The student crisis is not like any crisis this country has seen. It’s not a natural disaster like a hurricane, a medical pandemic like MRSA, or even an inability to stay competitive in the global economy. This is, in fact, man-made. To explain, a national innovation system has three parts, basically schools, companies, and customers. In a functioning system, customers tell companies what they want and companies ask schools to educate students to produce what customers demand. The companies are merely a go-between, and when they decide they don’t want to do that anymore, you get what we have today in the United States.
Too many Wall Street asset managers and finance professionals with similar experience have become directors and even CEOs of large nonfinancial corporations. They aren’t just at banks and insurance companies but places that are supposed to produce actual tangible items and also provide services. However, they know that they are beholden to Wall Street via their fiduciary duty to constantly raise earnings per share. As such, each line item on the income statement, to them, no longer represents a real product, an actual person getting paid a salary or getting fired, a tax that actually pays for something like roads and bridges and healthcare and so on, but just an input that either raises or lowers EPS. This abrupt divorce from reality, coupled with all the money in the world to set the rules however they want, has caused the national innovation in this system to fall apart.
We now have educated students who can’t find jobs because providing a job is not really a priority of that asset manager-turned CEO. The priority is earnings per share, no matter how it gets done. In short, the CEO may be blind or may be a jerk, but either way, it’s all about notspending money, even when that money could create ten times more money in the future. That initial dip in earnings per share is seen as a violation of the most basic rule of business–don’t piss off Wall Street–and since they’re longest time horizon is two years and is often shorter than six months, it’s not important to invest in anything with a payback period longer than year. Without getting into much detail, employee training programs have that kind of payback period. So, yeah, you get it. We suck because, as humans, we take too long to turn a profit because, ya know, robots don’t have to sleep or eat, and we do.