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What has happened to higher education is called "financialization". The loose definition of that is, prices have risen to the max that can be borrowed to pay for them. The same thing happened to real estate after WWII, and then to auto prices in the 70's. Almost nobody pays cash for these any longer; few now are paying cash for college. The difference is, this is the first time financialization has been foisted onto those not yet working.
It may be instructive to note that never in history has a financialized sector gone backwards to affordability, unless the economic system contracted severely. On the contrary, as each sector becomes financialized, it becomes necessary to do the same to a new sector, in order to keep the credit merry-go-round growing. Once that comes to a halt, it is game over.
If you haven't read his signature book, or had the pleasure of attending his lectures (he's a very good professor), he's built a career out of studying and figuring out how businesses with very good business models get blind-sided by competitors.
Quote:
The author, a professor at Harvard Business School, asks why some well-managed companies that stay on top of new technology and practice quality customer service can still falter. His own research brought a surprising answer to that question. Christensen suggests that by placing too great an emphasis on satisfying customers' current needs, companies fail to adapt or adopt new technology that will meet customers' unstated or future needs, and he argues that such companies will eventually fall behind. Christensen calls this phenomenon "disruptive technology" and demonstrates its effects in industries as diverse as the manufacture of hard-disk drives and mass retailing. He goes on to offer solutions by providing strategies for anticipating changes in markets. This book is another in the publisher's Management of Innovation and Change series. David Rouse --This text refers to an out of print or unavailable edition of this title.
I am one of the "nevers" that looks like a "late."
I'm graduated college at 24 with little debt, but with essentially two majors and a minor. I didn't know what I really wanted to do (still don't honestly) and worked in an IT call center for two years. I worked several more IT call centers until finally securing a professional position with a software company at 27. I make a decent wage in a fairly low cost area and am doing much better than most of the people I grew up with.
There are a lot of would have, should have, could haves here. Knowing what I do now, I would have left the South for New England at 18, but I was neither mentally ready for that nor could I have predicted the economic fall ten years ago. I'm not sure that staying in college two extra years even hurt anything, as conditions were probably about as bad in 2008 as they were in 2010.
At least I'm on a more sustainable track now. I have quite a few peers who are inundated with student loan debt, stuck working menial jobs, living with parents, have a kid to support, or some combination thereof. That's the real kicker.
Ok, unless states restore funding to universities comparable to the levels of 20 years ago adjusted for inflation, students will continue to have big student loan burdens. Sure, Gen Y will pay their loans off eventually, but by then the next group (Gen Z?) will be in the same situation.
The way to fix this problem is NOT "wait it out". The way to fix it is to make higher education affordable once again.
That isn't doable. We are adding more and more low skill and low wealth people. Even if we have resources, we will need to pour into educating the very bottom, which is going to be enormous in the upcoming years.
We are going down to be a second or third world country.
In our area where the median priced existing home is $600k and new homes start at $800k, there are plenty of Millennials
buying and starting families. They have jobs at companies like Boeing, Amazon or Microsoft, where, like much of the tech industry, there are far more younger workers and few boomers except in upper management. Her where I work (not tech though we have an IT department) 3 of my workers are millennials in the 60k salary range and have bought homes, one in Seattle two in more remote and inexpensive areas 30-40 miles away. None of them drives, one takes the bus or rides his bike, the other two both take the train.
This is why it's pointless to talk about millennials this millennials that. Some millennials are doing badly, some doing okay, some doing well, and very well. The age ranges are across the board.
The old school of elitist cultural humanities majors has been replaced by technology workers. In fact, our whole work visa scheme was driven by the technology boom. That's where the economy is.
Millennials are already starting families, buying homes, and traveling, and eating out. There are just many fractions of this generation. That wealth gap, over the course of the next several decades, will grow much bigger.
What has happened to higher education is called "financialization". The loose definition of that is, prices have risen to the max that can be borrowed to pay for them. The same thing happened to real estate after WWII, and then to auto prices in the 70's. Almost nobody pays cash for these any longer; few now are paying cash for college. The difference is, this is the first time financialization has been foisted onto those not yet working.
It may be instructive to note that never in history has a financialized sector gone backwards to affordability, unless the economic system contracted severely. On the contrary, as each sector becomes financialized, it becomes necessary to do the same to a new sector, in order to keep the credit merry-go-round growing. Once that comes to a halt, it is game over.
I would add that we are going through globalization, which is as significant as the discovery of new land and trading routes in history. Never ever in history has some change like this not reduced an established empire and fueled a different geopolitical and economic order. It did , every single time. This time is not different.
The US as a whole is going to be a nation of big wealth differences. But it doesn't mean that you as an individual would be poor. It does mean that you have to be smart enough to pick skills and trade and life strategies to find your place in this global economy. The matter of the fact is that many millennials have already become affluent and their children are going to get educated and fulfilling careers.
That isn't doable. We are adding more and more low skill and low wealth people. Even if we have resources, we will need to pour into educating the very bottom, which is going to be enormous in the upcoming years.
We are going down to be a second or third world country.
I totally disagree with this post. We are not adding low skill and low wealth people to this economy. Actually, the opposite is happening. We are adding too many high skill/educated people into an economy that doesn't have and is not creating enough jobs for them. Those that are being added are also arriving into the economy with unprecedented debt levels. So you have a situation where the employers have the pick of the litter and they have that litter over a barrel. That's why many of the same jobs that required a high school diploma a generation ago now require a college degree.
The lynchpin that makes the situation much, much worse is the collapse of credit. No credit= less small business growth, less innovation, less opportunity.
I totally disagree with this post. We are not adding low skill and low wealth people to this economy. Actually, the opposite is happening. We are adding too many high skill/educated people into an economy that doesn't have and is not creating enough jobs for them. Those that are being added are also arriving into the economy with unprecedented debt levels. So you have a situation where the employers have the pick of the litter and they have that litter over a barrel. That's why many of the same jobs that required a high school diploma a generation ago now require a college degree.
The lynchpin that makes the situation much, much worse is the collapse of credit. No credit= less small business growth, less innovation, less opportunity.
Or, maybe no credit just means businesses grow slowly at first instead of trying to expand so fast they get ahead of themselves and can't find enough customers to deal with being in debt to their eyeballs.
Or, maybe no credit just means businesses grow slowly at first instead of trying to expand so fast they get ahead of themselves and can't find enough customers to deal with being in debt to their eyeballs.
C'mon, now.
How many potentially successful businesses never get started due to lack of credit?
How many potentially successful businesses fail due to lack of credit?
How much money never gets spent and recycled through the economy due to lack of credit?
Leverage is economic power, and there is none right now.
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