All told, some 17,000,000 Americans with college degrees are doing jobs that the [Bureau of Labor Statistics] says require less than the skill levels associated with a bachelor’s degree.

The author includes the following chart:

Source: The Chronicle of Higher Education

This strikes me as consistent with the signaling model in education, à la Charles Murray and Bryan Caplan. In short, it says that it is difficult to distinguish between the skill sets of workers initially (i.e., by visual inspection), and having a college degree provides a way for a person to “signal” to potential employers that he or she is a higher quality candidate. Good grades can signal many traits about a person that an employer may find attractive — that he or she is conformist, obedient, smart, dedicated, motivated, hard-working, etc.

Central to the signaling model is the fact that, in most higher-education classes, a student learns no job skills. I have a bachelor’s degree in French, so I have personal experience with this. Although I enjoyed my French classes and found them very challenging and fulfilling, I did not learn any skills that I use professionally — with the possible exception of having the ability to read Frédéric Bastiat in his original French, of course.

Certainly, there are social benefits to education. An educated population is, in general, a very good thing. Even if they don’t use skills that they developed through higher education, it’s probable that these janitors and flight attendants are leading more fulfilled lives as a consequence of their education. Perhaps the time that they spend outside of work, in leisure, is more fulfilling than it would have otherwise been.

On the other hand, there are also negative consequences to having a high number of degree holders. If one person becomes more educated, then he or she has a good chance of making more money. However, when a majority of the population becomes more educated, they compete for the jobs requiring that knowledge. This is the phenomenon that we see in the article — that’s why 29.80 percent of flight attendants have a bachelor’s degree or more. An additional negative consequence is degree inflation. As a greater number of people seek education, it will become increasingly difficult to distinguish between the quality of individuals (i.e., it will mute the signal), and employers will demand even more education, contributing to degree inflation.

Government subsidization of education is one of the biggest reasons why these 17 million degree-holders are in positions that do not require a degree. Despite the aforementioned positive consequences of an educated society, subsidizing education should not be the objective of government. When the government makes something less expensive, individuals will consume more of it than they would otherwise — more than the socially optimal level. The housing market is an analogous example: The government subsidized homeownership, so many individuals over-consumed housing, including those who were poorly suited for homeownership. (The United States experienced a housing bubble; is an education bubble in our future?) Although a particular project may have some social benefits, when that project is subsidized with taxpayer monies, it should be weighed against the costs.

Please don’t mistake my statements as being anti-education; on the contrary, I am a supporter. This post is an argument against current funding mechanisms. The policy of subsidizing education is quite regressive. Public universities, including my own alma mater, are largely funded by tax revenues taken from the general population, not by consumers of education. It would be more efficient if everybody paid for the true cost of their consumption through private means (i.e., private loans, savings, scholarships), just like they do for other goods and services. The government could then devote the tax money that they would save on higher education to other programs instead — on primary and secondary education, perhaps — or return it to taxpayers, to spend in the private sector.

I encourage our readers to watch the video “So You Want To Get a Ph.D. in the Humanities,” which former Show-Me Institute intern Martha King recently posted on her Facebook wall. It’s simultaneously hilarious and depressing.

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While some of the larger national think tanks regularly take on this issue, we here at the Show-Me Institute cover occupational licensing more than most other state-based groups. It is great to see people engaged in the conversation, and I hope they enjoy getting punched in the face as much as I enjoy throwing the punches.

There really isn’t a more accurate example of democratic failure than occupational licensing. It is public choice economics at its most concise. A small group of people stand to gain financially from a very narrow policy action, and passionately advocate for it. A large group of people stand to be harmed very marginally from that same issue and so don’t care about it enough to spend time and effort becoming informed and fighting back. Politicians measure the gains for them to be made from satisfying the small group (campaign contributions, union support, etc.) versus the fallout from harming the larger group (there’s generally no fallout), and — voilà! — an entire industry becomes regulated with a few votes and the stroke of a pen, while the only person who shows up to complain about it is some jerk like me. You grandfather in the existing practitioners (or exclude only a small portion of them), and put the screws to future practitioners and the general public, neither of whom realizes at the time that anything is going on.

The purpose of licensing is always the economic gain of those practicing the occupation to be licensed (the regulatory push never comes from the outside — always the inside), but advocates are usually smart enough not to say that. Instead, the arguments actually advanced in favor of licensing are twofold: safety and search costs. The safety argument might be legitimate for a few professions (i.e., drug testing for school bus drivers) but very quickly devolves into a love of the nanny state — unless you really believe that the threat of a bad haircut actually involves your “safety.”

The search costs argument was always wildly overstated. It assumes that we need the state to license heart surgeons, for instance, so you don’t have to check references on your own while you are having a heart attack. (This is sort of a bad example, given that I think doctors and nurses may be one field in which the benefits of licensing outweigh the costs, but stick with me.) This general argument fails in that the employer is unlikely to have hired an unqualified person in the first place (the hospital probably confirmed that the doctor graduated from medical school), and how often do people really hire someone cold? You get references for plumbers, electricians, pediatricians, etc., from family, neighbors, or friends who have used those people before, and who are willing to recommend them. License or no license, reputation and referrals are what keep people in business, or drive them out of it.

The scam artists who successfully operate in the underground economy and show up at your house to do the roofing right after the straight-line wind blows the shingles off won’t be stopped by licensing laws. Even if I thought licensing laws protected consumers by limiting scams, I still don’t favor giving the government more power over our economic lives and taking the responsibility away from individuals to make better choices by checking references, calling the Better Business Bureau, etc. Others might disagree, but the evidence that licensing improves quality and protects the public is lacking.

I could go on, but this post is long enough. It is great to see people participating in this debate. Now, as they told me during my very brief boxing career, keep your hands up. …

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Postrel’s article lists suggestions for ways both to decrease the transplant wait time and to increase the supply of kidneys, which currently stands at approximately 16,000 per year. One of her suggestions, “donor chains,” would essentially allow a patient’s friends or family, who may be willing to donate a kidney but are not a match, to trade places with other willing donors who do match. The longer these chains of donor-recipients are allowed to grow, the more kidneys can be closely matched to existing biological needs. For people with lots of relatives and friends who are willing and able to donate, this would be a boon.

There are plenty of people who cannot take part in such a chain, though, and for them another interesting solution presented is to purchase healthy kidneys. Donating a kidney is not without cost, and there are very few people who would be willing to donate one to a complete stranger. Any major surgery comes with the risk of potential complications. While a person can live a very healthy life with only one kidney, this lifestyle has additional risks: A single kidney expands to compensate for its missing counterpart, making it more vulnerable to collisions or contact sports, for example. Offering compensation for a kidney donor is a way of taking into account and making up for the risks that the donor decides to undertake. (Also, as Andrew Sullivan’s blog notes, a kidney donor is thereafter limited to one alcoholic beverage per day, which might affect some people’s quality of life.)

The Atlantic article suggests that if Medicare paid donors even $25,000 or $50,000 for a kidney, the resulting equilibrium would cost less than than the current expense incurred by the government-guaranteed dialysis treatments — not to mention the immeasurable quality-of-life benefit for patients who would otherwise waste years of their lives on dialysis.

Some question the morality of “selling” organs like kidneys. They voice legitimate concerns that unscrupulous people would take advantage of the poor, or that debtors or drug addicts would rashly sell their kidneys. Internationally, the kidney market is not benevolent, because some kidneys for sale are taken from unwilling donors in prison.

However, if such a plan were implemented in the United States, each donor would first be required to undergo both a psychological and medical evaluation to ensure that he or she could undertake the ordeal. Waiting periods or payment plans could also be instituted that would prevent people from making snap decisions about becoming a compensated donor. A legitimate American market would also discourage coercive international practices, which mostly arise from transplant tourism. If kidneys are more readily available at home, gray-market transplants abroad would no longer fill a significant economic niche.

If morality is to enter the equation of whether to allow kidney sales in the United States, however, a better question to pose might be whether it is moral to let people die or linger for decades on a waiting list when there are already plenty of healthy kidneys available from willing donors.

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On a closely related point, I recently found one reason why AmerenUE was so intent on expanding within Callaway County — a project that hopefully will succeed eventually. Callaway County has a commercial property tax surcharge of just 11 cents per hundred dollars of assessed valuation, one of the lowest surcharge rates in Missouri. (Only two counties are lower: Reynolds and Camden.)

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George Stephanopoulos began his televised interview with Senator Hillary Clinton by asking if she could name a single economist who supports her plan for a gas tax suspension.

She did not. "I’m not going to put in my lot with economists," she said on ABC’s "This Week" program. A few moments later, she added, "Elite opinion is always on the side of doing things that really disadvantages the vast majority of Americans."

So I guess there is no point to asking her about a phase-out of the city earnings tax. Considering that a few months back she listed management of the economy (a terrifying thought that anyone thinks they can or should do that) as her primary interest as president, you’d think she’d at least fake a little respect for all the economists out there.

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