1. John Cochrane on the financial plight of universities.
One might say that universities have an over-bloated staff and a lot of deadwood so this might not be a terrible thing. But that requires an administration ready to impose pain on entrenched constituencies. Not hiring promising new researchers is a lot easier.
The worst thing to be right now is someone who will graduate with a Ph.D in a month. Cochrane has many other insights. Read the whole post.
2. From the NYT.
The difference in investor expectations for large and small companies is stark: The Nasdaq 100, an index of the largest technology companies — which also happen to be the largest companies in the country — is down 0.6 percent this year. The Russell 2000 index, which tracks small public companies, is down 22 percent — roughly double the 11 percent in losses for the S&P 500.
Wall Street thinks that it will be fine if not a single bank or goes under but thousands of small businesses disappear. I am guessing that they are counting on milder social unrest than might be expected.
3.
Ten percent of college-bound seniors who had planned to enroll at a four-year college before the COVID-19 outbreak have already made alternative plans.
Fourteen percent of college students said they were unlikely to return to their current college or university in the fall, or it was “too soon to tell.” Exactly three weeks later, in mid-April, that figure had gone up to 26 percent.
Pointer from Tyler Cowen. I don’t think that the higher education lobby will let this happen. That sector is going to get a decent amount of the money that is being printed these days.
1 & 3. It is a shame that the rent-takers are able to continue to maintain barriers to entry through this period of opportunity and preventing new and better educational paradigms from competing. Somebody in DC please convert this aid into the form of loans. The accreditors must be forced to allow accreditation of non-institutionally affiliated testing services to award diplomas and degrees. There is no reason why a self-directed learner should not be permitted to earn a degree through testing without paying a penny of tuition or ever stepping foot on campus.
And in the last month the Russll 2000 has outperformed and is up 35% and yes off the high for the year by 18%. Pick and choose as you may.
Arnold;
I can think of quite a few things that are worse than being someone with a Ph.D. in a month. Like Syrian. Or Rohingya. Just some COVID-19 perspective.
With regards to the apparently eager cooperation in bailing out universities, is there a GOP version of “vying for the rope contract to their hangmen”?
My own observation is that the way the GOP establishment opportunistically milks a crisis is the opposite of how the left does it.
When the progressives don’t let a crisis go to waste, they go to their “Amazon Wish List” / “Wedding Registry” and buy some ‘luxury’ items they really wanted but for which they previously lacked sufficient political capital.
When the GOP gets into a crisis, there is a “flight from right”, and they drop even the pretense of defending the millstones of politically controversial things their base voters want, but for which the media attacks them relentlessly, to which the big donors are opposed as conflicting with their special interests, and about which the politicians have zero genuine personal enthusiasm anyway.
One way that has manifested in this crisis is the administration bending over backwards to make sure businesses get all the H-2 series visa labor they want, for as long as they want, at even lower pay, despite 20+ million Americans having recently lost their jobs.
It’s not like the universities will give the tuition back when they shutdown in November when the virus has an outbreak. Only the most foolish would tie them to debt when their producer is likely not to fulfill their side of the contract. Residential campuses have always been places of outbreak and epidemics for a large variety of diseases, especially respiratory diseases.
And this doesn’t address the reality that many students will be seeking to move toward, if not economically useful, at least majors that lead to employment that adds value to the economy when in distress.
The “college experience” is directly implicated in common feature of the non-healthcare super-spreader events for COVID-19, i.e, prolonged, close-range, face-to-face conversations, not to mention, group spittle events such as singing and yelling. The more fluid exchanging activities popular in college residences are far more risky.
So Higher Ed moves even farther toward gerontocracy… and starts to look like pre-collegiate education where inferior senior teachers control unions and rule the roost.
That effect makes sense to me, but the massive decrease in enrollment surprises me. What exactly are these “other plans” to which students are turning? I remember one of my first college professors describing how he came to academia: graduated from high school… recession, so off to college; graduated from college… recession, so off to graduate school; earned a master’s… recession, so on to a Ph.D. Why are we not seeing *more* interest in education with such an uncertain labor market?
Too expensive?
My state commuter college is seeing a 7% increase for the summer term over last summer. Our tuition is less than $3000 a year.