Here's a puzzle: Try to figure out what we're describing.
It costs a lot of money, so much that most people have to go into debt to buy it. It has considerable intrinsic value, but it is also understood to be an investment. And it is a status symbol--indeed, almost a necessary condition for achieving middle-class status.
Its acquisition by as wide a swath of the population is widely seen as a social good. Thus the government heavily subsidizes it through tax incentives and other means. That, however, creates an artificial demand that drives prices up and, in a vicious circle, spurs demands for more subsidies...
In the current economy, it has turned out to be considerably less valuable than promised. As a result, many Americans are under water, with debts that they will not be able to pay off easily.
What is it? A house, but that's the obvious answer. We're thinking of a college education. The similarities between the housing bubble and the higher-ed bubble are remarkable, aren't they?
"The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year," USA Today reports. We'd seen that $1 trillion figure before--last Saturday, at New York's Zuccotti Park, where a 23-year-old Occupy Wall Street protester named Taylor was carrying a sign that read "Where's our bailout? $1 trillion in student loans outstanding."
You can see why young people like Taylor would feel aggrieved. Growing up, they were told they needed a college education as a ticket to a productive life. Now they find themselves deeply in debt, their employment prospects limited in the Obama economy. So they're lashing out at the banks that hold their debt and at the corporations that have made a college degree into a license to hunt for a job.
Their anger is understandable but misplaced. The banks were merely doing what banks do; if they had refused to make student loans, these youngsters would have been just as upset. As for the corporations, the reason they demand college degrees, as we wrote in 2007, is that the government forbids them to screen applicants directly for basic intelligence under a doctrine of antidiscrimination law known as "disparate impact" that the U.S. Supreme Court established in the 1971 case Griggs v. Duke Power Co.
October 21, 2011
The Next Bubble?
Interesting thoughts from James Taranto: