One of our themes has been as this economic malaise increases social acrimony will rise between
countries (i.e. protectionism) AND within countries (i.e. class warfare). We're seeing many signs - the story below via the New York Times is an interesting cross section of this thesis with another we've been promoting - the ridiculous cost of public education in America. [Dec 14, 2008: WSJ - K-12 Schools Slashing Costs, College Bills Wallup Families] [Dec 5, 2008: NYT - College May Become Unaffordable for Most in US]In October 2008 [WSJ: Universities Begin to Feel the Pinch] I wrote
All these stories we post continue a mosaic of higher costs of living for Americans in the long run as median wages falter. In the "richest country on Earth" many kids have been forced to borrow $20,$30,$40K to get higher education - creating a ball and chain around their lives for the first decade post graduation. Or robbing their parents the ability to save for retirement. The house ATM hid this situation for half a decade but now we're seeing reality.
Looks like costs are set to even go higher... remember our thesis that state budgets are going to be a complete disaster in 2009 - which means sharp reductions in what states can give to their state universities.
At some point the discounted cash flow model is going to show that it is better to begin work at 18 - at a lower wage - and skip the 4 years of wasted earnings potential plus the massive debt many are now being forced to pay off from their higher education. In fact, I would not be surprised if we've already passed that point for many careers outside law, medicine, and the like.
Remember the chart we outlined in September at how far ahead of inflation college tuition is rising. A breaking point must be reached at some point as people cannot borrow against their homes to help their kids go to college.
Let's see what is going on at NYU - it's interesting the cause they are fighting for...
- But outside the Kimmel student center on Washington Square South, more than a dozen New York City police officers stood watch with campus security officers. Inside the building, students who had barricaded themselves in a third-floor cafeteria on Wednesday night vowed on Thursday to continue their occupation until they were able to present a list of demands to school administrators.
- A surge of new protesters pushed their way past security guards and into the cafeteria about 9 p.m., according to students who were contacted on their cellphones. About 11:30 p.m., one of the protesters, Banu Quadir, 21, a senior at the university, said the group would soon begin negotiations with the administration.
- The N.Y.U. students created a Web site (takebacknyu.com) where they published their demands, including thorough annual reporting of the university’s operating budget, expenditures and endowment. The students also called on the school to allow graduate teaching assistants to unionize and to freeze tuition.
- Hundreds of NYU students rallied behind a dozen protesters who barricaded themselves inside a university cafeteria. The crowd chanted "We're not going to take it" and clashed with police. The scuffle happened around 1:30 a.m.
