The Agenda

Do This and You Will Be Safe: Peter Thiel on the Higher Education Bubble

Sarah Lacy, who is fast becoming one of my favorite opinion journalists (it helps that she has wide-ranging interests), recently spoke to entrepreneur and investor Peter Thiel about the notion that the United States is in the grip of a higher education bubble:

 

For Thiel, the bubble that has taken the place of housing is the higher education bubble. “A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

Like any good bubble, this belief– while rooted in truth– gets pushed to unhealthy levels. Thiel talks about consumption masquerading as investment during the housing bubble, as people would take out speculative interest-only loans to get a bigger house with a pool and tell themselves they were being frugal and saving for retirement. Similarly, the idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life.  It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.

Rather hilariously, Thiel’s efforts to encourage alternatives to traditional higher education, including efforts to attack the prestige of elite education by encouraging brilliant students to drop out of elite schools, have been criticized as inegalitarian. In truth, these efforts are radically egalitarian:

But Thiel’s issues with education run even deeper. He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on  something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status. In education your value depends on other people failing. Whenever Darwinism is invoked it’s usually a justification for doing something mean. It’s a way to ignore that people are falling through the cracks, because you pretend that if they could just go to Harvard, they’d be fine. Maybe that’s not true.”

He explains to Lacy the logic of attacking this higher education idee fixe from the top: 

 

To start a new aspirational example– an alternative path– it makes sense to start with the people who have all the options. “Everyone thinks kids in inner-city Detroit should do something else,” Thiel says. “We’re saying maybe people at Harvard need to be doing something else. We have to reset what the bar is at the top.”

That hints at another interesting distinction between the housing bubble and the education bubble: Class. The housing bubble was mostly a middle-class phenomenon. Even as much of the nation was wrapped up in it, there was a counter narrative on programs like CNBC and in papers like the Wall Street Journal pooh-poohing the dumb people buying all those condos in Florida. But with education, there’s barely any counter-narrative at all, because it is rooted in the most elite echelons of the upper class.

Thiel assumes this is why his relatively modest plan to get 20 kids to stop out of school for a few years is so threatening to a lot of the people who have the biggest megaphones to scream about it. “The people who are the most critical of this program are the ones who are most complacent with where the country is right now,” he says.

Many of these people are powerful, vocal academics who use their credentials to give their favored policies an imprimatur that perhaps they don’t deserve. Soaring education spending is as striking as soaring health spending, yet it has only recently started attracting the same critical scrutiny. Alternative credentialing systems, improved funding formulas, and tighter limits on education spending are all part of the solution. But the deeper change will be cultural. 

On Thiel’s scarcity point, I was reminded of Anya Kamenetz’s argument that TED is becoming something like a new Harvard, only scalable:

If you were starting a top university today, what would it look like? You would start by gathering the very best minds from around the world, from every discipline. Since we’re living in an age of abundant, not scarce, information, you’d curate the lectures carefully, with a focus on the new and original, rather than offer a course on every possible topic. You’d create a sustainable economic model by focusing on technological rather than physical infrastructure, and by getting people of means to pay for a specialized experience. You’d also construct a robust network so people could access resources whenever and from wherever they like, and you’d give them the tools to collaborate beyond the lecture hall. Why not fulfill the university’s millennium-old mission by sharing ideas as freely and as widely as possible?

You would do that, if you weren’t building your model on exclusivity and if you intended to rise or fall on the basis of whether your students found your teaching relevant, engaging, and useful.

Though we’re spending all of our time debating the shape and extent of our medical safety net, my guess is that the effort to transform our educational system will ultimately prove more consequential, not least because this effort will point the way towards self-tracking and self-treatment.

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