Adam Smith Institute

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The higher education bubble

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Rachel’s post yesterday got me thinking about university education. Like many, I’m coming to think of it as being the next big bubble. Money is being ploughed into it higher education, and for many – probably most – people, it’s just not worth it. We’ve become afflicted by acute credentialism: to be taken seriously in many professions, you need a couple of letters after your name.

What’s wrong with this? Well, for a start, it makes it harder to break into new jobs. Credentialism raises barriers to entry, and protects certain professions from competition. (Incidentally, occupational licensure – which I consider to be one of the great evils of our time – is worse.) Moreover, it increases the penalties for making bad decisions. Did you spend your teenage years getting drunk and skipping class? Well, sorry, you’ve ruined your life because you can’t get the degree from that Russell Group university that you needed so you could do the job you wanted to do. And God help you if you chose art history instead of accounting on your UCAS form.

Worst of all, credentialism forces people in education to conform so that they get the grades they need. School and university are the two places in people’s lives where freethinking and contrarianism can thrive; where being brilliantly wrong is better than being boringly correct. When your on-paper performance matters so much to your future job prospects, this becomes more difficult. As a result, university becomes more like a training course and less like the thoughtful, argument-filled Academy that it should be. 

In a speech at Oxford Brookes University last June, David Willetts said that more than 50% of degree courses were "license to practice" courses. In fact, the true figure is likely to be a lot higher. By now, almost all university courses are credentialist training courses, even humanities and social sciences, because having letters after your name is now so important to finding a decent job. 

How did we get here? Mostly, I blame government. Long ago, it was decided that education was the key to social mobility. Targets were set to get people into university, irrespective of their ability. That someone thought it a good idea to get 50% of school-leavers into university says it all – university was just an extension of mass schooling, and shunting as many people through it as possible was the key to making people smarter.

Where a bachelor’s degree once set people apart from the crowd, now it’s a master’s degree. Some day, I’m sure a PhD will be the minimum. Standards have fallen and costs have risen as the bubble grows. Once, everybody wanted to own expensive tulips. Today, people are putting their money into letters after their name. Bubbles are pointless, madness of crowds hysteria driven by easy money, and we're seeing one in education.

People use qualifications to signal their intelligence. It’s hard to show an employer that you’re smart, and a degree is like a good reference letter vouching for you to an employer. But forcing more and more people into university education has devalued that reference. Like trees competing for sunlight growing taller and taller, the credentials have become loftier and loftier to achieve the same ends. The bubble is growing. Someday, it will have to burst.