I've pointed out many times that the higher education establishment claims that universities are an "economic engine" and that investments in higher education will boost Arizona's economy. This logic seems persuasive because it's true that if you take a largely undeveloped country and teach engineering, medicine and agriculture to a significant percentage of the population, you can see huge gains--think Japan or South Korea in the 1950s. However, I've pointed out that investments in higher education have diminishing marginal utility--each incremental dollar will yield less return and eventually the overall benefit of more money will actually become negative.
So what happens when higher education is subsidized to the point that more people get degrees than there are jobs for people with degrees? Perhaps you have noticed footage of the recent events in Tunisia. Here's an interesting fact.
Tunisia has a gigantic education apparatus that has earned it plaudits for years. Free university education is guaranteed to anyone who passes the government’s exams at the end of high school. As a result, an estimated 30,000 to 40,000 university graduates enter the job market every year. Fifty-seven percent of young Tunisians entering the labor market are college educated.
The article goes on to point out that those highly educated Tunisians can't find jobs.
Of course, in Tunisia, higher education is free. Here, it's not just the policy makers who have been sold the "education is the greatest investment" line. Students fall for it too. That means that many of them have borrowed money that they will never be able to repay in order to get a degree that has no net economic value.
Eventually, the people will rise up. The older people have seen their banks get bailed out...yet those same banks are still foreclosing on them. The younger people realize that they owe $50,000 for a degree in sociology, can't get a job that pays more than minimum wage and can't discharge their debt in bankruptcy.
We've seen what that looks like in Tunisia and Cairo. But what does it look like here?
Maybe they just go Galt. Maybe it looks like this.