Tuesday, March 22, 2011

The Creative Surplus part one

Sometimes, placement of articles in the newspaper form the definition of irony. Two of the most popular stories on the New York Times Web site March 22 provide a case in point.

An article entitled "Incentives Offered to Raise College Graduation Rates describes efforts by the Obama administration to offer "incentives" like grants to raise the college graduation rate in the U.S.  According to the article, the idea is to crank out 8 million more college graduates by 2020. What these graduates are going to do, nobody knows. Somehow, educating more people will magically create a demand for them, I guess. It hasn't worked so far- our workforce is more educated than at any time in history, yet there are between four and six applicants for every job opening! It's a Red Queen's race - running faster and faster just to remain in place. No, all it does is ensure that our future unemployed workers are better educated than our unemployed workers of today.

And if you need proof, look no further than the article by Matthew Klein, published the same day, entitled "Educated, Unemployed and Frustrated." Klein eloquently makes the point that young  graduates with advanced degrees today cannot find jobs! Klein, a research associate at the Council on Foreign Relations, draws an analogy between the educated youths who cannot find suitable employment in the Middle East who are fomenting revolutions and the large cohort of young, unemployed college graduates in America and Europe. He writes:

About one-fourth of Egyptian workers under 25 are unemployed, a statistic that is often cited as a reason for the revolution there. In the United States, the Bureau of Labor Statistics reported in January an official unemployment rate of 21 percent for workers ages 16 to 24. My generation was taught that all we needed to succeed was an education and hard work. Tell that to my friend from high school who studied Chinese and international relations at a top-tier college. He had the misfortune to graduate in the class of 2009, and could find paid work only as a lifeguard and a personal trainer.  Unpaid internships at research institutes led to nothing.  After more than a year he moved back in with his parents.

Millions of college graduates in rich nations could tell similar stories. In Italy, Portugal and Spain, about one-fourth of college graduates under the age of 25 are unemployed. In the United States, the official unemployment rate for this group is 11.2 percent, but for college graduates 25 and over it is only 4.5 percent.

I wrote an extensive article on the effects of automation on the workforce. That article was in part inspired by Paul Krugman's column, Degrees and Dollars. In that article, Krugman makes reference to automation, specifically the automation of routine mid-range legal work, as being one reason that job creation even for those with college degrees has stalled. He points out that automation is now eliminating jobs that used to require college graduates, while low-end jobs like janitors and maids are still in demand because they can not be automated as easily (thus far). And that's not even bringing into the discussion the offshoring of work to places like Russia, Brazil and India, which also disproportionately effects middle-class college-level jobs. The point Krugman's article makes is that more education is not going to magically solve our unemployment problems. As he put it, there is a "falling demand for brains." Why should people go heavily into debt to attend college when the only jobs our economy is creating are sales clerks and short-order cooks? Message to the Arne Duncan: no "incentives" are going to matter unless that changes.

So what's with the incentives to get people into college? That's been our only job creation strategy since the end of the Second World War. The G.I. Bill made college affordable to everyone in the hopes of stimulating the economy, and the Vietnam war caused students to enroll as a way of avoiding the draft. Suddenly college became a requirement for every job, no matter how simple of routine. All this did was dilute the value of a college degree from an "advanced" level of knowledge to a "basic" level of knowledge. Now college became a requirement for everybody, from a secretary to a call-center worker. Due to this, colleges could name their price, and raised tuition every passing year far in advance of inflation. That money was plowed into sheer waste like administrative bloat, sports teams, oversize salaries for tenured professors and high-level administrators, and palatial buildings by famous architects. It also led to a major profit center for banks as going into debt for higher education became standard and students mortgaged their future salaries. College debt has surpassed credit card debt, and cannot be discharged even in bankruptcy. It has turned the U.S. workforce into indentured servants. Maybe this is the real reason for getting everyone into college.

We still have this idea that all you need to get a job is "more education," as if there are just so many jobs floating around that people are just too dumb to fill. There are already more educated people than there are jobs for them. We have no sufficient outlets for the amount of creativity in our society. There are all sorts of good ideas out there, but no money to implement them. What we have is a creative surplus.  There are all sorts of problems that require creative and innovative solutions: global warrming, peak oil, aquifer depletion, failing agricultural yields, pollution, urban sprawl, political conflicts, the list goes on and on. Yet our advanced knowledge and learning is not put towards the purpose of solving our real problems. This is the tragedy of our time. "More college" is not going to fix this. It goes back to our cardinal religion that the invisible hand will magically sort it all out. News flash: the invisible hand is invisible because it doesn't exist.

The truth is, our leaders have no answers and don't care. After all, they have jobs, and the power to make sure their friends and relatives do too.

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