The wife just returned from a presentation on Will The Bubble Burst in Higher Education? at a national conference of education counselors here in Denver.
The message? A bubble is an asset that is irrational, overvalued, and whose price cannot be sustained. But economists have found that the return on a college education is 10% per year. Since there is still value over a lifetime, even after you subtract the massive debt each student takes on, well golly gee! There is no bubble.
I spent the afternoon lounging in our hotel room, reading the latest Stephen Hunter novel, which I highly recommend. I think my time was better spent, don’t you?
Very few of those with a vested interest in living off a bubble will see it until it’s too late. Being both a libertarian and a teacher, I see a lot of things my fellow teacher don’t. Sometimes That causes problems. Sometimes, though, being able to ask them six or seven years later “did you buy that gold I recommended?” makes the friction worth it.
The fact that college graduates now are almost required to borrow obscene amounts of money guarantees that there is a bubble made up of people with college degrees and huge debt, but no value. Isn’t that the definition of a bubble?
dot.com bubble = tech companies with huge numerical values but no REAL assets or value.
housing bubble = buildings serving as shelter that had huge numerical values, but not actual values that were anything close.