As the economy struggles, we are told that education will be the key to renewed prosperity. So, I was quite surprised to read in the New York Times about a mother who was accused of over-investing in her daughter's college education, by borrowing to send her to NYU. After graduation, they realized the daughter's employment prospects fell well short of the income she would need to pay off her loans.
The article left the impression that the family's resources would have been better spent on some other investment, perhaps real estate, or T-bills.
NPR ran a similar story about five graduates of Georgetown Law School, who were struggling to find jobs. This spring, I talked to parents at Harvard Law School's graduation, who said their children had no job offers and would keep looking after graduation.
Huffington Post is running an on-going piece titled, "Majoring in Debt."
My education was the opposite of what we see now. I attended public universities that were heavily subsidized. At that time, public universities served as equalizing institutions -- gateways to economic security. I like to tease older audiences when I speak about this, asking anyone in the room to guess how much tuition cost at the University of California in 1968. Former residents of California will shout out $250 per quarter. We all smile when I say, "No, the campus fee was $232.50 per quarter -- tuition was free." (My out-of-state tuition was another $500 per quarter). Then, I personally thank all former residents of California, whose commitment to public education worked to my advantage.
In contrast, my two children have consumed about $500,000 in college education. They each had very good undergraduate and post-graduate programs. My family is 100% totally dedicated to education as a household strategy to secure our economic security. I'm in, as far as education goes.
In 1978, Proposition 13 passed in California, breaking the social contract which had provided heavily subsidized education. The cost of college has shifted to families. Great public universities in California and elsewhere have faded in quality, and tuition has become a barrier rather than a gateway to economic security.
The New York Times article accepts this downward trajectory by arguing that the mother over-invested in the daughter's education.
Consider this pull-out quote from the Times article, first from the mother, Cathryn Munna, then the daughter, Cortney:
"All we needed to do was get this education and get the good job. This is the thing that eats away at me, the naivete on my part."
But Cortney resists the idea that this is a tale of bad parenting. "To me, it would be an uncharitable reading," she said. "My mother has tried her best, and I don't blame her for anything in this."
Reading these statements, my head wants to explode. Naivete? Bad parenting? Blame the mother? What, for investing in her child's future?
The problem was not the investment Cortney's family made in her education. The problem is our dangerously low level of job creation.
What happened to the jobs Cortney was counting on?
Investment creates jobs. GE invests billions in China. Microsoft invests billions in India. Boeing invests billions in Russia. General Motors builds more cars in China than in America. We are making millions of new jobs -- just not in America.
It is no surprise that our economy is hollowing out. Look at the huge global oversupply of cheap labor, combined with mobility of capital, rapid transfer of technology out of the country, and trade policies that encourage investment offshore.
Our immigration policies also hurt domestic students. If Cortney had graduated in my field, physics, she could compete for her entry-level job with about 700,000 foreign temporary high-tech workers on H-1B visas. If she wanted an internship, she could compete with an additional 40- to 50,000 foreign students in the Optional Practical Training program. Incomprehensibly, Congress is considering making masters degrees in science and engineering a straight-line path to citizenship. Foreign students already make up 60 to 70% of many graduate programs in science and technology. Adding citizenship as an incentive to foreign students will displace even more domestic students from graduate programs.
The best job training is a job.
Education is part of the answer -- I am all for education. However, education, training and re-training do not cause new jobs to appear, particularly when new investment is heading overseas.
To capitalize on our social investment in education, we will need to create new jobs in our domestic economy. That means new trade policies, new policies for investment, economic development, R&D, education and immigration, and we will need a national industrial policy to coordinate new growth.