Good Luck!

6+

Let me get this straight. You think that your client – one of the wealthiest, and most powerful men in the world, is secretly a vigilante who spends his nights beating criminals to a pulp with his bare hands. And your plan is to blackmail this person?

…Good luck!

Lucius Fox in The Dark Knight (2008)

You tell me it’s the institution, well you know, you better free your mind instead.

Revolution, The Beatles (1968)

It is better to die well, than to live wrongly. Who is afraid of death loses the joy of life; truth prevails all, prevails who is killed, because no adversity can harm him, who is not dominated by injustice.

Jan Hus, in Letter to Christian of Prachatice

The first one I saw was from Noah Smith, an excellent econ writer, and one of the two or three Bloomberg Opinion contributors whose articles I prefer reading to flying cross-country in a MAX 8. “This admissions bribery scandal will be good for America,” he wrote, “because it will decrease the prestige premium of the top colleges, who didn’t really deserve it anyway.”

The AP piped in with a story about USC’s ‘reputation [being] on the line’, and the New York Times joined the fray shortly thereafter. Two students at Stanford sued UCLA, USC, the University of San Diego, UT Austin, Wake Forest, USC, Georgetown and Stanford itself, claiming (among other things) that “since Stanford is linked to the scandal, their degrees may be tainted.” Even the ouroboros of social media ‘influencers’ prophesied its own demise through reputational impact of the admissions bribery scandal.

Alright. Let me get this straight. Y’all believe that some of the wealthiest, most famous people in America took immense personal risk, lied brazenly, and paid up to a half million dollars to secure admission to these top universities…and the theory you would like to promote is that this harms the common knowledge about their prestige and reputation?

…Good luck!

Now, if you think reform is coming, you’re right. The SAT/ACT will make a big PR push to shore up their reputations, which are damaged, since what they’re selling is different. My guess is that they will take the familiar tack that goes like – “If we have made a mistake, it is that we felt it would be discriminatory to probe too deeply into the reasons special accommodations were requested, but we have identified process improvements which will…” – you know the rest of the gag. Admissions offices and athletic departments will find the 2-3 people who they have determined were rogue operators, terminate them with prejudice and “amend policies to make sure this kind of unsanctioned maverick activity never happens again.” The families, well, we’ll find all sorts of mortifying information that shows how much they deserve our scorn so that they can act as the real lightning rod. Tell me, friends, after reading the news about this subject, can you remember anything about a single athletic or admissions department individual involved in this scandal at any of these universities? How about anything embarrassing about Lori Loughlin’s daughter?

Yes, reform is coming. But reform isn’t how common knowledge about the signal value of an elite education is transformed or weakened. Reform is how it is protected! Reform is what makes the Narrative of Elite Institutions robust to a changing zeitgeist. Reform makes that narrative resilient to a new set of criticisms, able to continue delivering its core product – signaling and credentialing – without the inconveniences and distractions of activities the evolved world considers scandalous.

Yet even without these reforms, the belief that a few contrary facts will lead to the devaluation of the Narrative of Elite Institutions is a delusion. Why? Because the cartoon underlying the reputation of elite universities, their prestige and the power of their credential is deeply abstracted from those facts. At various stops in my career, I’ve had some 100-150 people work for me, with degrees from a mix of universities of both ‘good’ and ‘elite’ reputations. But in the list of my top ten performers, only one came from the ‘elite’ group. Many other managers and business owners share this experience. We all sit around saying things to one another like “no one really cares about your degree after two years” and “I don’t even know where most of my colleagues went to college”, and somehow – somehow! – that Stanford grad who dropped a resume still gets a call-back. I’ve seen your pitch books, people, and I’ve got the receipts, so please don’t @ me on this.

The point is that there has been plenty of evidence that the reputation and prestige of these universities is built on shaky ground for a very long time, if evidence is what you’re looking for. But that evidence and all the revenue from pitching Amazon products as an influencer on insta in the world won’t buy the change you’re looking for. This is how narrative works, and the Narrative of Elite Institutions is a powerful one.

How powerful?

The Narrative of Elite Institutions – the common knowledge about the importance of the credentials provided by the American university system – is more powerful than the common knowledge about any non-state institution since the pre-Reformation Catholic Church (with the possible exception of the Narrative of Home Ownership).

It is a big claim. You may think it’s an exaggeration. But to tell me that it’s wrong you will also have to tell me why – out of practically nowhere – Americans are now $1.5 trillion in debt to pay for these credentials. You’ll have to explain why the first eighteen years of a child’s life are now specifically structured to prepare a resume to submit for the approval of those who might provide these credentials. You’ll have to explain why the NCAA can endure rampant cheating, systemic sexual abuse, cover-ups of concussive brain injuries, and exploitative treatment of ‘student athletes’ in state-sanctioned collusion with trust-like professional sports leagues with practically no political or cultural blow-back beyond the occasional feature piece behind a paywall on a sports news website. You’ll have to explain why we continue to treat institutions with rapidly rising pay packages, administrative staff, facilities and endowment balances who pass on those costs (and more!) to their customers as non-profit entities.

All of these things – our debt, our crippling of true childhood education, our blind eyes to these many sins – are indulgences we pay to the Church of Credential.

We’ve got two choices. They are not mutually exclusive.

The first, more important choice is the Clear Eyes and Full Hearts solution that Ben proposed yesterday. We probably can’t change common knowledge about Elite Institutions – the things that everybody knows that everybody knows – but we can change the indulgences we’re willing to pay, and more importantly, that we’re willing to force our children to pay. We free our minds instead, as the man said.

The second choice is Reformation. The playbook is the same as it was for Luther: tell the truth about the Church, but in a way, and at a time and place when an alternative to its influence is politically valuable to the only narrative opposition they have – the State. No, I’m not recommending a state solution. On the contrary, I’m saying that the primary fuels to the engine of the Narrative of Elite Institutions have, in fact, been sponsored by the state – from its direct facilitation of low-cost student lending through Fiat World regulations like the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, to non-profit status and tax deductibility, to the taxpayer funding of research and scholarship in the face of vast revenue growth and asset accumulation.

There will be a time in the future when a “Destroy the credentialing power vested in elite universities by the state and political elites” policy platform that guts these special dispensations is viable. I don’t think it is now, because I think that it will require agreement and concessions from the political right and political left that aren’t realistic in the midst of the widening gyre. It is simply too politically advantageous to take polarized positions. I think it also requires a bit more maturity from alternatives to Elite Institution credentialing. Lamda is interesting, for example, and could be a useful case study. We need more. Even when the policy platform IS feasible, however, promoting it will be perilous –  Jan Hus’s heretical ashes had already floated down the Rhine and into the North Sea 100 years before Martin Luther posted his Ninety-five Theses to the door in Wittenberg. Whoever takes this issue on will bear the brunt of incredibly powerful science! and won’t somebody think about the children! memes.  

In the meantime, however, if you’re set on pretending that a minor scandal or two (or the reforms that follow them) are the start of a fix to this most abstracted part of our American culture?

Good luck.  

6+

4
Leave a Reply

Please Login to comment
  Subscribe  
newest oldest
Notify of
Christopher Beirn
Member
Christopher Beirn

I have the impression that you and Ben are suffering from confirmation bias when it comes to fitting events into your analysis of the zeitgeist. The most-read story on CNBC today was about Jamie Dimon’s critique of inequality in the U.S. economy. It quotes him as follows:

“It’s not about a college degree,” said Dimon, who graduated from Tufts University and Harvard Business School. “Having gone I know just how worthless a college degree is sometimes.”

Dimon called the education system “broken” and said his bank stopped giving philanthropic dollars to colleges years ago. Instead, the company is focusing on community colleges and training programs.

Sounds like this Nudging Plutocrat didn’t get the memo about the Narrative of Elite Institutions, doesn’t it?

Good luck, indeed.

0
Rob H.
Member
Rob H.

As a passport stamped member of Team Elite, I offer two insights. 1. I led analyst recruiting for a number of years for my I-banking department and subsequent investment management firm in the 90s. I restricted my on-campus recruiting visits to one “elite” east coast school. I didn’t do that because I believed that the top kids at that school were better than the top kids at any other school (elite or otherwise)— my employers were not prestigious enough to get the top kids anyway; I did it because I could spend a day and interview a dozen kids and find 9 of them capable and willing to do the job, as opposed to other schools where only one or two would fit the bill (and then would likely turn down my job offer anyway). It was a screening process to make me more efficient— but I was searching for competence over excellence. 2. My son is a high school senior who just completed the college admission process and will be going to a top 30 university next year. What is most frustrating to students (and parents) about the process these days is the sheer randomness of it. A student can check all the standard boxes (board scores, grades, academic rigor, extracurriculars) but without a “hook” (athletic recruit, mega-donor, nationally ranked in something, 1st generation college), the odds of getting into a “most competitive” school is probably sub 20%. Logically then, to reduce variance, the student must apply to a… Read more »

Victor K
Member
Victor K

If you have an ‘elite’ degree, you will feel, or will be made to feel, inadequate without an appropriate amount of ‘success’. Without an elite degree, you may feel, or may be made to feel inadequate despite an appropriate amount of success. Did we get the message? Good luck!

1+
Christopher Beirn
Member
Christopher Beirn

Well now, what a surprise (NOT). Just released by the White House:
PROPOSALS TO REFORM THE HIGHER EDUCATION ACT
“Unfortunately, many colleges and universities have been unable or unwilling to provide the necessary
types of education in a cost-effective manner.”
https://www.whitehouse.gov/wp-content/uploads/2019/03/HEA-Principles.pdf

And the timing of this release in the wake of last week’s indictments is purely coincidental, right?

0

The Latest From Epsilon Theory

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.