xkcd

In a recent blog post by Brian Caplan, he labels as cargo-cults those pushing for ever more education (especially in developing countries). This term cargo-cult conjures images in my head of Mad Max: Beyond the Thunderdome. There is a scene in while the lost children try to talk to the newly found Gibson by “radioing” him through an old mother board and a headset made of a bone. In a following scene they dance on the hull of an old airplane thinking they will fly away. The cargo cults, very accurately put by Wikipedia “consisted of mistaking a necessary… for a sufficient condition”.

This type of reasoning is like a naïve child. My boys think they can get the cat to come to them by clicking and holding out their hand like I do. They do not understand that she only comes to me because she likes me but she will ignore them because she fears them. The same goes for the average American’s position on education: they see prosperous countries engaging in a lot of education and naivily think they can elevate the position of the poor by giving them “more education”. In high school my teachers ascribed to this thinking and were quick to hold up graphs showing income of college grads v. non-college grads. But ever since education has been more and more pushed and more people have attended college, those numbers have begun to drop. Art and Social Work majors don’t seem to get a very big productivity boost by four years of college.

That education is over-consumed should be any good Economist’s default opinion. The reason is simple: because it is being subsidized by government. Subsidies shift the demand curve past its natural market price, and more people consume then would otherwise do so. When society as a whole, consumes more than would be warranted by the natural market price, the result is market inefficiency (lower standard of living than would have been otherwise). This is Econ 101.

William Easterly notes in his book The Elusive Quest for Growth that: “What has been the response of economic growth to the educational explosion? Alas, the answer is: little or none.” Why? Easterly hits the nail on the head a few pages later: “What if high school education is a luxury in which you indulge yourself as you get richer?” He then proceeds to say in the case of too much education: “you have created a supply of skills where there is no demand for skills. And so the skills go to waste – with, say, highly educated taxi drivers.”

Like the cargo cults mimicking radio conversations, Americans keep injecting education and praying for rain.