The Declining State of Higher Education

Welcome to “The Ben & Marc Show”, featuring a16z co-founders Ben Horowitz and Marc Andreessen. In this latest episode -- the final in a 3 part series on the current crisis in higher education -- Marc and Ben answer YOUR questions from X (formerly Twitter). In a one-on-one conversation, Ben and Marc unpack the merits of a Harvard undergrad education vs. a Thiel Fellowship, discuss the benefits of trade school, and determine what college is going to look like in ten years. That and much more! Please enjoy. * Watch Part I: https://youtu.be/7J2_G4oHRQ0?feature=shared * Watch Part II: https://youtu.be/EeIdalo2huI?feature=shared Topics Covered: 00:00:00 - Teaser 00:00:47 - Introduction 00:01:52 - Q: Given that there are some presidential vacancies at notable universities, how would you select a new president? 00:11:50 - Q: Why do we still think that it takes four years to fully bake an undergraduate student? 00:23:43 - Q: How can we convince smart young people to consider trade schools? 00:34:05 - Q: If you were 18 again and had the choice between [1] Going to Harvard, [2] 1-1 private tutor, or [3] Thiel Fellowship, which would you choose? 00:45:07 - Q: As a new(ish) father, what the hell is this going to look like for my kids? 00:57:55 - 3 question cluster on AI's impact on education 01:11:14 - Q: Can you talk more about the shift from tenured professors to adjuncts and how this might be linked to grade inflation? 01:19:12 - Q: I've been told by the chancellor of a large university that the increase in tuition is a result of the increase in needs-based grants. If this is correct, are there any alternative models for student financial aid that can offset this outcome? 01:23:21 - Q: Can you please dig a little deeper into the endowments and how they are primarily utilized and earmarked by the university? 01:28:46 - Q: What is the proper role of trustees? 01:35:34 - Sign off #education #university #college #school #history #podcast #technology #tech #entrepreneur #highereducation #learning Listen to Us! - Apple: https://bit.ly/3SdsfNt - Spotify: https://spoti.fi/3SclPOr Resources: Marc on X: https://twitter.com/pmarca Marc’s Substack: https://pmarca.substack.com/ Ben on X: https://twitter.com/bhorowitz Stay Updated: Find us on X: https://twitter.com/a16z Find us on LinkedIn: https://www.linkedin.com/company/a16z The views expressed here are those of the individual personnel quoted and are not the views of a16z or its affiliates. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors and may not under any circumstances be relied upon when making a decision to invest in any a16z funds. PLEASE SEE MORE HERE: https://a16z.com/disclosures/

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  The highest status thing you could do

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  as

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  a

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  parent in the

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  Bay Area five years ago was send your kid to one of the super elite private

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  schools.

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  Now, like it's at least as high status or maybe higher status to like have your kids in one of these super elite homeschool pods. Elon Musk, you know, famously created a new school for his kids, which was literally located in a rocket factory.

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  There are some very prominent Silicon Valley people who have created microschools, pods.

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  And so if the upper upper tippy top of the socioeconomic stratum starts to do that, and that's the highest class thing to do, then you could imagine a future system in which, you know, more and more parents kind of throughout society are like, oh, like I there actually is an escape hatch. Being on the traditional track actually is not the route to the highest status. There's this other route, and I should maybe be more creative and thinking about the trajectory that my kids have, including ultimately the question of whether they go to college.

• 0:47Speaker 0

  Hey folks, uh, welcome back. Uh this is uh the third and final round of the Mark and Ben show on the topic of uh the the troubles at the uh at the universities. Um we did uh for those of you who haven't heard the two previous episodes, the first one two weeks ago uh was about the troubles uh at the universities, the second episode last week um was about uh potential fixes of the current system and also potential entrepreneurial opportunities that are kind of spinning out um uh and and thinking about new approaches to things. And then this third episode is the QA episode. So we have a ton of really good questions. Uh we have a solicited on the X platform, um, and we are excited to uh get into those. Um, and then this will tie off this topic for us for

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  a while, and uh we will see what happens. We'll

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  find

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  something else to talk about.

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  We'll find something else to to talk about. But the feedback so far has been really good, um, including from a lot of our friends who actually work in the space. Uh and so um, including at some of the top universities. So we're hopefully we're we're contributing somewhat to the uh to to the to the current discussions.

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  Uh

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  so uh we're gonna launch right, there's a

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  whole bunch of questions across a lot

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  of topics. So we'll just jump right in. Parker Pruitt asks, um, given that there are some presidential vacancies at notable universities, and I should pause there and say that I believe that Harvard, uh, Stanford, uh, Penn and Yale are all currently searching for new presidents. Yeah. Um, which is remarkable to have four four of the top institutions simultaneously searching. So this is a pressing issue, both for those institutions, but also for the the entire category. Um how would you select a new president to address the various challenges you've defined? And let me let me just expand on that as Ben, you and I talked about last time on the last podcast, you know, the challenge of running one of these institutions is just the sheer number of constituencies.

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  Um

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  and I think we we tallied up 15 or 20 distinct constituencies, and we talked we talked a lot last time about how a leader of any organization can possibly deal with that kind of situation. So with that in mind, and then of course with lack

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  of uh, you know, lack of authority on you know, with the tenure system, um, you know, the faculty itself is kind of a little you know, largely in charge of the curriculum. Right, right. And

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  so Ben, if you were running uh if you were running one of these searches at one of these top institutions, like what would be the, what would be the what would be the plan?

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  Yeah, so you know, there's a term in the old business literature that they, you know, uh from like the 80s when I was a kid called a change agent. Do you remember this term, Mark?

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  Yep.

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  And a change agent was basically the way to think about it is you know, if you have uh kind of an organization that needs, you know, some new innovation or this or that or the other, then that's one thing. But if like the whole system needs to be redone um because it's broken, then you need this thing called a change agent, which is somebody who doesn't care about, you know, often characterized like they don't care about any of the kind of normal relationships and being liked or these kinds of things normal, they just are like hellbent on getting from the old system to a system that works. And often kind of these people become so intolerable to the old people in the system that either, you know, like most of the old people go or you know, the new person goes, the change agent goes.

• 4:14Speaker 1

  So it's a complicated thing. Um, but they you know, that there have been kind of many examples in business where this happens, and often, I mean interesting. Elon at at X is probably a change agent, and you know, people really hate it in a way, but um, he's certainly changed,

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  you know,

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  like it or not, it's a completely different thing than before he got there.

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  Uh,

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  there's a famous case study on Continental Airlines when they were going broke uh when they were going bankrupt, um, where they brought in a CEO who kind of changed everything. I think uh Bob Pittman when he went into Six Flags Amusement Park was that kind of guy where he kind of changed the whole thing. Um and you know, it's it's everything from the culture on down. Uh so how everything works is up for grabs when you have one of these people. So I think you'd be looking for somebody with those characteristics, or I think that I would. So, you know, it would be if I was looking for somebody to kind of run the university, it would be somebody who would go, like, you know, the value proposition for students is absolutely insane.

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  And, you know, we've got to cut the cost by 80%. And I have a plan to do that. And, you know, we're gonna,

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  and and

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  you know, and and and and am like, but somebody who's walking in like that, as opposed to somebody who's coming in, this great university that's been here since 1790, and you know, whatever Alexamel Hamilton, Alexander Hamilton studied here, you know, whoever studied there and all that kind of thing. Um, that kind of reverence is probably bad in a situation like this, uh, because what that tradition is and what it's become, there's just too big a gap now. Uh and you know, it really does need a major revision because you know, as we discussed last time, if you continue on the current trajectory, you know, you're gonna have a place where it costs uh, you know, a million dollars for four years, four-year degree, which is just uh, you know, it's very hard to earn that back.

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  You know, like I said, you know, even if you work for Andreas and Horowitz, that's not easy to earn back.

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  That's a hard, and there's interest, and so you're you're sitting on a you're sitting on a compounding, you're sitting on a compounding problem. Um, so uh you alluded to this, but I'll just ask the question directly. Um a change agent that comes into any organization, uh, they sort of face this thing where there's gonna be a lot of internal resistance, as you said, kind of the people who have been there, the incumbent, the incumbent

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  kind of power, you know, players at that place are gonna are gonna basically resist.

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  Um and so then there's like this sort of you know, game theory thing that plays out, which is can the change agent basically roll through and probably get rid of those people faster than they can basically destroy uh him or her uh on the launch pad.

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  Yeah, um that that's that's always a real question, right? And um, but I I do think that right, the the trustees hire the president at a university. So I think that what you would need is agreement among the trustees to back the change agent, you know, before you ever made the hire, um, in order to pull it off. Because right, if you know, whoever the administrators, the deans, the faculty could go around the the kind of president to the trustees and say, hey, this is crazy and the trustees cave, then that would be that. Um so I mean, look, and this presumes that you kind of believe our conversation in the first two episodes that there needs to be a major change.

• 7:58Speaker 1

  I think you know, most trustees at these universities that we've spoken to, and we've now spoken to a few, um don't feel like the situation is as extreme as we painted it probably. Uh and so the likelihood of them being able to either bring on or tolerate somebody who's got that kind of attitude at this point, probably willn't. I mean, in this cycle, you know, I wonder, but uh, but that's what I would do, you know, that's what I would advocate for.

• 8:31Speaker 0

  Yeah. And then, you know, what if somebody said, look, like, yes, there are problems, but you know, look, there's like a lot of constraints on what we can do, and there's a lot of good people, you know, in the system, and and there's a lot of, you know, there's like, you know, there's some shared sense of mission and goals around teaching and research and so forth. And like, you know, boy, Ben, actually, what we need is kind of the opposite of what you're saying is like we we need a conciliator and a diplomat. Um, and so we need some. Everybody to agree,

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  sure. Right, right. Right.

• 8:53Speaker 0

  Yeah. Well, and well, let me start before that, even just like take some of the tension out, take some of the conflict out, you know, kind of find common ground, you know, kind of, you know, build trust, um, you know, get, you know, sort of identify shared values that you can kind of rally around. Um, and then yeah, drive drive towards some sort of convergence of agreement, but like fundamentally, but you know, basically be it being a Henry Kissinger type as compared to like a Jack Welts type,

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  yeah,

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  like a diplomat. With that, like how would you, if somebody said they were the new person they were bringing in was was uh one of these, you know, with one of these places like that, like how how would you score the, you know, what sort of what happens at what happens next?

• 9:28Speaker 1

  Well, like, I mean, I think it it really depends on you know, the diagnosis, right? So, like the way we diagnose the problem, um that went change much um, you know, on our very long laundry list of issues that we kind of went through over the last four hours. Um the other hand, if the diagnosis was hey, somehow we got to the point where campuses are. You know, which we designed to be extremely tolerant, have become extremely intolerant of various points of view and Jews and whatever else, you know, has come up. And what we need is somebody to rebuild tolerance and everything else is fine, you know, like student debt, whatever, you know, the government will take care of that, we'll forgive the debt and this and and the other.

• 10:27Speaker 1

  And um, you know, the the fact that uh the world has changed and information is available. Well, you know, these are not really problems. If you if you came from that perspective, then you know, somebody who is a great uh kind of conciliatory kind of diplomatic, you know, Henry Kissinger uh sort of character, um you know could I guess potentially solve that problem? I mean, uh, I'm a little skeptical of that because I do think at least, you know, among a pretty big contingent in the university, it's a religion, it's not a um, it's not a point of view, it's a belief system that uh requires faith, um, and which is why it cannot be argued.

• 11:18Speaker 1

  And so I think that kind of person would run into trouble, you know, against their religious zealots of the university. Um but but I think that that's what would get you to that idea, I think. Yeah, yeah, that's that sounds right.

• 11:36Speaker 0

  Um let's go uh yeah, let's go, let's shift topics. Let's uh talk about um sort of the the education and credentialing you know components that we talked about a lot in the last two episodes. Um start with a very straightforward fundamental question um uh from uh MT Chillin. Uh uh, why do we think it still takes four years to fully bake an undergraduate student? What does that seemingly arbitrary uh timeline come from? Um, and how do we get away from the temporal packaging, which is a great uh uh phrase uh of undergraduate undergraduate education. Yeah, that that

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  I think that's like a fundamentally important question. And this is uh, you know, what Lambda School and some others are kind of tackling.

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  Um

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  let you you probably know more about the origin of the four years than I do, but I I look I think in the modern world, it's a pretty weird idea that you would spend four years getting educated and then the rest of your life working with no more education, right? Like if you think, and we talked about this a little before, but like you know, at least in in our field, that's absurd. But I think really in most fields, you know, you know, both you and I have been doing a lot of reading on foreign policy lately. And I think one of the problems that with foreign policy is that people have who are in the business have gotten education that's extremely dated, you know, the world has really changed, warfare has changed, um, power has changed, economics have changed, you know, since the kind of cold war negotiations or whatever they studied in school.

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  Uh and there's not like a constant refresh of the knowledge. And you know, I think arguably uh a better system is okay, you finish your 12 years of education in elementary and high school, at least in the United States, and then you know, you maybe get a year that bridges you from that to uh knowledge in a field where you want to go into that kind of work environment and then go from there for most people, you know, like of course, if you're you know, a super genius and a physics scholar, um, then you know, maybe the the full, not only the four years, but a PhD program is the right thing to do.

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  Uh but I think for most college students, probably over 95% of college students are there to prepare themselves for the workforce, and a four-year degree to do that um seems a little misplaced in uh in a world where the rate of change is so high, right? And we used to learn I I took typing in you know high school. I mean, I guess they still teach typing, but I took also cursive, uh, like in elementary school, like nobody learns cursive anymore. Um the things just get obsolete pretty fast these days. Yeah. I took what people don't take wood shop anymore, do they? Home act I did. Yeah,

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  I did, of course.

• 14:49Speaker 1

  No, no,

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  the boys take, yeah, the boys tech wood shop, the the girls take home back is the old model, um, which uh lasted for a long time. I've probably still out there. Um very fun. I love that it is true. It is fun to use it, yeah. Use it use a bandsaw. Um so um you know, as a teenager, it's a lot of fun to do things that run the risk of cutting off fingers. Um but um so I think that I think that all makes sense. I think the sort of, you know, the historical to modern lens I would I would provide to this is, you know, I think I talked earlier uh on the previous episode about the modern American university system is

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  sort of a

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  derivation of a

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  combination of the

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  old English system and the old

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  German system.

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  Yeah, and the old English system, you know, which still survives in the form of like Oxford and Cambridge is basically, you know, what they call I think philosophy, politics, economics, PPE, or sort of a sort of classical education that is intended to prepare uh basically future political leaders, and you know, basically all prime ministers of the UK basically have that educational background, you know, to this day. Uh so this sort of very humanities, liberal arts, classics, you know, Greek, Latin, ancient literature, politics, political ideas, political philosophy, some economics, maybe not enough. Um so there's very much that train training leaders fundamentally. Um and then the German model was technical education, and so it was training uh engineers. Um, and you know, to this day, uh, when you meet an engineer from Germany, it's actually you know pretty likely they have a PhD um from one of

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  these German technical universities, which you know,

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  the PhD is at

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  like much higher rates uh in engineering fields than

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  I think in

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  the

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  American system.

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  So

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  it's sort of designed to be a technical education system, and then the American system kind of, you know, starting about a century ago kind of merged those two and now now does does both of those. But look, that there was a presumption in both of those that basically you had elites teaching elites, right? And so you had sort of the absolute cream of the crop of the British aristocracy taking the those programs at Oxford and Cambridge 200 years ago, and then you

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  had

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  the

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  smartest math, you know, kind of uh,

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  you know, people

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  tested

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  highest on math scores, yeah, taking the those German systems. And then there were very specific things that they were trying to get across to you. Like they were in the one system they were trying to teach you how to run the British Empire, and the second system they were trying to teach you how to like build railroads.

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  Yeah, yeah.

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  Right, right. They had like very specific goals. And so they and they jammed these programs full of all of the knowledge that they thought, you know, that the previous elites thought that the new elites would need to do that. Right. And then there's this like there's this idea, you know, that I that I um you know, kind of uh think about a lot on things like this and how how how these things have evolved. And I think you'll Ben, I think you're familiar with this is called Goodhart's law. Um, when a measure becomes a target, it ceases to be a good measure. Yeah. Um, right. And it's or more colloquially, in other words, when we set one specific goal, people will tend to optimize for that objective regardless of the consequences.

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  Yep. Um,

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  or another, another way to put that, the term you'll also hear is cargo cult, right? Which is sort of this idea that um, you know, if um, you know, if if if uh if uh you know

• 17:46Speaker 1

  if I go to college, I'll get a high paying job.

• 17:49Speaker 0

  Yes, exactly, right. Because people went to college in the past, I got a high paying jobs, therefore, if I go to college, I'll get a high paying job. And and and the the activity itself becomes the point,

• 17:57Speaker 1

  yeah.

• 17:57Speaker 0

  Um, right, as as compared to the actual underlying substance. Um, and so the the the goodhart's law here is, you know, there and it's an element of good heart's law here, which is the four years.

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  Yeah. Uh

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  in other words, like it's sort of that that idea got abstracted out, and now it's like, oh, if you take classes for four years, therefore you now have a university degree and you are now qualified to do things. That that has become an abstract idea,

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  right?

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  Independent of the actual content,

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  right?

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  Right. In independent of what you're being taught, independent of what you're learning, independent of what the degree is, independent of how good the professors are, independent of whether there's any economic demand for any of that.

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  Independent of how well you learned it.

• 18:33Speaker 0

  Exactly, independent of whether you went to class. Or

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  if you just got drunk the whole time, and

• 18:37Speaker 0

  great inflate you through. Great of flavor, exactly. Yeah, well, it's this part of part of the old system, obviously. The old system was actual performance standards. Like, what if you still put everybody through four years and just got rid of all the performance standards, right? Um, and so it's it's this, it's this check the box, you know, it's process versus substance thing. It's this check the box thing where four, you know, and we talked about this last time. It's like there's no quote unquote college, it's not an abstract thing, it's it's a college, you know, with a specific quality, and then it's a degree um with you know, specific substance, and then it's you know, at a level of performance, you know, that actually like you know, validates that you've actually learned anything. And and so it's all extremely specific to the circumstances. But we we just we reduce it to this very abstract conversation of a college degree or not a college degree, four years or not, right?

• 19:24Speaker 1

  Well, and you you know, it's really interesting that you you bring that up because I I think back to when I was um a teaching assistant at UCLA in computer science, and even in computer science, which was super rigorous there, because just to qualify into that department was nearly impossible because they had very few slots, you know, compared to the number of people who wanted them.

• 19:46Speaker 0

  Um,

• 19:47Speaker 1

  but the variance in students and capability was profound. I mean, you know, they they're and all you know, in comparison. Computer science, everybody made an effort or they flanked out because UCLA actually wanted to flank you out of the major so they could make room in the major. I mean, that that's actually an important thing for them to have to do. Whereas that, you know, uh other schools and other majors, uh, that's not a thing, you know, clearly with great inflation and whatnot. And so, yeah, one could imagine that you have two totally different people coming out the other end, you know, in any any given time. Even a university in the same major.

• 20:34Speaker 0

  Yeah, exactly. That's exactly right. And so, so I this is sort of the thing is I think it it it all, you know, it's four years the right amount. It really begs these underlying questions. And so the underlying question is okay, like what you know, what are you learning? What what is the content? Um, how how are you doing with it? Are you actually learning it? What what is what is the the quality of the of the teaching that you're getting? What is the economic demand for the you know education and skills that you're developing? Um like those underlying questions really matter. And so for yeah, so for something like computer science, maybe the optimal amount is four years and maybe even longer. Um, you know, for for other fields, maybe not. Um and the the cookie cutter, the good heart's law aspect of this is it's the cookie cutter four years thing basically just does not, it doesn't even basically it it's a very easy way to not have to have any of those underlying conversations, uh, which which is what what I think has happened.

• 21:20Speaker 1

  Yeah.

• 21:21Speaker 0

  And so if you were inventing a system from scratch, you would do what the originators of the English and German systems did, and and what the creators, you know, of what folks like like Austin Atlanta school are doing, which is you would look from scratch first principles, and you would say, okay, like what is the specific purpose of this specific degree at the specific point in time. Um and and maybe that's a year, maybe that's four years, maybe that's eight years. You know, you that the like the time would be an output of that question, not an input.

• 21:46Speaker 1

  Right.

• 21:46Speaker 0

  And and this goes this goes to just the the, you know, to if if you want to be skeptical about the possibilities of reform here, a good reason to be skeptical is the Goodhart's law has fully kicked in, um, which is the the process has become the substance as opposed to the substance driving the process. Yep. Yeah,

• 22:01Speaker 1

  and like that, you know, in in academia's defense, I think that happens with everything that's lasted long enough. So congratulations to them for lasting long enough to hit Goodhart's Law, but uh probably need um pretty massive reform to get it back on track.

• 22:18Speaker 0

  Yeah, as it sort of is, I think as you're alluding to companies often run into the same situation, right? Over time. It's not unfamiliar to those folks who have run businesses. A hundred percent.

• 22:28Speaker 1

  No question.

• 22:29Speaker 0

  Yeah. In fact, it even happens at venture capital firms, right? Your stuff. Yeah,

• 22:32Speaker 1

  yeah, no question. Look, Sears Roebuck used to be a great company.

• 22:37Speaker 0

  Um, you

• 22:38Speaker 1

  know, venture capital. Anything that lasts long enough in particular, I think um any institution that outlives the people who started it, um, can very quickly run into this problem because the more successors you have, the more they tend to mimic the old way of doing things without necessarily knowing why.

• 22:59Speaker 0

  Yeah. The cargo

• 23:00Speaker 1

  cardiac, yeah.

• 23:02Speaker 0

  That's where it works. They're still doing the they're still doing the raindance from 200 years ago that resulted in, you know, the the uh parachuting in of a creative supplies, and they're still hoping another creative supply shows up. Exactly. So uh for those of you haven't heard of cargo cults to spend some time on the Wikipedia page. It's an idea, it's you see it, you see them everywhere. Um, and then let's go to this is very these very forward, there's a great forward looking. Well, no, I'm gonna divert and then I'm gonna go to the forward-looking question. So the diversion is a very, I think actually interesting question that is getting more and more discussion as people sort of observe the student loan crisis and the sort of dissatisfaction of the people coming out of universities and and quite honestly, the unhappiness of people coming out of universities, which is you know, spiking way up, which is which is remarkable in and of itself. But uh Jeff Johnson asks, um, how can we convince smart young people to consider trade schools, right?

• 23:47Speaker 0

  And and here, you know, trade schools is you know, literally, you know, good the electrician, plumber, so so basically the argument go there are people arguing this, and you see this on Twitter. It's an argument in particular on the on the on the right or the political right now, which is basically like look, like, you know, these universities have all these issues. Um, and so it's like there's this other path, and the other path basically is go get a skill, a ser a serious skill in a trade, um, where it's not a college degree, but it's like look, we'll say electrician, plumber, um, uh, or you know, the the these other things, or for that matter, yeah, like a like a data analyst or like even, you know, look, even like certain kinds of you know, nurse practitioner, you know, certain kinds of things like that, where it's not like a four or six or eight year college thing, but it's like a very applied one or two year, you know, kind of thing. And then you kind of enter the you're under the workforce where they trade. Um, and and then you know, people point out it's like, you know, a lot of liberal arts, you know, graduates are coming out of especially second and third tier colleges, and they get these 30,000 or 40,000 a year jobs, and that's why they're you know, maybe so so unhappy, they have such a large amounts of student debt.

• 24:44Speaker 0

  You know, look, people high skilled, I mean, Ben, what do what is what electricians get paid in the Bay Area right now?

• 24:50Speaker 1

  Oh, I think a lot and going way up. I mean, I I don't know the exact amount, but um well, it's funny. There was a I hate to bring up South Park again because it shows how much I watch South Park, but they had a great episode on AI where they were like the the richest guy in all of South Park was the uh handyman, because nobody knew how to fix anything and they were all the laptop class and they were all getting put out of work.

• 25:16Speaker 0

  He's driving around to Rolls Royce and like all the women are like hanging off of him and

• 25:19Speaker 1

  and look in terms of supply and demand, um at least in uh so in wealthy areas, so in urban areas, uh I think that if you're not um so look, if you're an elite engineer or whatever, like that's a great path, and you know, university is a great path. I think if you're kind of just chinning above the bar, um, and you go to four-year college to become part of the laptop class, which was a huge employer, um that set of jobs is kind of under pretty aggressive attack by technology, interestingly. Um, these administrative uh paper pushing sort of ideas. At the same time, um, you know, the thing that AI is not going to be able to do is be a handyman or a welder or an electrician, or like a lot of these things that you do learn in trade school.

• 26:18Speaker 1

  So there is an economic argument uh to do that. And you know, like you know, as that kind of thing, like I think that um, you know, a lot of those jobs, particularly if they're skilled, welding is pretty fucking tough job. Um so some of them are better than others. Uh but yeah, like I definitely think there's an argument. And you know, I think a lot of people would be if you are happier doing that, you no longer should feel like you have to go to college for economic reasons. I I guess is the

• 26:56Speaker 0

  way I would think about it.

• 26:58Speaker 1

  Um, because they think the economics are probably better at going to trade school. Um if if that's what you like doing.

• 27:05Speaker 0

  Yeah, I think electrician, I don't know for sure. I would suspect electricians in the barrier are probably paid something like probably mid sort of 150,000 or something. Um, you know, so which is like basically like 3x what maybe a typical liberal arts graduate is making in a sort of uh you know, a second tier from a second tier school

• 27:20Speaker 1

  in the

• 27:20Speaker 0

  same area, right? So like out of the gate, it's it's actually the to for all the reasons you described, there's actually this economic kind of re re the kind of economic uh re-refactoring that's happening kind of in that direction, um, at least out of the gate. Um so and let me also say, look, like, you know, the part of the argument on this is like, look, yeah, uh having a trade, um, working in the real world, um, you know, making things and fixing things uh and making things happen in the real world is like a you know deeply honorable, you know, kind of thing to do, being able to provide for your family by doing that, being able to, you know, contribute to community by doing that, you know, is is like an incredibly incredibly, you know, I just have like a ton of respect um, you know, for for everybody who does that. Um, the the counter the counter-argument on that, uh the counter-argument on that is yes, fine, but um our society is wired in for better or for worse, our society is wired in such a way that sort of the quote unquote elite, um, you know, kind of the people who end up running everything are are not that that it's it rather it's it's it's people who went to college.

• 28:17Speaker 1

  Yeah.

• 28:17Speaker 0

  Um is people who kind of get minted into the you know, the the presumption of some sort of intellectual social aristocracy that it where the evidence of that is the college degree, and and maybe even more than that, of course, within that is you know, which college um um and then you know the the people with college degrees who end up in all the management jobs, who end up in all of the government jobs, you know, who end up you know running, you know, basically running everything. Um and so by by taking the the counter argument is by taking the trade score route, you're kind of opting out of being on a track where you end up basically being in a in a in a societal leadership role. Um and in fact, look, I you know, I think you could actually even say this is this is driving a fair amount of our our you know political division between the between the parties right now. Um let me also say that we have made in our society, we have made including and in our government, we have made explicit policy decisions that drive that, and specifically the number of jobs in the system that require a college degree uh is very high.

• 29:10Speaker 1

  Yeah.

• 29:10Speaker 0

  Um and so and you do you just see this in job applications or any study of like job, you know, job postings, which is

• 29:16Speaker 1

  going down now.

• 29:18Speaker 0

  Well, let's talk about that. Like is it how fast will it? Like how what do we think about that?

• 29:24Speaker 1

  Well, a lot of companies have kind of announced that they're removing the requirement. And um, you know, I certainly um you know in our in our own hiring process, we uh encourage people not to have those kinds of requirements because you know, look, people can become extremely smart without ever going to college and very skilled, you know, particularly in computer science. Um, you know, there's the One could argue that there's better ways to learn it than going to class. So I I mean, I don't know, like it's been going the other direction for so long, it's hard to say, okay, it's going to stop and completely reverse course.

• 30:10Speaker 1

  But yeah, that conversation is definitely happening right now. And I know, you know, and because I sit on that, you know, or I did that kind of uh committee at the firm about like, okay, how do we think about criteria for this and that and the other? And the one thing that everybody always agreed on, or that's that people immediately agreed on was like, okay, let's remove college degree and talk about what are the skills and talents that they have to have, as opposed to what's a credential. Um, just you know, because all the things that we've we've been talking about here. So I think people are recognizing it now.

• 30:56Speaker 1

  I don't know if it like completely reverses trend. I do think, I mean, the other thing, kind of question on kind of trade school versus college on that. I think I think that that's right. I would add to that the Nassim Taleb thing, which is um, are you gonna work in mediocre stand or are you gonna work an extremist stand? And uh you can it's very So describe

• 31:22Speaker 0

  describe that for people who haven't heard that.

• 31:24Speaker 1

  Yeah, so I mean in mediocre stand, um, and like uh he'll attack me on Twitter if I get this wrong, but I'll do my

• 31:32Speaker 0

  don't worry, he's gonna attack you on Twitter no matter what.

• 31:36Speaker 1

  Um very very smart, very disagreeable person. Uh but um so so basically mediocre stand is uh the world in which um it it kind of follows um the Gaussian distribution. So you basically work by the hour, you get paid by the hour, and um the kind of highest paid person by the hour and the lowest paid person by the hour, you know, the difference is not that great. Uh, you know, it's two standard deviations above the mean two standard deviations below.

• 32:09Speaker 0

  In extremist

• 32:10Speaker 1

  Sam, on the other hand, uh it's not a Gaussian distribution, it's a mantle bratian uh distribution. Um which means that uh, you know, in this, if you build a product and you sell it to the world, you can make, you know, almost, you know, it feels like an infinite amount of more money, but you know, tens of thousands of times as much money as the next guy, as opposed to twice as much or you know, 10 times as much.

• 32:38Speaker 0

  Uh or

• 32:40Speaker 1

  zero. Or zero on the other side.

• 32:41Speaker 0

  Yeah,

• 32:41Speaker 1

  right. Or you can, you know, graduate and uh not be able to get a job and get stuck on meth or whatever. Like that that happens to be an extremist stand

• 32:50Speaker 0

  to a much greater degree.

• 32:53Speaker 1

  Uh and yes, so if you know, if you go to trade school, you know, unless you parlay that into some kind of really scalable business, which it's hard to scale trades to that degree, then you're not gonna get you're not gonna jump the fence into extremistan, and you're not gonna be kind of subject to these uh kind of hyperbolic kind of scale that you get, you know, potentially with the college degree. So I think that if your ambition is to be a world leader or like a billionaire or something like that, that is really not a good path, trade school, I don't think for those kinds of ambitions. Now, on the other hand, if you're like, I just want a good job, then that might be a better path.

• 33:41Speaker 1

  So it really depends on who you are and what you want to be. And like, not everybody wants to be that, like, you know, nobody wants not everybody wants to be hated to that degree, uh, you know, to have those things. Correct. Exactly.

• 33:58Speaker 0

  Um, okay. So then that takes us into the general question, coming back to the universities. Um, and so uh uh Matyaz asks, um, if you were 18 again and have the choice between the following number one, go to Harvard, uh, number two, one-to-one private tutor, uh, or number three, teal fellowship, uh, which would you choose and why? And I think it's a very provocative question because all three of those are like creamy the crop, top end, you know, anybody, any any kid who gets any uh any of those choices is great. And but it's an interesting kind of thought experiment to say, okay, what about those three? By the way, I would add four and five, um, uh, which I can't resist. Uh uh four would be what you know, basically go to work. Um, you know, just like all of that, it just goes straight to work. Um, and you know, um, you and I, you know, great came up in a field computer science where that that is actually something you can do.

• 34:43Speaker 0

  You can just like start coding, and if you're good at coding, you could just go to work. That's obviously not true in a lot of other fields.

• 34:50Speaker 1

  Yeah. And

• 34:50Speaker 0

  then I would also add Ben, I would add a fifth one, which is kind of uh another one we see, which goes back to this is the sort of question, which is um, I think it's University of Waterloo that has the is it the they have like the the sort of very integrated co-op uh program.

• 35:04Speaker 1

  Yeah, yeah, yeah, yeah.

• 35:05Speaker 0

  And the idea basically is they have work, they have periods of, you know, so like uh back up in like a normal engineering school, like you're you're in school, you know, the fall and spring, and then you you have time for like two month internships in the summer.

• 35:17Speaker 1

  Um,

• 35:18Speaker 0

  and so you can go to a tech company or whatever and and work for two months in the summer. Um at Waterloo, I think the way they do it, or what I recall is it's like almost think of it as like alternating semesters. You spend a semester in class, then you like spend a full semester like six months in a job somewhere. So that's

• 35:30Speaker 1

  and then you come back to the

• 35:32Speaker 0

  idea, yeah.

• 35:32Speaker 1

  Yeah. That's like great. Yeah.

• 35:36Speaker 0

  Yeah. And I actually did a version of that, uh, Illinois where I went, didn't really have the full version of that, but they had a version of that called the co-op program. And I actually spent, I actually had a nine-month stint in the middle of my my school. I had a nine month stint at IBM at the time in Austin in a job. Um, and I was there for a full nine months in the middle of my my college uh education. And it was actually really amazing because it was like having a you know, it's like basically being injected straight into the workforce, but but still kind of going through the education process. Um so anyway, let's let's go back to uh yeah, let's go back to this question. So going to Harvard, private tutor, teal fellowship, uh go straight to work, or maybe the sort of um ping pong, it's called the ping pong model of uh of education work, education work. Like how would how would we bake those off, especially for kind of the smartest, most talented kids uh or the parents of those kids?

• 36:17Speaker 1

  Okay, well, if you go the smartest and most well, okay, so it it even among the smartest and most talented, I think there's variation in how you mean smart and talented. Um so like if you are like the best in the world at one thing, and that one thing is like programming like that kind of smart um, then I think that the TL fellowship might be very, very interesting in the sense that it gives you um one, like you don't really need the learning part because you you can learn on your own. Um but it gives you uh kind of a little bit of capital and a little bit of networking, um, which is probably what you need the most.

• 37:06Speaker 1

  Uh and you know, and and being around kind of people like yourself uh and learning from them. So you get like an appropriate pure group, you get some money to get going, and you kind of launch out into the world. So I think that's very attractive for you know, kind of the the people are who are kind of one dimensionally like the the top of the top, like literally the kind of best Vitalik. Like that seemed like an unbelievable move for him because he's he, you know, maybe there's not a better programmer in the world than Vitalik, right? Like he is, he's like Jeff Dean level, whatever.

• 37:52Speaker 0

  Um

• 37:55Speaker 1

  the other hand, let's say you're amazingly charismatic, very good engineer, um, but not like that, then you think the teal fellowship might be tough because you might not have you know a good enough technical grounding at that point to go start a company. Um and you know, then you're kind of lost and you're in this world of you know, a bunch of other very nerdy characters. Uh but you're the argument gain that from them.

• 38:28Speaker 0

  The argument that I the argument, and I'm not saying I believe this argument, I'm just saying the argument that I've heard from people who have gone through the TL fellowship and had a bad experience with it. Um is the way they they I've heard them describe it as it's like being thrown to the wolves. Yeah. Um which is like you're you're tossed into a house where this is this is the glory, this is the glory, and possibly the the issue with it is you're tossed into a house with you know a bunch of other kids who are all 18 just like you.

• 38:51Speaker 1

  Yeah, and

• 38:51Speaker 0

  then raised by Willie, like you're

• 38:53Speaker 1

  you're just with

• 38:54Speaker 0

  yeah, no guidance, no guy, no adult, you know, no adult, no, no guidance. And and so you you're learning from each other, but like what do you even have to teach each other? You're also young, and so you sort of lack adult, you know, sort of sort of guidance is that like, yeah, let's let's factor that in. Like

• 39:07Speaker 1

  I don't think I would have done well with a TL fellowship. Well, like to me, it sounds perfect for Vitalik, because he could go build something. Um, and then it was enough kind of socialization networking for him. Um, but he didn't really need guidance because like he was following the idea. He had the idea and he was following that and away he went. Um and that seems like a very good kind of program for somebody like that. I think that if you're you know, if you want to be a world leader, um, I think maybe the one on one tutoring um with coupled with some kind of networking thing uh would be good.

• 39:55Speaker 1

  Um At least in my view. And then that co-op thing, you know, if you wanted to be like uh an entrepreneur or a um you know, a business person and you weren't like Vitalik level or you know, that kind of thing, then that seems like a kind of better balanced path, because you know, you can you don't have to learn everything on your own. And then you also start to understand some more kind of practical, tangible, like, okay, what does this mean what I'm learning in an actual real environment in the in the kind of actual world. Um, so so I think it depends a lot a lot on the student, it would be the way I would think about it.

• 40:45Speaker 1

  But um and then, you know, like a four-year university with no work component. Um, like I I kind of like the work component better now that you brought up the the co-op thing. But I I imagine there are certain things like if you but I think even if you're gonna be like a philosopher or you know, a social scientist or any of those things, like being in a workplace. Academia is such a like a a rarefied different, you know, almost artificial environment compared to everything else in life. And so I think the idea of just being there for four years, like in retrospect for me, like I think I would have gotten more out of uh, you know, and I I was one of the very fortunate people to have summer internships.

• 41:42Speaker 1

  Um, and I have to say the summer internships probably had a much greater impact on my career and my life than the university. Uh but the university enabled me to get the summer internship. So they they went together in that sense.

• 42:01Speaker 0

  Yep. Yeah, um, there's an econom famous economist, very highly regarded economist named Halvarian, uh, who's been a professor at UC Berkeley for for many years. I think may have at one point run the department. Um he went to work, uh it's like 15 years ago now or something, or maybe even 20. He went to work at Google as a fully like tenured econ professor top of his field. You went to work at Google as uh as their chief economist. Um and he he ended up basically like being central to the design of like all the ad, you know, all the ad auction algorithms and all these things. But that's a good job. He did he did a great job. He's he's for the uh it's for those of you into this kind of thing, like just search searching like Halvari and Google PDF, and you'll you'll see a lot of his presentations and papers over the years. Um and he I think makes this argument, if I recall correctly, he basically makes the argument you're making and that back into his field, which is economics, which is basically like wow, if you have like academic economics training, um, but then you get exposure to the real world and you're in an environment in which there's like an enormous amount of data in like real, you know, real situations.

• 43:00Speaker 0

  Um, and then you know, it's like you know, sort of the world as a laboratory, um, and the company uh and a company as a laboratory, like you can actually like test your theories, you can deploy your theories, right? Um, and you can you can avoid ending up in um you know just a world of abstraction, yeah, you know, which has the risk of being you know leading to kind of you know potentially derangement. Um, you know, he's been arguing that for a long time. I think you know, some some economists, especially younger ones, I think have followed in his footsteps. I think a lot of others have very, you know, deliberately not listen to that. Skip that, yeah, yeah.

• 43:32Speaker 1

  Well, now like when uh, you know, it's one of the kind of most um amazing possibilities with uh crypto is that you have an entire world, an entire economy that's completely observable um and studiable in a way, right? The the big problem with the field of economics is uh that there's this enormous amount of data, and you know, you you basically focus in on a small bit of that data, and then that small bit of data is also lagging and inaccurate. So, you know, you like a GDP numbers or this and that. And you know, it's hard to get all the way home. Whereas, you know, a com many economists love crypto because okay, here's the whole economy. It's sitting on the blockchain.

• 44:19Speaker 1

  Um, you can observe every last transaction, every piece of data, it's a hundred percent there and auditable. Right. And then you can analyze it and analyze the incentives and and see how they played out in the real world, because you know, I mean, that's the other challenge with economics is it's you know, all this human behavior psychology, which has been notoriously difficult to predict.

• 44:46Speaker 0

  Um

• 44:46Speaker 1

  people don't always turns out people don't always act in their best interest.

• 44:51Speaker 0

  Right. Or their best interest to find is a single utility function of future income or something like that. Right.

• 44:56Speaker 1

  Yeah. Von Neumann got that wrong. Yeah.

• 44:59Speaker 0

  Yeah. Yeah, exactly. Um okay, and then let's let's close off the section with in many many ways the most straightforward question, and then also maybe ultimately the most important one. Um Patrick Rahill asks, as an as a newish father, um, I couldn't help but wonder uh what the hell is this going to look like for my kids? Uh what would you do if you had two young kids and plan for their educational futures? And uh, as it turns out, I have an eight-year-old, and so I'm yeah, you should

• 45:21Speaker 1

  you should start on this one because you've thought about it much more than I have. My kids are adults. Your

• 45:26Speaker 0

  kids are adults. Uh some but some people don't

• 45:28Speaker 1

  worry about this nearly as much as you do.

• 45:30Speaker 0

  Yeah, although at some point they're grandkids in your future. So um, so um uh yeah, I mean, look, like it's really striking. And look, I don't know that I have any you know great answers on this. It's just it's really striking, you know. So my kid's eight, it's like he's gonna go to, you know, in theory, he's gonna go to college in 10 years.

• 45:46Speaker 1

  Yeah,

• 45:46Speaker 0

  like everything we've been talking about, Ben, for the last like, you know, seven hours on this on this topic, like what are colleges gonna be like in 10 years? Not the same.

• 45:55Speaker 1

  They'll either be much better or much worse.

• 45:58Speaker 0

  Yeah, exactly. And so like I I feel like like I I it, you know, to to to Patrick's question here, like how do you plan for a future in which you don't even know what's on the other end? Like you don't even know what the options are gonna be, you don't even know like how it's gonna be received. And then look, you know, look, maybe it's your point, like maybe that maybe in 10 years it'll just be like, wow, things are much better now. And yeah, there was a crisis some time ago, but this has all been fixed and things kind of go back to normal. Uh, you know, or maybe it's gonna be wow, these places have like gone like completely psychotic, and like I'm there's no way I'm gonna feed my kids into these threats threshing machines, and uh, and they're we're gonna we're gonna all be looking for like alternate paths.

• 46:31Speaker 1

  Yeah,

• 46:31Speaker 0

  um, and so it's it's a really like I think it's I think it's gonna be a very weird and disconcerting time for a lot of parents to try to think ahead for this.

• 46:37Speaker 1

  Yep. Yeah, no, I I agree with all that. I do think that um, yeah, this questioner seems to have very young kids, so that's good news, and that there's more time to see how it plays out. But I'm fairly confident that over a 10-year period, new models are going to emerge. Um look, I mean, the the great thing about new models is they tend to be extremely well thought through. Um, and hopefully, I mean, the big question is will the new models become robust enough, you know, in that time frame that you know you can count on them, uh, you know, particularly for the credentialing part. Um but but I I do think the choices will be different. Like I I guess what I'm saying is like if I had a two-year-old, I think it would be dangerous to or not worthwhile to try and overthink it now because it's gonna be very different, and you're better off making a late what we call in computer science a late binding decision.

• 47:41Speaker 1

  Uh and when things are known than you know, uh make the decision as opposed to try and make it early. It does, you know, like I mean, it's tricky because you you know do you do you have to save like five million dollars for college or you know, will that get fixed? Um, and that's certainly an open question.

• 48:03Speaker 0

  Um, or you just need to vote, spend the next 10 years only voting for and working on behalf of political candidates who promised to make it all free, right? Yeah, the other thing. Yeah, although as uh

• 48:13Speaker 1

  what did um the Argentinian president Javier Malay say if uh you know, if um printing money

• 48:21Speaker 0

  or

• 48:22Speaker 1

  printing saying printing money eradicates pro poverty is like saying printing diplomas eradicates the stupidity, which I think unfortunately making it all free by our current methodology, which is running a two trillion dollar deficit, um probably isn't gonna last.

• 48:39Speaker 0

  Probably not. Uh it's it's hard to imagine. Um yeah, look, here's the other thing I think is happening, and I I just I I don't even know quite how to think about this yet, but I'll just you know, as N of one, you know, we've we've we've you know we're homeschooling, right? Yeah, so one of the things we've done is we we're you know, we've we're homeschooling, we've gone we've

• 48:53Speaker 1

  gone back to the older model, which is actually the to the previous question more of like private tutoring.

• 48:57Speaker 0

  Um and and and you know, you and I both know I think a lot of parents, especially in tech and in business who, you know, say an increasing number who are either doing that or are creating kind of new micro schools. Well, you know, Elon Musk, you know, famously created a new school for his kids, which was literally located in a rocket factory.

• 49:13Speaker 1

  Yeah,

• 49:13Speaker 0

  um, you know, that there are other, you know, there are there are some very prominent Silicon Valley people who have created microschools, pods, um, you know, this sort of started during COVID, and then in a lot of cases they've they've continued. And the reason I bring this up is because, you know, the presumption for the last hundred years has been that if you are, you know, if you're just like a general American parent, um, you send your kids to, you know, K through 12, either public or private, you know, and then if it's if you're sort of upper middle class, you know, middle class, upper middle class, you're gonna send them to college. And then there's always been homeschooling as the out, but homeschooling, you know, generally until recently has been kind of the you know, quote unquote lower class, you know, kind of thing, you know, evangelicals, you know, people who

• 49:48Speaker 1

  you know,

• 49:48Speaker 0

  kind of, you know, people who are not aspiring to have their kids, you know, be the leadership class, but rather, you know, stay away from

• 49:54Speaker 1

  I mean, unless you have the money to hire uh kind of private teachers and so forth. Forth, you need kind of mom or dad to like literally be the homeschool teacher. Um, which is uh, you know, not always viable too.

• 50:12Speaker 0

  But here's a significance of here's the significance of it. You can feel this starting to tilt a little bit in the Bay Area. And I don't know if this is gonna the reason I bring this up is I don't know if this is gonna scale or not, but it'll be interesting to see if it does. The single that like the highest status thing you could do as a parent in the Bay Area five years ago was send your kid to one of the super elite private schools. Yeah. Like, you know, we actually had our kid at the end. Oh, is it more if

• 50:31Speaker 1

  you get into those schools, yeah. Uh, you know,

• 50:33Speaker 0

  very intense. You know,

• 50:34Speaker 1

  they're these kinds of things. I mean, they're gorgeous. Like the the private schools in in Silicon Valley are nicer than 98% of the college campuses in America. Yeah,

• 50:44Speaker 0

  yeah, that's right. And then these are the schools that literally are interviewing three year olds, right? Like formal interviews, you know, for for for admission, and and you know, we there's we had a whole game plan for how to like you know, have our three year old be like exhausted as possible by the time he went in for the interview, so he just wouldn't run around everywhere. Um, so it's like you know, the typical kind of high high status, you know, high stress, you know, kind of thing. But like I think in the Bay Area now, like it's at least as high status or maybe higher status to like uh have your kids in like one of these super elite uh homeschool pots um with like super top end uh tutors. Um and you know, the those kids at the very tippy top of sort of let's say the socioeconomic scale, they're they're they're you know, the parents are opting out of the private schools and they're they're just you know taking responsibility for their kids' educations. And as we discussed last time, like that is the traditional method of of the aristocracy.

• 51:30Speaker 0

  The traditional method of the aristocracy educating their kids is not to send them to some school, it's to is to is to is to have them have tutors and private teachers. And so if if the if the if the upper upper tippy top of the socioeconomic stratum starts to do that, and that's the highest class thing to do, then you could then you could imagine a future system in which you know more and more parents kind of throughout society are like, oh, like I there actually is an escape hatch. Um you know, in other words, being on the traditional track actually is not the route to the highest status. There's this other route, and I should maybe be more creative and thinking about the trajectory that my kids have, including ultimately the question of whether they go to college.

• 52:04Speaker 1

  Yeah, yeah, no, that is interesting. Um I'm kind of trying to think about how that works for like people who don't have a lot of money. I mean, just like so. If when I started my grading, have much money, my kids went to public school, then I got money and I put them in private school, you know, as they got to high school, also to keep them out of trouble. Um then I wonder, you know, because a lot of people look when you if you had had kids when you were young, you would have been in that situation too, of course. Um

• 52:39Speaker 0

  I'm not to be clear what I'm suggesting though. I'm not suggesting that I'm not suggesting that like home school suddenly scales or something for for the economic reasons you're talking about. I'm talking about like if it if it if it opens a crack in the door uh and says the route to the highest. But maybe

• 52:53Speaker 1

  yeah, uh you know, like maybe it's like you know you just need one uh kid in the neighborhood who's got a mom who's really smart and knows how to teach, and then you everybody just joins that, and then that enables her to teach and not have to you know get a job to support the family, and then you know, like if that model takes shape, the beauty of it is um, you know, the parents have total control right now. Like the the big complaint um and the big another political kind of tension is you know, parents have lost any control over the curriculum in public or private schools, um, but in home skill schooling, they've got ultimate control. And so that it's a it's an interesting idea, like just maybe it just goes back to that, and maybe that's better.

• 53:42Speaker 1

  Yeah,

• 53:43Speaker 0

  or yeah, or maybe it's new models, you know, maybe it's new models. Maybe you know, it's it's uh we'll we'll talk about the AI thing in a second here, but maybe it's some combination of AI teaching coupled with like intensive in-person tutoring

• 53:51Speaker 1

  in a

• 53:51Speaker 0

  way that's scalable. You know, if somebody maybe somebody does that as a business, you know, we fund a startup that does that. Um and my point being like if there's a route to high status, it's funny. If

• 54:00Speaker 1

  there's yeah, right. Go ahead. Go ahead. Yeah, I mean, you know, we do have a startup that does that for daycare, wonder school, and like Wonder School could just level up one level, you know, above you know, little kids into kindergartners and so forth. But but that it's essentially the model, you know, it's basically here's the way you set up a daycare for your neighborhood. Um, and what's all the tools and best practices and this and that and the other, and boom, and you just go. And then the great thing is you have this thing that we always talk about in business, which is how do you push ownership and accountability all the way down?

• 54:46Speaker 1

  Well, one way is every teacher is an entrepreneur, um, and every parent is deeply invested in the small

• 54:53Speaker 0

  school

• 54:54Speaker 1

  homeschool that they're part of. And like maybe that's the right model for America.

• 54:58Speaker 0

  Um, I

• 54:59Speaker 1

  hadn't thought about I hadn't thought about it until you brought it up, so it's not well thought through, but it's a very interesting that if it's working for the kind of the elite of the elites in Silicon Valley, then maybe it is the right model.

• 55:14Speaker 0

  Yeah, and look, by the way, there's a historical precedent, which is in the you know, a hundred years before the modern system, you know, in the 1800s in the US, you know, when the US was being built in the 1800s, the system was they called it the little red schoolhouse. And you'd have some town in the middle of nowhere, and you'd have a little schoolhouse and you'd have 15 kids and you'd have they'd be all mixed age ranges, and you'd have a single teacher, and you'd have whatever, you know, it would be the it would be the program the community wanted, and everybody the parents were all intimately involved in it.

• 55:38Speaker 1

  Uh it was hyper

• 55:39Speaker 0

  local. Um, and you know, they were geographically you know dispersed without some strong central, you know, there's no there was no department of education. Yeah,

• 55:45Speaker 1

  yeah, yeah. Um schoolhouse, yeah.

• 55:47Speaker 0

  It's a schoolhouse, right? And and and then and then as a kind of yeah, and look, where these are the people who like build America. I mean, these are the people who like built, you know, they built all the cities and they built all the you know factories and they built, you know, they built everything. And so like well,

• 55:58Speaker 1

  yeah.

• 55:59Speaker 0

  Yeah, yeah, it worked actually quite well. And good. No, it was it was variable, right? Um, and so you know, the the great kind of standardization wave that hit, you know, kind of with industrialization in the you know, 1910s, 1920s and after kind of you know, eliminated a lot of that. But like, you know, you that yeah, you that there is a there is a very successful historical precedent for just a much more distributed hyper-local, um, uh uh flexible, uh adaptable community-oriented approach to this that I you know, I I think basically I mean look, this is the this is the upside of the collapse of an existing you know, sort of monopoly is all of a sudden the fragmentation means you can have all kinds of experimentation. Yeah,

• 56:34Speaker 1

  yeah, yeah. Um, it's very easy to say, well, you know, the the way you tell it, it reminds me of Airbnb, right? Like Airbnb, um hotels kind of stand it started with these bed and breakfast ends and whatnot, and then hotels standardize the whole thing. Um and you could get count on a level of quality, but then the internet comes, and guess what? You can measure the quality of every tree house and every bedroom and so forth, and like you know, maybe you can actually measure the quality of every schoolhouse and you know um dad or mom who's teaching and all that kind of stuff and rate them all, and it becomes visible to everyone, and then you have, and then you get all the benefits of like extreme ownership, no bureaucracy, no waste.

• 57:18Speaker 0

  Um very

• 57:21Speaker 1

  interesting.

• 57:22Speaker 0

  I'll give you one thing we're gonna talk about AI here in a second, but I'll give you one thing you could just do is you could just assume that these schoolhouses just have cameras running all the time.

• 57:28Speaker 1

  Yeah,

• 57:28Speaker 0

  um, and so any any parent at any time can see what's happening, and then you could have a you could have uh AI give you a summary at the end of the day of what happened in the classroom.

• 57:36Speaker 1

  Yep, yeah, yeah.

• 57:38Speaker 0

  Right. And as a parent, you'd be like, oh, you know, this is what Johnny did today. And you know, it's a level of the number one, it gives you accountability, which is like you know what's actually happening way more than you know what's happening in the the public or private school you send your kid to today,

• 57:48Speaker 1

  right? Um

• 57:50Speaker 0

  right.

• 57:50Speaker 1

  Well, and then you have the AI tutor to supplement the teacher if they don't know something.

• 57:55Speaker 0

  So let's talk about that. Okay, so we have three questions in a cluster here. Um we'll dig in. So Sir Sergio uh asked with the rapid developments of AI, what role do you see the university playing in the future when people can learn from such resources for free? Uh Manuel Hernandez asks, given that lectures can now be online and tutorials can be performed by AI, how can we develop an independent study credentialing system? And then uh Cathedral Operative, uh, which is a great uh handle, uh says, uh, what are your ideas for maintaining or improving the quality of degrees if AI tech makes it easier for students to write essays and pass uh remote quizzes? So uh yeah, so let's let's use that to kind of lead into the um you know what what what what are our best guesses on like the impact of of the all these new AI technologies and and what do they open up? What are the what do they what are they potentially really damaged and what do they really maybe open up?

• 58:44Speaker 1

  Well, I mean, I think that uh you you would obviously design things extremely differently if you knew AI existed, right? Like, I mean, you know, yeah, every thing things really change. Um, and I think that you know, in particular, like the nature of homework for grades, um, you know, as a measuring stick of where the student is,

• 59:10Speaker 0

  you know, it's

• 59:10Speaker 1

  it's hard to imagine that working anymore, you know, in terms of like go home, write an essay or go home, answer these questions and bring them back. It's like you know, like uh they've got like the smartest like machine in the world that can answer those and do an amazing job of it. Like, why are we where you you know, like that's not no longer a technique, is it? Um, so that's well

• 59:36Speaker 0

  if it just add one thing there. Um, you know, there are various attempts by companies to do like AI detectors now. Um, you know, was this text written by AI and schools are actually starting to use that? And I think we can that's like we can definitively that will not work. Yeah,

• 59:49Speaker 1

  yeah.

• 59:49Speaker 0

  So what we can tell there's already been cases like this. I actually know of a case like this with a parent and a kid where they got really sideways with the school,

• 59:55Speaker 1

  yeah, um,

• 59:56Speaker 0

  in a very bad way. But just we can be very definitive. I think we can be very definitive, those systems. not work. The systems will not work. And so there's two and they won't work in a very dangerous. They won't work in a very dangerous way because they will both not catch AI generated content, but even worse, they will accuse kids of AI generated content even when it's not.

• 1:00:13Speaker 1

  Oh for sure.

• 1:00:14Speaker 0

  And so those systems I think are just very dangerous. And I think schools should not even go down any schools of any kind should just not even start down that road. Like they're there, there for sure there needs to be some answer to this, but like that can't be the answer.

• 1:00:25Speaker 1

  Yeah. No, that's an insane idea. Yeah. Yeah. That'll never work. It doesn't work now. And it's you know it's going to work worse as time goes on.

• 1:00:36Speaker 0

  Like that's that's very clear.

• 1:00:38Speaker 1

  So I think yeah this gets to the unbundling question where the kind of knowledge I think the internet started to unbundle like knowledge out of the university and uh AI kind of finishes the job on that. Right. Like it makes it you just do not have to go to university to get the knowledge of the world. And you know like that's how it started off. Like why do we read the classics that was the known knowledge you know why do we read the Bible that was the known knowledge and

• 1:01:12Speaker 0

  you

• 1:01:12Speaker 1

  know one the world of knowledge is so much more vast now but it's also much easier to access um than by like sitting in an hour and a half lecture with a room full of students and the you know in a poorly air conditioned environment in a university you know building that was built in 17 you know 95 or whatever. So with that gone entirely then you're talking about um the education part is really some common really instruction um and then you know the credentialing part as we talked about is being diminished. We'll see if it continues that and so it depends what gets unbundled. I mean there is another thing that we didn't that's a soft thing we we kind of mention it in reference to dating but there's this sort of networking component neither you nor I made much use of it in our university days.

• 1:02:13Speaker 1

  But you know one opportunity is to kind of uh you know kind of build relationships that may kind of lead to kind of work or opportunities down the line. And so you know that that's also something that's getting decoupled via you know social networking and um you know private WhatsApp groups and chat groups and these kinds of things. So I I look I think this all speaks to the okay is it going to get unbundled in a profound way that um makes the proposition of buying the bundle piece you want separately much better. And that's a that's a good question. I don't know if I know the answer to it but like it sure seems like a real possibility.

• 1:03:03Speaker 0

  Yeah it seems like a lot of these trends that we're talking about kind of play out first um in in actual in in actual software uh in the field of software in the field of software development computer science and so for example you know you mentioned the networking component like actually in software like a lot of networking is now unbundled in the form of the way the way people network in in as software engineers is they work on open source projects

• 1:03:21Speaker 1

  yeah

• 1:03:22Speaker 0

  um and they they and they build reputations um uh on uh for being open source contributors and then they meet other open source developers um working on those projects and then in a lot of cases you know the other open source developers they meet are people who like have jobs at big companies and then at some point they need to hire somebody and who do you want to hire as somebody who's already known the you know you know the quality of their code because you've seen it you've already worked with them on the project. So like there's a there's or you know stack is you know stack exchange plays a similar role and so forth. So there there's a um you know that sort of that happens and then like going back to the earlier topic but the you know the option of like going back to you know sort of going straight out of out of out of uh out of uh out of you know 18 going straight into the professional workforce like that's that's arguably easiest to do in software

• 1:04:01Speaker 1

  um

• 1:04:01Speaker 0

  again because like if you're a really good software developer at age 18 you it's very easy for you to demonstrate how good you are and there's lots of people who need to hire great software developers and so there's there's I just bring it up because like there's something about software that basically makes sort of causes this unbundling to happen faster. Yeah it just the the name and you know a lot of it is just like look a lot of kids learn how to be great software developers as kids um you know they're not a lot of kids sitting around learning how to become philosophers or learning how to become you know bridge you know civil engineers building bridges hope not well there are there are a few there I don't know about the bridge builders they're more and more young philosophers but um uh but um a separate topic but um you know software developers there's like a lot of that um and you know the critique that you could like level I think from the outside against a lot of stuff we're saying is like yeah Ben and Mark like yeah software developers can do this but like civil you know a lot of other fields and professions that that doesn't happen like the kids are you know there's nobody who's gonna be ready to enter the field and work in it at age 18 or there's no way to like meet other people in network you know the counterargument of the counterargument against that critique would be the software eats the world right uh thesis which is if other fields become more like software and they're more based on software and they more have the patterns of software um and the intellectual content of those fields becomes more software centric then those fields themselves might transform and so like a you know one one to really watch here is biology um which is um you know you you you've never been able to become a teenage biologist because you've never had access to a wet lab um and you you're not gonna sit and study biology textbooks you know as a as a as a 15 year old most likely um um but on the other hand if uh if the field of biology gets sort of enfolded um and and wrapped in software um and more things you know like drug design and virus you know sort of vaccine design and so forth are being in the software anyway then a kid on a laptop can actually become a biologist right

• 1:05:44Speaker 1

  yeah no that's really interesting point where with AI one could imagine you being able to model a human you know pretty exactly

• 1:05:55Speaker 0

  and do

• 1:05:55Speaker 1

  run experiments in vitro experiments so to speak um in software yeah

• 1:06:01Speaker 0

  yeah um and I we actually know you and I know a few people who like you know came out of basically high school is actually quite talented you know quite quite quite deep into biology so it's starting to happen and then you know my my my eight year old he's you know he's not ready to work at SpaceX but uh you know there's this thing called Kerbal space program um which is this game slash rocket simulator that is actually a full uh physics simulation engine and in the game you actually like design rockets build rockets launch rockets and it's all it's all it's all accurate it's all physics accurate um and engineering accurate um and so if you design a rocket and it and it has the a flaw in the simulation that is would have been a flaw in real life it blows up in the exact same way that it would have blown up in real life and so you know it's just like you know again again like I I don't want to stretch this too far but like if if somebody was super into rockets um you know a lot of kids are into rockets like it's not inconceivable in a few years that they're actually gonna you know if they if they really if they really get into it.

• 1:06:51Speaker 1

  Yeah you know

• 1:06:51Speaker 0

  they they're they by the time they graduate high school they will have built so many rockets in simulated environments that maybe they're ready for yeah at the very least an internship if not an actual job in the field.

• 1:06:59Speaker 1

  Yeah yeah yeah no that that that's that that's super interesting and definitely correct

• 1:07:04Speaker 0

  and so the the the point is like the soft software software eating fields basically makes them accessible you know sort of then makes them accessible anybody with a laptop

• 1:07:12Speaker 1

  yeah

• 1:07:12Speaker 0

  um and and and then as a consequence sort of drives them down to where you know young curious smart kids can actually get super into these things in a way that was just never possible before and so I think that over the next like you know 30 years I think it's been one of the interesting things to track which is how many fields start to have basically young prodigies um that you know where that that never happened before.

• 1:07:30Speaker 1

  Yeah yeah yeah yeah no that that that uh that's super interesting and then a yeah and

• 1:07:35Speaker 0

  then a AI right a AI accelerates that right because then you know like you know when my eight year old wants to talk about rocket design he talks to chat GPT right like um right um which actually knows a lot so

• 1:07:45Speaker 1

  yeah

• 1:07:45Speaker 0

  oh and then let me come back to I want to come back to one AI thing which I think is striking so I mentioned that the AI you know was this essay written by AI checkers like those don't work. So I I think there's a death of the middle barbell kind of thing here which is basically and and and by the way that this happened before. So this happened actually with the introduction of pocket calculators in math classes and Ben you you you probably remember when that happened when

• 1:08:07Speaker 1

  they came out it was uh the end of the abacus

• 1:08:11Speaker 0

  right well it's more it's also it was that but it was also um you know oh my god like our kids gonna be our kids gonna be cheating

• 1:08:17Speaker 1

  yeah

• 1:08:17Speaker 0

  you know you know so what are some and then you there were literally Casio made calculator watches and so like you had to like check kids to see if they had like a calculator watch on before before a math quiz um and then um you know there and then but then there was this counter argument that says well the world's gonna be a wash of calculators and so maybe math education should be redesigned. Drill the shit out of people on arithmetic anymore. Yeah. Exactly right but then the counterargument to that was boy don't you actually want people to actually understand arithmetic like do you want people totally dependent on on on machines and and then a you know similar similar debate broke out when search engine started to work and it's really you know happening now around AI. So I I think what I would advocate for educators listening to this I think what I would advocate is a very kind of stark bar barbell approach which is anytime there's a debate or discussion of the form of like oh my god is the kid cheating with AI the the very practice of whatever is happening in the classroom and and with with assessment is just wrong.

• 1:09:05Speaker 0

  It is the whatever that approach is just needs to be dumped because those are unsolvable problems.

• 1:09:09Speaker 1

  Yeah

• 1:09:09Speaker 0

  um instead basically it should bifurcate and basically um every every form of assessment should be should be one or the other of the following uh on opposite sides of the barbell either something in a literal classroom where there is no possibility that there's any sort of you know machine assistance right um and so you know literally the only things in the classroom are you know paper and pencil um and it's a it's a it's a contained environment so it's like if it's an essay thing the kid writes the essay right there in the classroom and there's just no opportunity to go talk to an AI or whatever.

• 1:09:38Speaker 1

  Right.

• 1:09:38Speaker 0

  Um and you know you're gonna have to check make sure they don't have an earpiece and so forth. But like you know let's assume you can do that.

• 1:09:43Speaker 1

  Yeah.

• 1:09:43Speaker 0

  Um or the other side of it which is like no we're just gonna assume that we're gonna live in a world where everybody's gonna have AI and in that case the educational mission is to teach everybody how to function in that world.

• 1:09:52Speaker 1

  Yeah.

• 1:09:53Speaker 0

  Right. And so and so fine bring me back the you know bring me back like the most spectacular you know or like you know or like forget an Say, go write a book,

• 1:10:01Speaker 1

  right?

• 1:10:01Speaker 0

  And like go use AI to write a book, um, right, and come back with the best book. And you know, that you could never assign a student to write a book before, but now all of a sudden you can.

• 1:10:09Speaker 1

  Yeah. Um,

• 1:10:10Speaker 0

  or you know, and you know, very you know, very variations on that, right? Uh, where you just kind of assume the world they're gonna live in, that they're always gonna have AI, and so you kind of teach with with with that parameter in mind.

• 1:10:18Speaker 1

  Yeah, yeah. I I think that's right. And by the way, when I was at Columbia, which is a long time ago, um the fraternities used to have these huge filing cabinets with every paper that was ever written by any fraternity member, and you could just go and copy one and turn it in. And they were perfectly designed for all the classes at Columbia because they were actually written for them, and you already knew the grade that they got. And so, like cheating, well, as we've seen, you know, like there's uh plenty of plagiarism at the height of the university pre uh AI. So, like I I think that the whole idea of uh how the current system works on that is probably a little off.

• 1:11:05Speaker 0

  Yeah, that's right. Um coming to the home stretch here. We'll go about an hour and a half, so we've got 15 minutes left. So a couple of specific questions I thought were quite interesting. Um, so Malcolm K asks, can you talk more about the shift from tenured professors to adjunct professors and how this might be linked to great inflation? And so let me describe the the question for people who haven't heard this issue. So there's a traditional kind of professor path, uh, you know, where they sort of they there's sort of three traditionally three layers assistant professor, associate professor, and then full professor, and then at some point you get tenure, which means you're you're at least in theory on fireable, which is when you're supposed to start doing your best work, although for some reason uh the reverse usually happens. Um so you know, that that's the system. And then, you know, look, these are full-time, you know, these are full-time, you know, prestigious jobs, and they you know, they don't pay, you know, necessarily millions of dollars, but you know, they're very well compensated for professors.

• 1:11:55Speaker 0

  Well, like as an example, so we know a claudine gay as a law professor at Harvard, you know, makes nine $900,000, right? So her her compensation for better or for worse is now public. So, you know, top professors make, you know, anywhere between, I don't know, probably 200 to 200,000 to a million dollars, depending on what field they're in. Um, and so you know, so it's so it's both a high prestige field and then also a you know relatively high income field for uh you know, for what what is a uh an academic job, not a not a sort of production-oriented job. Um, and you know, but then the issue of that is actually professors are actually quite expensive. Um, and uh so uh the university some time ago um created this kind of thing called the adjunct professor. Um, and the adjunct is somebody who is qualified to be a professor, has the PhD and all the equivalent training and so forth. Um, but we're not gonna hire them, you know, almost like the gig workers of the of the academic uh uh field. We're not gonna hire them as full-time employees, we're not gonna give them tenure, they're not gonna be on a ten-year track, we're not gonna pay them 200,000 a year.

• 1:12:47Speaker 0

  We're gonna pay them 40,000 a year. Um, and they're gonna teach classes and they're gonna be on contract for the year to teach classes, and maybe we're gonna renew the contract next year, and maybe we're not, and maybe they're gonna go to another school or not, or or by the way, maybe they're only going to get contracts some years, and in the other years, they're gonna be working, you know, you know, they're gonna get jobs in the in the hospitality industry.

• 1:13:08Speaker 1

  Yeah,

• 1:13:09Speaker 0

  right. And so then there's this theory that basically says, I think it's Jordan Peterson who said this. He's like, look, like if you look at like, you know, for people who are like worried about like political craziness and radicalization of the universities, he's like, Look, a lot of that are these adjuncts. Um, like they're incredibly alienated people. Uh, you know, there's this term called the precariat. They're like in the precariat, they're they're incredibly alienated people because as far as they're concerned, society has resolved to putting them in a situation in which they are in theory high status, in reality, poor and miserable. Right. Um, and so of course they're gonna go

• 1:13:39Speaker 1

  and make purgatory, yeah.

• 1:13:41Speaker 0

  Yeah, and they've got no way to get out of that. They're gonna spend their whole lives like that. Like they're not on a, they're not on a ladder, like they're stuck.

• 1:13:47Speaker 1

  Yeah.

• 1:13:47Speaker 0

  Um, and so he's like you Jordan Service who says, like, of course they're socialist, right? Like, of course they're gonna be like, you know, develop all kinds of you know, kind of crazy views. Like they they, you know, in other words, like they have no stake in society, right? Like they have they have no like permanent role to play, and so they they get incredibly alienated and they've you know, and they and look, they put all this work and effort into getting their PhDs and getting into this position and it hasn't paid off, and they just feel like they got screwed.

• 1:14:09Speaker 1

  Yeah.

• 1:14:09Speaker 0

  Um, and so and and you know, look, a lot of people, you know, they're not the only ones who go through that in our society and then feel like they get screwed, but these are the ones that are teaching your kids. And so he's like, look, if you wanted to like deradicalize universities, you could start by just paying all the adjuncts $300,000 a year.

• 1:14:24Speaker 1

  Yeah,

• 1:14:25Speaker 0

  right. And there aren't that many of them. Yeah, yeah, yeah. Um, you

• 1:14:29Speaker 1

  could you could just uh fire a few dozen administrators, you'd be fine.

• 1:14:35Speaker 0

  Exactly, in theory. In theory, you could, yes. Um, and so anyway, uh I'm gonna go through the long version of that, which is like this is actually a significant part of the educational experience now, which is as a student, you're being taught by a combination of actual professors and then these adjuncts. Um, and then these adjuncts do not have the same incentives or motivations, right? Or, you know, like whatever level of sort of vested interest that the actual professors have and the perpetuation of the institution and the discipline and whatever. Um the adjuncts just naturally just like they just simply don't have that.

• 1:15:05Speaker 1

  Yeah, um,

• 1:15:06Speaker 0

  and so it's like an IT, it's like an itinerant class that you've like inflicted on this system, and you and basically that you shouldn't be surprised when they they undermine the system. Um so let me yeah, let me let me uh that's uh that was quite a long long journey through the question. But yeah, let me let me pause there and see what we think of that.

• 1:15:21Speaker 1

  Well, I mean, I think that I I mean I don't I probably don't know enough about the kind of incentives for the adjuncts, but I could imagine that um, you know, they're heavily kind of graded on their uh student satisfaction scores. And if that's exactly and you know, you'd never give anybody anything but an A, because like you don't want your adjunct professor gig, which is your one piece of status in society to go away, that would be horrible. Um and the quickest way to make that go away would be to flunk a bunch of people who aren't doing the work. Uh so I can I could certainly see that. Whereas if you're tenured, you know, you're tenured, like nobody's firing you. Right. At least in yeah, in theory, it's right.

• 1:16:08Speaker 0

  That this is sort of the nature of the question, I think. I and I think I think I've heard that this is what's happening. I don't know how widespread it is, but this is what I've heard is yeah, a tenure professor can flunk kids because I'm a tenured professor F off.

• 1:16:18Speaker 1

  Yeah, an

• 1:16:18Speaker 0

  adjunct, actually, you know, it's in it, you may know this, Ben. It's like there's actually the internet's had an impact on this too. There's a website called Rate My Professor.com. Um, and so adjuncts, professors, including adjunct professors have a rating the same way that Uber drivers and Airbnb hosts have a rating.

• 1:16:32Speaker 1

  Yep.

• 1:16:33Speaker 0

  And the and the rate are glass door for you know, CEOs, and the rating is set by the people who took their classes, and specifically who are the most enthusiastic raiders of you know, professors, the ones who are mad.

• 1:16:43Speaker 1

  Yeah, yeah, yeah.

• 1:16:44Speaker 0

  Oh yeah. Just

• 1:16:45Speaker 1

  like Yelp.

• 1:16:46Speaker 0

  Right. Exactly. So like I I don't know for sure, but I could easily imagine this being a feeder into uh, I could easily imagine this system being a feeder into a great inflation. And then, you know, Ben, you and I, you know, I have talked a lot about the fiscal situation of these universities, but this is one of those, to your point, you could fire a few administrators and fix this problem. You know, this is one of the sort of things that kind of squeezes out the side of a system where the economics have gone sideways, which is you actually have important jobs, which is literally like the person at the front of the class teaching the class and grading, where you know, the institution as a whole, you would think would be prioritizing their income uh and their incentives, but in reality, the whole place is so squeezed for money, yeah. Um, you know, that that but you know, we need that sort of at the end of the process, you know, that's actually where they actually take the money away.

• 1:17:28Speaker 1

  Yep.

• 1:17:29Speaker 0

  Um which you know, no nobody would have designed a system in which that happens, but I think that's the system that at least I I I hear that a lot of universities have ended up in that situation.

• 1:17:37Speaker 1

  Yeah, no, look, I mean, and I think that if you look at professor salaries, you know, other than look, if you're a Stanford professor or a Berkeley computer science professor, and you help like spawn giant companies like Google, you make a lot of money. But if you look at you know, the level of qualification for a professor on their salary, um, they're not paid that well. Like, I mean, I think that if you're designing the system from scratch, at least I would probably pay professors much much more, particularly in fields that are highly competitive, like you know, computer science or you know, physics or things where like if they were to leave the university, they would get a much more high high-paying job.

• 1:18:28Speaker 1

  Um just that seems like an obvious thing to do, but to do that, you'd have to spend much less money running the rest of the university. Um, or you know, although they're not that many professors compared to others. You know, the the minority.

• 1:18:46Speaker 0

  That's what's amazing. That's what's amazing. That's from the people I've talked to who have observed this at their at their institutions. That's what's amazing. Is we're we're not talking about that many professors, and we're talking now talking about their you know that much money

• 1:18:56Speaker 1

  uh

• 1:18:56Speaker 0

  for their salaries, like just for their

• 1:18:59Speaker 1

  but the the gigantic you know, ocean of money that washes through the university, it's tiny, yeah.

• 1:19:06Speaker 0

  Yeah, that's right. So uh that's a uh yeah, okay. So three three questions to close out. So um uh I love this question. There's a very interesting observation buried in it that I'm gonna flesh out. So Shane Tucker asks, I've been told by the chancellor of a large university that the increase, you know, we talked about the radic, you know, sort of radical ongoing increase in tuition faster than inflation uh over time is a result of the increase in needs-based grants, right? And so, in other words, um uh, you know, you you have more and more students as you've been diversifying the student base uh in lots of ways over the last 30, 40 years, you have more and more students showing up who's you can't afford to pay. Um, you know, so as a consequence, you need to sort of charge the the kids who can actually pay the parents who can actually pay more because they're they're sort of covering the tuition costs of the of the parents who can't.

• 1:19:52Speaker 0

  So so the result, right? The result of more the need more needs-based grants basically means higher higher tuition. Um, if this is correct, are there any alternative? Models for student financial aid that help offset this income. Now, what I find interesting about this question is there's an assumption buried in there that I wonder if the chancellor of the university even even would would realize it's buried in there. Um, so let's walk through the logic chain. The increase in tuition is a result of the increase in needs-based grants. Well, the increase in tuition, like, okay, the increase in tuition, tuition is the is the payment. Yeah. Um, but the the tuition also like

• 1:20:26Speaker 1

  as much for the grant if tuition wasn't so bye.

• 1:20:30Speaker 0

  Exactly. Exactly. So it's exactly right. So you've got an you've got a snake eating its tail thing here. Yeah, yeah. Um, where if the cost of the education is high, then the needs-based grants are high, then the money needed for that is high, which means the the what you need to charge for tuition is high. This

• 1:20:45Speaker 1

  higher. And

• 1:20:46Speaker 0

  it's higher, right? And so it's a it's a snake eating its tail, or in economic terms, it's a doom loop where like you run this enough. And this this is part of the dynamic that leads to the you know, tuition heading to a million dollars.

• 1:20:56Speaker 1

  Yeah, you

• 1:20:56Speaker 0

  know, which is which is where it's happening. And so, yeah, so Ben, this this like really this really begs the question, just give given given this is another example of sort of one of these, one of these sort of dysfunctional loops

• 1:21:04Speaker 1

  that people

• 1:21:04Speaker 0

  sometimes find themselves in. Like, how do you like what what would be our like top recommendation for like breaking the current model um of both uh tuition and of uh student financial aid?

• 1:21:13Speaker 1

  Yeah, I I just think it's a 100% uh cost structure issue. Um and you know, as we talked about previously, it's not that long ago when college was very when I was a graduate student at UCLA, um was uh, and I want to remember this right, but it was like $1,500 a quarter. It was like on that order. I can't remember exactly because I remember I made a thousand dollars a month as a as a kind of a research assistant, and uh and that was enough to pay tuition easily and cover, you know, other stuff. So the fact that it's gone inflated this fast and furiously is just you know, bananas.

• 1:22:03Speaker 1

  And when you look under the covers at like what all the money is going to, it's insane. Um it's the much of it is not you know necessary. And if you redesign the curriculum and apply technology and

• 1:22:21Speaker 0

  you

• 1:22:21Speaker 1

  know, used AI for administrative tasks and these kinds of things, like I think you could greatly reduce the costs. I mean, the like if the professors are the essential thing, um, there's just not very many of them compared to you know, the the kind of the the overall cost of the university. So I think that the you know that's the only way to deal with it. Like I, you know, and I look, I think that probably you know, the the financial aid, the need space grants are really important because otherwise you're in this like crazy insane debt situation um that you know that we get into uh so which is also caused by the outrageous costs.

• 1:23:10Speaker 1

  So I I just think the cost of university is so completely out of control at this point.

• 1:23:17Speaker 0

  Um

• 1:23:18Speaker 1

  that the you have to start there.

• 1:23:21Speaker 0

  So let's go to the then a related related second to last question on on finances. And we talked about this some last time, but there's a very good question that came across that we should hit directly. Um so Joaquim Wernerson asks, um, can you please dig a little deeper into the endowments um and how they are primarily utilized and earmarked by the university? And I'll just I'll highlight that he included a key term in there of earmark, which we should talk about. But yeah, Ben, like what's what's the for people who don't really have a people have a vague idea that these universities have a giant pool of money in their endowments, like what does that actually mean?

• 1:23:51Speaker 1

  Well, and there's a giant difference, I think, between it's like the top 10 or 15 endowments um and the rest. So there's and let me talk about it because I I probably know the the very large endowments better, but the big endowments are really big. So, like, you know, if you get into the largest one, Stanford, Harvard, Yale. I mean, these things are on the order of 30, 40, 50 billion dollars. I mean, it's they're big. Um now, a lot of the money in the endowment has been given for a specific purpose. So the biggest donations that you get. So somebody's gonna give you a hundred million dollars um to your university, which is kind of those and there are more of those donations than you might think.

• 1:24:43Speaker 1

  Um, and they are kind of the a huge portion of the endowment funding are these very large grants. There are almost none of those that are this is the general fund. They're always put my name on that building, you know, build it uh, you know, it's not a statue of me, um, and you know, library and and these

• 1:25:06Speaker 0

  kinds of things. So people like

• 1:25:08Speaker 1

  get very specific things. Um they also uh you know, at the next level down, there's things like I'm going to endow a professor. So like here is a chairman of the data science department at my alma mater, because I think data science is really important and we need to recruit somebody really good. So I'm going to donate 10 million dollars, and that's going to kind of pay for like the best of the best in that field or something like that. And then, you know, kind of on down, and then even you know, a lot of the smaller grants, uh, you know, people are like, well, you know, I want scholarships for Hispanic kids, um, or I want, you know, like so a lot of this, you know, a lot of the endowment is earmarked.

• 1:25:56Speaker 1

  Um, you know, the general, you know, the things that go to the general fund can be used for anything, a lot of it goes to administration, um, unfortunately. Uh, you know, and it's you know, some goes to operating costs, uh, you know, anything that kind of university needs to kind of make the budget close. Um, but the big endowments all have an obligation to kind of uh deploy money into the operating costs of the university. And a lot of that um, by the way, does go to needs-based aid. Uh, you know, because the uh that that's where that comes from. And so if you don't have the big endowment, then that needs-based aid kind of really kicks up the tuition for the other side.

• 1:26:43Speaker 0

  Yeah.

• 1:26:44Speaker 1

  And so,

• 1:26:44Speaker 0

  yeah, the two, the two key things I think important for people to understand. You you highlighted these, but I'll just I'll pull them out. So, one is um the endowment thing is really only a thing for the top institutions. Um, most colleges universities don't have significant size endowments. And so they they they don't have they don't have which is significant because they don't have a buffer to fall back on.

• 1:27:01Speaker 1

  Right.

• 1:27:01Speaker 0

  Um, so they they you know, they have to they have they have to run a balanced budget, right? Um uh they they they can't uh you know, and and by the way, that that you know, on the one hand, you might say maybe they can be more disciplined that way. On the other hand, they're they're actually a lot more vulnerable to going under. Um, and there, you know, there are a lot of small, you know, there are a lot of kind of smaller tier two, three, four institutions who actually they do go away, and there are there is sort of a wave of bankruptcy.

• 1:27:22Speaker 1

  But anyway, yeah, the whole I think the whole junior college system is under extreme duress right now.

• 1:27:29Speaker 0

  Yeah, that's right. And then second, um uh is even the large endowments, the money's not sitting there to be deployed by the uh president of the university, however he wants or to make up for shortfalls in other parts in parts of the business. You know, most of that money uh in the typical case is actually earmarked um and and for as you said for specific programs and can't be used uh for general buffer. Um this is the thing about the large institutions that I think is actually quite quite quite interesting. And if I were on the board of one, I'd be quite distressed by, which is like the the amount of resilience um in in the the in terms of like the amount of financial buffer and the endowment that can be used to uh you know sort of compensate for breakage um in the core model is actually not that big after you take out the earmarks, it's not that much money relative to the operating cost uh budgets now that these places have. And so I think even the large institutions are closer to the edge financially,

• 1:28:17Speaker 1

  yeah,

• 1:28:17Speaker 0

  um, then a lot of people think. Um especially, of course, if there's any withdrawal of federal funding.

• 1:28:23Speaker 1

  Yeah, yeah. No, that that's for sure. Yeah, that was man, a withdrawal of federal funding would be such a earthquake and shock to the system. It's a little scary to even think about because the knock-on effects would be so it'd be so fast. Um,

• 1:28:46Speaker 0

  so then the the final question, and then you're you know, you're well suited to answer this. Um if you'd like, um, is uh Evan Jay Zimberman asks, what is the proper role of trustees? Um it seems like a lot of these problems that we've discussed happen under the nose of people who are supposed to provide oversight. Um let me let me start by making a claim, Ben and see what you think of this. I resemble that remark. So for those of you who didn't see the prior episodes, Ben was on the board of uh Columbia some years back, um, and uh so has hands-on experience with this question. So uh so look, I would start by saying the following and see if you agree or disagree with this, which is you know, I'm yeah, I'm coming up on now 30 years of experience being on boards in companies, public and private. Like I'm just watching a lot of companies and knowing a lot of uh companies um and knowing a lot of boards um over time. I mean, I probably it's I don't know if it met with hundreds of boards at this point uh in one context or another.

• 1:29:35Speaker 0

  Uh I I just don't think in general, I don't think like for companies, I don't think boards the the structure of board actually doesn't work very well. Um and the reason is just is because the presumption is you have a committee of board members overseeing an executive, the CEO. Um, and you know, who's gonna who's gonna be more effective at you know, sort of managing situations, the executive or the committee. Uh it's almost always the executive. And then by the way, where does the committee get its information? That gets this information from the executive. And so corporate boards, you know, they function as well as you could imagine part-time committees functioning, but just like that in general is just actually not that good. And so, and I, and I just say that again, I have been on a lot of boards. I've been, as you said, I resemble that remark also. It's just like, look, like ultimately, it's a question of the it's a it's the fate of companies is much more a question of who the executive who the chief executive is and what they do than what the board does, just due to the basic nature of leadership.

• 1:30:27Speaker 0

  Um, you know, for better and for worse. Um for uh nonprofit boards and university boards specifically, uh, you know, the problem I would say it appears to me at least to be even more intense, which is uh just as a consequence of the but you have more constituencies. And in particular, so now you have a committee of the board of trustees, you have an executive in the form of the president of the university, but then you have the other constituencies and components of

• 1:30:48Speaker 1

  the institution, specifically the faculty,

• 1:30:51Speaker 0

  um, as well as the students and the alumni and the donors and and and and and um and so it like let's put this way it it's easy to criticize uh a board of trustees e diversity for being like it's easy to criticize them for their faults as individuals or as a group of people. It's somewhat harder and maybe equally important to kind of think about just structurally, does that even work? Like couldn't can we even expect that structure to function and generate the the outcomes that people think they want. Anyway, let me let me use that as a setup and see what you think.

• 1:31:20Speaker 1

  Yeah. I I think generally not, I think, you know, um in a crisis, they can kind of do what Harvard did and remove the president. Um but look the the university trustee thing is actually more difficult than the corporate thing because first of all, the boards of trustees are very large compared to corporate boards. So Columbia by charter was 24 people, and that was a small uh trustee committee. Um, secondly, the the a huge function of the trustees is to raise money. So a big reason you're on the board of trustees is because you have money or like can go get money. Um so like that's a big part of the function. And then, you know, like nobody is uh it's somebody's job to be a trustee.

• 1:32:05Speaker 1

  It's kind of everybody who is a trustee. Most people have jobs or they're retired. And you know, as you know from corporate boards, there's issues with both of those. The people who have jobs, you know, often sitting CEOs and these kinds of things are just too busy. They could do it. They could drop down into the university and figure stuff out, but they don't have time. And they and there's no, there's just no way they could have that kind of time. And then the people who are retired are look, they're retired. They're they're much older. Um, you know, they're not there to fight a political battle, they're there to do a victory lap in, you know, many ways and so forth. And then the, you know, like there's another problem which you kind of alluded to, which um you know, it's always an easy thing to say is like, you know, what the hell are the trustees doing?

• 1:33:02Speaker 1

  You know, what are they doing? And it kind of reminds me of um, I probably shouldn't bring this up, but my friend Kanye, like every time he gets, you know, anything goes wrong with him, it's like, what are the people around him telling him? And I'm like, okay, Kanye is like truly, truly a genius, is supremely confident and is massively successful. Nobody's telling that guy anything, especially like if he's going off the rails, like, you know, or doing something that people don't like, like he's not listening to the people around him. So you can't blame whoever it is, Doncy or Sakai or like any of his friends, because like they they can't tell him to stop. He is the kind of supreme powerful person in that in that circle.

• 1:33:50Speaker 1

  And that is true with a university president as well, where like they're running things there in a day to day, they know every detail of what's going on. Um, and so you can say, hey, like, I think this whole like uh, you know, thing with anti-Semitism is getting out of control, and they go, no, no, no, no. Like these are college kids. They protest. This is how it goes. They've protested, you know, since like the 60s, they've been doing this. Come on. And you go, well, I guess they know, you know, and then they'll bring in their experts, you know, they they have experts that'll tell you and so forth. So you're not really in position to do it until it gets so bad. Um, you know, or you have like Bill Ackman, you know, chewing your leg off, where you know, the trustees feel like if they don't act, there's gonna be some other thing that's even worse than overriding the president.

• 1:34:49Speaker 1

  Um, and that's just very rare. I mean, I I'm thinking you know, the university precedents are generally only fired when there's massive outside pressure. I can't think of one where the internal trustees were like, this is F. Let's do something. It's always, okay, now it's on the front page of the New York Times. Now, you know, somebody's going berserk, now there's a protest. Okay, now we have to do something. Um, and I just think it's set up

• 1:35:18Speaker 0

  that way.

• 1:35:19Speaker 1

  Um, you know, like there's just not really room to corral 24 or 40 people together to all agree to override somebody who's doing it full time. Yeah. So

• 1:35:34Speaker 0

  maybe there's a good closing note, which is a lot of what we've discussed. The theme of a lot of our discussions over these three episodes has been, you know, it's it's really easy, and by the way, sometimes appropriate to criticize individuals. Uh, but you know, the the these things are also systems um and the systems are designed in a certain way, they've evolved in a certain way. Yeah,

• 1:35:49Speaker 1

  they

• 1:35:50Speaker 0

  run in a certain way, the incentives within the system are laid out a certain way, and the individuals involved are wrapped up in the system. Yeah, um, you know, just like the rest of us are wrapped up in the systems we're wrapped up in. And so when we think about topics like reform or change or crisis or whatever, you know, the our our suggestion for people thinking about this and still listening after all this time is basically think in terms of systems, uh, because the the problem is probably more rooted in the system as opposed to the individuals than you think, and the solution would require change in the system, which you know, which may or may not be possible.

• 1:36:19Speaker 1

  Oh, 100%. And by the way, like plotting gay is a product of that system. Um, and you know, and then how it all unraveled was a product of that system. I 100% agree, which kind of goes back to the beginning of the conversation, which is if you wanted to change it and you were hiring the president, you would want a president who was capable of basically tearing down and redesigning the entire system because it's not just good leadership that that will not get it done.

• 1:36:52Speaker 0

  Right. Okay, great. Thank you all for bearing with us. Uh, hopefully you enjoyed it, and uh, we will be back soon on another topic. Okay, thank you so much.