. Where are you going to draw the line where the government does the dirty work for the criminal?

Most of the "Governmental Authority" is derrived from the "General Wellfare" caluse, that is all that is said on that matter, in the U.S. Constitution, but Thomas Jefferson clearly stated in the Federalist Papers that the Constitution should be read consertivitely where the rights are given to the Government and liberally where the rights are the individual. Then by what right does the Government have in transfering ownership of your property to someone else?

What this leaves is the voluntary contribution to charities and your proposal is just another charity. Since the Government has taken over many of the charities functions, Voluntary contributions have fallen, drastically, in the past 40 years.

Not to mention the failure to get the collected funds to the intended recipitants. The government adverages less than 30% where private charities average over 70%. Why should we create another inefficient beurocracy, cant we just let the individual earn their own way in life? There are many different avenues to earning a college degree to choose from.

Posted by: Ed S. on December 5, 2002 01:32 PM

Jane assumes that what constrains the number of people seeking humanities majors is the cost of the degree. Is that so? I see no evidence of that. It seems more reasonable to think that what constrains these majors is not the cost of the degree itself but a judgment of the likelihood of getting a job afterwards. Subsidizing college education will not change the functioning of the labor market. If more people choose to go for a humanities major than there is demand for, that will pretty quickly correct itself and the number of students applying for a humanities major will drop.