Bryan: If we were to actually get every kid to graduate from college, you would need a
college degree to be a janitor.
Nat: Bryan Caplan, welcome to AEI.
Bryan: Thanks so much for having me
Nat: So your book, "The Case Against Education: Why the Education System Is a Waste of Time
and Money" makes you sort of a popular guy, maybe with an unpopular argument.
How's the reception so far?
Bryan: Well, it's not that unpopular.
So, maybe because the book's only 20 bucks on Amazon I've been moving a lot of copies,
and I've been getting some very fair reviews.
People criticize me, but at least they criticize me for what I said, so I've got no complaints.
Nat: Okay, that's fair.
All right, well, let's jump right in.
So, you start off in the book and you talk about sort of three things that education
communicates to employers, three perspectives.
Can you sort of break those down for us?
Bryan: Yeah, sure.
I say it's a package of three big traits.
So first of all, intelligence, such that your education shows how smart you are.
Secondly I say it also shows how hardworking you are, because you could be really smart,
but if you're really lazy you're not gonna be able to finish high school, much less college.
And then last and least obviously, I say it signals conformity.
It shows that you are willing to submit to social expectations, that you're willing to
be an obedient little sheep, right?
Which, of course, our society needs obedient little sheep a lot of times, because if everyone
were a free thinker and free spirit, how would anything get done?
Nat: Hold on a second, you've got this all wrong.
So, you know, I learned in graduate school this human capital theory.
Right, human capital theory?
We go to more years of schooling, and we get more benefits.
And that, you know, when I go out on a job market, they're gonna say, "Yeah, that guy's
got more years of school," and so that's why we go to school?
Am I wrong?
Bryan: Well, what you've said isn't literally wrong, but, you know...
So, the whole idea of human capital theory is that education pays because school pours
useful skills into you.
So you actually learn how to do your job better.
Nat: You learn, right.
Bryan: And I don't deny that occurs sometimes.
So, literacy and numeracy are very useful skills, and if you go to school to learn computer
programming or something like that, then you really are emerging as a more skillful person
and it makes sense for employers to prefer you.
But I still say there's a lot of education where they aren't teaching you very much,
or at least it's not very relevant to any job you'd ever do, and yet employers still
seem to care.
Like, why do employers care if you failed your foreign language classes even though
the people who got A's don't speak the language either?
Right?
And I say that reason is that when you do well in school, you are sending a message
to employers.
You're saying, "Look, I'm the kind of person who has the package of brains, diligence,
and conformity to go and jump through all these hoops, so at least don't throw out my
application when I apply for the job."
Nat: Right, so in your book you say, let's see, I have it in here, you say, "Signalling,"
which is this theory around signalling "has been kept in the ghetto, and this book's goal
is to first emancipate it from the ghetto."
So why's it been in the ghetto?
Bryan: Right, so there are multiple Nobel Prize winners that have worked on this idea
that part of what or why education pays is just that you're impressing employers.
You're getting certified, you're getting a stamp on your forehead, you know.
There's one economist Michael Spence, he really got his Nobel prize entirely for this idea.
But the strange thing is that people who look at the real world, right, so in what we call
empirical research, those people who study actual schools, actual education, the actual
labor market, have never been very fond of this idea.
And they treat it, yeah, yeah, sure there is this idea but we're just gonna focus on
going and measuring the payoffs for education.
And it really bugged me, because on the one hand there's this explanation that seems to
make a lot of sense, but the people looking at the real world don't talk about it very
much.
And I wanted to go and bring theory and reality together, and that's really what this book
is all about, where I try to say, "Look, there's actually a lot of empirical evidence, a lot
of evidence in the real world, that signalling is a big part of what's going on in education,
it's a big part of the reason why it pays.
And actually there's a lot of facts that you really just can't explain without signalling.
If you didn't believe in signalling, the world would just make no sense at all."
Nat: All right, so we have a human capital theory which says kids are learning more and
that's why education's valued.
And then we have a signalling theory that says, you know, we have these sort of credentials
basically, it hinges on credentials.
And those credentials are signals that folks who are hiring in the labor market say, "Well,
you know, I see that signal so I know this is quality."
And these aren't independent, and it seems like your argument is certainly a step beyond
signalling.
It's about empty signals.
Is that fair?
Bryan: Well, I mean, so, if you convince people that you're great by learning a lot of useful
skills then human capital and signalling would be almost the same thing.
But one of the big puzzles that I talk about in the book is, why do we spend so much time
learning subjects that almost no one uses on the job?
Almost no one has a job that uses history, or social science, or art, or music, or foreign
language.
Right?
I mean, just think about all the classes that you took where you never used them again after
the final exam.
And yet employers care.
If you were to say, "Look, I only did the classes that I thought were useful, now give
me a job," most employers would not say, "Oh, good thinking."
Instead they would not even be talking to you because you application would be in the
trash.
And signalling can explain what's going on here, which is even when you study something
useless, something that you absolutely do not need to know on the job, still the fact
that you did it and you jumped through these hoops shows a lot of good things about you.
And especially it shows that you are a conformist person, that you went and followed the norms
of our society.
You did what your parents, teachers, and peers all said everything has to do.
Because if you're an employer do you wanna hire someone who doesn't do those things?
I'd be nervous.
I mean, I have a lot of nonconformist friends.
I love them, they're fun.
But if I were hiring people I would be scared to hire those friends, I'd hire the boring
people.
Nat: Yeah, I mean it seems like a safer bet to hire somebody who's got the credential
than doesn't.
But you also make some serious claims about, you know, there's just a lot of waste.
So paint this picture for us.
Where's all this waste, and about how much of schooling is wasted?
I mean, the subtitle of the book is "...The Education System Is a Waste of Time and Money."
Bryan: That's right.
Nat: Show me.
Bryan: So my preferred number is 80% of the payoff for education is signalling.
And it's basically just a waste of social resources.
It doesn't mean it's a waste for the individual.
The individual gets to look good and outshine the competition.
But is it the kind of thing that it makes sense for taxpayers to encourage?
And that's where I say no.
And there's a lot of different ways that you can come at this, and I say all of these different
ways point in the same basic rough ballpark of a number.
To me probably the most impressive evidence is, let's take a look at the amount of education
that you need to get a job, not to do a job, but to get a job, to be considered worthy
of employment.
Since 1940, the amount of education that you need to get one and the same job that your
dad or grandfather had back then has risen by about 3 years, almost a full degree.
Right?
So in 1940, there'd be almost no waiters or taxi drivers or cashiers with college degrees.
It would have been almost unthinkable back then.
Now these are very common jobs for people with college degrees to have.
All right?
And you say like, what's going on?
I say what's going on is that the more education the workforce has, the more you need to impress
employers.
Like, when almost nobody has even a high school degree, then if you have a high school degree,
employers say, "Look at this person, this is management material."
Now no one looks and sees that you've finished high school and says management material.
Now you might need to have not only a college degree, but an MBA.
So, you know, this is called credential inflation.
It just means that, you know, like, aside from the fact that jobs have changed...that's
happened too, right?
So there are some more intellectually demanding jobs, but that only explains a small part
of what's going on.
Most of what's gone on in the economy is that you now need a lot more education in order
to be considered worthy of the very same jobs that people used to have in the past.
Nat: Right.
So I hear a lot of folks saying, you know, "We have this new economy.
It's a new economy.
It's the future of economy, so kids are gonna need more and better education, and newer
education."
Wrong?
Right?
Bryan: Well, it'd be nice if they were being trained for the new economy, but I don't see
signs that schools are doing much of that at all.
So again, the education system is normally extremely backwards-looking.
Teachers basically teach you the same things that they were taught when they were students.
Their teachers did the same thing to them.
If you look at the curriculum, the curriculum has barely changed over time.
There's a little bit more time for computer science, although, you know, like, as far
as I've heard only Washington State lets students do a computer language instead of a foreign
language, all right?
So, you know, there's almost no adaptation to what the modern economy is, or is going
to be.
Before, you know, you say, like, "Wow, like, how can we even get by with this education
system?"
I say the answer is that almost all of the actually useful job training happens on the
job.
The main thing that you do with your education is not actually get ready to do a job.
The main thing you do is convince employers that they could train you in the actual job
that they want you to do.
Right?
And you know, of course you do learn some useful things in school, and there are some
majors that are more vocational.
So like, nursing, or medical school, or engineers, or computer scientists, but it's always important
to remember that these are exceptions and that most students are doing majors in fields
where there's almost no jobs at all.
And then you're like, well, then where do they get jobs?
They get jobs in something outside of their fields.
So, like, you know, every year we graduate more new psychology BAs than there are jobs
in psychology.
Every year we graduate more communications BAs than there are jobs in the entire entertainment
industry.
So it's not like people in psychology and communications never get jobs.
They just get a job where the employer says, "I want someone with a college degree in something
or other," right?
And the reason why the economy works is that when you finally get that job, then the employer
says, "Huh, well, did you learn how to do videography while doing psychology?
No?
Well, that's unfortunate, but none of your competitors know that either.
Now let's go into it."
Or maybe you did an internship where you did, and then like, fine, you have an internship,
that's useful actually.
Nat: So, let me ask you this, does this system work for employers, and does it work well?
I mean, if I'm on the hiring side, you know, the demand side of the labor market, is it
working?
Bryan: Well, here's the main thing.
There's about a trillion dollars of government money in favor of the status quo every single
year.
So I wouldn't say the current system is passing the market test by any stretch of the imagination.
It's propped up by enormous subsidies, and if government spent a lot less, there might
be very different systems of figuring out who's good for jobs, who's bad for jobs.
There'd probably be a lot more apprenticeships, there'd probably be a lot of other kinds of
certification.
But at the same time, I don't see any sign that employers are really looking around very
hard for something else.
You know, there are stories where people say, "Well, employers wanna do other things but
it's illegal."
I did look into this idea in the book.
Like for example, a lot of people say, "Employers would do IQ testing for hiring if it were
only legal, but since that's illegal they do college instead."
So here's the striking thing, when I actually, you know, did research on this, found out
that IQ testing is like 98% legal, 2% illegal, 98% legal, and the amount of actual punishment
that you're likely to receive in the legal system for doing IQ testing for hiring is
peanuts compared to the cost savings.
So I have to say that I don't think that employers are eager to switch to something else.
And you know, my story for this is that if you were to go and say we're hiring people
that dropped out of high school but they have high IQs, I think you would get a certain
kind of really smart person, namely lazy, non-conformist, defiant smart people who are...
Again, I love them.
A lot of these are my favorite people in the world, but I don't wanna hire them.
Nat: Yeah, you don't wanna depend on them.
Bryan: Yeah, I don't wanna depend on them.
I want, you know...
Well, I can depend upon them to be ready to go to a concert on a moment's notice.
Say, "Hey, buddy.
Hey, smart, lazy friend, do you wanna go to a concert?
Free tickets."
"Like, dude, I'm up for that."
So yeah, so those, you know, like...
Nat: Depending on them to get your taxes done by April 15th is a different question.
Bryan: Exactly.
Then, I want the boring person.
Nat: Sure, I understand.
So let me ask you a question.
It's you're a little bit all over the map here on which level of education you're talking
about.
It sounds like you're talking about higher education.
And I know that a lot of people would say, "Yeah, higher ed wastes a ton of money."
So, but, you know, where does it stop?
I mean, high school certainly is always a good investment, right?
Bryan: Well, for the individual, then generally it pays very nicely.
But you know, for society, I don't think so.
So again, think about all of the time that you wasted in high school, all the useless
requirements, things that you had to do in order to graduate that you're never going
to use again.
I mean, it's just very striking if you make an inventory of all the time that you spent
in high school studying subjects that you will never use after the final exam...
You know, like, massive foreign language requirement, two or three years, and yet almost no one
in America learns to speak a foreign language very well in school, all right?
So you know, just like history, civics, art, music, these are required classes to an insane
extent, and yet if you don't jump through these hoops, then you're not going to be allowed
to advance, you're not gonna be allowed to get into college, and you're cutting off a
lot of opportunities for yourself.
So you know, like, one of the other things that I say in the book is it'd be much better
if kids, especially kids who just don't like school...there are a lot kids like that.
There are a lot of kids who are miserable, bored out of their minds.
You know, if kids like this could instead go and do vocational education, or they could
do apprenticeships and be prepared for an actual job...
You know, it's very striking that there are countries like Germany and Switzerland where
kids who just don't like school, never have, when they're 13 or 14 or 15, they can go and
do vocational education.
Nat: But there's...
Bryan: Yes?
Nat: But we've got this educational credential arms race.
And with that background, right, for these kids, it's not a rational decision for them,
right?
I mean, the rational decision for them would be, look, if you drop out of high school,
things are not gonna go very well, am I wrong?
Bryan: So, if you drop out of high school and do nothing, then you're totally right.
If you quit high school and learn to be a plumber, especially if you're the kind of
person who probably was gonna quit high school anyway eventually, then I think there's actually
very good evidence that the vocational track is a good idea for you.
So the main idea in my book is just that taxpayers are wasting a lot of money encouraging this
rat race.
But I do also have this side idea that even in high school, there are a lot of kids, maybe
even a third of kids or half of kids, who would actually be even personally better off
if parents would just listen to them, and teachers listen to them, and say, "Look, you
don't wanna do college.
College is not the kind of thing that in any way inspires you.
How about we go and teach you something else?"
And especially, you know, like, you have people say, "Well, so you get tagged as a plumber
at 13?"
I say, "How about this?
How about when you're 13, if you don't like school, we introduce you to 20 different occupations,
2 weeks as a plumber, 2 weeks as an electrician?
Just try a bunch of things.
Is there anything you like and are good at at all?"
right?
And I think there's a lot of 13-year-olds who would jump at that chance because, you
know, like, they've spent years of their life just being told, like, you're a C or a D student,
you're not good at this stuff, you shape up.
Nat: Yeah, interesting.
So we've had actually the absolute polar opposite of that as far as sort of the dominant K-12
theme over the past decade.
Bryan: College for all.
Nat: College for all, right.
And we should design our education system to get everybody to graduate high school and
everybody to go to college.
Bryan: It sounds great.
Nat: How does this play?
I mean, how does this play out?
How do you see this playing out?
If we were to succeed in that, what would we have?
Bryan: If we were actually to get every kid to graduate from college, you would need a
college degree to be a janitor.
You would need a college degree to be a waiter.
And it would no longer be in any way impressive to employers, and so employers would then
say you need to have a master's degree, or a PhD or a professional degree to be worthy
of even being our intern, right?
So, I mean, you know, like, in a world where everyone has a college degree, then garbage
men have college degrees, then, you know, janitors have college degrees, this is a crazy
system.
You know, it's never going to happen and we're not even...we're nowhere close to it.
Just because even though we...
About 70% of graduating seniors go on to college, but the actual rate of completion is much
lower.
Nat: Yeah, right.
Absolutely, I mean, you know, even two-year college we're having two-thirds of our kids
not making it through.
You know, and there certainly is a lot of ways...
Let me ask...let me push back on a couple of things.
Bryan: Sure thing.
Nat: So when I was in graduate school, I learned hierarchical linear modeling.
I'm just gonna use it as an example because I TA'd it for several years, I taught it as
an assistant.
And, man, you know, I really knew every different way to run it.
Today, I need to go back to my textbooks and sort of review some of my notes and sort of
brush up on that.
But in the book you use lots of examples that are sort of akin to that.
Now I'd say, well, I would not be able to go back and do HLM today without some review,
but I can go back and do it.
So in the book you use examples like, well, a lot of kids could never pass an algebra
test now.
And my question is...
Bryan: Or adults, yeah.
Nat: Or, yeah, adults.
The test they could have passed when they were kids.
So my question is, isn't there some value there that isn't being captured when you say,
well, we've lost the discrete skills we had in tenth grade?
Bryan: There's a small amount of value.
So it's definitely true, any educational psychologist will tell you it's easier to re-learn than
to learn the first time around.
But so much of what people forget is stuff they never use.
It never comes up in adult life, and that's why they forget it, actually.
If you were...if you periodically brush up and refresh your memory, then at least you
retain the basics.
And yes, it remains useful, but stuff I'm talking about is really stuff that, really,
adults virtually never use.
But what's striking to me is that out of adults who actually went on to calculus as high school
students, only about 20% even use algebra on the job right now.
So, you know, it's not like that we're training people something so that they can re-learn
it at each point where it becomes appropriate.
Most of it is just stuff that you will never encounter again after the final exam.
That's why we forget it so readily is that we have no additional practice because what
was taught was not really well-thought-out preparation for adult life.
Nat: So getting even past sort of the discrete skills that you can re-learn, how about things
that can't even be sort of communicated in the skills?
For instance, you know, some people will say, well, you know, part of getting through high
school is just learning how to negotiate the system.
And part of the problem with kids who drop out is they're never gonna learn to negotiate
the kinds of systems that are gonna give them success of any kind in the labor market.
So without, you know...
If we roll back the education system substantially, are we prohibiting kids, are we making it
very hard for kids to learn how to negotiate those systems?
Bryan: Right, so, this is a classic compared-to-what question.
If it's either school or play video games home alone in your basement, then school is
a great socializer and I'll say nothing against it.
However, is that really the relevant alternative?
In all other human societies, and earlier in the U.S. history, the alternative to school
wasn't sitting home alone, the alternative was work.
And work also teaches people to negotiate systems, and you know, it teaches social skills,
it teaches you how to get along with other people.
But it also teaches a bunch of social skills that aren't really being taught very well
in schools today, like accepting criticism.
Right?
In modern schools they're so touchy-feely and they're so positive that kids often are
not told, "By the way, you screwed up, you are not...
You know, your work is inadequate and you need to improve, sorry."
Right?
On the job you still get that kind of thing right now, you know.
So on the job you learn the idea of, you have to make the customer happy, right?
And life is not equal or fair.
These are lessons that are taught on every job.
School, on the other hand, you really are preparing them for this strange world that
no adult experiences of equality and fairness.
So, you know, better to go and prepare kids for the world they're actually gonna be facing.
You know, of course, don't go and give them immediate shock therapy where you give them
a boss who screams at them on the first day, but just to move them gradually to a realistic
environment where people don't love you, right?
You know, so like, teachers at least pretend to love the students.
I mean, even at the high school level, like, they're so nice.
But in terms of preparing people for adult life, people aren't gonna be that nice afterwards,
so you better get used to it.
Nat: Hey everyone.
Thanks for watching part one of our discussion with Bryan Caplan.
Part two picks up right where we left off here, so click the link to see the next part
of the series.