Why most university degrees are worthless, Part 2

When I say that “most university degrees are worthless” I don’t mean “no one should go to college” or “drop out of school now.”

I mean that the objective value of university degrees is more often than not negative. If governments stopped subsidizing higher education, the vast majority of young people and employers would find a way to match with each other without wasting four years.

By this, I don’t mean “in a theoretical utopia you don’t need to go to school, but in the real world, you better start on your applications.” The fact is that many, if not most young people *are* needlessly wasting four years and getting into lifelong debt for no good reason. The alternative to university is not “apply to the same position four years earlier” — though in many cases college grads and dropouts do end up in jobs they could have gotten out of high school.   If you’re determined to be a industrial engineer, brain surgeon, rocket scientist, you currently have no choice but to get a degree.  However the majority of students – the business, english, history, education, and other assorted liberal arts majors have no business being there.

The real alternative to college is to find a way to build skills and demonstrate your market value with less time and money than a conventional education. Vocational training, apprenticeships, online courses are all possible paths to a career. People often respond to this argument by pointing out that college grads tend to earn much higher incomes than those with only high school diplomas. But this is a misleading statistic because a university is nearly universally viewed as the only means to a successful career, so highly motivated people are brainwashed into thinking that success means going to school. If these people were aware that another option was open to them, they might be even more successful.

Michael Dell, Steve Jobs, Bill Gates, Mark Zuckerberg, John Mackey, and many more dropped out of school when they realized that the benefit of starting their careers immediately exceeded the return on their degrees. I’m not saying that everyone could be a billionaire if they drop out, but how many people needlessly delay the real world to meet someone else’s standard of success?

Do I regret going to school? No – I regret going to school with the expectation that a degree in itself would guarantee a good career, instead of the goal to become someone who could create value in the market. When I failed out of aerospace engineering as a freshman, I regret not taking a break to decide what career I wanted instead of changing to the first major that seemed interesting at the time. I regret leaving the dot-com I started with a friend as a junior to focus on my grades, instead of working harder to make the business a success. I regret not starting my career with two useless bachelor’s degrees and learning to code instead of getting a useless masters that I never used. I regret not pursuing my passion for web design during my senior year of high school in 1999, when I mastered Dreamweaver and started my first blog.

Here is the mistake that so many make: I delayed entry into the real world for as long as possible based on the lie that what I learned in school would be valued by the market, and my skill at passing tests would translate to skill at doing a job. I was wrong: I spent the first ten years of my career learning for the first time how to be a productive worker. In short – I let my schooling interfere with my education.

A letter to my broker on the Fiduciary Rule and the repeal of Dodd Frank

The CEO of my brokerage firm asked for my support in opposing the Trump administration’s plan to roll back the Dodd Frank Act and the Fiduciary Rule for retirement accounts, which would require brokers for retirement accounts to act in their client’s best interest. Sounds great, right? This is what I wrote in response: 

Dear [CEO’s Name],

Please allow me to share a few thoughts on your request as a client of [Firm Name]:

I appreciate that you believe that the Fiduciary Rule and the Dodd Frank Act are in the interests of consumers and the economy. I respectfully disagree.

Furthermore I think it is a bit irresponsible for you to advocate for these policies without admitting that [] has a personal financial interest at stake.

One of the selling points for [] is that your advisors are fiduciaries. I don’t need to tell you that the Fiduciary rule shook up the 401K/retirement industry and created an advantage for companies which already had a fiduciary policy for their clients. Firms like [] which did not have to make the switch had an edge in selling their products.

Now as to the wisdom of the Rule itself:

Personally, I value having a fee-only advisor who is legally bound to sell the best products for me. Yet this not necessarily true for everyone. A fiduciary advisor who cannot profit from selling securities directly must earn his living by charging an explicit fee for his services. This fee-only model is not suitable for everyone — especially investors who are just starting out.

I would not have made my first mutual fund purchase as a 16-year-old if not for the efforts of a commission-only advisor who taught me about the value of compound growth. Years later, as a financially irresponsible young professional who had failed at investing on his own, another commission-only advisor set me on the path to financial independence. While management fees would have discouraged me early on, at some point, without any legislative help, I recognized the value of a fiduciary advisor, and switched to your company on my own. Yet if it were not for the initial push and value of no-fee offering, my 16 year-old-self would probably not have started on this road.

While I would not advise anyone to use a commission-only advisor today, fee-only advisors are prohibitively expensive or unknown to many people with limited access or experience with the financial system, and I don’t like the idea of a legislative solution forcing a one size fits all fix on everyone. Furthermore, while a fiduciary is prohibited from *profiting* from his advice, the law can’t make him give *good* advice, so there is no guarantee that budget fee-only fiduciary advisors will offer better financial advice than commission-based advisors.

Now as to Dodd-Frank. This legislation is complex, and has many provisions, and I think it’s an oversimplification for you to simply say that that it “protects consumers” and will “prevent recessions”:

First, surely you don’t believe that Dodd Frank prevents *all* recessions, or even major recessions, or you would not be investing my money as you are [by putting a portion in safe, recession-proof securities]. Recessions have many causes, but the most common one is government policies — and there is no reason to believe that the Fed or other government institutions are any less likely to cause a recession in the future due to this legislation.

Second, as I’m sure you know, the financial industry was already heavily regulated prior to Dodd Frank, and the Act adds several more layers. We can debate just how much protection it adds, but all the numerous prior laws (starting with Glass-Steagall, etc) failed to stop recessions, bailouts, or bad behavior towards consumers, and there is little reason to believe that this time Congress finally fixed capitalism once and for all.

In fact, all this legislation created numerous additional costs which consumers ultimately pay for, and leads to regulatory capture — the most common way for financial institutions to mask their bad behavior. Without going into technical and historical detail, I believe the Dodd Frank Act created a lot of extra costs for consumers without much additional protection. This is why most banks eliminated freebies such as free checking and the community banks’ share of the lending market fell to just 20%. Surely companies with established and fell-funded compliance departments such as yours have an easier time complying with these rules than small startups who might try to compete with you.

To conclude, I do appreciate the fiduciary policy of [] and the legal protections for what others can do with my assets. Yet I dislike my money being used to advocate for overly simplistic and historically ignorant political solutions, especially when such advocacy comes with a conflict of interest.

Make your job your primary focus in life

Our culture has shifted away from viewing work as the main focus of people’s lives.  Part of the cause is economic: most people no longer need to work hard in order not to starve to death on the streets. Furthermore, the differences between income levels are far less important: your friend might have $1 or $1 million in the bank without much noticeable difference in lifestyle, whereas it used to mean the difference between a poor house or a mansion. Another aspect of it is philosophical: we have lost the understanding that markets are responsible for civilization, and so place far less value in productive work.

Career advice for the young: your job should be your primary focus in life. This is not to dismiss the value of family, friends, etc, but as far goal pursuit is concerned, you need to prioritize your career. I see young people who come in the morning tired from video games, partying, reading books, hobbies, etc. You guys need to think hard about your life and your time management. Schedule your social life, put time limits on games, sip your liquor, whatever it takes.
Cut out the non-essential crap in your life so you can come in and perform like a rockstar every morning. Playtime is over — you’re not a kid anymore and need to start adulting ASAP. If you can’t get sufficiently motivated about your job to do that, quit now and find something that drives you to perform your best. Trust me – it will be worth it.

When I give this advice, people inevitably complain that by stressing the importance of work, I dismiss the value of family. Nevermind that young people today don’t place much value in family either – the kind of diversions I mentioned have little to do with forming meaningful relationships. In one aspect, however, I think I value family more than most of my critics. I used to dismiss stay at home moms (or dads) as incomplete human beings who failed to reach their potential. Over time, however, I saw the value of attachment parenting – close physical and emotional contact between parent and child is very important. Furthermore, the financial advantage of two working spouses is less than is often assumed and misses out on major non-material costs. So I’m not so “anti-family” after all.

Finally, making your career your primary purpose in life does not mean working more hours. Not only is overwork counterproductive, but it is often the excuse to avoid taking the few, uncomfortable steps needed to actually make progress in life.  A good work-life balance doesn’t mean arbitrarily delimiting work/non-work hours. It means evaluating what habits and activities in your work and personal life are worthwhile investments and which ones are not, and delegating time accordingly.

Why we need disruption now more than ever

Ever since I discovered the importance of individual rights and the role of markets in human progress, my biggest fear about the fate of world has been not that things will get worse, but that we will muddle along with more of the same.

My study of history led me to the conclusion that the rapid growth in the power of the State following the First World War reached some threshold in the late 1960s, and damned up (however imperfectly) human moral, social, artistic and technological progress in many ways.   I don’t mean some sort of utopia, but the next semi-metaphorical stage of human evolution.  A true cosmopolitanism to replace multi-cultural tribalism, post-post-modernism, post-democratic forms of government (distributed citizenship?), ubiquitous encryption, smart contracts, prediction markets, distributed education, designer babies, single stage to orbit, organ printing, uploaded brains, etc.  Ironically, it was capitalism that created the technological progress and additional capital to make the modern welfare-warfare state possible, before Statism throttled it.

The perpetuation of the mixed economy, a condition somewhere between freedom and slavery threatens the progress of civilization on a fundamental level. The social-democratic welfare-warfare governments of the world strangle innovation, corrupt cultural and moral progress, and hinder the flow of history itself. Ultimately, the fault is not with politicians but with ourselves, down the small-town American voter who uses political violence to zone his competitor out of business, or big-city busybody who votes to decide what how neighbor is allowed to eat, drink, smoke, or play.

I know that no human institution is eternal, and for better or worse, this era of history will someday come to an end, but the possibility that it will last through my lifetime fills some deep part of me with an existential dread.

How will the next phrase of history arrive? Will it be a peaceful and harmonious transition to a glorious future, a descent into totalitarianism followed by tragedy, conflict and collapse, or something I cannot imagine? Whatever it is, I want to live to see it — and I will do my damnedest to bring our long-delayed future forward.

I believe that history has a momentum and a direction of its own. Capital accumulates, knowledge and wisdom is perfected, and though it is weak, imperfect and inconsistent, I believe that there is a *moral* arrow to history – a steady progress towards a better, more rational, just, kind, and *human* future.

For decades now, democratic nations have existed in an increasingly precarious state, as increasing productivity of labor enables ever more looting of the productive class, but just below a level that would lead to social collapse.

I believe that technological progress will become ever more rapid and unpredictable, disputing the rigid schemes of the central planners. Economic cycles will accelerate, central banks will fail, and empires will rise — and fall. Or so I hope.

For better or worse, we need disruption to bring our long-delayed future forward. This is the thread that informs my criticism of our most respected institutions, and my support of the most subversive, disruptive trends.

Here is why most university degrees are worthless, Part 1

I needed a foreign language credit for my undergraduate, so I decided to take Russian, since I had grown up speaking it. So I took a Russian assessment test. It was harder than I expected, but I was still pretty surprised when told that I would have to start from scratch with Russian 101. When I challenged the head of the Russian language department, he asked me a series of grammar questions, which only confirmed the test results. So I took the few semesters of Russian needed for my degree. I got easy A’s – not because I was fluent in Russian, but because I had been trained by 13 years of schooling to memorize grammar rules for tests. My friend Tim took them with me, and I think he would not dispute that he learned absolutely nothing while getting the same grades.

16 years later, and 26 years after I had last spoken Russian on a daily basis, my uncles, who only speak Russian and Hebrew, came to visit. Within a few hours of speaking (and drinking) with them, we were talking and joking together. I had been reading at a college level when I left the USSR, and all I needed to jog my memory was a little language immersion. It turns out I’m not a total beginner. The head of the Russian language department, who had learned the language in a classroom, and probably had never lived in Russia outside of supervised university trips had no interest or ability to spend a few hours with me, and do more good than three semesters of classes. Not everyone can re-learn a language with a few hours of immersion, but everyone has different needs and learns in different ways, and our schooling system is designed for mass instruction without any regard for individual needs.

A month ago, I changed my job from technology to marketing. A graduate degree and 14 years of experience in tech, and I suddenly decided to do something different. Do you think I could have done that if I defined myself by my university degree? I haven’t read a book on marketing (not proud of that btw, just saying), much less taken a class on it, but was I worried? No – because I know how to Google, I know how to ask for help, and I know how to Get Shit Done. And I’m getting it done, my useless economics, political-science and MIS degrees be damned.

Meanwhile, do you know how many unemployed/underemployed marketing/communications graduates there are? I’m hiring one as an intern next week – who wised up to his useless degree and got Praxis (God bless ‘em) to show him to do marketing – starting with marketing himself.

Who knows what I’ll be doing a few years from now. I’ve thought about writing a few books, maybe doing travel photography for a while, or even a starting a hedge fund. If I thought that I needed four years of school for every job, I would still be an unemployed economics graduate.