Virginia Postrel takes on typical arguments about worthless college majors

Virginia Postrel counters arguments that many American college students are studying subjects that don’t matter and won’t help them find a job:

According to the National Center for Education Statistics, humanities majors account for about 12 percent of recent graduates, and art history majors are so rare they’re lost in the noise. They account for less than 0.2 percent of working adults with college degrees, a number that is probably about right for recent graduates, too. Yet somehow art history has become the go-to example for people bemoaning the state of higher education.

A longtime acquaintance perfectly captured the dominant Internet memes in an e-mail he sent me after my last column, which was on rising tuitions. “Many people that go to college lack the smarts and/or the tenacity to benefit in any real sense,” he wrote. “Many of these people would be much better off becoming plumbers — including financially. (No shame in that, who’re you gonna call when your pipes freeze in the middle of the night? An M.A. in Italian art?)”…

The higher-education system does have real problems, including rising tuition prices that may not pay off in higher earnings. But those problems won’t be solved by assuming that if American students would just stop studying stupid subjects like philosophy and art history and buckle down and major in petroleum engineering (the highest-paid major), the economy would flourish and everyone would have lucrative careers…

The critics miss the enormous diversity of both sides of the labor market. They tend to be grim materialists, who equate economic value with functional practicality. In reality, however, a tremendous amount of economic value arises from pleasure and meaning — the stuff of art, literature, psychology and anthropology. These qualities, built into goods and services, increasingly provide the work for all those computer programmers. And there are many categories of jobs, from public relations to interaction design to retailing, where insights and skills from these supposedly frivolous fields can be quite valuable. The critics seem to have never heard of marketing or video games, Starbucks or Nike, or that company in Cupertino, California, the rest of us are always going on about. Technical skills are valuable in part because of the “soft” professions that complement them.

The American economy is large and difficult to describe. It is a complex system where there are lots of educated and uneducated workers trying to fill a lot of different job slots. Simple answers on either side are not the solution in helping people to understand what is really going on. If there are lots of jobs in certain fields that need to be filled, like technical trades or nursing, it doesn’t necessarily mean that every student should suddenly go in that direction. I wonder if this is all tied to the Sportscenter-ization of discussion.

I wonder if someone has tracked whether these sorts of discussions happen in good economic times. In other words, when the economy is good and unemployment is low, do many people worry about what majors college students are pursuing or does it not really matter?

Americans buy a lot of stuff they don’t need

Americans are known for being consumers. In fact, Americans spend quite a bit of money on non-essential goods:

This Easter weekend, Americans will spend a lot of money on items such as marshmallow peeps, plush bunnies and fake hay, begging a question: How much does the U.S. economy depend on purchases of goods and services people don’t absolutely need?

As it turns out, quite a lot. A non-scientific study of Commerce Department data suggests that in February, U.S. consumers spent an annualized $1.2 trillion on non-essential stuff including pleasure boats, jewelry, booze, gambling and candy. That’s 11.2% of total consumer spending, up from 9.3% a decade earlier and only 4% in 1959, adjusted for inflation. In February, spending on non-essential stuff was up an inflation-adjusted 3.3% from a year earlier, compared to 2.4% for essential stuff such as food, housing and medicine.

It would be helpful if this post had more details about the “non-scientific study” and what data is being examined. Nonetheless, it is interesting to see this story at Easter time: isn’t Christmas supposed to be our most commercial holiday? There does seem to be more stories in recent years about the increased spending at Halloween and Easter. Perhaps we just like holidays because they are excuses to spend!

Here are two possible conclusions regarding this data:

The sheer volume of non-essential spending offers fodder for various conclusions. For one, it could be seen as evidence of the triumph of modern capitalism in raising living standards. We enjoy so much leisure and consume so much extra stuff that even a deep depression wouldn’t – in aggregate — cut into the basics.

Alternately, it could be read as a sign that U.S. economic growth relies too heavily on stimulating demand for stuff people don’t really need, to the detriment of public goods such as health and education. By that logic, a consumption tax – like the value-added taxes common throughout Europe—could go a long way toward restoring balance.

Interesting options: we spend so much on these things because we can (conspicuous consumption?) or we frivolously throw our money away at things that don’t really matter while ignoring important issues. Neither sound particularly good. The second one does seem to be at the root of most advertising: make a pitch so that the consumer thinks they “need” a product. Don’t people need iPhones, new cars, and lots of beer?

Ultimately, we might need some more numbers to settle this debate. How does the discretionary spending of the American individual compare to that of other nations? (During this recent recession, we have heard about how Americans had a lower savings rate than past Americans going into this period but how do we compare to other countries?) What are the total costs of living in such an economy (which certainly must help create jobs and generate wealth for someone) vs. one that does put more money into education or infrastructure? How much do average Americans think they should be spending on non-essential items and if given the choice, would they want to spend more?

h/t Instapundit

The new American normal: pursuing an enriched social life rather than spending

Sociologist Amitai Etzoni argues that Americans have reached a point where from this point on they may choose to enhance their social lives rather than consume:

The Great Recession provides a golden opportunity to test Maslow’s prescription. As most everybody has read by now, we lived beyond our means for decades, and we borrowed about all we could from overseas and indebted our children. It’s payback time.

There is no way on earth Americans over the next decade will continue to experience the kind of increases in income, and hence standards of living, we have seen since World War II. The question is if they will respond in anger — or benefit, by dedicating themselves, once their basic needs are sated, to spending more time with each other, their children, in social activities and cultural pursuits.

Polls suggest that large numbers are ready.

As Etzioni notes at the end of this piece, the real test of these opinions will come once the economy recovers. If people have more income and disposable income, will they return to their consumerist ways?

But perhaps these attitudes will lead to something different: a society that no longer desires or tries to attain explosive growth periods. Perhaps the true non-consumerist society will be content with slow but consistent growth.

Measuring the economy by looking at midnight Walmart shoppers

There are all sorts of figures and statistics that are used to measure how the economy is doing. This NPR story introduces a new metric: looking at midnight sales at Walmart on the first day of the month.

Wal-Mart noticed that sales were spiking on the first of every month. In a recent conference call with investment analysts, Wal-Mart executive Bill Simon said these midnight shoppers provide a snapshot of the American economy today.

“And if you really think about it,” Simon said, “the only reason somebody gets out and buys baby formula is they need it and they’ve been waiting for it. Otherwise, we’re open 24 hours, come at 5 a.m., come at 7 a.m., come at 10 a.m. But if you’re there at midnight you’re there for a reason.”

And so Wal-Mart has changed its stocking pattern. It brings out larger packs of items in the beginning of the month, and smaller sizes toward the end. It makes sure shelves have plenty of diapers and formula.

This is a creative data source – but we would need more information before making broad conclusions about the American economy. Do other stores experience similar spikes? How big of a spike is this? What Walmart locations have seen the biggest jumps?

It strikes me that Walmart probably possesses a treasure trove of data that would be very interesting to look at.