4. VI 2016

But thought is the slave of life, And life times fool, And time, that takes survey of all the world, Must have a stop[1].

I remember when growing up used to be fun. Youth was claustrophobic. We were looking forward to getting older and becoming adults, moving out of our parents homes, living alone, making decisions about life, owning our mistakes, moving in with our girlfriends, finding jobs, becoming financially independent, paying bills with the money we earned, partying, having kids, and generally getting engaged with the world. The future was full of promises. There was nothing we couldn’t do, no dream was too grand. The whole world was ours. We lived without restraint. The future was our collateral and there was no limit to how much it could deliver. Life was wonderful.

All of this has changed rather abruptly in the second decade of this century. For millennials, life became complicated, heavy, full of problems without solutions; financial independence illusory, rents unaffordable, moving in with parents rational. Insurmountable obstacles were everywhere. The future holds no promises, only threats. It has become a compromised collateral and growing up one of the most highly overrated experiences. Entering adulthood is now like entering a latrine: The first reaction is a shock, and then you get used to it. Life became a bitch.

The front page of the May 30 issue of the Newyorker gives an eloquent summary of this state of affairs.

Two consecutive generations of graduates from the same college

Every year around this time, graduation ceremonies remind us of what the future has become. Every new generation is facing an increasingly more precarious road ahead. Every year we wonder if the best days are behind us. And every year we ask the same wrong question: Are the gains of the last 150 years real, when, instead, the actual question should be: Are these gains permanent.

Every year, young graduates have to revise down their expectations of life and adjust to new realities and accept whatever job they can get. And yet, everyone keeps going to college, although tuition has been skyrocketing and it has become increasingly clear that more education does not give one more prospects of getting a good job. However, education appears to be the ONLY chance of getting any job. But, what kinds of jobs are we talking about? Collecting leaves and mowing loans on campuses of the very same universities which granted students their degrees in the previous year? New York City is flooded with waiters and baristas with graduate degrees from elite private schools who work for a minimum wage and who owe over a quarter of a million through student loans on which they can never default.

Commencement speeches have become structured increasingly more along the lines of worn out clichés peppered with some forms of lightweight humor and anecdotes aimed at anesthetizing graduates against the bleakness of reality rather than attempting to invigorate their expectations and create hope. Several years ago, Bard College invited Ben Bernanke as a commencement speaker. The man who had been at the helm of the Federal Reserve in the times of epochal crisis, and who had access to considerable insights, had essentially nothing to say about the future in his message to new graduates. Not good, not bad… Nothing! Instead of using his privileged position to enlighten the audience with new visions, raise their expectations and send them thus prepared into the world, his entire speech revolved about how difficult life was 100 years ago, how then we were worse off than today. Really? Was he reluctant to tell them the truth because it was too depressing or was he just being cynical? Or he didn’t know better? Hard to believe.

Is there any evidence, which is not faith based, that suggests the next 20 or 50 years will lead to a better quality of life as recent history suggests? The answer to this question has become very much sample dependent. If we take the first 15 years of the 21st century as a base, the first seven have been in no way indicative of how the subsequent eight would feel. This is in sharp contrast with the pattern the developed world has experienced in the second half of the 20th century: the 60s were better than the 50s, 70s better than 60s (maybe not culturally, but economically), 80s better than 70s, etc. The very same system that had denied nobody anything in the past, now denies everyone everything.

Credentials inflation

The way education is functioning these days has changed dramatically. More and more universities operate like businesses. The aim is to attract as much money as possible. Students are treated as clients and incentivized by grade inflation. Significant sums of money are spent on infrastructure aimed at attracting affluent foreign students, new buildings, studies abroad, networking… Many state schools have luxury condos built on campuses. Acceptance of foreign students has increased to the point that they are crowding out domestic applicants. An emphasis is shifted from academics to marketing and expansion in administration. Around 80% of new hires are in administration. This is financed by diluting the academic quality: About two thirds of academic staff consists of adjuncts and only one third permanent professors. Universities operate like Cartels. There is very little price variation between colleges of different ranking. Nevertheless, college attendance has never been higher. In the last 30 years, the number of Bachelor’s degrees per capita increased by 25%, masters by 90%, PhD by 40%.

What do new graduates face? Two things dominate the post-graduate landscape: precarious job market and enormous student debt. The price of education has grown so much that it makes little or no sense. There are a countless number of tenured professors who are still paying their student debt. Moreover, admittance to a good college requires, almost as a rule, networking that is assured only by going to a “proper” (and inevitably expensive) private school, admittance to which is conditioned on attending a special pre-K etc. By the time one graduates from college, families and individuals have accumulated over half a million dollars of debt per child (after tax), and for most of the college graduates the realistic prospect is a $40K starting salary. So, student debt becomes perpetuity and life reduces to serfdom.

Education is facing credentials inflation: more education buys less opportunity. In the last three decades tuition in the US has risen about three times faster than living costs. The figure shows the history of college tuition in units of 1978 costs. In order to put it in the right economic context, the costs of living and healthcare, which have changed since then, are shown on the same graph.

Compared to 1978, costs of living have increased roughly 3.25-fold; medical costs inflated roughly 6-fold; but college tuition and fees inflation approached 10-fold. Thus, education costs have increased by about three times faster than the costs of living.

As much as this number looks extreme, it is a logical consequence of developments that took place in the last two decades[2].

Educational degrees are a currency of social respectability, traded for access to jobs. Like any currency, the prices inflate when increase in monetary supply (money printing) chases an ever more contested stock of goods. In our case, an increasing supply of talent/qualification/educational degrees is chasing an ever more contested pool of upper-middle-class jobs.

So, while there is an oversupply of degrees, people are willing to pay the high price because jobs are scarce. The availability of funding in terms of student loans, which has also gone into overdrive, is a mid-wife, but not a cause of this process.

At the root of this anomaly is, in fact, the ongoing process of dismantling of the welfare state. The idea of a welfare state in capitalism is to broker the meeting between capital and labor. Its role is to make sure that capital is funded and that labor is saleable, i.e. that it is healthy, trained and generally ready to endure the rhythms of the factory floor. Without externalizing those costs, capital would be unable to operate profitably, thus, public healthcare, housing and education. The reason for dismantling the welfare state is that it is no longer needed: there is increasingly less need for labor, and in order to keep taxes low, welfare costs need to be severely reduced or completely eliminated. Instead of public housing, we have mortgages, instead of healthcare, private insurance, instead of public education, student loans.

The ongoing transformation of education is a consequence of this transition from public to private deficit spending, which has been both a direct cause of the current crisis and a core reason behind the inability to recover from it.

Future as an existential impossibility

We are born, we die. Everything in between is subject to interpretation[3]. Our time between birth and death is structured by desires — not their fulfillment, but rather a desire to continue to desire. And, in order to sustain the capacity to desire, our lives need a virtual layer. A loss of that capacity results in an ultimate state of melancholia, libidinal disinvestment and spiritual coma. In modernity, the future has provided the interpretive grid responsible for the maintenance of this virtual layer. For almost two centuries, the future has been perceived as a better place. All political systems, from democracy to socialism, to dictatorship or anarchism, shared the belief that, irrespective of how dark the present might appear, the future is bright.

This has changed radically and abruptly in the last years. The future has become a crowded place. There is not enough future for everyone. No one believes in it any more. But, without belief in the future, the present cannot take off, and without the present there will be no future.

[1] Shakespeare

[2] Randall Collins, in Does Capitalism Have a Chance, Oxford University Press (2013)

[3] Nora Ephron