To paraphrase Donald Rumsfeld, we work in the economy we have, not the economy we might want or wish to have at a later time. And what characterizes the economy we have?

It's bewildering because nothing works like it's supposed to. For example, getting a college degree was supposed to guarantee a good job and an 80% lifetime wage premium over people without college degrees.

But in the economy we have, getting a college degree no longer guarantees a good job, or indeed, a job of any kind: 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college.

The payoff for getting a college degree is declining while the risks of becoming a debt-serf due to crushing student loans is rising. The big premium that once accrued to college graduates is eroding for reasons of basic supply and demand: there are far more people with college degrees than there are high-paying jobs for people with degrees--even law degrees, MBAs and PhDs.

The entire notion that a college degree "signals" something valuable to employers is breaking down. In the good old days, earning a college degree proved that a student was hard-working and conformist--just what hierarchical corporations and government agencies want in employees. (The "signaling" value of a diploma is based on work by economist Michael Spence in the 1970s. In general, the signal indicates an attribute whose value is correlated with the difficulty and cost of the signal: the harder it is to get a degree, the greater the value of the signal it sends.)

But in an economy in which education credentials are in over-supply, that signaling mechanism is running up against a basic reality: a degree accredits very little about the student's knowledge, problem-solving skills or professionalism. A degree is simply a proxy of knowledge, not evidence of knowledge or useful skills.

Indeed, the study Academically Adrift: Limited Learning on College Campuses concluded that "American higher education is characterized by limited or no learning for a large proportion of students."

Signaling an ability to grind though four or five years of institutional coursework is no longer enough; the signaling needed to indicate an ability to create value must be much richer in information density and more persuasive than a factory model diploma.

A resume is equally thin on information that accredits a worker's knowledge, useful skills and professionalism. A resume is a public-relations summary that everyone knows has been tailored to present the candidate in the best possible light. And precisely how useful and trustworthy is PR in any setting?

Put yourself in the shoes of a hiring manager or potential collaborator: there is precious little useful information in either a diploma or a resume. As a result, human resources departments have been tuned to eliminate as many candidates as possible by signal-based winnowing rather than by the collection of useful information on the skills, knowledge and professionalism of the potential employee/collaborator.

Conforming to social behavioral norms and being able to grind through mind-numbing work used to be enough to create value in the economy--but this is no longer the case for high-value (i.e. well-paid) work. The "signaling" camp holds that a degree showing the student sat through four or five years of classes is sufficient to justify hiring the person. That the student learned essentially nothing useful doesn't matter; the entire value of college is in the last class needed to get the diploma.

This was true in the long postwar boom when the number of well-paid jobs expanded at a faster rate than the number of college graduates. This is simply no longer true.

In contrast to the "signaling" theory of value, the "human capital" camp holds that working knowledge is what creates value. If the student learns little critical thinking, real skills or practical knowledge, then a college degree has little value.

What if conformity and being able to navigate formal systems/bureaucracies no longer creates value or helps people solve real-world problems? In the economy we have, the "signal" value of a college degree has sharply declined. This is why college graduates can send out hundreds of resumes and not even receive a single reply, much less an interview or job offer.

Systems analysis teaches us that changing the parameters of a system (for example, adding another line to your resume or getting another degree) does not change the system; only adding a new feedback loop can change the system.

Clearly, an entire new feedback loop of accreditation is necessary in the economy we have, and fortunately that feedback is within our individual control: it's a process I call accredit yourself. The most powerful feature of accredit yourself is the process is open to anyone: recent college graduates, those without degrees, those re-entering the workforce, those seeking to launch their own enterprises--everyone who wants an income stream in the economy we have.

I outline the process of accrediting yourself in my new book Get a Job, Build a Real Career and Defy a Bewildering Economy which is on sale through Tuesday evening (Pacific Standard time) at a 20% discount for my regular readers ($7.95 for the Kindle edition, 20% off of the list price of $9.95. The print edition is $20).

Anyone can read a Kindle ebook on any digital device: PC, laptop, tablet or smart phone. Just download the free Kindle reader app:
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I explain why the economy no longer responds as conventional commentators expect, and why it will remain in a state of rapid transformation for decades to come.

The book makes a useful gift for high school and college graduates; if you give a Kindle ebook as a gift (the gift button is in the right sidebar), you can schedule delivery of the gift to coincide with a graduation date.

You can read the introduction and first section of the book here.