Recently, Tufts University professor of International Relations and zombie specialist Dan Drezner played grammar Nazi, by taking issue issue with the word ‘bubble’ word in discussing the the horrendous debt load associated with obtaining college degrees as compared to their worth in the real world.
Editor-at-Large of The American Interest magazine Walter Russel Mead offers a detailed counter to Drezner’s challenge:
The higher ed bubble analogy refers not to the original financial market meaning of a bubble, but to the secondary and very long established extension of that financial metaphor into the industrial sector where bubble is habitually used to refer to overcapacity and asset prices, rather than to asset prices alone. A bubble develops in the steel market, for example, when erroneous beliefs about the future price of steel lead to over investment in steel plants. A relatively minor decline in the price of steel can then lead to dramatic changes in the steel industry as the formerly hidden overcapacity becomes evident.
The point of the higher ed bubble analogy isn’t to compare Harvard diplomas to tulip bulbs or shares in the South Sea company; it is to compare higher ed to overbuilt or poorly structured industries that are cruising for a bruising. It is saying that higher ed is like the automobile industry that has developed too much capacity and the wrong kinds of capacity….
The big difference between the bubble metaphor as classically used and the bubble metaphor as applied to higher ed is simple: higher ed is a (mostly) non-profit industry. While colleges and universities issue debt (and with ratings agencies downgrading some higher ed institutions there is a small financial bubble in these securities that appears to be losing air), the higher ed bubble is less about profits and stocks than it is about capacity. We have built too much inefficient capacity in higher ed, and the bursting of the bubble won’t be manifested in a falling value of Yale stocks and bonds or of diplomas, but in a constricted hiring market, the closure of some institutions and painful contractions at others. It is also manifested in an excessive growth of student debt, much of which will not be repaid.