A recent television documentary focused on the plight of college and university graduates unable to find employment that relates to their respective fields of study. Provincial governments directly or indirectly influence what is being taught at the majority of post-secondary institutions across Canada and they keep the doors open to a variety of programs irrespective of possible employment opportunities following graduation. The documentary focused on the teaching profession across Ontario, where faculties of education have graduated some 11,000 new teachers every year for the past several years, with only some 4,500 teaching appointments being available.
If a private sector were to offer training programs, they might risk negative coverage on social media sites such as Facebook, YouTube and Twitter for having taken large amounts of money from unsuspecting people to train them for nonexistent jobs. A private institution could face legal action for false advertising. Across the USA, college and university graduates who found themselves jobless following graduation are in fact posting commentaries on social media sites about the massive debt they and/or their families incurred due to high tuition fees.
Across the USA and Canada, several hundred thousand graduates who attended universities and colleges are working as waiters and waitresses, parking lot attendants, taxi drivers, retail clerks, and retail cashiers. Many graduates are employed in the same kinds of jobs they occupied on a part-time basis during their school years and full-time over the summer holidays. One perspective offered by several commentators holds that the economy is not creating enough of the kinds of jobs that reflect the qualification levels of college and university graduates.
Messing with the Market
The boom and subsequent collapse of the high-tech sector during the 1990s, followed by the boom and bust of the housing industry after 2000, and followed by the boom and slowdown of the green energy sector, may provide some insight as to why an economy would malfunction. Common themes of all three booms and bust cycles included direct and/or indirect funding by some level of government along with state officials guiding or influencing events in the economy. At the same time, the US Federal Reserve bank keeps on printing currency, keeping interest rates at artificially low levels.
The artificially low interest rates in no way reflect the sum total of all other economic events that occur naturally in a free-market economy. Market-driven interest rates provide reliable market information that allows entrepreneurs and businesses to formulate accurate business development strategy. When market-driven interest rates prevail, entrepreneurs can regularly test market demand for a range of products and services by fluctuating prices to produce changes in market demand. The market response to changing prices provides accurate information as to the actual demand for a product or service over an extended duration of time.
A market that is subject to artificially low interest rates will still generate changes in demand for a range of products and services in response to changing prices, but the information may be valid only for the very short term and not reflect any long-term trend in the market. In such an economy, the majority of entrepreneurs may ‘stick to their knitting’ and remain in areas of business that they know and understand. They may be reluctant to invest in new ventures or enter new areas of economic activity. In such an economy, thousands of entrepreneurs would subsequently create comparatively few new jobs.
The Hands-On Approach
The world provides examples of people such as Microsoft founder Bill Gates, electrical pioneer Nikola Tesla, inventor Thomas Edison and a long list of entrepreneurial types who never attended or earned degrees or diplomas from any Ivy League educational institution. Nevertheless, they made significant contributions to the world. As recently as the year 2000, some 9 out of 10 successful business owners in the USA had little formal education beyond high school. They learned their business and entrepreneurial acumen in the school of hard knocks.
Over the past 40 years and perhaps longer, a percentage of high school students learned business skills by the hands-on approach, buying low and selling high to fellow students. Governments provided the opportunity for students to learn such business skills firsthand by having enacted laws that prohibited the sale of products that had previously been legal. Due to the risks involved, only a small percentage of high school students learn entrepreneurial skills through the real world, hands-on approach. There have been cases where enterprising children of grade school age have opened lemonade stands in their neighbourhoods only to have municipal bylaw enforcement officers shut them down for having contravened a municipal ordinance.
During the winter months long ago, there were enterprising preteens and teenagers who were willing to shovel snow from a neighbour’s driveway, walkway and sidewalk in exchange for a small fee. Today, homeowners are required to file tax forms and face numerous other legal obligations should they agree to have snow removed from their driveways, have their lawns mowed or gardens weeded by enterprising students. A small handful of students who live in populated areas can still earn money by delivering newspapers.
By the time they graduate from college or university, the overwhelming majority of students have had zero exposure to entrepreneurship. Most graduate expecting somebody with entrepreneurial skill to create a job for them. A small percentage of the graduates will be hired by public-sector organizations. Government officials at all levels have enacted laws and regulations that curtail enterprising young students from earning money by engaging in entrepreneurial activity.
During an earlier time, enterprising young students could quite legally earn money by offering services in a wide range of socially acceptable entrepreneurial activities. The experience of earning money as a young entrepreneur, who usually offered personal services, often set the stage for the same person to expand into other entrepreneurial areas. They may have delivered groceries on a sled or cart, shoveled snow, cut lawns, picked fruit and/or vegetables from gardens when they were young,
As they grew older, they may have begun to offer other products and services to potential customers in the communities where they lived, perhaps even opening a service business or retail outlet. The young entrepreneurs of many years ago operated free from the institutional obstacles faced by young potential entrepreneurs today. In this way, the state has played a significant role in the destruction of entrepreneurship at an age when the future of a generation of young citizens depends on entrepreneurial skill and personal initiative.
At the present time, government officials at all levels endeavour to enact new regulations aimed at restricting or eliminating the practice of private exchange and voluntary trade among peaceful citizens. There are municipalities across Canada and the USA that are trying to end the age-old practice of garage sales, yard sales and flea markets. Provincial and state governments enforce minimum wage laws that reduce the number of teenagers who could otherwise find part-time employment.
These same authorities have enacted regulations that prohibit several categories of skilled tradespeople from hiring student apprentices who may be willing to learn a trade, through hands-on experience. This was how many tradespeople of an earlier era acquired their skills. Today, interested students are required to attend classroom sessions that are offered at community colleges, while government officials ignore that most potential tradespeople are hands-on learners who learn by doing.
Compulsory classroom attendance serves as the means by which government officials justify the operation of state colleges. In this regard, it may be no coincidence that state and provincial colleges and universities are the institutions that are graduating massive numbers of people for whom there is limited opportunity of being hired in the economy as a professional. The majority of them spent, or their families spent, large sums of money to obtain an education at a state-run institution, believing that the education would provide an opportunity for the future.
The high unemployment rate among recent graduates from state-run colleges and universities may be the result of the combination of central banks recklessly printing new paper currency, governmental economic regulation of multiple sectors of the economy and government control of education. National economies have been underperforming while governments appear unlikely to relinquish control in any of these areas any time soon.
Perhaps a higher percentage of homeschooled young students who learned at their own pace following a course of study that maintained their joy of learning and their interest, may gain greater exposure to the nature of entrepreneurship than their counterparts who attended government-run schools. Provided government officials respect the rights and freedoms of homeschooled students, there is the chance of a greater percentage of them creating some worthwhile entrepreneurial activity in the economy. Perhaps students who had never been tainted by government control of education may take up the slack and make a significant contribution to the future of entrepreneurial activity.
* Harry Valentine is a free-marketeer living in Eastern Ontario.