Frankly Signaling By Bryan Caplan

Within economics, the idea that education has a larger effect on income than productivity is vaguely right-wing. Why? Because economists realize that this premise undermines the textbook efficiency case for governments’ massive education subsidies.

Outside economics, however, the idea that education has a larger effect on income than productivity is vaguely left-wing. Why? Because non-economists realize that this premise undermines the legitimacy of the status quo – which they think of as “capitalism.”

For an excellent example, notice how much Thomas Frank’s latest Salon piece on education sounds like me:

Perhaps those universities exist to educate, too. Perhaps professors

here and there still concern themselves with whether students understand

epic poems and differential equations. But that stuff is incidental.

The university’s real purpose, as just about every modern college

entrance guide will confirm, is to make graduates wealthy.

Not too many employers really care what you studied there, or how well

you did; they only care that you got in and that you got a diploma, our

society’s one-and-only ticket into the middle class. Graduate from

college and you have a chance of joining life’s officer corps. Quit

after high school and it doesn’t matter how well you know your

Nietzsche; you will probably spend the rest of your days as a corporal.

Again:

…what those professors teach doesn’t matter. This is also why people who fake their college degrees

often lead long and successful corporate lives without being

detected–because the stuff you actually learn to get a liberal arts

degree isn’t important in the corporate world. Only the diploma itself

has real meaning in the marketplace, and only the marketplace has real

meaning in America.

The main difference between me and Frank: He never clearly addresses the question, “Would employers be more profitable if they ignored educational credentials?” My answer is no; while credentials do little to raise productivity, they genuinely signal it. Frank, in contrast, tries to straddle two conflicting positions. He’s eager to ridicule college degrees for their classist humbug:

Just think of the salutary effect such “classism” warnings would have on

the elite colleges themselves, where students are in a frenzy of

self-love brought on by the success of certain very rich

graduates–success which everyone attributes to college-certified merit,

of course.

At the same time, though, Frank seems to take the greed of the business community for granted. But if “college-certified merit” is really a myth, replacing overpaid college graduates with equally able but vastly cheaper non-graduates is a no-brainer.

I am a sincere fan of Thomas Frank. His What’s the Matter With Kansas? ably debunks the Self-Interested Voter Hypothesis. His writings on education ably debunk Human Capital Extremism. It’s unfortunate, then, that Frank is so eager to lash out at economics:

Maybe we can take it a step

further and string yellow “classism” warning tape around the perimeter

of the economics department, which in many places exists in order to

prove that what’s good for the wealthy is what’s good for the world.

If Frank studied economics more closely, he’d discover much common ground. Yes, most mainstream economists blithely equate “sitting in classrooms” with “acquiring job skills.” But plenty of economists – including Nobel prize-winners Michael Spence and Kenneth Arrow – dissent from this Panglossian consensus. Even more surprisingly, though, the economists most likely to share Frank’s doubts about modern education are the free-market economists he’s most eager to condemn.

Left-leaning non-economists and right-leaning economists have never been close. But when such different groups look at education and see similar ills, it’s time to calm down and listen to each other.