The education system is so much more than merely an education system. In fact, it serves many different purposes. For example, in the early years, the education system acts as the parents when the parents are not present (especially in broken households – even more important). The education system also serves as an allocator of human capital while fostering a foundation for critical thinking and providing students with the tools necessary for the future. However, due to structural factors in the education system and the pace at which the world changes, there can be a disconnect between human allocation/tools needed and provided, leading to misallocation. This misallocation can cause 1) Students to obtain degrees they do not utilize, 2) Over emphasis on obtaining more education, 3) Over emphasis on attending more prestigious schools, 4) Meaningful student debt due to frictions and 5) A disconnect between the human resources/tools that are needed versus provided.
By looking at age cohorts, it is predictable to know the quantity of progression through the education system. For example, many people did not attend college at first. From the perspective of “herd threshold saturation levels,” most people had 2 year degrees or vocations, then 4 year degrees, then MBA’s, then PHD’s. As each layer of the education industry became more and more saturated, this is also when more and more families believed it was necessary for their children to attend the most prestigious colleges or obtain more advanced degrees as a means to get ahead (what parent doesn’t want the best for their child?). As an aside, vocations are looked down upon for no apparent reason. There is meaningful gap if the older generation does not teach the younger generation its skills in the trades as such a shortage will drive up costs for such skilled labor.
Yet, there is also a great chasm between the cost at prestigious colleges or staying in school longer to acquire more advanced degrees (college tuition in general is extraordinarily high) and what jobs were and are actually willing to pay due to many factors – Please refer to the following excerpts and reports:
“However, commodity markets are typically purely competitive in nature whereby the benefit goes to the industry or business that has the lowest cost structure and/or comparative advantage. Therefore, maintaining a low price for a commodity industry or business that does not have the lowest cost structure and/or comparative advantage will ultimately require continued increases in borrowing or taxes to support the differential between the relative price points for the commodity at each cost structure that equates to its Return On Investment (ROI) or less. A subsidy under such conditions will typically require cash infusions via government borrowing or taxes.
A subsidy should be utilized to spawn strategic industries and/or create new markets. Granted, this is supposed to be accomplished via the emergent property of markets. Moreover, businesses are innovations in of themselves, therefore, hampering the structure that produces businesses also hampers innovation – its not simply cutting red tape if the structure is the issue.”
“The basic underpinnings of the economic model are such that businesses start off small as a simple idea and, if successful, grow to typically become larger, incorporated businesses that are either private or public in nature with the residual benefit accruing to the owners (not necessarily the founders.) Moreover, at various stages of development when seed or growth capital is needed in excess of a company’s revenue, the option exists to attract capital via the private or public markets (most deals are done in the private markets). Yet, it is the aforementioned structure in and of itself that can stifle job creation and innovation.”
“Initially, globalization caused many commodity-like industries to move to lower cost regions of the world because they had a comparative advantage in labor costs, some of which was unethical from a human rights perspective. That being said, this allowed the United States consumer to maintain purchasing power because those imported goods were now cheaper than what could be made domestically. This needs to be taken into consideration with the fact that wages have not increased meaningfully for consumers since the 1970’s adjusted for inflation. Although, it should be noted that the wage declines are also due to jobs transitioning overseas and workers being unable to find equal-to-or-higher paying jobs as well as a decline in workers’ bargaining power as Corporations are viewed as entities and employees have merely become invariable costs. Moreover, the hyper-globalization phase is commiserate with China’s rise to prominence.”
🔺 Pace of Hyper-Globalization as Analog for Automation, Forced Displacement, Social Safety Net, and Job Placement/Transitions https://internationalcapitalmarkets.org/2019/10/13/%f0%9f%94%ba-pace-of-hyper-globalization-as-analog-for-automation-forced-displacement-social-safety-net-and-job-placement-transitions/ via @Diamond1_CEO
🔺How the Economy Works, New Credit Creation, Borrowing vs. New Credit Creation, Velocity of Money, Real vs. Financial Economy, & The Catch-22 of Leveraging/De-Leveraging https://internationalcapitalmarkets.org/2019/10/23/%f0%9f%94%bahow-the-economy-works-new-credit-creation-borrowing-vs-new-credit-creation-velocity-of-money-real-vs-financial-economy-the-catch-22-of-leveraging-de-leveraging/ via @Diamond1_CEO
🔺Part 1: Subsidies should Spawn Strategic or New Industries, Not Support a Below-or-Equal to Cost/Comparative Advantage Market Price for Commodities https://internationalcapitalmarkets.org/2019/10/11/%f0%9f%94%bapart-1-subsidies-should-spawn-strategic-or-new-industries-not-support-a-below-or-equal-to-comparative-advantage-market-price-for-commodities/ via @Diamond1_CEO
🔺Businesses are Innovations in and of Themselves and Job Creators https://internationalcapitalmarkets.org/2019/09/12/businesses-are-innovations-in-and-of-themselves-and-job-creators/ via @Diamond1_CEO
🔺New Model: Impacts of Forced Displacement and Built-In Solution https://internationalcapitalmarkets.org/2019/09/03/impacts-of-forced-dispacement/ via @Diamond1_CEO
🔺The 11 Factors to China’s Rise to Prominence on the World Stage https://internationalcapitalmarkets.org/2019/08/21/understanding-chinas-rise-to-prominence-on-the-world-stage/ via @Diamond1_CEO
The unified argument from companies that freshly minted college students have a lack of experience (i.e. lower pay compared with student loans), in and of itself, would then completely negate the need to obtain more advanced degrees or attend the most prestigious schools in lockstep (no I am not advocating against receiving an education). Moreover, as everybody is forced into the same education dynamic, I find it hard to believe that most 18 year old students know exactly what they would like to become once they enter college. The process of self-discovery is absent as well as trial and error. Or, said differently, the process of trial and error is quite expensive.
The point is there are larger top-down, market and macro oriented factors that can cause jobs to leave either permanently or temporarily including jobs moving overseas, M&A consolidation, and automation. When provided with the proper social safety nets to fill-in the gaps, new jobs and industries are supposed to be created which create greater employment opportunities than those lost. Yet, within this dynamic are students that go to school not necessarily based on the above aforementioned factors, but based on their own individual interests and/or circumstances. A disconnect among these interrelated parts can create a build-up in student debt and misallocation of human resources as a result if the educational system is not as fluid with the macro and market factors.
🔺 New Model: Top-Down/Bottoms-Up Human Resource Allocation Model https://internationalcapitalmarkets.org/2019/10/28/%f0%9f%94%ba-new-model-top-down-bottoms-up-human-resource-allocation-model/ via @Diamond1_CEO