The global higher education bubble

Dr. Krassimir Petrov | Gold Newspaper No. 6 | 2017

Education is one of the best investments that individuals can make for themselves. Extensive research over the last 50 years has quite conclusively indicated that higher education provides outstanding long-term returns with relatively small overall risk. Many consider those long-term returns vastly superior to stocks, bonds, and even real estate and gold. Indeed, as a university educator with 20 years of teaching experience, I am a true believer in quality higher education. Yet, even with all of my teaching experience — in 10 different countries on 3 continents and in almost 20 different subjects related to economics, finance, and business — I believe that modern education (in its current form) is not worth the time, the cost, or the effort.

THE BUBBLE

Indeed, modern university education is in a giant bubble across the globe. All over the world, higher education is mushrooming. Universities are proliferating in every shape and form. Parents are eagerly rushing to enroll their children, hoping to secure them a bright future. Yet, not all is well with modern “education.” Pervasive problems plague the “industry.” Education has degenerated, while universities have turned into giant diploma mills. Academics is a thing of the past; today, it is all about the money. The goal is to milk the parents dry — to the last penny. Competition among universities has been devastating, especially to the overall quality, which is in a race to the bottom. Universities survive and thrive by attracting students and keeping them happy; failure is not an option, so no one is left behind, and everyone passes. Academic standards are getting lower and lower, textbooks thinner and thinner, and exams easier and easier. Business students can now graduate without learning about basic balance sheets or income statements; economics students now graduate without learning about growth or business cycles; even medical students can graduate without properly mastering anatomy and physiology. And these problems are endemic across the world.

PROFESSORS

The root causes can be found at various levels. On the global scale, university education is in a giant bubble. The bubble has ensured a rapid increase in supply and a dire shortage of quality. There are simply not enough educators in the world to fill all its academic needs. Many strive to become professors, thinking it would be a “sweet and easy” job. Thus, the hottest educational trend is in manufacturing PhDs. Almost anyone with a bachelor’s degree can pay a modest tuition and enroll in a PhD program. The beauty of offering a PhD today is that most programs do not even require any coursework, so it is dirt cheap to “teach” PhD students because there is no actual “teaching” in the program — only research. Moreover, universities can actually require those PhD students to teach undergraduates, thus benefiting from them twice — first, by collecting a tuition fee from them and, second, by using them as cheap labor. Many PhD programs are not even full-time, so students can just show up a few times throughout the semester; and only a few years later, they have freshly minted PhDs and can immediately become assistant professors at most any university around the world. Yet they hardly even know or understand their subjects, and so are far from competent at explaining them to beginning students.

This rapidly growing bubble ensures that most faculty members at most universities do not even have PhDs; there simply are not that many PhDs in the world. Oftentimes, a master’s degree is more than enough to get a teaching job. However, not surprisingly, teaching quality is low, and due to their perception of job insecurity, such instructors may feel inclined to go extra-easy on their students. Admittedly, some of them demonstrate good teaching skills because they have recently suffered through their own master’s studies and remember what helped them learn well, but they are in the minority.

PARENTS

The global bubble is being fueled by ambitious parents all over the world. The root of the problem is the basic principal-agent problem so pervasive in banking and corporations. Parents eagerly pay for their children’s education, but are unable to monitor or control its quality. The same blind faith that made them invest in the real estate bubble is now making them invest in the education bubble. Unfortunately, they cannot “see” the quality of education, much less evaluate it. Oftentimes, universities’ primary focus is on fooling the parents into believing that the level of education is extremely high; their second priority is fooling the education regulator; next is keeping the students happy; and last of all is the overall quality itself. Remember, survival does not depend on quality; it depends on keeping the parents fooled and the students happy.

STUDENTS

The higher education bubble is especially demoralizing to students. Most of them do not care about learning or gaining an education. They go to school because everyone else is doing so and because their parents expect them to. Many are there to please their parents; their parents even choose a major that the students have no real interest in. These days, universities are not selective, so whoever can afford the tuition can enroll. Once in, their graduation is almost guaranteed. The scale of the university system is so massive and the quality so mediocre that modern universities look like high schools, are managed like high schools, and function like high schools — essentially, they are an artificial extension of the high school system. Academic spirit is a strange and unfamiliar concept. Self-motivation is lacking; slacking is common; and cheating becomes a way of life. Campus life revolves around hanging out with friends, mostly on Facebook, and goofing off. Instead of forcing students to keep up with teachers, the system forces teachers to slow down for the students. Back in the old days, we covered 13-15 chapters per semester; later on, it was 9 to 10; now, students struggle over barely 5 to 6 chapters per semester. Back in the old days, textbooks were on the verge of obesity; now most textbooks are anorexic, and usually to be covered over two full semesters. Even better, students do not really need to read textbooks anymore; all they need are PowerPoint slides, on which they take notes during lectures. Even better than the slides, students now demand “notes” from the teacher, so they can “read” and “study” from the notes, which is quicker, easier, and “better” than reading the textbook. Exams are now open-book, and/or open-note, and — just to make sure things go well and no one complains — “open-internet.”

TRENDS

There are two mutually-exclusive and opposing trends in the modern university system around the world today. The first is the rise of various phony “social sciences” that offer relatively useless majors such as “Gender Studies,” “History,” “Religious Studies,” “Philosophy,” and “Psychology” — with few practical skills and no job opportunities. The education system has a very strong incentive to offer these degrees: the more worthless the degree, the more likely that the student will be back in a few years for something more “practical.” It is the same with doctors — the sicker the patient, the better for the doctor.

The second deplorable trend is the excessive emphasis on the practical to the exclusion of everything theoretical or conceptual. The focus is on “how to do” things. Education is based on practical examples and case studies. There is nothing really wrong with this approach, except one simple observation: the modern 4-year university has degenerated into a glorified one-year vocational school or a two-year college. Hard-core engineering is now “product design”; accounting is now simple “book-keeping”; electrical engineering now prepares “electricians,” and automotive engineering now prepares “car mechanics.” Rather than provide a broad education in sciences and develop analytical and critical thinking skills, the modern university has regressed into a vocational school, teaching only a few practical skills to make a living.

CONCLUSION

This dim view is not to negate the value of university education. On the contrary, today — more than ever — we need true, genuine university education. Unfortunately, the global education bubble has spawned modern universities that are anything but “real” universities. This is not to say that all universities fall into this category, but most of them do. This is also not to say that all professors are ineffective, but most of them, indeed, are. And finally, this is not to say that all students are under-motivated and -trained, but most of them are.

For what it is worth, modern university education is not worth it! Unfortunately, most parents have not figured that out, yet — but they will.