Housing Bubble Jr. - Young Americans mortgage their future.

[Ubiquitous]

Here's a puzzle: Try to figure out what we're describing.

It costs a lot of money, so much that most people have to go into debt to
buy it. It has considerable intrinsic value, but it is also understood to
be an investment. And it is a status symbol--indeed, almost a necessary
condition for achieving middle-class status.

Its acquisition by as wide a swath of the population is widely seen as a
social good. Thus the government heavily subsidizes it through tax
incentives and other means. That, however, creates an artificial demand
that drives prices up and, in a vicious circle, spurs demands for more
subsidies. Efforts to make it more easily acquired for minorities, who by
objective standards tend to be less qualified, compound the problem.

In the current economy, it has turned out to be considerably less
valuable than promised. As a result, many Americans are under water, with
debts that they will not be able to pay off easily.

What is it? A house, but that's the obvious answer. We're thinking of a
college education. The similarities between the housing bubble and the
higher-ed bubble are remarkable, aren't they?

"The amount of student loans taken out last year crossed the $100
billion mark for the first time and total loans outstanding will exceed
$1 trillion for the first time this year," USA Today reports. We'd seen
that $1 trillion figure before--last Saturday, at New York's Zuccotti
Park, where a 23-year-old Occupy Wall Street protester named Taylor was
carrying a sign that read "Where's our bailout? $1 trillion in student
loans outstanding."

You can see why young people like Taylor would feel aggrieved. Growing
up, they were told they needed a college education as a ticket to a
productive life. Now they find themselves deeply in debt, their
employment prospects limited in the Obama economy. So they're lashing out
at the banks that hold their debt and at the corporations that have made
a college degree into a license to hunt for a job.

Their anger is understandable but misplaced. The banks were merely doing
what banks do; if they had refused to make student loans, these
youngsters would have been just as upset. As for the corporations, the
reason they demand college degrees, as we wrote in 2007, is that is that
the government forbids them to screen applicants directly for basic
intelligence under a doctrine of antidiscrimination law known as
"disparate impact" that the U.S. Supreme Court established in the 1971
case Griggs v. Duke Power Co.:

But why are employers able to get away with requiring a
degree without running afoul of Griggs? Because colleges
and universities--again, especially elite ones--go out of
their way to discriminate in favor of minorities. By admitting
blacks and Hispanics with much lower SAT scores than their
white and Asian classmates, purportedly in order to promote
"diversity," these institutions launder the exam of its
disparity.

Thus the higher-education industry and corporate employers
have formed a symbiotic relationship in which the former
profits by acting as the latter's gatekeeper and shield against
civil-rights lawsuits. Little wonder that in 2003, when the
Supreme Court considered the constitutionality of discriminatory
admissions policies at the University of Michigan, 65 Fortune
500 companies filed a friend-of-the-court brief urging that
they be upheld.

Now of course the kids at Occupy Wall Street don't know any of this. They
have received four-plus years of "education" from mostly left-wing
professors who owe their sinecures to this arrangement and who are happy,
for reasons of both ideology and self-interest, to vilify the capitalist
system they feed off. When we explained this to Taylor, it was totally
new to him, and he was fascinated.

If these young people ever figure out the real reasons they're so deeply
in debt, maybe they'll "occupy" Columbia and NYU rather than Wall Street.

---
"If Barack Obama isn't careful, he will become the Jimmy Carter of the
21st century."