Dean Dad has one plausible response to the latest installation of the “college is the next asset bubble to burst” argument, and every time I come across it I grind my teeth, think of ravens and writing desks, and go on. At least Glenn Reynolds is neither an economist nor an historian, or I’d accuse him of professional incompetence. Hint to all who might think he’s right: a college degree is not an excludable good that is the type normally resellable on a speculative basis. But at least I have material for this Out of Left Field Friday entry…
Some part of the argument regularly floated on this topic is an anticipatory taste of Schadenfreude: “I just can’t wait for the bastards to get their due,” with higher education standing in for all bastards here. As many people before me have pointed out, Schadenfreude isn’t a wise basis for public policy, and desire for it tends to blind one to analytical details. Most students are not in the type of tuition-dependent institution that Dean Dad rightly points out is the only part of higher ed vulnerable to a “oh, we can’t spend as much as we’d like” change in behavior. Millions still want a college education, and if they can’t afford private tuition or out-of-state tuition somewhere else, they’ll pop for a four-year university degree or start at community colleges.
At some level, the dissatisfaction with higher education leads to grumbling and sometimes structural changes in public higher ed (e.g., calls for accountability, today more about attainment than cognitive outcomes). Concerns about family costs have led to the changes in student loan policy. Grumbling has not yet led to changes in tax laws that would move the needle on athletic departments or large endowments. And given the labor-market queueing advantage of those with college degrees, you’re not going to see people leaving colleges in droves, or at least not “college” in the abstract.
In other words, this doesn’t look like an asset bubble to me in any way I’m familair with.