On this Valentine's Day, ask "Do the Chinese think about love (as opposed to obsessing about industriousness and success)?"*
In defense of love, or doing your own thing
James Altucher also drew a firestorm of criticism when he wrote 10 more reasons why parents shouldn't send their kids to college. He argued that college is expensive and a waste of time. Kids spend all their time partying and doing very little learning. Instead, he suggests that kids become entrepreurs by starting a business, or pursue their dreams, by either learning and perfecting a cherished skill. etc.
These kinds of solutions only work well for exceptional people. While we would all like to think that our kids are exceptional, mostly they are in reality average - by definition. For this group, Mike Mandel puts the reality of young college graduate unemployment into context.
The debate over whether to be industrious (Tiger Mother parenting) and to pursue your own dreams (as per Altucher) is a debate over the value of an education. Philip Delves-Broughton, writing in The Economist, has questioned the value of an MBA.
There is no question that education is expensive but it's still worthwhile. As the first chart shows, the rate of improvement in unemployment for the less educated is better than the educated in the 2010/2009 period. On the other hand, the absolute level of unemployment for the more educated is a lot lower than less educated and the results slope downwards monotonically.
As for the question of an MBA, if you just want to make the big bucks, don't bother unless you can get into one of the top schools. As one of the discussions on the value of a Top-20 MBA puts it succinctly, it's not just about what you learn but who you learn it with and the branding that comes with it [emphasis added]:
And so the debate rages on. Consensus seems to indicate that a top MBA programme does matter is you are intending to launch into a management consulting or investment banking career, where the competition for MBA's is most heated. To be frank, the main reason to go to a top ranked school isn't necessarily the strength of the curriculum. Funny that. While I'm sure that the top 10 programs are arguably tougher than say the 50 - 60 ranked programs, I'd venture to say not by a whole lot. So what's all the fuss?We can also extend those conclusions to an undergraduate education. It's not just about what you what you learned, but the branding, i.e. you have a piece of paper showing your credentials.
The true value is brand name and connections.
The social and business networks you gain from these top schools are easily worth the tuition. After two years of shared project angst and coffee-filled all-nighters, it's often easy to reconnect with good friends or even acquaintances from your MBA days with a simple email or phone call. The bond created through an alumnus is a strange, mystical thing, especially at top tier schools where the sense of belonging to an elite group is strong.
Employers these days do give more weight to your experience than to your degree, but they're still more likely to favour people they know. Sorry, folks. The Harvard MBA network is a very impressive example of how productive a branded network can be for graduates. Come resume screening time, it proves to be a huge leg up if the recruiter recognises you as an alumnus. Employers assume, with some justification, that someone who managed to get into an elite school (and pay the tuition, to boot) is ambitious, intelligent, and motivated. Further to this, many of your old buddies would probably be at senior positions in major companies 10-15 years post graduation. Now, you are both in the situation to "scratch my back, and I'll scratch yours."
The education arms race and national competitiveness
Today, most of the industrialized countries recognize the value of university education. Higher and higher proportions of the population are being pushed into universities compared to 50 or 100 years ago. As a consequence, a global educational arms race has developed. We have seen that in the attitudes of Amy Chua and others. Moreover, we have seen the results in the Olympics like competition (if you aren't in the top three and a medalist you don't count) in MBA education.
The United States has long enjoyed a lead in education. Most of the top schools that students and parents aspire to (Harvard, Stanford, etc.) remain in the United States but that lead is getting eroded. More and more Americans are going to college, which devalue the brand of a college education. Frankly, many of them don't belong there. Consider these comments from Canadian columnist Margaret Wente:
I recently sat down with a professor from a large university with an excellent reputation. He's deeply immersed in undergraduate issues. I asked him how well-prepared today's kids are for university life. After a long pull on his beer, he said: “The top 20 per cent are great. They're smart and self-directed and they'll succeed anywhere.”On the other hand, attitudes towards education have been getting downgraded in the last 50 years. Consider the level of respect that the teaching profession is getting in America (you're a fool to be a teacher, teachers are lazy civil servants, etc.) compare to China (a highly respected profession); science fair participating is falling; and the message about priorities when a Texas high school spends $60 million on a football stadium in the current climate of austerity.
Then there are the rest. One of his biggest challenges as a teacher is that they don't know much. He teaches social history, and he can't assume they know what “tenements” were, or “steam locomotives.” They're digital whizzes, but they can't do the mental math of “10 per cent off.” Despite 12 years of schooling, they arrive at university with a poor stock of general knowledge.
When it comes to competitiveness, education still matters. While western societies now turn their attention to concepts such as child-centered education and self actualization, other countries are catching up in other measures and the American lead is getting eroded.
On the other hand, it is also important for personal self-fulfillment to be happy at what you do. Speaking personally, I have been lucky to have been able to pursue both my passion and be fortunate enough to be in a business that pays well. I would not be writing this blog if I wasn't passionate about investments and markets. I would not have re-entered the business after trying semi-retirement by starting a new fund if I did not believe that I was offering a real solution to the current environment of a volatile and low-return investment environment.
* Before the flame wars begin, that was a rhetorical question. Of course the Chinese think about love.