Subsequent events have proved me right as students have begun to think twice about indebtedness and schools have begun to face pressure over tuition. For higher education, costs have skyrocketed even as the value of their product has been declining, and people are starting to notice.
Just last week, the New York Times, normally a big fan of higher education, ran an article on "The Dwindling Power of a College Degree." In our grandparents' day, a college diploma nearly guaranteed a decent job.
Now, not so much: "One of the greatest changes is that a college degree is no longer the guarantor of a middle-class existence. Until the early 1970s, less than 11 percent of the adult population graduated from college, and most of them could get a decent job. Today nearly a third have college degrees, and a higher percentage of them graduated from non-elite schools. A bachelor's degree on its own no longer conveys intelligence and capability."
This is a simple case of inflation: When you artificially pump up the supply of something (whether it's currency or diplomas), the value drops. The reason why a bachelor's degree on its own no longer conveys intelligence and capability is that the government decided that as many people as possible should have bachelor's degrees.
There's something of a pattern here. The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle class people go to college and own homes, then surely if more people go to college and own homes, we'll have more middle class people.
But homeownership and college aren't causes of middle-class status, they're markers for possessing the kinds of traits -- self-discipline, the ability to defer gratification, etc. -- that let you enter, and stay in, the middle class.
Subsidizing the markers doesn't produce the traits; if anything, it undermines them. One might as well try to promote basketball skills by distributing expensive sneakers.
Professional basketball players have expensive sneakers, but -- TV commercials notwithstanding -- it's not the shoes that make them good at dunking.
If the government really wants to encourage people to achieve, and maintain, middle-class status, it should be encouraging things like self-discipline and the ability to defer gratification. But that's not how politics works.
Passing out goodies generates more votes, even though doing so undermines the character traits upon which prosperity depends. That may change as the global political class, pretty much everywhere, runs out of other people's money, but it hasn't quite changed yet.
For higher education, the solution is more value for less money. Student loans, if they are to continue, should be made dischargeable in bankruptcy after five years -- but with the school that received the money on the hook for all or part of the unpaid balance.
Up until now, the loan guarantees have meant that colleges, like the writers of subprime mortgages a few years ago, got their money up front, with any problems in payment falling on someone else.
Make defaults expensive to colleges, and they'll become much more careful about how much they lend and what kinds of programs they offer. China, which has already faced its own higher education bubble, is simply shutting down programs that produce too many unemployable graduates.
So far, Sinophile pundits like the New York Times' Tom Friedman don't seem to be pushing this idea for America. I wonder why not.
Another response is an increased emphasis on non-college education. As the Wall Street Journal has noted, skilled trades are doing quite well. For the past several decades, America's enthusiasm for college has led to a lack of enthusiasm for vocational education.
That may be changing as philanthropists ranging from Andy Grove of Intel to Home Depot's Bernie Marcus work to encourage the skilled trades. We need people who can make things, and it's harder to outsource a plumbing or welding job to somebody in Bangalore.
Of course, the thing about skilled trades is that they require skill. Even with training, not everyone makes a good welder or machinist any more than just anyone can become a doctor or lawyer.
And there are dangers in focusing too narrowly on a career path that looks good right now: The biggest constant in the global economy of the past several decades has been wrenching change. Jobs that look great today may not look so good in a few years.
The answer to that, I think, is adaptability. Whether their training is liberal arts, engineering or a trade, most people getting out of high school today will probably have to navigate multiple career paths over a lifetime.
How do we teach adaptability? That's a subject for another column, but you might ask yourself: Are tenured professors the best people to do that?