Saturday, April 2, 2011

On The US Becoming a Nation of Takers, Not Makers

One of my responsibilities as one of the Graybeards at work is to mentor new grad engineers.  I usually call them my "padewan learners" as I train them in the ways of the force.  It's not unlike the Jedi/padewan relationship.

As you might imagine, the college graduates in engineering are among the top few percent of the high school class that produced them.  Add to that the fact that our company won't hire new grads unless they were in the upper quintile of their college class, and you can realize it's a rather elite group.  I don't mean to dis their peers that went on to med school, or pharmacy, accounting or other things; certainly dear son (biologist/entrepreneur) and dear daughter-in-law (research biochemist) are in the same group.  Except lawyers, we can all dis them.   

Increasingly, college students that can do the work required to enter engineering or other highly-skilled occupations are choosing to work in other fields.  A decade ago, the lure of big money on Wall Street attracted many; today, it's the lure of a secure Government job.  One of the problems we have is that these top few percent of students see that if manufacturing industry jobs are declining in availability (as percent of jobs), and ask themselves why should they do the work necessary to go into manufacturing. 

This is doubleplusungood.

First: all of the points that Stephen Moore makes are good.  This is a bad trend for society as a whole.  Government workers live off the wealth created by the private sector, so they're not a good investment:
  • While the loss of many manufacturing goods can be traced to productivity improvements, government doesn't improve productivity. 
"Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity."  This graph from the Cato Institute and American Thinker demonstrates that we pour money into K-12 education and get nothing for it. 

  • "The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. "  I've only taken one class with a traffic engineering aspect, and it was enough to know that mass transit won't work in most situations.  It requires a certain population density to work, one more in line with small Euro-cities than our spread out suburbias.  High speed rail is a solution in search of a problem.
  • "Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. "
Second, it's bad for the other places that would hire those graduates, including where I work.  Despite the recurring bleat that "we don't manufacture anything in America", I've been working in a series of manufacturing companies for around 35 years.  If the top students don't think there's a future in manufacturing and choose government work, the remaining manufacturing companies are in trouble.  Then there will be nobody making enough to pay the taxes to keep them employed.  Then everyone is in trouble. 

I think this graph (from Wikipedia) says a lot.  Increasingly, college costs are out of line with the cost of living, and with what you can earn based on that degree. 

There's an old saying that productivity doesn't improve in everything: you still need four people to play a string quartet.  They extend that to say that you still need one teacher to some small number of students and the productivity gains due to new technologies can only be marginal.  In a word: bullcrap.  If the cause was that the number of teachers needed per student had to stay constant, the cost of the teachers would track inflation, not exceed it by a factor of 3x, as in this last plot.

These curves bear the hallmark of a market that isn't free.  Medical costs are rising faster than inflation because the free market isn't allowed to work; the rising cost of education shows strange influences, too.  Where the medical costs are closest to free market; things where people pay their own money like plastic surgery and Lasik/RK, prices have not risen at twice the cost of living.  In the case of college costs, with scholarships and federal student loans picking up much of the out-of-pocket expenses, coupled with a perceived need (that doesn't seem to match the market), people seem willing to bear any debt to get their college degree.   A college degree is turning into a bad investment for people who aren't intending to go into engineering or one of the professions, and I never thought I'd say that.

Edit:  1815 EDT  I forgot a title! 


  1. Hey Greybeard, I'm not a High School Graduate guess what my annual gross is(3 figures)and I work in the private sector. I worked my way from the bottom up, payed for my own Professional Education for Licences and Endorsements,and have I believe a somewhat natural talent at what I do. At My Job Sites I am the H.M.F.I.C.

    I did this with hard work and determination.

    I still like what I do and sometime enjoy teaching younger people a couple of details about the things to be watching out for and what they are really seeing when they see it.

    It's nice to see someone refine their skills and find their Rhythm with Machine and Nature.

    For many people college is a waist of time, especially in a couple of the Baser Trades, to much education closes the mind the skills that Just Have to Be Learned by Experience.

    I have seen a couple of USN Ensigns and Lt.Commanders along with a more than a few of the Maritime Academy Grads that should have never stepped foot upon a vessel that they would be operating themselves.

    Dennis (U.S.M.M.)

  2. Dennis - thanks for an excellent lead in to part 2 of this article. In a little while. The outdoor range is calling...