Modern educational institutions are mere shells of the learning centers they once were as a result of fiat incentives.
This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.
College is a scam.
Colleges don't sell education, but an upper class lifestyle for four years. Like most things in the fiat economy, they bring consumption forward through loans like that car that you can get with no money down or the Jack LaLane Power Juicer you can get for four easy payments of $49.99. Instead of earning money first and then getting what you paid for, college offers four years of hedonistic indulgence which you then have to pay off. What was once an investment has been debased to a consumer good.
At best, colleges offer the exciting prospect of becoming a cog in a corporate machine. They teach rent-seeking skills like political posturing, acceptable narrative regurgitation and if you go to business school, Machiavellian backstabbing. For those lucky enough to climb the status ladder, their hope is to be a Cantillionaire, suckling at the teat of the central bank. They're auditioning to be celebrity hanger-ons with less glamor.
There's a polite fiction at play that college is a way to find yourself, to mature and to become a productive citizen. Yet all evidence is that the enterprise is a status game, where people who aren't upper class fake it 'till they make it. These are the people college serves the least and like most fiat institutions, exploits the poor and middle class for the profit of the rent-seekers.
The best that non-upper class people can hope for is to graduate into the rent-seeking class. They, too, can get an administrative position scamming middle-class families out of hundreds of thousands of dollars and spreading the lie that college is the key to wealth.
The worst outcome is a lifetime of debt slavery as an NPC zombie. Student loans are not discharged in bankruptcy, so it's a particularly onerous burden, like the monetary equivalent of weighing 400 pounds. Being in significant debt creates terrible incentives politically, as socialism starts looking much more attractive. The unfortunate result is that we have the monetary equivalent of zombies who vote for whatever will give them relief from their economic burden.
But the gruesome end of all those unsuccessful people is understandably not in the marketing pitch. Colleges sell access to the good life, the lifestyle of the upper class, which in our economy are people that have taken advantage of the Cantillon Effect. Much like altcoiners, they are selling hope to people who desire to rent-seek. I can invest $200,000 now and get passive income? Sign me up!
Like altcoiners, they don't deliver on their promise and the stats bear this out. Just 45% of students graduate after four years and only 65% graduate after six years.
How did we end up here? Where did higher education go so wrong?
The answer, as readers of this column can probably guess, is fiat money. There are many ways in which fiat money affects education, but let's look at two: universal education and student loans.
The first is an outcome of the progressive era, which brought about such wonderful things as the income tax and the Federal Reserve. Universal education was the idea that every child should have the opportunity to learn. This is a great sentiment, and one that civilization should aspire to, but the problem wasn't the intention. The problem was who was running it and how it was executed.
Government granted itself a monopoly on education, and like most things it does with no competition, it screwed it up worse than Hollywood screws up child actors. The monopoly persists because of the momentum of bureaucracy funded by the money printer.
The existence of the money printing machine is both a boon and a curse for governments. It's a boon because they can steal money from everyone else for whatever purpose they desire. It's a curse because there is now a moral imperative to solve all societal problems. It's like the idea that Superman is a jerk because he's not constantly rescuing people. The money printer makes the government Superman.
If the government can print money to fix injustice, it's hard to justify not fixing it, especially in a democracy. Education is seen as a way to provide equal opportunity, so the government had to keep trying, no matter how badly it failed. Like a degenerate gambler that keeps doubling down, they keep throwing more funding. And they provide this funding as they do everything in a central-bank-backed fiat monetary system: through loans. And thus colleges were turned into rent-seeking institutions by subsidization of student loans.
A large bureaucratic class of rent-seekers take advantage of this money, growing like an invasive species to choke out anything and everything in its way.
Fiat money grows the educational industrial complex as it does the health care industrial complex and the military industrial complex. Industrial complex is a synonym for rent-seeking outgrowth that's difficult or impossible to remove.
As more people became educated, the dissatisfaction with the opportunities in the economy led to a focus on college. College was for a long time, an upper class endeavor and unsurprisingly, those that went to college had higher incomes.
The correlation between income and college was always mingled with the family backgrounds of the attendees, but that was ignored for the preferred narrative. College became the reason poor people were not rich.
The class envy and general predilection in a democracy to equalize led to public funding of college education through student loans. Propagandizing to poor people, they blamed education as the primary reason for economic failure. Lack of education became a convenient scapegoat rather than the injustice of the Cantillon effect.
Once again, the moral imperative of fiat money came into play. Taxing the public to fund college education would be called what it is: wealth redistribution from poor people to rich people. But doing the same thing through fiat money printing, aka student loans, obscures the wealth redistribution aspect. The focus goes toward the intention, which is to equalize opportunity and indeed, that's the basis by which these loan programs were sold to the public.
Student loans made college way more expensive as any analysis of college tuition costs over time makes clear. An increase in the supply of money and a relatively fixed supply of colleges meant that tuition skyrocketed. What's remarkable is how the additional revenue didn't go into professors or even research, but to administrators.
I remember going to my alma mater about 10 years ago and seeing a building that was new. It was a beautiful collegiate gothic building and I imagine it was expensive. I was shocked to see what the name of the building was: The Law School Administration Building. The building didn't hold classes or house students or even a cafeteria. The building was for a bunch of busybodies.
The growth of the bureaucratic class is obvious in any graph of college tuition costs and college administrators employed over time. Bureaucrats are like termites. They consume and destroy.
The bloat of the rent-seeking class has meant that colleges started focusing much more on getting people in the door than in educating them. Unsurprisingly, the easiest way to do that is to make the experience a lot more fun and appealing. This is how college became a 4-year vacation.
It's worth thinking about what Bitcoin does to the education system. College costs are bloated as a result of too much money being pumped in through student loans. When that spigot of money stops, what will education look like?
The first thing to consider is that college is a recent phenomenon. It's only in the last hundred years or so that college has become something most people strove for. Prior to that, education was much more a private affair. Families would hire tutors or send their children to private schools.
A Bitcoin standard will lead to a return to a similar system. With more competition and different ways to educate, clear winners will emerge and the most effective, best ROI education systems will proliferate.
To some degree that's already happening with boot camps and charter schools. A Bitcoin standard will let the market choose rather than the government. Status will not be intimately tied to education as it is now and there will be a decoupling of jobs from their prestige. There are all manner of trade school jobs like welding or plumbing which pay handsomely but aren't well regarded because of their "low" level of education.
Second, there will still be a market for colleges, though there will be a lot fewer of them. Schools cannot continue to support a large bureaucracy without the student loans funding them, so I expect many colleges to fail. The good schools will show good ROI and keep the rent-seeking to a minimum. They'll be far less able to exploit the poor and middle class because the main weapon of student loans won't be there. Bitcoin takes away the monetary equivalent of sugary, processed, carb-heavy foods and we're likely to see a lot less 400 pound people.
Because the loans won't be there, families that want their children to go to college will save up Bitcoin to pay for it. They're likely to be a lot more discerning since the money was earned and saved. In other words, Bitcoin fixes the economic incentives and that will stop the exploitation of colleges.
The current system of fiat education serves the people in power through fiat money. The values they encourage are rent-seeking, debt slavery and acceptance of propaganda. Most children go through at least 12 years of indoctrination about why the current system is good and should be unquestioned. College furthers this indoctrination with Keynesian lunacy and Cantillon status games.
It's no wonder we've got an anxious population. They're all forced into status games which are naturally zero-sum. There's a large chance they come out on the short end of the stick and it's a miracle that many break out of the fiat status game and create goods and services needed by the market.
Bitcoin changes education because it won't be a moral imperative of the government anymore. Education will take on the values of the free market instead of a centralized government. We'll see more self-sovereignty, personal responsibility and entrepreneurship which will build up civilization instead of tearing it down.
We've been under the fiat standard in education for so long that it's hard to see that we can have a different system. Yet with Bitcoin, a different system is not only possible, but inevitable. The current educational industrial complex will soon be too large to sustain itself. There will no longer be enough suckers that buy into its promises. At that point, something will change.
Much like altcoins, I await the day when this scam finally burns down.
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This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.