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Higher ed in upstate NY: Knitting, eggs, baskets, and bubbles

Ithaca is actually on the radar of Greg David of Crain's New York Business:

The big success story upstate is Ithaca. Virtually untouched by the recession, Ithaca has added jobs almost every year since 2000. That area's most important industry? Higher education as it is the home of prestigious Cornell University and the well regarded Ithaca College.

The job numbers should be center stage in Albany because they show how higher education is the key to reviving the upstate economy. On Monday, Gov. Andrew Cuomo threw his support behind a plan to unleash the key SUNY campus from micromanaging by Albany--including deciding on their own tuition--so they can marshal the revenues to realize their potential. (A compelling case for the proposal is available on the Citizens Budget Commission website.)

The proposal is being blocked by downstate Assembly Democrats who worry that higher tuition will close the door to minority students. The claim is probably not true, and even if it is, the costs to upstate are devastating. The only alternative to giving SUNY the tools it needs is to condemn upstate to becoming even more a welfare ward of downstate. Is that what the Assembly Democrats really want?

In other words, upstate should stick to its proverbial knitting.  But is it wise to put all of upstate's eggs in one basket?

We've blogged about what may be a higher education bubble here and here. In 2010, Michael Barone, who spoke at Cornell recently, wrote in the Washington Examiner last September:

As often happens, success leads to excess. America leads the world in higher education, yet there is much in our colleges and universities that is amiss and, more to the point, suddenly not sustainable. The people running America's colleges and universities have long thought they were exempt from the laws of supply and demand and unaffected by the business cycle. Turns out that's wrong.

Read the whole thing.

And at TechCrunch is an interview with Peter Thiel, PayPal co-founder, hedge fund manager and venture capitalist, in which he says

A true bubble is when something is overvalued and intensely believed.  Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.

And as the interviewer, Sarah Lacey, continues

It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligensia.

Again, read the rest.

So if upstate NY does decide to stick to its existing knitting rather than diversifying, and at the same time potential students (or their parents) start to figure out that it might be wiser to acquire higher education in some non-traditional way (such as distance learning), or build up a work history and become self-sufficient earlier, thus becoming able to take more risks because they haven't racked up buckets of debt—what then? What happens to upstate? Wouldn't it just become "even more a welfare ward of downstate" anyway?

As we've said here before, the laws of economics don't stop at the state—or county—line.

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