Between a bubble and the cloud

The higher education finance bubble is here.  Unlike those icky derivatives on mortgage-backed securities, you can see this one in plain day.

Like the housing bubble, the cost of higher education has grown wildly inflated by the relatively easy access to student loans and grants over more than three generations.  And unfortunately for graduates burdened with ever-increasing levels of college debt, the economy has left them "upside-down" and "underwater" (like their parents houses?).

We got here almost the same way housing did.  Like home ownership, a college education had become so virtuous and culturally-standard, banks were pushed by government guarantees to lend to students regardless of either the student (borrower) or the institution (house price) or chosen major (neighborhood). Like mortgage lending, the bank gets paid for initiating and writing the mortgages, not servicing them.  College administrators get paid for selling an educational product, paid admissions, not for the value of the degrees-- which are deemed valuable on their face as long as someone else is paying.

College students are presumed smart-enough, right? But when it comes to their own education, students can be fallible and gullible consumers.  They trust in the notion that if they were accepted to a highly-competitive school, they must be getting an excellent product and will be able-- the social contract goes-- to repay whatever it cost them because they will be successful.

But what happens when the marketplace for their talents and degrees hits a recession?  Can they sell their degree at a loss to cover the loan?  Default on the mortgage on something that resides only in their heads?  What happens when the brain bubble bursts?

While the current President has proposed restructuring the mass of student debt, extending it or limiting payments to a percentage of earnings, the colleges and universities know very well that doing so avoids the root cause: the cost and street value ratio for a traditional brick and mortar college education is out of whack.  When money was cheap and easy, of course, the educational establishment could afford wages and salaries that surpassed the norm in the communities where they operated, provide the ultimate in job security, and cave in to union-like demands for both.  No self-respecting university president believes this can go on, which makes one wonder why the craven effort to salvage students' bad loans?

Instead, many smarter universities heeding their own favorite rallying cries for "sustainability" and have been, true to creed, open minded enough to see their circumstances from the outside-in, be analytical about themselves, and willing to experiment with new ways to serve students.  They are embracing the cloud, distance learning via computer, and lower priced tuition.

There are limits to what can be translated effectively via online lectures and course material without the in-person experiences and dynamics that college memories are made from.  Professors who put students to sleep in person can be assured of higher slumber scores teaching via Skype.  Students who kissed-up by asking nuanced questions to show their inquisitiveness, without proving their failure to read the material, will no longer be sneered at by their peers, they will be muted.  The cloud will have a silver lining.

Even the most traditional schools, like Harvard are giving the new cloud the old college try.  Why?  Because the cloud will rain money.  By opening their campuses through the cloud, more students can enroll at lower prices and still receive approximately the same educational product-- maximizing per-professor output and increasing demand at lower prices.  Moreover, the cloud lets students attend lectures they miss while they are at work, scaling-up the phenomena of a "go-as-you-pay" education, versus go as you pray (for a job). And what about that ultimate sacrilege: making Harvard and MIT classes free online?  Go as you learn!

The only way for the university cloud degree innovation to be killed mid-birth is the government bail-out the current President proposes (and very much like the one General Motors was forced to take that essentially protected the United Auto Workers contract, not the viability or value of GM cars).  If the higher education finance bubble is dealt with the same way as GM-- subsidizing the status-quot bloat, making innovation "risky," while the economy continues to languish under government regulation and debt-- there will be a race to the bottom, and the cloud will dissipate as a passing educational fad.

The Googled Age

In history's so-called "Gilded Age," the US in particular experienced tremendous economic growth and prosperity from the late 1860s until near the turn of the century, lifting a Northern industrial revolution from the ashes and spoils of the Civil War.  Among its characteristic achievements, the first transcontinental railway was built along with many other fortunes, including oil and mining.  Its excesses led, some say, to the American "Progressive Era" redistribution and class-warfare politics that mirrored the rise of European Communist movements.

In today's "Googled Age," a cultural and economic phenomena best known by the internet search engine verb species "Googling" or "to Google," whole industries have sprouted in media, entertainment and commerce.  We have integrated Google and other electronic and internet apps and tools so much in our daily life that our brains no longer need to store "ancillary" information such as phone numbers and addresses and directions for getting from point A to point B.  The massive amount of seemingly "ancillary" recall functions (e.g., "Oh, gee who was it that said, 'Ask not what your country can do for you...'") that can reside in the "cloud" versus retaining such information in our heads, is breathtaking.

One version of this Googled Age promises liberating us to use our brains to think better and more clearly about issues and ideas.  With our "ancillary memory" recall just a few search clicks away, tons of freed-up brain power can double-down solving mysteries and problems that have eluded us in the past.  As long as the cloud, chock full of "ancillary memory" remains quick and easy to access and retrieve from (far from being a guaranteed right) society will flourish as never before.

Yet just one byproduct of the Googled Age-- students who use search engines instead of their own recall of facts to do their homework-- points to disaster.  When information becomes unworthy of being retained in our heads, it's not just facts that "live" elsewhere, memories do, too.  The power of the human mind is its capacity to make associations and relationships, what ties facts with feelings.

Computers just can't do this.  Despite improvements in data-association, tagging, indexing and correlation that make the internet function so seemingly well, there's no app that feels shame or joy-- the kernels of memory and human feeling.  When the Googled Age does us great harm, it will be manifest in a generation perhaps three or four beyond now, where evil is no longer discernible from good because memories of evil consequences are irretrievable from a digital cloud, but do not reside either in the public mind.

Thinking of evils in the past such as the Holocaust or 9/11 will still be possible, of course, but lost will be the indelible sensations of anger and shame that propelled civilization to reject the perpetrators.  On a more fundamental scale, think of how society at large needs to parse the conflict between free speech and religious pluralism (to wit, the Arab protests against a YouTube video) without considering the heaviest of consequences.  In the Googled Age, of course, we can use search engines and online books to read history's legends and even its facts, but lost will be our sense of indignation if our personal convictions are enumerated in a digitized cloud of "facts" that are inevitably not retained in our minds.

While on the flip side, this Googled Age offers millions of channels granting access to incredible artistic riches and virtual experiences, we risk a lot by letting our minds and imaginations off the hook.  Our growing reliance on the "cloud," which makes it easy to hear or view creative works "on demand," makes retaining the good ideas and feelings evoked by them is less important-- perhaps meaningless.  In a world where anyone can publish and produce art and music, no doubt a positive phenomena, we might quickly forget what used to be remembered.

The Googled Age also presumes we humans retain an absolute right of perpetual access to the "cloud" where more and more of our less and less "ancillary" life elements get stored.  As we rely increasingly on instant retrieval (from smart phones' mobile cloud) rather than our own recollection, supposedly we're ahead; our brains can work on the more important stuff.  But what if this seeming "right" is corrupted, taxed or regulated, as easily as it can be?  What if the Googled Age is switched-off by a future tyrant who rises to power because the popular culture and the electorate can't remember-- relying on the almighty cloud for its facts-- what tyranny feels like?

I'm not the only one who has noticed that some of our present-day hallmarks-- tolerance for stupidity (e.g., billions lost in Iraq, the GSA convention in Vegas), immorality (e.g., President Clinton sodomizing a White House intern, pedophilia at Penn State, etc.), and armed extremism (e.g., nuclear Iran, North Korea, Islamist mobs)-- would in any other era be unforgivable, unjust, and severely punished.  No sane people would put up with these things, and so begs the question: what has so clouded (pun intended) our sanity and good judgement?

Lest I be misunderstood, I am not a Luddite and I do not fear the internet or the myriad conveniences it gives to a free society.  But as our mind-machine interfaces grow more and more indistinguishable, the human mind must remain ever more vigilant and dynamic beneath the cloud.  The unchecked excesses of the Gilded Age led (according to Wikipedia) to a socioeconomic revolt that, in turn, gave quarter to a new human tyranny, Marxism-Leninism.  The unchecked risks of this, the Googled Age are likewise worth our concern.