Justin’s
note: Today, instead of our usual market commentary, we’re doing
something special.
I recently sat down again with Casey Research founder Doug Casey
to discuss a troubling trend: the fast-rising cost of a college
education.
Read our conversation below to see why Doug says relying on—and
paying for—today’s educational paradigm “makes as much sense as entering a
Model T Ford in the 24 Hours of Le Mans”…
Justin: Doug, I
recently had an interesting conversation with my sister.
She told
me that her financial advisor suggested she start setting aside $500 to
$1,000 a month to pay for her son’s college education.
That’s because a four-year college education is apparently going to cost
between $400,000 and $500,000 18 years from now.
Her advisor clearly arrived at this figure based on how fast
college tuition costs have been rising, which is about 6% per year based on my
research.
But you have to wonder if the cost can keep rising at this rate.
It seems to me that no one will go to college if it’s going to cost a
half-million bucks.
What do you make of this trend?
Doug: Well, the
first thing—my advice to your sister is to get a new financial advisor. I fear
that she’s relying on a complete imbecile. She should fire him immediately, and
for a number of reasons.
Number one is his assumption that the trend of higher college
costs is going to continue to a totally unaffordable level. In fact, the
cost/benefit ratio of going to college is already so out of whack that the
whole system has to change radically. A college degree, even now, is of only
marginal value; most everybody has one. And things that everybody has are
devalued. You’re quite correct that colleges and universities today are dead
ducks as businesses. Unless you’re going to learn a trade, like doctoring or
lawyering, or you’re going for science, engineering, or math, where you need
the formal discipline and where you need lab courses, it’s a total
misallocation, even a waste of money to go to college today.
So I applaud the fact that all these colleges and universities
are dead men walking, that they’re all going to go bankrupt. They are totally
overrun and infested with cultural Marxists and progressives, militant leftists
that are propagandizing kids with absolutely the wrong kind of values. It’s
astonishing that parents are willing to pay even today’s prices to subject
their kids to four years of indoctrination. So I’m glad that they’re all going
bankrupt.
Justin: But don’t
you need a college education to get ahead in life?
Doug: It’s not
necessary to go to college. You’re likely to be corrupted, and indebt yourself
like an indentured servant for many years to come. The question is: Do you want
an education, or do you just want a piece of paper that says you logged the
time in a classroom? These are two different things. Getting an education is
strictly a matter of motivation and self-discipline, not paying money to sit in
a classroom. If you’ve got half a brain, you realize that you want the
knowledge, not the diploma, and there’s no necessary correlation between them.
Nobody can “give” you an education; it’s something you must gain for yourself.
Most top universities now have their courses online. You can get
an education by listening to these courses. And even when you’re driving your
car, you should be playing CDs by The Teaching Company. They have the best
professors in the world giving command performance lectures. And you can hear
them an unlimited number of times. This is much better than listening to some
also-ran drone on, while you may have cut the class, or be half asleep, or not
taking good notes.
Technology has changed the whole landscape of education. Its
cost is approaching zero, not the stratosphere, as your sister’s advisor seems
to think. If the kids insist on going to college and indenturing themselves, as
well as cluttering their minds with irrelevancies and false data, then they
should only consider, say, Harvard, or very few schools like it. At least there
the prestige, and qualifications for admission, are so high that the
connections they make may compensate for the many downsides.
And anyway, Ray Kurzweil’s right about the Singularity, in my
opinion. And he’s upped the date to when it’s going to occur to 2029, which is
only 12 years from now, at which point the whole world will have changed in
ways that will change the nature of life itself. So forget about saving to send
your kids to college; and that goes double for your grandkids.
Justin: I
thought the same thing, Doug.
You see, my sister’s advisor suggested that she and her husband
set up a 529 plan, which is basically a tax-friendly way to save money for
college. I asked her what would happen to the money if her son didn’t go to
college. She said she could use the money to pay her for grandchildren’s college
education.
But, like you said, the world is going to be very different 12
years from now. Who knows what it’s going to look like 40 or 50 years from now?
Doug: Over
the next generation the world is going to change totally and unrecognizably
from the way it is right now. Technological change is compounding at an
exponential rate. It’s always been exponential, quite frankly. Ever since the
invention of fire. But we’re now in its later stages; it’s like a Saturn rocket
taking off, very slowly at first, but constantly accelerating.
It’s going to be fascinating and fantastic to watch what happens
over the next 20 years. And relying on, and paying for, today’s educational
paradigm makes as much sense as entering a Model T Ford in the 24 Hours of Le
Mans.
Justin: I agree
100%. We’re living in very exciting times.
Anyway, thank you for taking the time to speak with me, Doug. It
was a pleasure, as always.
Doug: You’re
welcome.