Video: Milton Friedman on The Social Costs of Middle Class Welfare

In the following video, the late illustrious Nobel Prize winner Milton Friedman eloquently deals with effects of middle class policies of higher education and social security which he shows as coming at the expense of the poor. (hat tip Prof Peter Boettke)

Notable quotes

(4:10) Social security is the case, as you may know, one of the most extreme case of misleading advertising that I know of. It is not social, and it is not security. What it is a combination of a bad tax and a bad relief program. A bad distributive program. It is sold as if individuals who pay social security taxes are paying for their own benefits that they are going to get later on. That’s the language in which social security administration sells it. That’s extremely misleading. What’s happening is that people today are paying taxes on their wages, people today are receiving payments from the government. The relations in which mr. X pays and the benefits for which he is entitled is very very small

(7:52) Taken as a whole, it’s a marvelous illustration of the tendency for legislation enacted for helping the poor, to turn out the way in which middle income people help themselves

Free Education: 3 Best Websites offers University Level Education

From Makeuseof.com (hat tip Professor Mark Perry)

The idea that you are never done learning has never been more true than today. The Internet has revolutionized the way we access information and knowledge – formerly a luxury accessible only to the rich and highly gifted – which is now freely available to anyone with Internet access.

Education and learning should be a lifelong process and the Internet is your chance to get a university level education for free, regardless of where you are in life. This article introduces you to the three best websites to get started.

1. Khan Academy

2. Coursera

3. Academic Earth

Education from the information age will give traditional 20th century based education a run for the money.

Peter Thiel Pays People to Drop Out of College and Pursue Entrepreneurship

Billionaire entrepreneur and libertarian Peter Thiel pays students to drop out of college to pursue entrepreneurship.

From CBSNews.com

One of the wealthiest, best-educated American entrepreneurs, Peter Thiel, isn't convinced college is worth the cost. With only half of recent U.S. college graduates in full-time jobs, and student loans now at $1 trillion, Thiel has come up with his own small-scale solution: pay a couple dozen of the nation's most promising students $100,000 to walk away from college and pursue their passions.

See the interview below.

Some noteworthy parts of the interview… [bold emphasis mine]

Peter Thiel: We have a bubble in education, like we had a bubble in housing in the last decade. Everybody believed you had to have a house. They'd pay whatever it took. Today, everybody believes that we need to go to college, and people will pay whatever it takes.

Morley Safer: You describe college administrators as subprime mortgage lenders, in other words conmen.

Peter Thiel: Not all of them, but certainly the for-profit schools, the less good colleges are like the subprime mortgage lenders where people are being conned into thinking that this credential is the one thing you need to do better in life. And they're actually not any better off after having gone to college; they typically are worse off because they've amassed all this debt.

More Peter Thiel quotes:

Peter Thiel: I'm saying that people should think hard about why they're going to college. If your life plan is to be a professor or to be a doctor or some other career where you need a specific credential you should and probably have to go to college. If your plan is to do something very different you should think really hard about it.

Peter Thiel: I did not realize how wrong-- how screwed up the education system is. We now have $1 trillion in student debt in the U.S. That trillion dollars-- wanna describe it cynically? You can say it's paid for $1 trillion of lies about how good education is.

Peter Thiel: We have a society where successful people are encouraged to go to college. But it is a-- it's a mistake to think that that's what makes people successful.

In the interview, Mr. Peter Thiel has been criticized for advocating or pursuing “anti-education” sentiment. But such accusation represents a misplaced understanding of Mr. Thiel’s position: the growing impracticability and irrelevance of the current “screwed up” educational system.

In other words, Mr. Thiel has not been anti-education “where you need a specific credential you should and probably have to go to college”, but rather he points out that the cost benefit tradeoff of higher education has become infeasible, and worse, the quality of education has not been aligned with the “education” necessary for work. And this is evidenced by the decreasing returns of higher education.

Finally Mr. Thiel doesn’t really pay people to drop out of college to become bums. He has instead been preaching entrepreneurship to students.

To quote anew the great Ludwig von Mises on the relationship between education and entrepreneurship,

In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained. A man becomes an entrepreneur in seizing an opportunity and filling the gap. No special education is required for such a display of keen judgment, foresight, and energy. The most successful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal [p. 315] to their social function of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership.

Once again Peter Thiel

Mark Zuckerberg from Facebook didn't complete Harvard. Steve Jobs dropped out of Reed College. Bill Gates dropped out of Harvard. When you do something entrepreneurial, the credentials are not what really matters. What matters is having the right idea at the right time, the right place.

Peter Thiel has definitely not been out of touch with reality.

Chart of the Day: Decreasing Returns of Higher Education

From the Investor’s Business Daily

For the first time in history, the number of jobless workers age 25 and up who have attended some college now exceeds the ranks of those who settled for a high school diploma or less.

Read the article here

Politicization of any social activities eventually lead to the law of decreasing returns, higher education in the US notwithstanding.

This applies to the Philippines as well.

The information age will accelerate the deflation of this education bubble.

Higher Education in the Information Age

How higher education may look like in the future

From Mark Weedman (hat tip Professor Arnold Kling)

A school in this Google model derives its identity from its faculty and curriculum, or its “software” while de-emphasizing the importance of its infrastructure, such as its classroom, library and other campus facilities. In other words, it is possible to provide a first-class education in a school without a full range of campus facilities (or maybe even a school without a traditional campus) as long as the curriculum gives students access to the right kind of critical thinking, formation and training. It used to be that to provide a first-class education required institutions to assemble all three components: faculty, library and classrooms. The Google model suggests that it is possible to re-conceive that structure entirely by shifting the focus to curriculum (and the necessary faculty to teach it) and then adapting whatever “hardware” is available to give the curriculum a platform.

The key to this model is the curriculum. There are a number of reasons why traditional higher education institutions have gotten away with fairly generic curricula (i.e., a series of courses taught in classrooms via lectures and discussion), but one of the most important is that the other components offset the inadequacies of curriculum. Stripping away the infrastructure exposes the curriculum and demands that it be effective and have integrity on its own. Stripping away the infrastructure, however, also frees the curriculum to provide new and dynamic ways of learning. If you have a classroom or library, you have to use it. If you do not have a classroom, then entirely new educational opportunities present themselves.

The information age will transform the way we live.