Do you really need a university education? And should you pay for secondary school? Plus why a blind monkey could invest better than your broker.
We don’t need no education. As tertiary students around the country pack their bags for O Week, parents are turning their minds to the issue of what they are actually getting for their money. Anyone who thinks the purpose of higher education is employment should read Thomas Friedman’s column in The New York Times, “How to Get a Job at Google”.
In it, Laszlo Bock, Google’s head of “people operations”, is quoted as saying that “GPAs [grade point averages, or university results] are worthless as a criteria for hiring, and test scores are worthless … We found that they don’t predict anything.” He also notes that the “proportion of people without any college [university] education at Google has increased over time” and is now as high as 14% on some teams. Bock says the most important attribute managers are looking for is general cognitive ability, which is not the same as IQ:
“It’s the ability to process on the fly … to pull together disparate bits of information. We assess that using structured behavioural interviews that we validate to make sure they’re predictive.”
And university can be a waste of time — and money:
“Too many colleges don’t deliver on what they promise. You generate a ton of debt, you don’t learn the most important things for your life. It’s [just] an extended adolescence.”
School fees don’t pay. For those of us who still have children in the school system, David Gillespie’s new book, Free Schools, is a cracker read. Gillespie, a former IT consultant and corporate lawyer, is a kind of Australian version of United States iconoclast Michael Moore, who made movies like Sicko and Bowling for Columbine. Like Moore, Gillespie takes aim at sacred cows, previously writing game-changing books about the sugar and diet industries.
In this book, Gillespie has forensically analysed the education sector. Privately educated himself at one of Brisbane’s most elite schools, he and his wife calculated that sending their six children to similar schools would cost them $1.3 million in school fees, without the extras. His conclusion?
“There’s no correlation between how much you pay and the quality of the education your child is likely to receive.”
The book has created a storm of controversy, of course, and for taking aim at such a commonly held belief, Gillespie may have to go into the witness-protection program, or at least avoid his school reunions. But how could you not love a book containing a comment like this:
“Australia is the only OECD country that runs three different brands of government school, and pretends that two of them are private.”
He has also printed a graph entitled “Enrolments versus Money”, which shows government schools have a higher level of recurrent spending (which is mainly staff salaries) than capital spending (buildings). Catholic schools and independent schools, however, spend less money on recurrent spending than capital. All the money parents spend on independent school fees isn’t “changing educational outcomes at the individual level”, he said:
“Studies have consistently shown that when you adjust for the socio-economic status of the children in the systems, all three Australian systems are equally effective (or equally ineffective).”
In fact, an Organisation for Economic Co-operation and Development report released last week pointed to the fact that our education outcomes are lagging. Results from the OECD Program of International Student Assessment, which tests 15-year-olds around the world, showed the children of garbage collectors in Shanghai had better maths results than the children of Australian doctors and lawyers. Which means we should all be shipping our children off to boarding schools in China to learn maths, manners and the violin — and wouldn’t that be a worthwhile investment?
In other parenting news, a new book by US child psychiatrist Jasper Lambsharkssen — entitled Because I’m Older Than You, Because You Have the Brain of a Squirrel, and Because I Fucking Said So: Why Being Friends With Your Kids is Dumb — is about to released. I am buying several copies.
The house always wins. As several thousand more Australians hit the dole queue next month, investment advisers will be champing at the bit to get their hands on some of those six-figure redundancies. But potential investors should tread carefully, heeding the warnings in an article entitled “The Best Investment Advice You’ll Never Get”, by San Francisco magazine’s Mark Dowie. Written in 2004 but recently republished on Bill Ritholtz’s excellent blog The Big Picture, it quotes numerous investment experts saying variations of one simple concept — “you can’t beat the market”.
In the article, the writer interviews a senior executive of Google just before it floated in 2004. He was so concerned about his soon-to-be-rich employees that he had organised for some eminent investment specialists to come in and give lectures on how to manage money. Stanford University’s Bill Sharpe, the 1990 Nobel Laureate economist, told the employees to put their savings into indexed funds, “which will make you just as much money (if not more) at much less cost by following the market’s natural ebb and flow”.
Next it was Burton Malkiel, a professor of economics at Princeton, who thinks that a “blindfolded monkey” will, in the long run, have as much luck picking a winning investment portfolio as a professional money manager. In 1994, in his annual letter to his shareholders, Warren Buffett advised both institutional and individual investors:
“… that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals.”
As the Australian government tries to water down consumer protection in the financial planning industry, it may be easier to just opt out of the system, start a self-managed super fund, and then “set and forget”.
Writing’s on the wall. Don’t miss Sol LeWitt: Your mind is exactly at that line at the Art Gallery of NSW, which opened last week and will run until August 3. The exhibition looks at 40 years of LeWitt’s practice and includes four new wall drawings, three of which will be created in Australia for the first time …
LeWitt’s personal art collection included 30 indigenous Australian artworks. This exhibition places his work with paintings from Emily Kam Ngwarray and Gloria Tamerre Petyarre and includes correspondence in which LeWitt describes his deep admiration for Ngwarray’s work, which were a source of inspiration.