Michael Lind on the Educational-Industrial Complex

By John Ballard

This brief column by Michael Lind puts a couple of big thoughts into a a small apace.
Definitely recommended reading in full.

The elderly in America can remember a long-distant era when progressive thinkers included leaders of organized labor and small-town populist politicians. But nowadays progressive politicians and strategists tend to be affluent meritocrats who got where they are by making good grades at highly selective schools. Their narrow personal experience leads many elite progressives to equate social mobility and increases in income with obtaining academic credentials like their own. While New Deal labor liberals and populists wanted to promote unions and a living wage, many members of the new breed of Ivy League-educated liberal technocrats prefer an alternate plan: send everybody to college.

Progressives love to claim that education is the key to upward mobility. But this is based on an obvious fallacy. The "college premium" that results in higher incomes for college graduates is the result of the relative scarcity of college degrees. If everyone had a B.A., then the value of a B.A. in generating high wages would drop. We know this to be the case, because access to college has expanded more rapidly in Europe, where the gap in wages between the college-educated and the rest as a result is smaller than in the U.S.

...many have profited from the peddling of the dream of the mass upper middle class. The claim that everyone should go to college served the interests of the educational-industrial complex... And the claim that everyone needs to pour money into the stock market... served the interests of the financial-industrial complex that has replaced real-economy businesses... Both the educators and the brokers have successfully lobbied Congress to subsidize their bloated industries, swelling them even further, by means of tax breaks for student loans and personal retirement savings. The big losers have been the millions of working Americans whom many Democrats and Republicans alike have persuaded, against their interests, to indulge champagne tastes on beer budgets.

He has put his finger exactly on Barack Obama's most vulnerable lack of insight, that some bootstraps are shorter than others, not to mention that barefoot people are a long way from boots..The president's mother and grandparents grew up in the shadow of the Great Depression, were sold the myths of the educational-industrial complex and he never heard stories from the pre-war generation who endured the Great Depression as older adults.

I don't know if he coined the term but "trophy houses" is more descriptive than trophy wives.

...Millions of Americans who by objective standards belong to the working class or lower middle class have persuaded themselves that they are part of the professional-investor elite, because they have worthless degrees from diploma mills, negligible amounts invested in stocks, and suburban trophy houses they cannot afford. For the college graduates at Starbucks working to pay off student loans for degrees that they will never use... the American dream has turned into a nightmare.

I take issue with "worthless degrees from diploma mills" because there are lots of people with excellent credentials trapped in the current recession. The real insight is the part about champagne tastes and beer money, those suburban trophy houses they cannot afford.

Actually McMansions can be as affordable as land yachts. The real problem is the difference between equity and cash. Urged by sales people and the very banking institutions which ought to have known better too many consumers have used homes as ATMs, swelling their debts way beyond what they could afford. Instead of asking "Can we afford this?" the question became "Can we afford the payments?"

Any time a debt is incurred, two debts are actually created, one for the object, the other, called interest, for the money. Those of us who have always lived on a cash economy understand this primitive idea. Paying cash eliminates interest. Too much hard earned money has been pissed away in the form of interest. And we wonder why the banking industry has become so big.