The bursting of market ‘bubbles’ have had devastating effects in recent years. The housing bubble is often cited as a key cause of current economic recession. Part of the bubble phenomenon is that they are so difficult to recognize when they are building.
Venture capitalist Peter Thiel believes he has pinpointed the next bubble primed to burst, however, and it is the government spending bubble.
“When the government bubble breaks… The [libertarians] in this room will be the only ones who were right all along,” Thiel told them.
Thiel defines the “government bubble” as an unsustainable growth in government spending, it is “bigger and dumber” than the housing bubble of the last decade. The spending is being paid for by future earnings that are not possible., he says, because the government has killed the economic drivers that are necessary to pay for the spending.
Education is a part of this “government bubble,” and a sub-bubble that Thiel suspects will burst first. When asked why he so sharply criticize higher education to a room full of college students, Thiel said that the warning is not to tell young people not to go to school, but to try to escape the “bubble dynamic” in their own lives.
The education bubble has convinced many people that they can delay making the big decisions, Thiel said. Whereas our parents and grandparents had to begin making decisions about their lives after high school, society has told our generation to go to college to continue figuring it out. If we still don’t know after four (or six) years of undergraduate education, then we should go to graduate school.
Thiel says this type of thinking is unsustainable because for the most part, students are attending college and graduate school on someone else’s dime. The hope is that once they figure out what they want to do with their lives, they will will not only succeed in finding a job, but they will make enough money to pay their loans back.
Young people need to make decisions about their lives earlier, and only pursue post-secondary education with a purpose. We need to take the “individual, libertarian framework” which is “to ask what can I do?” Thiel told the audience.
The education bubble also entices young people to make a living doing what they think will pay the loans back, not what they are truly passionate about. To find something worthy of the investment of your life, Thiel asks, “what do you believe is true, that almost nobody agrees with you on?” The issue on which you stand alone, is the issue for which you ought to fight.