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What Thiel doesn't get is that the reason why it's a bubble is also what keeps it afloat. It's exclusionary, and something inherent in humans is a desire to ca

What Thiel doesn't get is that the reason why it's a bubble is also what keeps it afloat. It's exclusionary, and something inherent in humans is a desire to categorize and compartmentalize -- credentials. Sure, if you're starting a web startup or a basketball team, no one cares where you went to school (although an offensive lineman in football benefits from going to a top tier school -- despite football being a meritocracy its surprisingly difficult to measure how effective linemen are). But the top lawyers, doctors, professors, and even business managers will be recruited from where people think the best people are. The ironic thing is that the only reason people listen to Peter Thiel is because of his credentials as PayPal co-founder and VC investor. There are a million people have an opinion on education and tecnology. There's too much noise -- the ideas that are listened to are those that come from people who have done soemthing in the past -- a credential. At a massive scale college is still THE credential. And surprisingly the internet has actually made elite schools more important, not less. Pre-internet regional schools were often held in near equal esteem as Harvard/Yale. As information became more fluid (USNWR and the internet) the ranking of credentials became easier to obtain. This won't change.

jdavid 16y ago
Then invent a new credential system and you will be plenty wealthy. i have heard people murmuring about one.
- kenjackson 16y ago
  New credential systems are created all the time. One we hear people talk about nowadays on HN is a GitHub repository. Another one is acceptance into YC. All a credential is is something you've done in the past which implies your ability to do something in the future. Graduating with a degree in Econ from Harvard implies that you might be a good consultant for McKinsey. Founding Facebook implies you might be a good founder for a future effort. Having a great GitHub project implies you might be a good programmer for some simliar tasks.
  - patio11 16y ago
    YC is a better example of a credential than a Github account. The function of credentials is to outsource decision making about quality: you have to actually read code to extract signal about a candidate from Github, a task which is expensive and beyond the capabilities of most investors and people with hiring authority. "YC alum", by comparison, tells you a lot about somebody in a sentence and doesn't require any work to understand - pg et al already did the vetting for you. There probably exists a spectrum of opinions on whether the credential is useful because of the vetting or the experience of the actual program. Candidly, I think that YC probably has a value add in attendance. Higher education? Not generally, no. I have a $140,000 degree (two, technically) which basically certifies that at 18 years old I was smart enough to get into my university and then, for the next four years, I did not die or fail to sign my loan docs. I know I learned some things of value in those four years, but I could just as easily have written myself a course of study with zero commercial potential, and my degree would say the same thing in a language 99.998% of Americans can't even read anyway. (East Asian Studies degree written in... Latin?!
    - kenjackson 16y ago
      There probably exists a spectrum of opinions on whether the credential is useful because of the vetting or the experience of the actual program. Candidly, I think that YC probably has a value add in attendance. Higher education? Not generally, no. The problem with higher ed is that if there is value add they make it impossible to know. Try to get outgoing metrics, besides grad rates, of outgoing undergrads and its near impossible. Professional schools do a better job of this.
      - robrenaud 16y ago
        Facebook and LinkedIn definitely have good data about college education and employment outcomes. I really wish they would just compete head on with USNews for college rankings. For example, I'd love to see income distributions by university/major. The universities themselves cannot be trusted to provide it in any accurate fashion[1], but mining it from a large sample of graduates would be much better and less biased. [1] http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&src=me&ref=homepage http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&#...
- jonbischke 16y ago
  I don't think it's going to be one system but rather many systems. I think there are a host of online communities that have arisen in the last few years that are actually doing this. A good example is Stack Overflow/Careers 2.0. The fact that companies are hiring people on the basis of their Stack Overflow reputation graph should strike fear into the hearts of college administrators everywhere (but likely won't of course). The change won't happen overnight but we've come a long way in just the last few years in terms of mechanisms that could ultimately rival the university when it comes to signaling and I think this shift is only getting started.
  - SergeyHack 16y ago
    Even the founders of SO acknowledged that their (up-to-date) reputation does not reflect "smartness" :) So this is just another example of corruption as I see it. But I agree with you that future online community reputations can improve the situation.
jpadvo 16y ago
A more accurate statement would be "what Thiel isn't quoted about in this article is..." Otherwise, very interesting points. :)
JoachimSchipper 16y ago
From the article: "But Thiel’s issues with education run even deeper. He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status[...]”" You're probably right on Harvard-as-a-filter, but Thiel has seen this.
- kenjackson 16y ago
  He's definitely seen it, but he misses it. Let me start by saying that the standard of living has increased for everyone, but yet being poor still sucks. And it will continue to suck. Increasing you standard of living is no fun if everyone else's increases faster. The reason you do things like college, YC, or even start a company, is generally to differentiate yourself with respect to standard of living (some people do this to make the world a better place, but those people are few enough that wlog we can ignore them). You can't look at a system that is meant to create differentiations and then complain because it creates them. For better or worse, its doing what its meant to do. Even if you were to get rid of college altogether, you'd still have the issue persist. But now it would just shift to making into Thiel's Talented 20, or the Moritz 5, or YC, or TechStars -- each with a different level of repute (because at the end of the day, there is going to be differentiation between who is given nothing to start a company and those people that everyone wants to shove a million dollars in their pocket). Unless we go to a socialist system, people will value metrics that differentiate people -- and ideally the differentiation should happen on someone else's dime. Today that dime is the student/parent/government. Maybe in the future it will be VCs, but trust me it will still happen as a VC as bright as Theil knows its not prudent to fund everyone at equal levels.
  - entangld 16y ago
    >"Let me start by saying that the standard of living has increased for everyone, but yet being poor still sucks."< I'd argue people are going to school to get higher wages. Wages have stagnated for the last 20+ years. High cost university educations are offering little or no bargaining power to individuals. Just like buying an overpriced house you can't sell. It's a bubble.
gammarator 16y ago
the reason why it's a bubble is also what keeps it afloat Federally guaranteed student loans. [1] http://www.thebigmoney.com/articles/money-trail/2010/06/17/subprime-students http://www.thebigmoney.com/articles/money-trail/2010/06/17/s...
- 3dFlatLander 16y ago
  PBS did a good Frontline episode on for profit colleges and the federal student loan situation for their students. Available online here: http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?utm...
  - stretchwithme 16y ago
    yeah, the government is after for-profit schools with shoddy predictions about what a good investment those student loans are. But the recent legal efforts give a pass to not-for-profit schools, as usual. Seems its evil for the non-unionized to make money in education. The unions and the overpaid civil servants that manage them can rake in as much as possible without federal resistance, even if the product is marginal. I wonder if that came up when the unionized PBS did their expose. Money that flows from DC has a way of wrecking things.
    - redrobot5050 16y ago
      >Seems its evil for the non-unionized to make money in education College professors are tenured, not unionized. And considering that most schools hire adjunct professors and slash benefits to the bone, it's hard to argue that teachers are bleeding the system dry. On the other hand, the school where I just got my Master's from just built a brand new 177,000 square foot rec center, complete with 3 story climbing wall. And we've proudly paid good money to bring the guy/girl who invented Zumba to teach a few Zumba sessions. On top of this, programs that bring recognition to "joe consumer" (college football, basketball, etc) want for not. Also, much of PBS is not unionized. It's kind of hard to unionize organizations that rely on member donations to keep afloat.
joe_the_user 16y ago
What Thiel doesn't get is that the reason why it's a bubble is also what keeps it afloat. It's exclusionary, and something inherent in humans is a desire to categorize and compartmentalize -- credentials. A rule of thumbs for bubbles is each one must have a "why this time it's different" elevator pitch ("Dow 40,000', "there's only local housing markets"). Exclusivity likely is a large part of what gives an elite education its value, normally - a Harvard education has indeed generally been highly prized. But what keeps a bubble afloat is bubble dynamics. Even a valuable item can be over-valued. The self-validating quality of increasing prices and valuations really does works well for a while - like it did for all the other bubbles - and can then can be expected to stop working - like it did for all the other bubbles.
- entangld 16y ago
  I think the housing bubble analogy is a good one. Prices for the highest quality houses rose and that tide also lifted housing prices in poor areas. But when the market crashed everything went down. For profit colleges are selling garbage degrees to poor people in urban areas. Degree inflation has already begun and soon it will also effect people at some of the highest levels. Look at PhDs and JDs. Soon this paper inflation will suck real value away from the areas we haven't even thought of.
  - yummyfajitas 16y ago
    For profit colleges are selling garbage degrees to poor people in urban areas. Low end non profit colleges do the same thing. http://www.washingtonmonthly.com/college_guide/feature/college_dropout_factories.php?page=all&print=true http://www.washingtonmonthly.com/college_guide/feature/colle... This particular focus on for-profits is simply the work of a media campaign against them (by short sellers and non-profits afraid of cheaper competition).
    - jbooth 16y ago
      I think a lot of people work with an assumption that the non-profit colleges at least have pure motives, so they may fall short on execution but they're trying. For profit, on the other hand, I have no problem with capitalism but the incentives in the low-income-education market point pretty clearly to "crank out as many degrees as possible with more emphasis on marketing the degree than making it good". Butts in chairs and all that, if you want to make money. EDIT: Although, I'd love to be proven wrong. Cheap vocational training where the school turns a profit would really be a great system. I'm just concerned that the priorities will have to be 1) attract lots of students, 2) cut costs per student, 3) deliver education, in that order, if your organization's goal is profit rather than education.
sdizdar 16y ago
The problem with credentials you get from some universities (even elite ones) is that they are of much less value than you paid for it. It like buying house in San Francisco Sunset district ("elite" town) for 2M and saying it is a great deal. No. It is great deal for 500K but not for 2M since max rent was is 4K.
hessenwolf 16y ago
I remember before the internet, and a degree from Harvard, Yale or Oxford still would've made you Jesus-with-a-keyboard. It's about branding, i.e., transitive trust - I trust Harvard, Harvard trusts you, therefore I trust you. As joe-the-user points out, this gives it value, and has nothing to do with whether it is currently over- or under-valued.
dgudkov 16y ago
> the only reason people listen to Peter Thiel is because of his credentials as PayPal co-founder and VC investor. There are a million people have an opinion on education and tecnology. That million people haven't founded such significant ventures as PayPal is. That's why you call'em "a million", not by names.
- varjag 16y ago
  Yes, because Thiel has better credentials so can be singled out. This is sorta the parent's point.
ignifero 16y ago
"This won't change." Of course it's a bubble. It's the law and finance that sustains it. Inevitably, it will change, and the asians may have to pioneer it.
ig1 16y ago
You're assuming that the schools don't in themselves add value beyond signalling. Even after adjusting for academic achievement students from top-tier university do better post-university, as this broadly tends to hold true across subjects. Of course this could be purely be down to signalling effect, but if so it would imply signalling has as strong impact across all industries not just a handful of professional ones.
jonnathanson 16y ago
Frankly, Thiel's rhetorical "Why aren't there 100 Harvard franchises?" question is a reasonable one to ask. By its own admission, Harvard turns down hundreds -- maybe even thousands -- of students each year who are qualified to attend Harvard. There simply isn't enough space, and at the highest tiers, it becomes a crapshoot. Kid A and Kid B could be equally qualified, and both could have made it through the gauntlet and down to the wire, but Kid B wins out in the end through a process verging on picking straws. For the rest of his life, Kid B is "Harvard-educated," while Kid A is deemed by many folks in society to be Kid B's intellectual inferior. But what if Harvard had enough capacity to admit everyone who met its admissions standards? It's a question worth asking. Would Harvard cease to be "Harvard" if that were the case? Thiel's point is that it would -- which is indicative of a problem with our valuation of Harvard. Be that as it may, your overall point is sound. Harvard may have some mystique baked into its valuation, but most of us still hold the valuation -- mystique and all -- in high esteem. We accept it at face value. So long as we continue to do so, the bubble stays afloat. In order to test Thiel's thesis, we'd have to go a step further and ask ourselves: what would, in theory, cause the bubble to pop? What would it take? Given that this bubble (for lack of a better word) has been propped up for hundreds of years, and is still going strong, what straw would break the camel's back? I'd argue that it's Stanford. Or, rather, everything the proverbial Stanford represents: Silicon Valley, something approaching new-money meritocracy, and so forth. If enough Stanfords emerge across the world, suddenly the time-honored value of the Harvard degree seems less shiny than it once was. [Interestingly enough, Harvard does a pretty darned good job at being a Stanford, too. But, for the set of Harvard attendees who are there to collect the credential and not to start up a company, the value of that credential-qua-credential would decrease in a bubble-deflating scenario].
- numeromancer 16y ago
  There simply isn't enough space, and at the highest tiers, it becomes a crapshoot... ...to which the rich bring weighted dice.
  - jonnathanson 16y ago
    Interestingly, I would argue that we've got two oppositional forces at play in today's admissions game: 1) Seldom before in recent American history has it been easier for a well-qualified, but SES-disadvantaged student to gain admission to Harvard. 2) Seldom before in recent American history has it been harder for an SES-disadvantated student to become well-qualified to gain admission to Harvard. Once you've reached the admissions gates, so to speak, your merit is a better calling card today than it ever has been. But getting there is becoming tougher and tougher, thanks to a chronically deteriorating public education system and increasingly costly college-preparatory mechanisms. It is commonly assumed that the rich receive advantages at the gate. Rather, they've been receiving advantages throughout their lives that increase their likelihood of getting to the gate in the first place. It's a subtle, but important distinction.
michaelochurch 16y ago
And surprisingly the internet has actually made elite schools more important, not less. Pre-internet regional schools were often held in near equal esteem as Harvard/Yale. As information became more fluid (USNWR and the internet) the ranking of credentials became easier to obtain. This won't change. What changed in the second half of the 20th century is that academia became (for students and professors) a national, rather than a regional, market. Now every top high school student vies for an Ivy League slot, and there just aren't enough of them to accommodate all the great students, especially when there's an implicit contract between the Ivy League and the WASP old-board that about half of the slots are going to go to entitled aristocrats based on privilege rather than merit. The national market actually makes the process a lot noisier, not a more efficient informational market. The internet didn't create the national market. That began in the 1960s (air travel, television) if not earlier. The Internet just sped the process along by making it a lot easier for people to send out 20+ applications and clog up the system. The job market has the same problem. It's not flow of information that's the problem. It's, for lack of a better word, spam: content without information. You know how selective tech companies brag about their 1:250 acceptance rates? For an even moderately qualified applicant, odds are closer to 1:15 to 1:4. Companies get a ridiculous number of spam CVs-- often in duplicate or triplicate, because many of the worst recruiters are prolific spammers, and because the least-qualified applicants send out so many CVs. On this note, be very careful about using recruiters and make sure they won't send out your CV without your consent; the worst recruiters not only throw CVs around promiscuously, but often "upgrade" details, meaning that a later (honest) CV submission may contradict one on file, make you seem a liar, and flush you out on that alone. It's not fluidity of information that is the problem. In an efficient market for information, no one would give a shit about college prestige in the first place because the (smarter and harder-working) 85th-percentile state-school graduate would beat the 65th-percentile Ivy graduate, hands down. College prestige only matters because people are often typecast to the average quality of a student from their school, at least as the starting assumption about a young person with a blank CV. The problem isn't "fluidity" of information but that personnel markets (job market, academic admissions) are clogged up with so much useless spam information that separating the signal from noise is nearly impossible.
freshfunk 16y ago
There's a subtle but big difference between what he said (at least how I read it) and what you said he said. You're implying he said credentials are worthless or meaningless. He actually was saying that there's a bubble in education. That is, the cost of education is overvalued vs the return one typically gets. Yes, he talks about the exclusionary nature of institutions but I don't think his point is that credentialing is pointless. His point is that the system has built a bubble (overvalued not worthless)

jdavid 16y ago

Then invent a new credential system and you will be plenty wealthy. i have heard people murmuring about one.

kenjackson 16y ago
New credential systems are created all the time. One we hear people talk about nowadays on HN is a GitHub repository. Another one is acceptance into YC. All a credential is is something you've done in the past which implies your ability to do something in the future. Graduating with a degree in Econ from Harvard implies that you might be a good consultant for McKinsey. Founding Facebook implies you might be a good founder for a future effort. Having a great GitHub project implies you might be a good programmer for some simliar tasks.
- patio11 16y ago
  YC is a better example of a credential than a Github account. The function of credentials is to outsource decision making about quality: you have to actually read code to extract signal about a candidate from Github, a task which is expensive and beyond the capabilities of most investors and people with hiring authority. "YC alum", by comparison, tells you a lot about somebody in a sentence and doesn't require any work to understand - pg et al already did the vetting for you. There probably exists a spectrum of opinions on whether the credential is useful because of the vetting or the experience of the actual program. Candidly, I think that YC probably has a value add in attendance. Higher education? Not generally, no. I have a $140,000 degree (two, technically) which basically certifies that at 18 years old I was smart enough to get into my university and then, for the next four years, I did not die or fail to sign my loan docs. I know I learned some things of value in those four years, but I could just as easily have written myself a course of study with zero commercial potential, and my degree would say the same thing in a language 99.998% of Americans can't even read anyway. (East Asian Studies degree written in... Latin?!
  - kenjackson 16y ago
    There probably exists a spectrum of opinions on whether the credential is useful because of the vetting or the experience of the actual program. Candidly, I think that YC probably has a value add in attendance. Higher education? Not generally, no. The problem with higher ed is that if there is value add they make it impossible to know. Try to get outgoing metrics, besides grad rates, of outgoing undergrads and its near impossible. Professional schools do a better job of this.
    - robrenaud 16y ago
      Facebook and LinkedIn definitely have good data about college education and employment outcomes. I really wish they would just compete head on with USNews for college rankings. For example, I'd love to see income distributions by university/major. The universities themselves cannot be trusted to provide it in any accurate fashion[1], but mining it from a large sample of graduates would be much better and less biased. [1] http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&src=me&ref=homepage http://www.nytimes.com/2011/01/09/business/09law.html?_r=1&#...
jonbischke 16y ago
I don't think it's going to be one system but rather many systems. I think there are a host of online communities that have arisen in the last few years that are actually doing this. A good example is Stack Overflow/Careers 2.0. The fact that companies are hiring people on the basis of their Stack Overflow reputation graph should strike fear into the hearts of college administrators everywhere (but likely won't of course). The change won't happen overnight but we've come a long way in just the last few years in terms of mechanisms that could ultimately rival the university when it comes to signaling and I think this shift is only getting started.
- SergeyHack 16y ago
  Even the founders of SO acknowledged that their (up-to-date) reputation does not reflect "smartness" :) So this is just another example of corruption as I see it. But I agree with you that future online community reputations can improve the situation.

jpadvo 16y ago

A more accurate statement would be "what Thiel isn't quoted about in this article is..." Otherwise, very interesting points. :)

JoachimSchipper 16y ago

From the article: "But Thiel’s issues with education run even deeper. He thinks it’s fundamentally wrong for a society to pin people’s best hope for a better life on something that is by definition exclusionary. “If Harvard were really the best education, if it makes that much of a difference, why not franchise it so more people can attend? Why not create 100 Harvard affiliates?” he says. “It’s something about the scarcity and the status[...]”" You're probably right on Harvard-as-a-filter, but Thiel has seen this.

kenjackson 16y ago
He's definitely seen it, but he misses it. Let me start by saying that the standard of living has increased for everyone, but yet being poor still sucks. And it will continue to suck. Increasing you standard of living is no fun if everyone else's increases faster. The reason you do things like college, YC, or even start a company, is generally to differentiate yourself with respect to standard of living (some people do this to make the world a better place, but those people are few enough that wlog we can ignore them). You can't look at a system that is meant to create differentiations and then complain because it creates them. For better or worse, its doing what its meant to do. Even if you were to get rid of college altogether, you'd still have the issue persist. But now it would just shift to making into Thiel's Talented 20, or the Moritz 5, or YC, or TechStars -- each with a different level of repute (because at the end of the day, there is going to be differentiation between who is given nothing to start a company and those people that everyone wants to shove a million dollars in their pocket). Unless we go to a socialist system, people will value metrics that differentiate people -- and ideally the differentiation should happen on someone else's dime. Today that dime is the student/parent/government. Maybe in the future it will be VCs, but trust me it will still happen as a VC as bright as Theil knows its not prudent to fund everyone at equal levels.
- entangld 16y ago
  >"Let me start by saying that the standard of living has increased for everyone, but yet being poor still sucks."< I'd argue people are going to school to get higher wages. Wages have stagnated for the last 20+ years. High cost university educations are offering little or no bargaining power to individuals. Just like buying an overpriced house you can't sell. It's a bubble.

gammarator 16y ago

the reason why it's a bubble is also what keeps it afloat Federally guaranteed student loans. [1] http://www.thebigmoney.com/articles/money-trail/2010/06/17/subprime-students http://www.thebigmoney.com/articles/money-trail/2010/06/17/s...

3dFlatLander 16y ago
PBS did a good Frontline episode on for profit colleges and the federal student loan situation for their students. Available online here: http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/?utm...
- stretchwithme 16y ago
  yeah, the government is after for-profit schools with shoddy predictions about what a good investment those student loans are. But the recent legal efforts give a pass to not-for-profit schools, as usual. Seems its evil for the non-unionized to make money in education. The unions and the overpaid civil servants that manage them can rake in as much as possible without federal resistance, even if the product is marginal. I wonder if that came up when the unionized PBS did their expose. Money that flows from DC has a way of wrecking things.
  - redrobot5050 16y ago
    >Seems its evil for the non-unionized to make money in education College professors are tenured, not unionized. And considering that most schools hire adjunct professors and slash benefits to the bone, it's hard to argue that teachers are bleeding the system dry. On the other hand, the school where I just got my Master's from just built a brand new 177,000 square foot rec center, complete with 3 story climbing wall. And we've proudly paid good money to bring the guy/girl who invented Zumba to teach a few Zumba sessions. On top of this, programs that bring recognition to "joe consumer" (college football, basketball, etc) want for not. Also, much of PBS is not unionized. It's kind of hard to unionize organizations that rely on member donations to keep afloat.

joe_the_user 16y ago

What Thiel doesn't get is that the reason why it's a bubble is also what keeps it afloat. It's exclusionary, and something inherent in humans is a desire to categorize and compartmentalize -- credentials. A rule of thumbs for bubbles is each one must have a "why this time it's different" elevator pitch ("Dow 40,000', "there's only local housing markets"). Exclusivity likely is a large part of what gives an elite education its value, normally - a Harvard education has indeed generally been highly prized. But what keeps a bubble afloat is bubble dynamics. Even a valuable item can be over-valued. The self-validating quality of increasing prices and valuations really does works well for a while - like it did for all the other bubbles - and can then can be expected to stop working - like it did for all the other bubbles.

entangld 16y ago
I think the housing bubble analogy is a good one. Prices for the highest quality houses rose and that tide also lifted housing prices in poor areas. But when the market crashed everything went down. For profit colleges are selling garbage degrees to poor people in urban areas. Degree inflation has already begun and soon it will also effect people at some of the highest levels. Look at PhDs and JDs. Soon this paper inflation will suck real value away from the areas we haven't even thought of.
- yummyfajitas 16y ago
  For profit colleges are selling garbage degrees to poor people in urban areas. Low end non profit colleges do the same thing. http://www.washingtonmonthly.com/college_guide/feature/college_dropout_factories.php?page=all&print=true http://www.washingtonmonthly.com/college_guide/feature/colle... This particular focus on for-profits is simply the work of a media campaign against them (by short sellers and non-profits afraid of cheaper competition).
  - jbooth 16y ago
    I think a lot of people work with an assumption that the non-profit colleges at least have pure motives, so they may fall short on execution but they're trying. For profit, on the other hand, I have no problem with capitalism but the incentives in the low-income-education market point pretty clearly to "crank out as many degrees as possible with more emphasis on marketing the degree than making it good". Butts in chairs and all that, if you want to make money. EDIT: Although, I'd love to be proven wrong. Cheap vocational training where the school turns a profit would really be a great system. I'm just concerned that the priorities will have to be 1) attract lots of students, 2) cut costs per student, 3) deliver education, in that order, if your organization's goal is profit rather than education.

sdizdar 16y ago

The problem with credentials you get from some universities (even elite ones) is that they are of much less value than you paid for it. It like buying house in San Francisco Sunset district ("elite" town) for 2M and saying it is a great deal. No. It is great deal for 500K but not for 2M since max rent was is 4K.

hessenwolf 16y ago

I remember before the internet, and a degree from Harvard, Yale or Oxford still would've made you Jesus-with-a-keyboard. It's about branding, i.e., transitive trust - I trust Harvard, Harvard trusts you, therefore I trust you. As joe-the-user points out, this gives it value, and has nothing to do with whether it is currently over- or under-valued.

dgudkov 16y ago

> the only reason people listen to Peter Thiel is because of his credentials as PayPal co-founder and VC investor. There are a million people have an opinion on education and tecnology. That million people haven't founded such significant ventures as PayPal is. That's why you call'em "a million", not by names.

varjag 16y ago
Yes, because Thiel has better credentials so can be singled out. This is sorta the parent's point.

ignifero 16y ago

"This won't change." Of course it's a bubble. It's the law and finance that sustains it. Inevitably, it will change, and the asians may have to pioneer it.

ig1 16y ago

You're assuming that the schools don't in themselves add value beyond signalling. Even after adjusting for academic achievement students from top-tier university do better post-university, as this broadly tends to hold true across subjects. Of course this could be purely be down to signalling effect, but if so it would imply signalling has as strong impact across all industries not just a handful of professional ones.

jonnathanson 16y ago

Frankly, Thiel's rhetorical "Why aren't there 100 Harvard franchises?" question is a reasonable one to ask. By its own admission, Harvard turns down hundreds -- maybe even thousands -- of students each year who are qualified to attend Harvard. There simply isn't enough space, and at the highest tiers, it becomes a crapshoot. Kid A and Kid B could be equally qualified, and both could have made it through the gauntlet and down to the wire, but Kid B wins out in the end through a process verging on picking straws. For the rest of his life, Kid B is "Harvard-educated," while Kid A is deemed by many folks in society to be Kid B's intellectual inferior. But what if Harvard had enough capacity to admit everyone who met its admissions standards? It's a question worth asking. Would Harvard cease to be "Harvard" if that were the case? Thiel's point is that it would -- which is indicative of a problem with our valuation of Harvard. Be that as it may, your overall point is sound. Harvard may have some mystique baked into its valuation, but most of us still hold the valuation -- mystique and all -- in high esteem. We accept it at face value. So long as we continue to do so, the bubble stays afloat. In order to test Thiel's thesis, we'd have to go a step further and ask ourselves: what would, in theory, cause the bubble to pop? What would it take? Given that this bubble (for lack of a better word) has been propped up for hundreds of years, and is still going strong, what straw would break the camel's back? I'd argue that it's Stanford. Or, rather, everything the proverbial Stanford represents: Silicon Valley, something approaching new-money meritocracy, and so forth. If enough Stanfords emerge across the world, suddenly the time-honored value of the Harvard degree seems less shiny than it once was. [Interestingly enough, Harvard does a pretty darned good job at being a Stanford, too. But, for the set of Harvard attendees who are there to collect the credential and not to start up a company, the value of that credential-qua-credential would decrease in a bubble-deflating scenario].

numeromancer 16y ago
There simply isn't enough space, and at the highest tiers, it becomes a crapshoot... ...to which the rich bring weighted dice.
- jonnathanson 16y ago
  Interestingly, I would argue that we've got two oppositional forces at play in today's admissions game: 1) Seldom before in recent American history has it been easier for a well-qualified, but SES-disadvantaged student to gain admission to Harvard. 2) Seldom before in recent American history has it been harder for an SES-disadvantated student to become well-qualified to gain admission to Harvard. Once you've reached the admissions gates, so to speak, your merit is a better calling card today than it ever has been. But getting there is becoming tougher and tougher, thanks to a chronically deteriorating public education system and increasingly costly college-preparatory mechanisms. It is commonly assumed that the rich receive advantages at the gate. Rather, they've been receiving advantages throughout their lives that increase their likelihood of getting to the gate in the first place. It's a subtle, but important distinction.

michaelochurch 16y ago

And surprisingly the internet has actually made elite schools more important, not less. Pre-internet regional schools were often held in near equal esteem as Harvard/Yale. As information became more fluid (USNWR and the internet) the ranking of credentials became easier to obtain. This won't change. What changed in the second half of the 20th century is that academia became (for students and professors) a national, rather than a regional, market. Now every top high school student vies for an Ivy League slot, and there just aren't enough of them to accommodate all the great students, especially when there's an implicit contract between the Ivy League and the WASP old-board that about half of the slots are going to go to entitled aristocrats based on privilege rather than merit. The national market actually makes the process a lot noisier, not a more efficient informational market. The internet didn't create the national market. That began in the 1960s (air travel, television) if not earlier. The Internet just sped the process along by making it a lot easier for people to send out 20+ applications and clog up the system. The job market has the same problem. It's not flow of information that's the problem. It's, for lack of a better word, spam: content without information. You know how selective tech companies brag about their 1:250 acceptance rates? For an even moderately qualified applicant, odds are closer to 1:15 to 1:4. Companies get a ridiculous number of spam CVs-- often in duplicate or triplicate, because many of the worst recruiters are prolific spammers, and because the least-qualified applicants send out so many CVs. On this note, be very careful about using recruiters and make sure they won't send out your CV without your consent; the worst recruiters not only throw CVs around promiscuously, but often "upgrade" details, meaning that a later (honest) CV submission may contradict one on file, make you seem a liar, and flush you out on that alone. It's not fluidity of information that is the problem. In an efficient market for information, no one would give a shit about college prestige in the first place because the (smarter and harder-working) 85th-percentile state-school graduate would beat the 65th-percentile Ivy graduate, hands down. College prestige only matters because people are often typecast to the average quality of a student from their school, at least as the starting assumption about a young person with a blank CV. The problem isn't "fluidity" of information but that personnel markets (job market, academic admissions) are clogged up with so much useless spam information that separating the signal from noise is nearly impossible.

freshfunk 16y ago

There's a subtle but big difference between what he said (at least how I read it) and what you said he said. You're implying he said credentials are worthless or meaningless. He actually was saying that there's a bubble in education. That is, the cost of education is overvalued vs the return one typically gets. Yes, he talks about the exclusionary nature of institutions but I don't think his point is that credentialing is pointless. His point is that the system has built a bubble (overvalued not worthless)