In Academically Adrift, Arum and Roksa paint a chilling portrait of what the university curriculum has become. The central evidence that the authors deploy comes from the performance of 2,322 students on the Collegiate Learning Assessment, a standardized test administered to students in their first semester at university and again at the end of their second year: not a multiple-choice exam, but an ingenious exercise that requires students to read a set of documents on a fictional problem in business or politics and write a memo advising an official on how to respond to it. Data from the National Survey of Student Engagement, a self-assessment of student learning filled out by millions each year, and recent ethnographies of student life provide a rich background.

Their results are sobering. The Collegiate Learning Assessment reveals that some 45 percent of students in the sample had made effectively no progress in critical thinking, complex reasoning, and writing in their first two years. And a look at their academic experience helps to explain why. Students reported spending twelve hours a week, on average, studying—down from twenty-five hours per week in 1961 and twenty in 1981. Half the students in the sample had not taken a course that required more than twenty pages of writing in the previous semester, while a third had not even taken a course that required as much as forty pages a week of reading.

One of the subtle cultural shifts arising from the education bubble has been how people are inclined to view college. It used to be that people went to college for an education. Now people go to college in order to ensure having a good job later on.* In essence, the role of college has shifted from education to credentials.

As such, it should not be surprising that colleges dumb down both their admission requirements and their curriculum, for the goal is not education. Rather, the goal is giving students customers a piece of paper that says they are smart. This claim doesn’t have to reflect reality in any meaningful way because most students don’t bear the direct costs of their “education.” Therefore, students are considerably more willing to spend their parents’ money and their future income on degrees that become less and less valuable.

Basically, then, the dumbing down of academic standards is proof of the education bubble because the free and cheap money subsidizes marginal students who would otherwise have no business being in college. This subsidy is then seen in the dumbed-down curriculum, for students expect to have something to show for the time and money they’ve put into college, and it’s easier to satisfy customers by giving them a degree regardless of their actual accomplishments.

*One thing that always puzzles me is how parents think that four to six years of extended adolescence is better for their children’s future than having an actual full time job is. But that’s for another post.

Economists essentially have a sophisticated lack of understanding of economics, especially macroeconomics. I know it sounds ridiculous. But the reason why I tell people they should study economics is not so they’ll know something at the end—because I don’t think we know much—but because we’re good at thinking. Economics teaches you to think things through. What you see a lot of times in economics is disdain for other’s lack of thinking. You have to think about the ramifications of policies in the short run, the medium run, and the long run. Economists think they’re good at doing that, but they’re good at doing that in the sense that they can write down a model that will help them think about it—not in terms of empirically knowing what the answers are. And we have gotten so enamored of thinking things through that the fact that we don’t know anything needs to bother us more. So, yes, it’s true that the average guy on the street doesn’t understand economics, and it’s also true that we don’t understand economics. We just have a more sophisticated lack of understanding than the guy on the street.

What would evidence-driven copyright law look like? (I won’t discuss patents here, although this argument should roughly apply to patents as well as copyright.) The length should be determined by looking at earnings distributions for things like music and books, and cut the copyright protection period to only include, say, the first nine-tenths of the average distribution. Most copyrighted productions follow a power law – the bulk of their earnings from a novel or movie will usually be earned in the first couple of years (see diagram above). It’s the initial high earnings that IP should be aiming to protect, not the “long tail” that comes afterward. This would reduce the stifling effects that copyright has, without reducing much of the innovation incentive, since most profits would still be protected.

Putting aside, for the moment, the details of the Ryan plan, what many voters refuse to understand is the unpleasant choice they inevitably face. Either cost-control by the consumers or cost-control (aka rationing) by the State. The issue is stark.

Either consumers directly or indirectly will communicate to healthcare providers the need to economize or the State will put limits on what people can get. The thing is Americans don’t want to have to do the former nor allow the latter to happen. The “advantage” of State limits is that they feed fantasies Americans may still have about State magic. Stones into bread, and all that. We can all get the best care regardless of cost. (Keep in mind I want the best care regardless of cost too!)

People use particular resources only for the services they provide, not because of any intrinsic value of the resources. People use copper because it conducts electricity or heat, is malleable or displays many other useful qualities. Petroleum is used because it powers vehicles, provides heat, light and power, and can be transformed into a huge variety of plastics and useful chemicals. Iron, gold and, indeed, all physical resources, have certain measurable characteristics which human ingenuity can use to solve the many problems of living healthy, comfortable lives.

Gasoline is only one means to an end. Before the advent of internal combustion engines, there were other modes of transportation which people used, because they were the best, most efficient choices at the time. Horses, mules and wagons provided local transportation services for a long time. The horse was valuable primarily because of the service it provided. When motor vehicles took over their role, horses became less scarce and less valuable, even though their numbers declined.

Whale oil was used for lighting before kerosene. It was very scarce, and thus, very expensive. The dawn of kerosene as a cheap, plentiful substitute for the service of providing light made whale oil too expensive, and it quickly lost out to the new, more efficient rival. Cheap electricity subsequently took over the lighting role played by kerosene.

The idea of scarce resources only makes sense when there is a human use for them. Before the beneficial properties of oil were discovered, nobody ever considered petroleum scarce. It was, rather, a considerable nuisance wherever it was found. The instant that people discovered the valuable products that could be made from it, it became a scarce resource.

A resource is only scarce if there is not enough to provide for all of the demand for its useful properties. Scarcity is relative. It is a function of how much is readily available in relation to how many people want it and the size of the problems it solves. Whale oil may be very rare these days, but most people would not say there is any scarcity of it. We have no need for it because its useful properties have been provided much more efficiently and cheaply by substitutes.

If you want to know how scarce a good is, you only need to look at its price. That is the most reliable gauge of scarcity. In the absence of intervention in the market, the more scarcity, the higher the price. Diamonds and platinum are very expensive because there aren’t enough of them. Their physical characteristics make them very desirable, so people are willing to pay a high price for them. If new sources of supply were found and they became readily available, the prices would drop, not because they were less useful, but because they became less scarce, relative to the demand for their useful qualities.

With that in mind, one of the most fascinating phenomena related to human civilization becomes more understandable. Even as there are more people using more resources year after year, there is less and less scarcity. While prices of resources may fluctuate significantly in the short run, in the long run, there is a very real trend toward falling prices and less scarcity of virtually all resources. There is no credible reason to believe that that trend will suddenly reverse.

That may not be the case in every geographic area for every resource at every time. In some places, resources such as water may become more scarce. From an overall perspective, however, there is no less water in the world than there was a million years ago. The only water we have lost has been from transporting it out of our atmosphere with the space program. The same goes for virtually every other chemical substance on earth. Humans need to locate where there is plenty of usable water, or to efficiently purify it or transport it to other places where they want to go. The problem with water is that people typically think that it should be provided cheaply or for free by government, and thus, market prices do not guide responsible action.

Declining scarcity of resources, even as they are used, makes sense when you recognize that it is not the resource itself, but rather its useful properties, that people buy. If one resource gets too expensive due to scarcity, people use less of it or develop more efficient methods of getting the same benefits. The higher price makes it more profitable, and the higher profits draw competitors to develop more of the resource. The higher price also makes alternative ways of providing for human needs more attractive.

The opposite dynamic occurs in the case of high availability and low prices. Producers develop more efficient methods of production and distribution so they can remain profitable. Those improvements carry over into times of greater scarcity, and the net result is that prices continue to fall over time while long term scarcity declines.

We see those opposing processes happening on a continuing basis. In the case of petroleum products, higher prices encouraged more conservation efforts, more efficient technology and increased exploration and development. It also made alternative forms of energy more profitable and promoted their development. There is less scarcity of oil lately, due to lower demand, and thus, significantly lower prices. Producers are trying to become more efficient in order to stay profitable. Society benefits because the cost of energy is less than it would have been had the consumer and producer improvements not been made over time.

Some day it is possible that petroleum could become the whale oil of tomorrow, becoming too expensive for economical use. But there is more than one way to skin the cat of heating, lighting, transportation and manufacturing needs. The most efficient forms of energy will ultimately win out, and in the long run, the cost of energy will continue its long and relentless trend to less scarcity and lower prices, just like every other form of natural resource throughout the course of human civilization.