The sooner the higher-education bubble bursts, the better.

Jan 26, 2012
WSJ

By JAMES TARANTO

In the Chronicle of Higher Education, economist Richard Vedder notes a new development in the education marketplace that should make many of his fellow academics nervous:

The announcement of agreements between Burck Smith’s StraighterLine and the Education Testing Service (ETS) and the Council on Aid to Education (CAE) to provide competency test materials to students online is potentially very important, along with several other recent developments. A little economics explains why this is so.

With regards to colleges, consumers typically have believed that there are no good substitutes–the only way a person can certify to potential employers that she/he is pretty bright, well educated, good at communicating, disciplined, etc., is by presenting a bachelor’s degree diploma. College graduates typically have these positive attributes more than others, so degrees serve as an important signaling device to employers, lowering the costs of learning about the traits of the applicant. Because of the lack of good substitutes, colleges face little outside competition and can raise prices more, given their quasi-monopoly status.

As college costs rise, however, people are asking: Aren’t there cheaper ways of certifying competence and skills to employers?

“This is not for everyone, of course,” Vedder notes. “Many have the resources to go to expensive residential colleges, which is as much a consumption as academic/investment experience.”

The crucial distinction here is actually between the “academic” and “investment” functions of higher ed. The industry has exploded over the past few decades based on a business model that focuses more on selling the college degree as a credential–an “investment” that yields an increase in one’s own “human capital”–than on persuading young adults that education is intrinsically valuable.

If someone could offer a less expensive job-hunting license–one that assessed an entry-level job-seeker’s worth to a prospective employer at least as accurately as a college degree does–then the demand for college would plummet, as young adults could realize the same gains from a much smaller investment.

That’s where ETS and CAE come in. They will offer two tests. One, called iSkills, “measures the ability of a student to navigate and critically evaluate information from digital technology.” The other, the CLA, “assesses critical learning and writing skills through use of cognitively challenging problems.” As Vedder explains: “Students can tell employers, ‘I did very well on the CLA and iSkills test, strong predictors of future positive work performance,’ and, implicitly ‘you can hire me for less than you pay college graduates who score less well on these tests.’ ”

If the practice became widespread, it would drive college costs down and force cost-cutting and downsizing within the higher-ed industry. So you can expect the industry to fight hard against it.

How might it do that? One aspect of all this that Vedder doesn’t explore is the historic origins of the higher-ed industry’s credential cartel. As we’ve explained before, it goes back to Griggs v. Duke Power Co. (1971), in which the U.S. Supreme Court held that companies could not administer IQ tests because they had a racially “disparate impact”–that is, it discriminates against blacks because they score more poorly on average than whites do.

The disparate-impact test in Griggs, written into law in the Civil Rights Act of 1991, applies only to employers. Educational institutions are free to administer IQ tests, which is essentially what the SAT and other entrance exams are. To assure that their degrees pass muster as a condition of employment, colleges and universities go to extreme lengths to ensure a “diverse” student body, including discriminating in favor of blacks (and selected other minorities) in admissions.

As we noted last month–and a tip of the hat to Heather Mac Donald for documenting the phenomenon–colleges and universities have developed sprawling bureaucracies to encourage “diversity,” at the expense of traditional academics. Higher-ed institutions also pump out an enormous quantity of dubious scholarship that purportedly proves the ideological presupposition behind this business model–namely, that white racism is the proximate cause of all racial disparity. Here’s a funny example, reported by LiveScience.com:

There’s no gentle way to put it: People who give in to racism and prejudice may simply be dumb, according to a new study that is bound to stir public controversy.

The research finds that children with low intelligence are more likely to hold prejudiced attitudes as adults. These findings point to a vicious cycle [sic], according to lead researcher Gordon Hodson, a psychologist at Brock University in Ontario. Low-intelligence adults tend to gravitate toward socially conservative ideologies, the study found. Those ideologies, in turn, stress hierarchy and resistance to change, attitudes that can contribute to prejudice, Hodson wrote in an email to LiveScience.

So IQ tests are racist, except when they’re used to “prove” that people with “socially conservative ideologies” are racist and intellectually inferior.

TheRoot.com has an article arguing that the Republican presidential candidates are racist. It’s about as uninteresting an argument as you can find–but the headline is revealing: “Colorblind Racism: The New Norm.” That Orwellian term, “colorblind racism,” is the pithiest summation we’ve ever encountered of the absurdity of contemporary left-liberal racial dogma.

It also turns out to be a product of academia: The idea of “colorblind racism” was hatched by Eduardo Bonilla-Silva, a professor of sociology at Duke University, a decade ago. Here’s a paper on the subject from the journal Critical Sociology.

The higher education industry’s credential cartel is under financial threat owing to the necessity of state and local (and eventually federal) budget cuts and the increasing sense that a degree isn’t worth incurring a mountain of debt. It is under legal threat, too. There is a strong likelihood that the Supreme Court will abolish or severely curtail the use of racial preferences in college admissions sometime in the next few years, a possibility that led to gnashing of teeth at the New York Times editorial board. Thanks to the senescence of white guilt, explicated here Monday, it is also under cultural threat.

Now, as Vedder reports, there is a competitive threat as well. We can expect that the higher-ed industry will do whatever it can to crush this threat. The obvious point of attack would be to claim that the new skills tests have a racially disparate impact. ETS and CAE would be well-advised to take strong defensive measures.

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