Human Capital Diversification vs Pancake Mix

I went to the grocery store yesterday (late morning) expecting either business-as-usual or empty shelves. I was surprised to see both. I’m currently regretting not taking photos because it probably will be business-as-usual by the time I go back.

Some shelves were empty, and others were full. What I saw was a direct visualization of what my neighbors don’t know how to cook.

Going through my store I could see that my neighbors know how to put jarred sauce on pasta. But I saw the opportunity to blend some canned whole tomatoes and make my own sauce. “International” foods were largely untouched, but anything in the local culinary lexicon was sparse.

The whole Baking Needs aisle was basically fine, except for the pancake mix which was all gone. This is really the whole story. Who buys pancake mix? Culinary illiterates.

(Disclaimer: I’m a biased source when it comes to pancakes. I take pancakes as seriously as 75th percentile Bostonian takes the fact that the Yankees suck.)

It takes a modest amount of skill to make pancakes, but the ingredients are cheap and YouTube wants to help you. Now is a great time to up your pancake game. But even if you just follow the directions on any random pancake recipe you’re stirring together flour, salt, baking powder, sugar, eggs, oil, and milk.

The mix will either give you a crappy shelf-stable replacement for the eggs and/or milk (yuck!) or hold your hand as you stir together some powder with eggs, oil, and milk.

Thinking back to my career as an omnivore, I can recall a time when I’ve bought ingredients I really should have made. I’m not judging people who don’t know how to cook, because I’ve been there.

What I’m pointing out is that those people are always going to have the hardest time when it comes to food shortages. I’d be in the same boat if I was shopping at a store that didn’t sell the limited set of ingredients I know how to use.

There’s a tension in economics that we don’t pay enough attention to: gains from specialization vs. gains from diversification. At a system level (and in a Principles class) the two go together. But at the level of individual there is a lot to be said for diversification–you’re more robust to change, resilient in the face of problems, and perspectives gained in one domain may have lessons to apply to others.

I’m grateful I haven’t taken my own human capital specialization so far that I can’t make my own pancakes.

Prediction: Online Adjuncting is About to Boom

SUNY has been pushing for more online for some time. It means an increased ability to sell credentials to a broader market with lower real estate costs.

As far as I can tell, the primary constraint has red tape. I don’t know who put it there (unions? accreditors? governments?), but getting a class certified to go online on my campus has meant going through a steep enough up front cost that few people bother. Combine that with the fact that an online class is simply less fun and you’ve got a recipe for a mercifully slow expansion of online teaching.

That changed this week. Now almost all of SUNY is online, like it or not. The red tape might be there when we get back to normal, but the up front cost to getting a class online will fall enough that many adjuncts will get in on the action next fall.

About 15% of summer 2020 classes are slated to be led by adjuncts. I predict that by summer 2021 that will increase to 25% and that will just be the start of a much larger trend of adjunctification of online classes.

“There’s Nothing Morally Wrong With Not Wanting to Work Hard at School”

That’s a point I agree with in an opinion piece I recently stumbled across.

And it relates to a larger point that’s been brewing in my head the longer I hang around campus. Most of these kids simply shouldn’t be here. They don’t want it enough, and they really don’t need it. There’s nothing wrong with the fact that they don’t want to work hard enough to make school a valuable experience. College is a distraction for most kids who really should be getting work experience instead.

I’d love to live in a world where people valued education and pursued it for its own sake. I’d love to find out my garbage man is a lover of classic Russian literature. But I actually live in a world where people value schooling which they pursue for credentials. And any education they get along the way is an accidental byproduct. The one things students seem to learn is how to flatter their professors. Sure, they learn while they’re at school (how can you be 18 and not learn something?!), but I’m far from convinced that they learn because of school.

The trouble is that the one thing schools have been effective at teaching students is how important school is. Is it so important that nearly a quarter of “amusement and recreation attendants” should have bachelor’s degree or higher? I won’t argue that carnies should be high school drop-outs like in the good old days. But if I had the choice between one who passed my class (with a C+) and one who spent an extra couple years learning how to make sure a bolt is tightened properly, I know who I want operating my teacups.

As a society, we’re fooling ourselves. We’ve set up a system where we convince kids that they need a degree to live a good life, and it becomes a self-fulfilling prophecy as college graduates go on to uncritically hire college graduates. That leaves an unsustainable tension: most students (rightly) don’t want to work hard at school, but they want to go to school. “Society” wants them to work hard at school, but doesn’t want to deny anyone a degree. At best we end up wasting everyone’s time. At worst, we set kids up for failure then leave them with student loans. In either case we erode standards and diminish the signalling value of school along with the educational value. We need someone to go into high schools to tell kids that there’s nothing morally wrong with opting out of college entirely.

Departments of Higher Education should have mystery shoppers

As you know, I teach at a SUNY campus. As you can imagine, the views I express here are only my own and certainly not those of any authority figure in the bureaucracy I live in or the higher ed industry more broadly. My union would be mortified.

In my opinion–coming from a limited perspective within the sausage factory–the problem we’re facing is that universities are good at education and bad at credentialing (at least when there’s a significant demand for the signal value of a degree). This has lead to a host of problems–Baumol disease, growing administrative expense, all sorts of cultural unsavoriness, declining standards, grade inflation, etc.

Education just happens. You can’t plan for it. You don’t do x amount of philosophy and then you’re enlightened. But a navel-gazing, consequence free environment with a culture of inquiry is a fine place for education to happen.

Credentialing on the other hand is a common pool with the usual problems. It doesn’t have to interrupt the educational component of the university, but when actors in this setting follow the basic economic logic of their situation enrollments (and budgets) expand and the nature of the good produced by schools shifts from unquantifiable to commodity.

In such a setting there is a strong case to be made for regulation. At the very least to manage the common pool resource of the signal value of a bachelor’s degree, but more ideally to ensure students aren’t simply learning to minimize cost while navigate a bureaucracy.

Of course, NOL readers know that regulation is never easy and comes with many problems of its own. In fact, many of the problems I see in the industry are the natural bureaucratic outcome of such regulation (particularly as I sit here avoiding the work I’ve got to do making my tenure packet more closely resemble a checklist version of the guidelines my campus gave me. God I hate this!). For a taste of how this mess is currently killing the goose that laid the golden eggs, check out BadAssessment.

How do we improve the regulatory quality? Mystery Shoppers!

My industry is disciplined through:
* direct state regulations,
* marginal nudges through strings-attached financing,
* “self”-regulation through quasi-public regional accreditation and much-less-public discipline-specific accreditation,
* direct consumer experience,
* U.S. News (and similar) rankings, and
* Peter Theil and other critics complaining about how the education system is broken.
My proposal could be done at any of these levels, but to my knowledge is only actually done at the statistically invalid level of direct consumer experience.

Governments could invent many students and their traits and send copies of these students to a sample of online programs. Teams would manage sets of students and gather data. With several of these students taking different paths through each school the agency could learn something useful about the school as a whole–is it a degree mill? How does the actual student experience compare to other schools? Are there pitfalls that might put vulnerable groups at a disadvantage?

Peter Theil could do it more aggressively and generate an upper-bound estimate on the bullshit in the industry.

The College Board or U.S. News would probably turn it into a new costly margin of competition between schools, but that’s probably an improvement over what we’ve got now.

To my knowledge, nobody is doing this. In my opinion, given the stakes and the size of the industry, it’s worth approaching this from many directions. Mystery shoppers would certainly be a more direct evaluation than the hundreds of pages of sacrificial paperwork we’re currently using.

The Lesson to Unlearn

Paul Graham writes:

In theory, [classroom] tests are merely what their name implies: tests of what you’ve learned in the class. In theory you shouldn’t have to prepare for a test in a class any more than you have to prepare for a blood test. In theory you learn from taking the class, from going to the lectures and doing the reading and/or assignments, and the test that comes afterward merely measures how well you learned.

In practice, as almost everyone reading this will know, things are so different that hearing this explanation of how classes and tests are meant to work is like hearing the etymology of a word whose meaning has changed completely. In practice, the phrase “studying for a test” was almost redundant, because that was when one really studied. The difference between diligent and slack students was that the former studied hard for tests and the latter didn’t. No one was pulling all-nighters two weeks into the semester.

Even though I was a diligent student, almost all the work I did in school was aimed at getting a good grade on something.

This, in a nutshell, is what’s wrong with the education system. Forget governments, unions, misunderstandings, standardization, Baumol Disease and all the rest. The big problem is that the signal value of school subsumed the educational value. It’s Campbell’s Law.

The rest of the article is worth the read.

Goodbye Rudy

In 2008 I found myself at SJSU study economics as an undergrad. That was the big turning point that landed me on this blog.

A lot of people insist that was a fantastically interesting time to study economics, what with the global financial sector crumbling and society at large humbly learning a lesson in allowing markets to discipline irresponsible risk taking. (Right? Isn’t that what happened?). But for me, what was fascinating was the intellectual framework that allowed you to dig into the root causes. The SJSU econ department was a fantastic place for me to start building up that framework.

Fall 2008 was professor Rudy Gonzalez’s last semester before retirement and my second semester in that program. I took advantage. Rather than four discrete classes (Law & Econ, History of Economic Thought, Labor Econ, and Public Choice) I essentially had a 12 credit class in Economics broadly understood. It was the most intellectually fruitful semester in my economics career.

Rudy was the sort of freewheeling professor I try to be. He set a tone. In Rudy’s classes I learned the most in the gaps between the stuff for the exam. My classmates and I came out of his classes debating concepts and engaging with ideas. This was the semester I wrote my best joke: The Physiocrats. I learned a lot from studying for those exams, but the best stuff was in the digressions.

I think my students hate it when I digress. They’ve been trained by a lifetime of standardized tests and the empty promise that ambition is as simple as uncritically ticking off the right boxes: take these classes in this order, get a degree, then get a job (whatever that means). There’s a lot of lip service to the importance of education, but now education is a commodity. Bricks to be stacked mechanically.

In Rudy’s class, education was a process of enlightenment. Knowledge wasn’t an assembly of bricks, but a garden–different bits of knowledge growing and complementing one another, fertilized with jokes and stories.

It was in his class I decided I wanted to be an economics professor. He also gave me a copy of the paper that convinced me of anarchism. I’m still trying to share a taste of the excitement I got in his class with my students. It’s an uphill battle, but I’m glad I’ve had the chance to fight ignorance with economics and humor.

Goodbye Rudy. You will be missed.

Second Nature

Michael Pollan gets me. Highly edumacated middle class white guy whose in to food and gardening. Last year I read Omnivore’s Dilemma and became convinced that Pollan occupies essentially the same position as me (challenging my preconceptions): the humble anarchist. Pollan has a sense of emergence, and skepticism of the beneficiaries of government policy. He might not take public positions as an anarchist, but that doesn’t mean I don’t see Ol’ Spooner’s ghost whispering in his ear.

This Christmakwanzakkah I read an older book of his. Second Nature is his record of the same experiences I’m currently going through as a gardener. This is from way back in 1991, and in it gives some evidence that he might be an epistemological anarchist:

As it happens, the etymology of the word true takes us back to the old English word for “tree”: a truth, to the Anglo-Saxons, was nothing more than a deeply rooted idea.

p. 159

Here he is appreciating emergent order in markets:

More than a work of art, I like to think of the garden as if it were a capitalist economy, inherently unstable, prone to cycles of boom and bust. Even the most prosperous times contain the seeds of future disaster. A flush year in the perennial border usually means lean times ahead; now spent, the perennial need dividing and won’t peak again for two years. Unless pruned in spring, my asters, phlox, and delphinium willput out way too many shoots, a form of herbaceous inflation that will cheapen all their blooms come summer. Wealth is constantly being created and destroyed in the garden, but the accounts never blanace for very long–a shortage of nutrients develops in this sector, a surplus in that one, the value of water fluctates wildly. Who could hope to orchestrate, much less master, so boisterous an assembly of the self-interested? The gardener’s lot is to try to get what he wants from his plants while they go heedlessly about getting what they want. …

The garden is an unhappy place for the perfectionist. Too much stands beyond our control here, and the only thing we can absolutely count on is eventual catastrophe. Success in the garden is the moment in time, that week in June when the perennials unanimously bloom and the border jells, or those clarion days in September when the reds riot in the tomato patch–just before the black frost hits. It’s easy to get discouraged, unless, like the green thumb, you are happier to garden in time than in space; unless, that is, your heart is in the verb. For the garden is never done–the weeds you pull today will return tomorrow, a new generation of aphids will step forward to avenge the ones you’ve slain, and everything you plant–everything–sooner or later will die. Among the many, many things the green thumb knows is the consolation of the compost pile, where nature, ever obliging, redeems this season’s deaths and disasters in the fresh promise of next spring.

p. 131-2

Pollan is showing as a great an ability to appreciate the market as a process as any Austrian economist.