The War on Normal People_The Truth about America’s Disappearing Jobs and Why Universal Basic Income Is Our Future
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The main reasons cited for dropping out are being unprepared for the rigors of academic work; inability to cope with the competing demands of study, family, and jobs; and cost. The worst part is that no school will refund you your tuition if you don’t get your degree. Millions of high school graduates show up to college or community college, rack up significant debt, and then don’t graduate. We are up to a record $1.4 trillion in educational debt that serves as an anchor on the futures of many of our young people.
Meanwhile, the New York Federal Reserve estimated the underemployment rate of college graduates to be as high as 44 percent for recent grads and 34 percent overall. One-third of college graduates are working in jobs that don’t require a degree. We pretend that a college degree will prepare one for the future and ensure gainful opportunities when that’s often not the case.
WHY IS COLLEGE SO EXPENSIVE?
This raises a central question: Why is college so expensive? There is no real measure of the effectiveness of college; it’s not like they give you the SAT again and see how much better you got at it. And yet, college tuition has risen at several times the rate of inflation the past 20 years, more dramatically than all other costs, including health care. Thousands of parents right now are sitting there thinking, “Gosh, sending two kids to college might cost half a million dollars.” The real income received by college graduates has declined even as the cost of a degree has gone through the roof.
Private university tuition is up to $50K per year at some schools, with public university fees rising to about $10K for in-state residents and $25K for out-of-state students, all before living expenses. Average college tuition has risen as much as 440 percent in the last 25 years. It’s little wonder that students are being forced to load up on government-provided loans to go to college.
It’s not that professors are getting paid more. It’s not even all the new buildings and facilities. It’s that universities have become more bureaucratic and added layers of administrators. According to the Department of Education and Bloomberg, administrative positions at colleges and universities grew by 60 percent between 1993 and 2009, 10 times the rate of tenured faculty positions during the same period. An analysis of a university system in California showed a 221 percent increase in administrators over a multiyear period even as the number of full-time faculty members only grew 5 percent. One report observed that “America’s universities now have more full-time employees devoted to administration than to instruction, research and service combined.”
I understand it. I’ve run a nonprofit. If you get more resources, you hire people to work for you. Everyone is well intentioned and pleasant. You do great work. An organization’s imperative over time becomes its own growth and self-maintenance. But in this context, it’s critical to bring education costs down for the sake of the public good in the age of automation.
At the high end, universities are spending a lot of money on making more money. In 2015, a law professor pointed out that Yale spent more the previous year on private equity managers managing its endowment—$480 million—than it spent on tuition assistance, fellowships, and prizes for students—$170 million. This led Malcolm Gladwell to joke that Yale was a $24 billion hedge fund with a university attached to it, and that it should dump its legacy business.
Yale and all other nonprofit universities are tax-exempt and receive millions in research money from the government, which means that American taxpayers are paying for and subsidizing the accrual of billions to both the universities and their endowments. A research group documented the cost of taxpayer subsidies for a community college student as between $2,000 and $4,000 per student per year, with that figure climbing to $10,000 per student per year at a typical state university. For Harvard the taxpayer subsidy jumped up to $48,000 per year, for Yale it was $69,000 per student per year, and for Princeton it was $105,000 per student per year. Being tax-exempt is more valuable the more money you’re generating.
This is a perverse use of taxpayer resources—it’s literally just helping rich schools get richer as opposed to spending money on education. One way to change this would be a law stipulating that any private university with an endowment over $5 billion will lose its tax-exempt status unless it spends its full endowment income from the previous year on direct educational expenses, student support, or domestic expansion. This would spur Harvard, Yale, Stanford, Princeton, MIT, Penn, Northwestern, and others to spend billions each year directly on their students and expansion within the United States. There could be a Harvard center in Ohio or Michigan as well as the new one they just opened in Shanghai. This would also induce investment from schools that approach the $5 billion threshold, such as Dartmouth and USC, who would want to stay below this level. Another possible approach would be to simply tax rich universities’ endowments and use the proceeds to subsidize students at community colleges and public schools, which has been advocated by at least one progressive group. One could also mandate that they spend a certain percentage—say 6 to 8 percent—of their endowments each year.
The trickiest part is to introduce cost discipline and discourage administrative bloat at universities. Capping cost increases now won’t be that helpful because the horse is already out of the barn. In 1975, colleges employed one professional staffer—admissions officers, information technology specialists, and the like—for every 50 students. By 2005, the proportion had risen more than 138 percent to one for every 21 students. Media coverage calling out administrative efficiency and bloat could be a useful galvanizer. But it will likely be necessary for the government to install benchmarks around the proper ratios of administrators to students and administrators to faculty and then give institutions time to move in that direction. The government subsidizes education through research money, the tax-exempt status of universities, and the provision of hundreds of billions of dollars of school loans—it needs to help rationalize all of this spending without blindly saying “more college will fix everything.” It won’t.
We also need to amend or ignore the U.S. News and World Report college rankings. At present, the rankings reward colleges for accepting more rich students by including measures like financial strength, student-to-teacher ratio, and alumni giving. Perhaps not surprisingly, Yale and Princeton admit more children from the top 1 percent than from the bottom 60 percent combined. Schools that admit more varied types of students or even operate more efficiently will be penalized in the rankings. Brit Kirwan, the former chancellor of the University of Maryland, said, “If some foreign power wanted to diminish higher education in America, they would have created the U.S. News and World Report rankings. You need both more college graduates in the economy and you need many more low-income students getting the benefit of higher education—and U.S. News and World Report has metrics that work directly in opposition to accomplishing those two things.” It’s insane that the rankings of a single publication shape the behavior and policies of dozens of billion-dollar organizations against the public interest.
NEW SCHOOLS
We have been grasping for more economical ways to educate people for years as the cost of college has escalated. There are high hopes for coding boot camps that can train people in coding and get them high-paying jobs in four months. Flatiron School and General Assembly took the world by storm with successful job placement rates as high as 95 percent. After some early success and an excess of investment, a number of the larger boot camps have recently closed, and the industry as a whole is consolidating. The 90 coding boot camps across the country produced about 23,000 graduates in total and have almost exclusively found success with immersive in-person programs. “Online boot camp is an oxymoron,” said Ryan Craig, an investor at University Ventures. “No one has figured out how to do that yet.”
Perhaps the most interesting application of technology in college education is the Minerva Project, a startup university now entering its fifth year. At Minerva, students take classes online, but they do so while living together in dorm-style housing. Miner
va’s online interface is unusual in that the student’s face is shown the whole time, and they get called on to ensure accountability and engagement. This “facetime” is even the main performance metric—there aren’t final exams. Professors review the classes to see if individual students are demonstrating the right “habits of mind.” Minerva saves money by not investing in libraries, athletic facilities, sports teams, and the like. Students spend up to one year each in different dorms in San Francisco, Buenos Aires, Berlin, Seoul, and Istanbul. Minerva is selective—the acceptance rate for the latest class was only 1.9 percent. Students socialize and build connections because they live and travel together. Minerva delivers learning but it also delivers the credentialing, network, socialization, and identity that students crave. And it does this at $28K a year, a little more than half of what similarly selective universities charge. I met a group of Minerva students in San Francisco last year, and they struck me as unusually self-determined and thoughtful.
One thing I love about Minerva is that it’s a new school. Ben Nelson, the founder and CEO, has made the point that if everyone wants to attend a great university, why don’t we create more of them? It’s truly odd that we’ve maintained a similar number of slots at selective schools even as admissions rates have plummeted to record lows. It may serve a school’s interest to remain small and selective, but it’s better for society if they were to try to expand. Dartmouth recently announced it may grow its entering class by as much as 25 percent, which is a step in the right direction.
REDISCOVERING IDEALS
The single best thing that universities could do would be to rediscover their original missions. What do you stand for? What should every graduate of your institution hold or believe? Teach and demonstrate some values. They’re not your customers or your reviewers or even your community members; they’re your students. They can tell if you’re primarily sitting there selecting them, trying to connect them to jobs, building your endowment for the future, and encouraging them to donate.
Harvard was originally founded to prepare clergy for their work. Now its main purpose seems to be to make sure that at least one banker a year used to play the cello. I spoke at Princeton a while back, and the students literally laughed when someone mentioned their motto: “In the Nation’s Service and the Service of Humanity.” I’m sure if someone had said it was “For the Wealth of Princeton” or “In Service of the Markets” they would have laughed, too, for different reasons.
In his book Self and Soul, Mark Edmundson, a University of Virginia professor, writes that Western culture historically prized three major ideals:
• The Warrior. His or her highest quality is courage. Historical archetypes include Achilles, Hector, and Joan of Arc.
• The Saint. His or her highest quality is compassion. Historical archetypes include Jesus Christ and Mother Theresa.
• The Thinker. His or her highest quality is contemplation. Historical archetypes include Plato, Kant, Rousseau, and Ayn Rand.
Edmundson mourns that these ideals today have been largely abandoned. The new ideal is what he calls “the Worldly Self of middle-class values.” To get along and get ahead. To succeed and self-replicate. The three great ideals live on in diluted form (e.g., spin classes and Spartan races for the Warrior, nonprofits and social entrepreneurship for the Saint, Ta-Nehisi Coates and the blogosphere for the Thinker). But anyone who pursues one of these ideals to their extremes in modern life would seem ridiculous, impractical, unworldly, and even unbalanced. I’m sure most college students would agree.
Personal qualities today are increasingly marginalized in favor of technocratic, market-driven skills. Instead, finance is the new courage, branding is the new compassion, and coding is the new contemplation. Schools today don’t believe it’s their place to teach toward the big questions. They can barely remember what ideals look like. If they can remember, there will be much more hope for us all.
CONCLUSION: MASTERS OR SERVANTS
I realize the vision I paint of our present and future challenges in this book has been a lot to take. The challenges of this era are massive. Automation-led job destruction has had a running start weakening our society. We feel paralyzed because we fear that our institutions and leaders are no longer able to operate and the solutions require many to act against their own immediate interests. We strive to make more people and communities capital-efficient and market-friendly even as the water level rises. The logic of the market has overtaken most of our waking lives. Normal Americans will increasingly suffer as the market grinds on and eliminates opportunities and paths to a better life.
A majority of the technologists I speak to are already 100 percent certain that the automation wave is coming. They skip to the logical end. The time frame is unclear, but it really doesn’t matter that much if it’s 5, 10, or 15 years. They’ve already gotten there in their minds. Most are ready to head for the hills.
I am fighting for my soul because I’m right there with them. I see it, too. I see the path from here to there filled with broken people and communities, and a society torn apart by ever-rising deprivation and disability. People will blame each other because they are locked in a fight for scarcity. Experts will squabble while the average person suffers. Families will deteriorate into dysfunction. Children will come of age with no real hope of a better life and with institutions selling them false promises.
The age of automation will lead to many very bad things. But it will also potentially push us to delve more deeply into what makes us human.
I spent the past six years raising a small army of idealistic entrepreneurs who have fanned out to 18 cities around the country. Dozens of our alumni have started companies ranging from a crawfish restaurant to a company connecting brand sponsors to Little Leagues to a chickpea pasta company to a company that helps make construction projects more environmentally friendly. We have helped create more than 2,500 jobs. It’s amazing. It’s inspiring.
It won’t be nearly enough. It will be like a wall of sand before an incoming tide.
I created a multimillion-dollar organization out of people and ideals. I have lived in Manhattan, Silicon Valley, and San Francisco while working in Providence, Detroit, New Orleans, Cincinnati, Las Vegas, Baltimore, Cleveland, Philadelphia, Pittsburgh, St. Louis, Miami, Columbus, San Antonio, Charlotte, Atlanta, Nashville, Birmingham, Denver, Kansas City, and Washington, DC.
I have been in the room with the people who are meant to steer our society. The machinery is weak. The institutionalization is high. The things you fear to be true are generally true.
I wrote this book because I want others to see what I see. We are capable of so much better.
There’s a very popular notion out there that ideas change the world. That’s wrong. People change the world. People making commitments and sacrifices and doing something about the forces that are tearing our society apart. Whom do we serve, Humanity or the Market?
Are we the opiated masses, the elites in our enclaves, careening toward a conjoined bleak destiny that we are powerless to stop?
Is there enough character and will and confidence and independence left to build the world and do what is required? Is there enough empathy? Capital doesn’t care about us. We must evolve beyond relying upon it as the primary measurement of value. Human Capitalism will give us the chance to define what’s important and pursue it.
I’m now a grown man with a family. I know the difference between talking about something and actually doing something about it. There is no hiding from what one knows. I even know the difference between writing a book about something and fighting for it. The choice is essentially to cut and run or to stand and fight. We must convert from a mindset of scarcity to a mindset of abundance. The revolution will happen either before or after the breakdown of society. We must choose before.
It will not be easy. We all have dysfunction within us. Darkness and pain. Contempt and resentment. Greed and fear. Pride and self-consciousness. Even reason will hold us back.
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Through all of the doubt, the cynicism, the ridicule, the hatred and anger, we must fight for the world that is still possible. Imagine it in our minds and hearts and fight for it. With all of our hearts and spirits. As hands reach out clutching at our arms, take them and pull them along. Fight through the whipping branches of selfishness and despair and resignation. Fight for each other like our souls depend on it. Climb to the hilltop and tell others behind us what we see.
What do you see?
And build the society we want on the other side.
Evelyn, thank you for all that you do for me and our boys. They will grow up to be strong and whole.
The rest of you, get up. It’s time to go. What makes you human? The better world is still possible. Come fight with me.
ACKNOWLEDGMENTS
Thank you to my editor, Paul Whitlatch, for being such an incredible reader and collaborator. And thank you to my agent, Byrd Leavell, for being a great friend and the best in the business. Belief in someone is a powerful thing.