Musings Report #26 6-29-13 Disconnect of Higher Education and the Emerging Economy
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Disconnect of Higher Education and the Emerging Economy
"Candidates' past academic performance wasn't predictive either, Bock said – a stunning admission for a company that's notoriously stuffed to the gills with PhDs. "Google famously used to ask everyone for a transcript and G.P.A.'s and test scores, but we don't anymore, unless you're just a few years out of school," Bock said. "We found that they don't predict anything."
"In fact, Bock said, Google is increasingly hiring candidates who have no formal education, to the extent that you now see teams at the Chocolate Factory where 14 per cent of the team members have no college background."
The bottom line, he said, is that Google's earlier hiring practices simply weren't effective. When Google studied its employees' performance and compared it to how the same employees scored in interviews, there was no correlation. "We found zero relationship," Bock said. "It's a complete random mess."
Since Google is famously data-driven, I don't think we can dismiss these conclusions as outliers. Though it could be argued Google is a high-tech company and therefore not a reliable mirror of the economy as a whole, I think it is self-evident that Google is precisely the sort of company that we're telling college students they need a degree to work for.
Google found academic success has little correlation with performance in the workplace, and I suspect this is one result of higher education being increasingly disconnected from what I term the emerging economy--the parts of the economy that are growing and expanding, as opposed to those that are shrinking or declining.
In other words, if the ability to excel in the system of higher education does not generate an ability to excel in the emerging economy, then something is systemically wrong with higher education, which is supposed to prepare students for employment in the real world.
Given the wide acceptance of the correlation between high GPAs and future workplace performance, there is a second-order consequence of Google's insight: the vast majority of corporate human resource (HR) departments are actively hiring the wrong people for the wrong job, as they are essentially randomly matching people and jobs.
I think this disconnect between higher education and the emerging economy is simply part of a systemic (and widening) disconnect between the emerging economy and legacy systems designed for the society and economy that existed 60 or 100 years ago.
That Google is hiring more people without any degree suggests having a degree is no longer a signifier of much value to employers such as Google. We can speculate that people who learned on their own by following Emerson's mandate to "Do the thing and you shall have the power" may have more applicable (i.e. useful) experience as a result of their self-learning than people who submitted to four years of college.
Is there value in a general education? Of course. But can most or all of this material be learned online or on one's own? Yes.
We as a society have enormous sunk costs in monstrously costly legacy systems; these generational investments in the status quo have created institutional momentum, vast armies of vested interests and cultural habits that actively resist structural reform. Three of the largest such systems are healthcare, defense/national security and education.
One place to start an investigation of any legacy system is to ask: how would we design a replacement system from scratch? In the case of higher education, I think the first answer is: accredit the student, not the school. The second is to tie the curriculum and processes to what emerging-economy employers actually need.
If we think of the current higher-education system as a Factory Model (something I have written about for years) that took a small Elitist system designed for scholarship and expanded it to ramp up wartime production in a era of typed-on-paper orders and labor-intensive industries, we can understand the widening disconnect between the emerging economy and this legacy system.
Market Musings
Anecdotally, it seems relatively few people own any physical gold (usually coins) or shares in mining companies, and so the media coverage of gold's spectacular waterfall decline from $1,520 in April to $1,180 last week has been more a spectator sport for most than a financial drama with personal repercussions.
As a trader, I am not particularly interested in forecasts on gold's eventual price, whether they are bullish ($5,000/ounce) or bearish ($500/ounce); I focus solely on tradeable action, i.e. the current trend, which might only last a few days or weeks, or perhaps months.
There are a number of respected technical analysts on both extremes of the spectrum in terms of forecasting future prices, and my perspective is "we'll see." Fundamentally, the middle classes of India and China now have enough paper money wealth (purchasing power) to send gold a lot higher, and regardless of one's view on "gold as money" in the West, that's not the perception in the East.
Eventually the paper money markets in the West for gold and the physical markets for gold in the East will converge.
Technically, I find it significant that NUGT, the leveraged bullish ETF for gold miners, traded over 5 times its average volume on Friday while rising over 20%. There are several possible explanations (end of quarter rebalancing, etc.) but I suspect supply-demand and short-covering have something to do with it.
The stock markets are in the middle of a bounce from recent lows, but it remains to be seen if this is an oversold rally or the real thing. The 20-day moving average is slicing down through the 50-day moving average for the first time since November 2012, and while this indicator is not guaranteed (no indicator is), it certainly opens the door to a protracted summer weakness or sharp decline if a credit event occurs.
The best thing that happened to me this week
Longtime correspondent George B. (currently in Japan) who also happens to be a Wikipedia editor was generous enough to create a Wikipedia entry for me. Now I feel like a real writer....
From Left Field
Want to save at the supermarket? Compost: more evidence that 40% of food is wasted...
“Even in war moral power is to physical as three parts out of four.” Napoleon (via Jeff W.)
Thanks for reading--
charles
