The Price Is Right

The press has been chattering recently about the “confusion” diploma mills are causing government and industry. And, as always, the Internet is only making things worse. Diploma mills are companies that, for a nominal fee, will grant you any college degree you like based on whatever life experience you claim to have. Some require applicants to write an essay or two, while others have streamlined the process to simply cashing the checks and mailing the diplomas.

Diploma mills have been around for decades, but revenues have doubled over the past five years. It seems Internet marketing is the engine driving that growth. We are bombarded daily by banner ads and spam email offering to sell us a college degree that will move our career to the next level, and there is no shortage of takers.

Last year the US General Accounting Office completed an investigation of the academic credentials of senior military officers and high-ranking federal employees. They discovered hundreds of individuals, including dozens in very senior positions, had used government funds to obtain degrees fromdiploma mills. Estimates are that there are thousands, perhaps tens of thousands, of such degree holders employed by the US government.

Congressional hearings were held, policies were dictated, and an abundance of righteous indignation was vented over the “scam” these institutions were perpetrating on all of us.

But no one is talking about the most shocking finding in the GAO report. Although many of us have suspected it for a long time, the implications are too frightening.

Those with the fraudulent degrees were doing their jobs just as well as those who had attended real colleges. It took a lengthy and expensive audit of the educational credentials of thousands of people to identify the fake degree holders. Actual ability and job performance would never have given them away. More than anything else, the GAO research clearly demonstrates that there is little or no relationship between academic qualifications and job performance.

Of course, that train of thought goes to destinations unknown, so it's much better to stay on track and blame the diploma mills for all the confusion they are causing. At this point, it’s pretty obvious that this controversy will be resolved by legislating these companies out of existence. All industrialized societies have far too much invested in the myth of higher education to allow it to be seriously questioned.

Safe in that knowledge; lets see what happens when this myth is challenged.

What's My Line?

A microcosm of the higher-education myth played itself out during the bubble days of the late 1990s. At the time, software engineers were in demand, but the technology was new, and employers had a hard time evaluating potential employees. Software companies saw the business opportunity and quickly came up with an array of certification programs. Most of these programs consisted of a few days of lectures followed by a simple test. Almost everyone that attended these lectures received their certification, and for the most part, graduates were profoundly unqualified to manage the systems in which they were certified.

But of course, that was just fine. Getting people to believe in the value of an education has nothing to do with education. It’s about marketing, and the marketing strategy was simple and brilliant.

These companies spent half their marketing dollars convincing employers that certification was important and should be included in job requirements. This was surprisingly easy to do at the time since companies were desperately looking for ways to vet applicants. They then spent the other half of the marketing budget convincing job seekers that most employers required these certifications. If done properly, the result is a lucrative self-fulfilling prophecy.

In the year 2000, it looked like software certifications would become as established as college degrees, but the bursting of the Internet bubble reduced job demand and led employers to question the value of such certifications. Only a small fraction of these certification programs exist today.

I believe the reason software certifications failed where college certification succeeded is two-fold. First, software certification developed far too quickly to be credible. In only a few years the industry went from having a handful of well known certification programs to having hundreds of which most people had never heard. Second, and perhaps more important, in many cases employers ended up paying for these certification programs themselves, and were therefore much quicker to question their value when budgets got tight.

If employers were paying for their employee’s college degrees today, we would be hearing very different accusations about who is being scammed.

Let's Make a Deal

Let us suppose that we run a business and need to send our employees for training. We send half to School A, in which training costs $1,000 and takes one day. The other half, we send to School B, which costs $100,000 and takes four years. After completing their training, both groups of employees perform their jobs equally well.

In this situation, we would naturally and correctly conclude that the expensive four-year program was a scam. However, if the employees must pay the training costs out of their own pockets, and if we too have invested in an expensive multi-year program, we reverse our conclusion and declare that the inexpensive one-day school must be shut down.

In all discussions about the diploma mills, the educational value of real colleges is simply asserted. Most often with a rhetorical question along the lines of “Would you want someone with a diploma mill degree performing surgery?” Well, no I would not. However, when examined closely, the question is an indictment of higher education in general rather than diploma mills.

When lives are actually at stake, society recognizes that there is little relationship between education and ability. Being a doctor, a pilot or a professional civil engineer requires extensive and continuing certification based on real knowledge and experience. No one in these fields pretends that a collage degree demonstrates competency. Only in low-risk professions do we indulge ourselves in the myth.

The $64,000 Question

So how did higher education convince us of the value of their certification?

The same way the software companies did it. Great marketing.

Higher education is truly a capitalist success story. In 1940, 13% of college-aged Americans attended college. Today, that number is 62% and it increases nearly every year. Furthermore, there used to be less than 200 accredited schools offering degrees in the United States, and there are now more than 4,500. Oddly, according to the US Bureau of Labor Statistics, despite increased competition in the marketplace, the cost of college has been rising an average of a few percentage points faster than inflation every year since 1950.

Precisely what all this expensive education has bought us is unclear. We like to tell ourselves that life is more complex than it was 50 years ago, and that today’s society requires greater intelligence than before. Unfortunately, not only is there no evidence to support these assertions, but the claims have been popular at least as far back as ancient Rome. We may be performing different tasks than we were 50 years ago, but nothing really suggests that today’s tasks are more intellectually challenging.

Higher education created the self-fulfilling prophecy that the software companies could not. Although degree holders are no more skilled than those who lack degrees, all large organizations use these certificates as one of the most important criteria for hiring and promotion.

Simply and circularly put, employers require degrees because they need to have job requirements, and job seekers need degrees because employers require them.