The crisis gave people like Peter Thiel an opening to question the dogma and sacred creed of a college degree as palliative for the fundamental socioeconomic problems of American society. Thiel recently almost caused a scandal by calling an investment in a college degree speculative and ill-advised. Thiel has, of course, been criticized for not getting the secret – college education is not an investment, it is something more mystical and therefore priceless.
Even now, as Ph.D.s toil behind lunch counters, waves of gold-seekers descend on the nation's campuses. The idea that a college degree can cure all social ills is powerful indeed. To question it is to question the centerpiece of political and social stability in the country, because to say that a degree doesn't mean much is to say that America has become a nation where it is impossible for most to meaningfully change their lives for the better. No politician can admit this openly. And so the fantasy persists.
But the economic reality responsible for the thousands of graduates with advanced degrees working menial jobs supports not the delusion that we need more accessible higher education for more people, but the conclusion that the American economy has, for the last two decades, been actually shrinking. Not only has the shrinking economy been shedding jobs for years and causing the incomes of most to remain flat, but a shrinking economy will be unable to supply the kinds of jobs in the numbers required for many Americans to maintain a middle class lifestyle, auguring rising poverty and diminished means for many formerly of the great American middle class.
A shrinking economy also means that even if the economy gets “better” for those on Wall Street and the rest living at the very top of the ladder, it won't get better for those on Main Street, for the shrinking economy has decoupled from the rest of America, leaving millions permanently stranded in the periphery of stagnant or falling wages and few prospects.
An economy could be shrinking for two reasons: productivity and globalization. It is its greater productivity that causes an economy to shrink in terms of its workforce size needs. A simple example shows the process at work: Instead of many secretaries and office clerks there are computers and software that allow only a handful of office workers to do the same amount of work. The principle applies across most industries.
This technology-inspired rise in productivity is only part of the equation, however. In similar ways as technological innovation, globalization makes economies more productive in the sense that it allows for the outsourcing of jobs to sites where more work can be done for less. Traditionally, the media has focused on the outsourcing of blue collar jobs and plants being shipped abroad. But even white collar jobs can be outsourced: legal documents can be prepared in India, and much other similar skilled work can be outsourced as well. As a result of globalization, perhaps the entire law office, not only secretaries and clerks but paralegals and even attorneys, has itself been outsourced, leaving only a handful of partners. While in a previous era that law office could hire several college graduates to work as paralegals, the outsourced office has no such needs. In fact, it doesn't really need to hire new law school graduates either. The only place those college graduates can end up is behind the lunch counter.