A Patriots Manifest May 16 2008
William White
The housing bust is well underway, a stock market bust is probably on its way. But what about the exit strategy of education and retraining? Can it go bust? Yes it will go bust. The Public Service Ads about how much more money you will make if you get a degree leave out a hell of a lot of relevant information such as what type of degree are you getting? The liberal arts means learning those arts you need to know to be an effective slave owner in ancient Greece or Rome so you can avoid slave revolts. Not many slaves in the markets anymore so learning to be a better slave master does not generate much revenue. Business management degrees (I got mine in Finance on old style GI Bill since I enlisted in 1972.) emphasize stewardship. The steward was a free(d)man who kept track of the accounts of the estate of the slave master. While an MBA or other business degree does have some value, a business major without other skills is fairly useless outside of the finance industry. Even subtracting out the fine arts, liberal arts, social science and business school degrees the promotion of college contains a lot of errors of omission.
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“On average you can make a million dollars more money with a college degree.” Let’s double that figure before ripping it apart. Anyone who borrows money to get a four year fine arts degree is brain dead also everyone else who gets a degree that leads to an average income lower than that of an average high school grad.
If your student gets a degree that means something on average over a 40-44 work life they will make a pre-expense, pre-tax additional 46-50K annual income more than an average high school grad. That totals up to 2 meg if all other things remain unchanged over the next 40 years.
The dependable hot degrees include logistics, hospitality management and building maintenance: warehouseman, cook and janitor in simpler terms. Am I joking with you, no. These degrees are hot because they are not subject to outsourcing. Medical tourism is a major industry already. Malaysian , Indian and Jamaican lawyers do not advertise on TV but they do a lot of back office work by internet. A lot of engineering work is outsourced too.
Still why are stock clerks getting degrees as stock clerks? Profit margins are getting squeezed. If profit is 20% of sales price a 1% decrease in inventory losses = 5% increase in gross profits but at 5% profit a 1% decrease in inventory losses = a 20%increase in gross profits. There is an actual school in Orlando that gives a one week course in the proper use of a forklift. That school is hard to get into and expensive to attend, it also does not advertise and all freelance grads (almost all students are sent by their employers) have job offers waiting. If your kid attends the local forklift school and graduates send them to the local big box store warehouse and he (she) will be reimbursed for their education in logistics while making a decent income for a young single. Call that local warehouse(s) to find out where the school nearest you is, they are hard to find.
Your kid will be told about the high average income of logistiticians. High averages tell you nothing. The 20/80 rule indicates that the top 5th average 16 times as much income as the bottom 4/5ths . So your student should expect to make ¼ the average in a hot field. But if he/she hits the big time they get to go to high tax, high cost of living areas to spend their increased salaries. In other words if the kid gets accepted to a name school get the kid in there but there are maybe as few as 10 and certainly not more than 20 colleges that will get your kid into the big time with a reasonable probability of staying there. Harvard, Stanford then a big drop off to the other Ivies, some quasi-Ivies and the University of Chicago followed by Podunk U. The five service Academies, MIT, Caltech and the Colorado School of Mines round out the list on the technical side. Do not go into debt on any other degree programs. To take one example Auburn U in AL has an outstanding Pharmacy program but if your kid becomes a pharmacy tech and gets accepted for the program their employer will either reimburse them or the military will hire the kid and pay for the schooling. (Pharmacists do not normally come under fire.)
This bubble too will bust and it is the official exit strategy from bad times. We are in deep doo-doo.
The views expressed by William White are his and his alone and may not be the views expressed by A Patriots Manifest. Thank you .... Michael Roller...