The Case Against Getting a Ph.D. in Economics (and Almost Everything Else)
Remnant Review (July 30, 2011)
On July 26, I debated Professor Walter Block on this topic: "Resolved: It is Smart to Get a PhD in Economics." I took the negative. Had the topic been, "Resolved: It is smart to get a Ph.D. in petroleum engineering," I would have taken the affirmative.
The debate was held at the Mises Institute. The debate was part of the annual week-long event, Mises University. There were about 230 college students present, plus at least 70 non-student visitors and faculty. At the end of this article is an audio file of the debate. The video will be posted on the Mises.org site next week.
I am posting here the text of my written preparation.
As a debater, I did not read this presentation. That would have been far less effective rhetorically. I rehearsed it verbally about ten times or more. I had never done this before in 53 years of public speaking. I usually speak with a few notes or even no notes. But, in a formal debate, it pays to prepare. I went into this planning to win. Block is a smart fellow. I needed an edge. I needed more than one.
Lesson: Never underestimate your opponent.
The debate was structured in the traditional debate format:
15 minutes: presentations
10 minutes: first rebuttals
5 minutes: second rebuttals
Because this was highly competitive, I decided who my target audience was. It was not the majority of the people in the room. I assumed that Dr. Block would target that audience exclusively. My audience was different: college seniors watching the video. I opened my remarks with a declaration of this strategy.
Why did I do this? Because they have always been my audience, ever since I began writing on this topic. I am trying to change minds when the minds need changing. I am not interested in changing the minds of holders of Ph.D.'s in economics. What would be the point? I went into the debate on this assumption: Dr. Block would try to persuade the immediate audience, but also offer a justification of this career path for his academic peers. I planned my presentation to undermine any such justification. I focused on how the college-age students would respond, not how academics would respond.
I also made a decision not to use the first rebuttal to respond to his remarks. I used it as the second part of my persuasion strategy: presenting market-driven alternatives to the Ph.D. path. In a formal debate, I would have lost it on points by not replying. But I did not care about points. There were no official judges. I cared about persuading my target audience. It is not good enough to talk about negatives. You must talk about positives. I was taking the negative position. I had to offset this with positive.
I did not prepare a second rebuttal. I chose to respond to whatever Block presented overall. People may not remember the details of my final rebuttal -- only that I did respond. Memories are short. Attendees would not remember that I broke the rules with my first rebuttal: no rebuttal. Most people have never seen a formal debate. They would not notice what I did. That assumption proved to be accurate.
On the other hand, I loaded my first two presentations with facts and logic. The attendees would not recall them, but a student listening to the debate months or years later can play it over and over. I was trying to persuade listeners who were not attendees.
Block made two strategic errors. Because he spoke first -- the affirmative goes first -- his second rebuttal did not end the debate. I had the final presentation. In his final remarks, he repeatedly insisted that I had not answered his arguments. This was correct. But, as I pointed out to the audience when I began my second rebuttal, it is not a good idea to say that an opponent has not answered you if your opponent has the final rebuttal.
Second, he had made what I regarded as a devastating mistake several hours earlier. He gave a lecture on the economics of unemployment. He devoted time to considering labor union restrictions on entry. These restrictions are the result of government regulation of the terms of employment. Legislation creates winners who get above-market wages and losers who get below-market wages. This analysis is correct. But he did not mention that this is the basis of the enormous salaries of senior full professors and poorly paid adjunct professors. The government-enforced accreditation system has created a cartel. Tenured professors are the equivalent of union members. This is why the Ph.D. degree is referred to by academics as a union card.
As I told my son-in-law after the speech, he had given me a significant debate point based on free market principles: the high risk of becoming a low-paid adjunct professor for life.
In the debate, he spoke of his $175,000 a year salary, which takes little time. He makes over $1,100 per hour. He said that adjunct professors in economics might make $40,000 or more. That wage discrepancy points to functional unionization. It can exist only because of government intervention. In my debate, I identified this intervention: government-regulated accreditation of higher education.
I had planned to use this argument from the beginning, but his reference to his salary made him far more vulnerable. I presented this in my second rebuttal.
I knew enough about debating to know this: a debate is won in the second rebuttal. I structured my presentation in terms of that old rule. Because of his failure to guess that I would use his earlier speech against him in my second rebuttal, I torpedoed him. I think I won on substance, but I surely won on strategy. He could not respond, because the debate had ended. Time had run out. There were no questions and answers. It was time for dinner. That, too, had been part of my plan, which I proposed in my original challenge. I timed it so that there would be no time for questions. I planned to sink him in the second rebuttal. I took a risk that I could do it. He would be unable to respond -- as in any formal debate.
Debate is like any other structured contest. There are basic rules. Use them to get an edge.
I targeted ideologically free market undergraduates who have a decision to make. They can watch the video several times. I think they will do so. It's a major decision. I am after the college senior who is watching the video for the second or third time. I went into this debate on the assumption that Dr. Block would try to win in front of the people present in the room, who would hear it only once, and who were not making a major decision. Because my goal was different, my strategy was different.
The last debate I was in was in 1988. Before that, in speech class in high school 30 years earlier. So, I do not debate often. Why this debate? Because Block had gone into print against my previous article recommending that students not pursue a Ph.D. My article was picked up by The New York Times. He had written a rebuttal in a Romanian academic journal. He sent me a letter challenging me to answer him. I decided that I would be better off challenging him in a formal debate than in print, where hardly anyone would read my rebuttal. I also knew that the Mises Institute would post the debate as a video and in MP3 format. That way, I could reach my targeted audience: college students who are thinking of getting a Ph.D.
I had planned to refer to three sources. I decided not to, since they apply to Ph.D.s in general, not economics Ph.D's. There is a gravy train for senior professors and poverty for adjunct professors.
Faulty Towers: The Crisis in Higher Education, The Nation (May 23, 2011), by William Deresiewicz
"Hello, Adjunct, Meet Prof. Cozy," Wall Street Journal (July 22, 2011), by Frank Gannon
The Faculty Lounges: And Other Reasons Why You Won't Get The College Education You Pay For, by Naomi Schaefer Riley
This gravy train exists only because of government coercion.
I wrote my presentations to give me a sense of what I had to say. I also wanted to be sure that I stuck to my time limits.
INITIAL PRESENTATION (15 Minutes)
This is a formal debate. Every formal debate has a group of judges. A wise debater seeks to persuade these judges.
In this debate, I have a specific group of judges in mind. My judges are college seniors who are facing a momentous decision. They want to know whether they should sacrifice a lot of money, plus between four and six years after graduation, in order to earn a Ph.D. in economics. They are watching a video of this debate, or they are listening to an audio file.
A few of them are in this room. This, after all, is Mises University, not the Austrian Scholars Conference. Some of them may be interested in the pro's and cons of earning a Ph.D. in economics. I hope to persuade them not to. There are also older people here, most of whom have not earned a Ph.D. in economics. I think they made the correct decision all those years ago. Finally, a few of the attendees did earn a Ph.D. in economics. The best I can do for them is remind them of the doctrine of sunk costs. Bygones are bygones. There is no use crying over spilt milk.
The reason why I proposed this debate is because the video will be online. Dr. Block wanted me to respond in print, but I much prefer video.
I am a great fan of videos. I think that creative YouTube videos have widespread positive effects. Think of the two Hayek vs. Keynes rap videos, which have had 3.5 million hits so far. Contrast their influence with a typical economics professor's 30-year career teaching bored students. Most of these students are not interested in economics. They are just fulfilling a requirement for graduation. They would much rather be partying. An introductory economics course is part of a heavily marketed program that gets their parents to finance the parties. These undergraduates do not intend to spend their lives teaching graduate students who are either Keynesians or monetarists, and who have enrolled in the class of an Austrian School economist in order to fill a departmental requirement, not to learn about Austrian economics.
In the first part of this debate, I will make two suggestions.
First, before you decide to go to graduate school in economics, estimate the costs. The costs are much higher than you think.
Second, estimate the benefits. The benefits are much lower than you think.
Point 1. Estimate the Costs.
I will start with chapter 2 of Henry Hazlitt's book, Economics in One Lesson. He presents Bastiat's story of the broken window. The naive analyst looks at a broken window and argues that this will be good for the economy. It will lead to expenditures to replace the window. This will create employment. Broken windows are therefore positive, economically speaking.
Bastiat and Hazlitt warned us to look for the things unseen. These are the costs unseen. The capital and time required to make a new window and install it would have been used for purposes higher on the window owner's hierarchy of economic values. The broken window is a loss to him. It is also a loss to those members of the community who would otherwise have been the recipients of his expenditures.
When seeking career advice from Austrian School economists who earned their Ph.D's at government-accredited universities, you are looking through the windows that did not get shattered by the graduate school experience. You need to consider the windows that did get shattered. They are the examples of costs unseen. The victims of the Ph.D. system are hard to locate. They leave few public traces. They do not want to talk about it. You do not want to join the fellowship of shattered glass, shattered finances, and shattered dreams. You must take eight steps to avoid this.
First, go to the top two departments that you are considering applying to. Find out how many graduate students entered the program a year ago. Find out how many students were awarded a Ph.D. a year ago. This will give you a rough estimate of the program's attrition rate.
Second, find out the median number of years required to earn that degree. If the department cannot supply these figures, you are walking into a mine field.
Third, find out how many students advanced to the dissertation. How many then earned the degree? How long on average did this take? If you leave with ABD status -- all but dissertation -- your career in college teaching is doomed.
Fourth, estimate the net cost of room, board, tuition, and textbooks for the full period.
Fifth, estimate the after-tax income that you could have earned during your graduate school years.
Sixth, estimate the value of real-world, profit-and-loss experience that these graduate school years will cost you, were you to go into another field right after graduation.
Seventh, estimate what you may be able to learn from the Mises Institute's Website if you were to devote the same number of hours that you are planning to devote to mastering Keynesian economics in grad school.
Eighth, estimate the costs of not getting tenure. Seven or eight years into your career, you will be dismissed, as a majority of Ph.D's are. You will then face oblivion, or what is the equivalent, community college teaching. There, you will make $20 per hour at age 35, and you will not get a raise, since there are dozens of candidates for every open position. If you want the grim reality on how bad this situation is, read the article in The Nation published on May 23, 2011. It has the appropriate title, "Faulty Towers."
Ninth, to get your Ph.D., you must submit your mind to a department in which there may be no Austrian School economist, unless you attend George Mason University. You therefore must spend four to six years disciplining your mind in terms of a series of falsehoods, beginning with false answers to this question: "What is economics?" You must run the academic gauntlet of falsehood in order to teach the truth after you are awarded your Ph.D.
You expect these professors to act against their self-interest. You expect them to award you a degree when you think they are dupes of Keynes. This makes about as much sense as a six-day creationist enrolling in an accredited department of biology or geology. Of course, you can fake it, pretending that you buy into their methodology. This is not the way to begin your career.
Mises was an a priorist. The faculty is officially a posteriorist. Mises argued that higher mathematics has no role in economics. He argued that it is in fact misleading. But you must master mathematical economics. Mises argued against central banking. Most of the faculty in money and banking will be on the payroll of the Federal Reserve as consultants. In short, you will spend six years as an intellectual schizophrenic, either concealing your views or wasting your time mastering useless technical skills that have no place in Austrian School economics.
The goals of graduate departments of economics are as follows:
1. Screen out unbelievers.
2. Convert unbelievers.
3. Promote economic coercion in the name of value-free economics.
4. Enlist recruits to spread the message of salvation through coercion.
When you submit yourself to these people, you are conforming to their program. You are implicitly saying that the best way for anyone to teach freedom is to spend years under the authority of people who resent economic liberty, and who use their positions as state-licensed oligopolists to promote economic interventionism.
You must submit to all this in order to join them in the same coercive system. Accreditation by state-licensed agencies is coercion in education. You are trying to get a piece of that action. Why?
Tenth, if you get through the gauntlet of graduate school taught by the enemies of liberty in an institution subsidized by coercion, you will get an opportunity to spend the rest of your life as the department's eccentric. You will be part of the indoctrination process that leads students in the direction of Keynesianism or, if things go really well in the faculty, monetarism.
The faculty will pick the introductory economics textbook. It will not be Austrian in outlook. One thing is sure: it will promote the Federal Reserve System. There will be no discussion of the FED as a cartel.
The upper division textbooks will be either Keynesian or monetarist. There has been only one upper division textbook written from an Austrian School outlook, Israel Kirzner's Market Theory and the Price System. It was published in 1963. He never revised it. It went out of print for 40 years. I recommended to Jeff Tucker that he post it on the Mises Institute's site. He did. That is why you can still read it. But you will not be allowed by the department to assign a half-century old textbook to grad students as the primary textbook.
You will spend your career as the odd man out. You will punch the tickets of hundreds of students moving through the system.
You will never have a student as good as Henry Hazlitt. Hazlitt never went to college.
Conclusion. This is the minimum investment of time that you must invest in order to count the cost. You are trying to estimate your risk of failure. If you refuse to go through this exercise, you are a sheep who is headed for the government-accredited slaughter.
Point 2: Estimate the Benefits.
There is one wonderful benefit that is unique to academia.. It was articulated best by a fellow graduate student, Gordon Geddes, back in 1968. Our professor asked the students in his seminar why we were seeking a Ph.D. Geddes had the correct answer: "I want a job where I get paid to read." He got his Ph.D. a few years later. Unfortunately, the Ph.D. glut that hit in 1969 kept him from ever getting that reading job.
If you get tenure, you cannot be fired. But few Ph.D.-holding assistant professors ever get tenure.
Most teaching positions are in tax-funded universities. If you get tenure here, you will spend the rest of your career knowing that there is a man with a gun and a badge who is keeping you employed. You will have the power of the state backing you up.
This may bother you morally. You may not want to live as an intellectual schizophrenic, teaching Austrian economics in a system of compulsory financing. In this case, the financial benefit is not a benefit after all. It's a huge liability.
Dominic Armentano taught at the University of Hartford because he refused to work in a tax-funded university. There are not many Austrian School economists who are this committed to Austrianism.
Admittedly, if you get tenure in an Ivy League private university, you will have a good soapbox for your views. Unfortunately, no Austrian School economist has ever received tenure in an Ivy League university. There are two seeming exceptions, Gottfried Haberler and Fritz Machlup. Haberler taught at Harvard for over three decades, 1936 to 1971. He abandoned his support of the Austrian theory of the business cycle. In the 1950s, he rejected the international gold standard. Machlup did the same regarding the gold standard. He was hired by Princeton at age 57 in 1960. That was over six decades ago. Almost no American economist in their day knew the two had been Misesians in Austria. If this represents a victory for Austrian School economics, include me out.
Conclusion
Do not go to graduate school in economics. Instead, get a life, make some money, read books published by the Mises Institute, start a blog, produce videos, and teach at the online Mises Academy.
There is an old slogan in politics: "You can't beat something with nothing." I find that it applies to all areas of life.
I have argued that you would be unwise to pursue a Ph.D. in economics. I have argued that the costs are too high. The benefits are too low. The risk of either flunking out or running out of money is very great. So is the risk of not getting tenure.
I have argued that graduate programs in economics are designed to screen out the critics of the Keynesian status quo.
I have argued that the system of accreditation is designed to keep prices far above market pricing. Higher education is an oligopoly that systematically reduces customer choice. Ultimately, it is enforced by people with badges and guns.
Having argued all this, I now move to phase two of my presentation. I am going to offer you a different approach, which is cheaper to obtain. The payoff is greater. The risk of failure is lower. Best of all, it does not involve government coercion.
I will make four simple points. Then I will defend them.
First, you need 5,000 hours of systematic work to become a master. Most of the time that you need in order to master Austrian economics will be squandered in graduate school.
Second, find consumers of Austrian School economics outside of academia.
Third, the Internet is the best way to get to large numbers of readers.
Fourth, if you are really any good at economics, you don't need a Ph.D.
Point 1: 5,000 Hours
Malcolm Gladwell has argued in his book, Outliers, that virtuosity in any field requires an investment of 10,000 hours. The 10,000 hours will not make you a virtuoso, but if you don't put in 10,000 hours, you probably will not become one.
Mastery takes less time: 5,000 hours. This is a rough estimate.
At 50 hours a week, it will take 100 weeks for you to achieve mastery of Austrian School economics. This is two years, approximately what a master's degree requires. The 10,000 hours will take two more years. That is what a fast-track Ph.D. student invests.
Every hour that you spend studying Keynesian monographs is time that you cannot devote to studying Austrian economics. If you want to master Austrian economics, you do not have time for graduate school.
If you want mastery, but you need money, work full time and invest 20 hours a week in study. That will take you 250 weeks, or about five years. You will have whatever wealth you have accumulated, plus mastery. If you want a shot at virtuosity, invest five more years. Then keep learning. The best way to learn is to write and speak. You will get much better.
Point 2: Target a Broad Market
If Mises and Rothbard could not persuade the economics profession, you won't, either. Don't bother to try. You would be wasting your time. The entire profession since 2008 has returned like a dog to its vomit to doctrines of deficit spending and central bank inflation. Jesus warned against tossing pearls before swine. The economics profession today promotes government pork on a scale undreamed of in Mises' day.
In any case, academia is far too small a market. Imitate LewRockwell.com and Mises.org. Target intelligent people around the world. Forget about bored sociology majors in Economics 1 classes. Forget about upper division students in Keynesian-dominated departments.
Build your reputation as a clear, concise, relevant writer. This will not impress academia. Ignore academia. Let the dead bury the dead.
Point 3: Publish on the Internet
The Internet is producing a series of revolutions: in marketing, in publishing, in entertaining, and in research. The combination of cheap delivery of information and search engines is changing the way we gain information. Put this tool to good use.
Begin with your own free YouTube channel. If you don't know how to do this, go to my site, GaryNorth.com. I have a free department that shows you how to get online in minutes.
Next, start a free blog on WordPress.com. Publish your thoughts on a regular basis. You will improve your writing skills.
For the first time in history, an author can put his work into print and know that it will be available forever. You will never go out of print. Once it is on YouTube or WordPress.com, it stays online permanently.
If you decide to sell commercial products, download free website software from WordPress.org. You can create a subscription site. Set up a low-cost Amazon S3 account to post videos that are available only to your site's members. Publish ebooks books for Amazon's Kindle. You keep 70% of the sales price on ebooks priced under $10. Use iTunes to sell audio files.
Use free screencast software to create effective instructional videos. Screencast-O-Matic is very effective. Or go whole hog and buy Camtasia Studio for $300. Use it with PowerPoint or its equivalent in OpenOffice.
Use a $20 AudioTechnica lapel microphone and a $75 Logitech webcam to create talking head videos.
Use cheap video editing software, which sells for under $100. Or just use the video editing program that comes free with your computer.
Submit articles to LewRockwell.com. Submit them to Mises.org. Get wider readership. I reach more people in one day with a LewRockwell.com article than a Ph.D. economist reaches in his classroom in a lifetime. I reach interested readers all over the world. He reaches bored sociology majors who are fulfilling a graduation requirement.
You do not need a Ph.D. or tenure to reach enthusiastic learners. You don't need any money. You simply need the Internet.
If you have anything worth saying, learn to say it on the Internet. Learn the tools of digital communication.
Point 4: What If You Are Really Good?
If you are really good in economics, you don't need a Ph.D. If you aren't any good, you need a guy with a badge and a gun to create a cartel to employ you. This cartel raises wages by restricting entry. How? By creating formal bureaucratic hoops for Ph.D. candidates to jump through. Then you must learn how to jump through these hoops.
If you are really good, meaning Hazlitt good or Leonard Read good, you don't even need to go to college. Let's assume that you're not that good.
If you can write clearly, you can get an audience. Earning a Ph.D. does not enable you to write clearly. It does the opposite. It teaches you to write in pigeon German. You develop verbal constipation, straining for obscurity. It teaches you to write for scholarly journals. It teaches you precision without relevance.
If you can speak clearly, you can get an audience. There is no training for public speaking in a Ph.D. program. Most of your professors are poor speakers. No one gets paid for speaking well. In universities, senior faculty members are terrified of classes of 300 to 500 students, which is where the big money is for universities. So, they assign these classes to junior faculty members, most of whom will not gain tenure. The mark of a tenured faculty member is a graduate seminar of eight or nine students. He teaches two of these per semester.
Ph.D. training rewards skills that have no market value outside the government-created cartel of accredited higher education. Take away the guy with the badge and the gun, and higher education would be priced the way that Wal-Mart prices its inventory. It would be priced to sell.
Conclusion
Let me summarize.
First, you need to invest 5,000 hours to attain mastery. Spend this on mastering Austrian economics, not Keynesian economics. Keynesian economics is not worth mastering. Keynesian economics is to economic theory what phlogiston is to chemistry.
Second, target a broad market.
Third, learn how to use the Internet.
Fourth, if you are really good, you don't need a Ph.D.
The most important skill I learned in graduate school was how to make money by selling articles to The Freeman. I could have done this in my spare time while working in a productive job. That way, I would have mastered two salable skills.
Here is the debate:
Here is Dr. Block's lecture, which gave me the hand grenade for my second rebuttal: