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Offline 360c

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I've been pondering this for some time. Universities have become "sausage factory" businesses that take in as many fee paying students as possible into all University courses and then flood the market with graduates who have little chance of finding employment in their chosen field. The surplus of graduates over the number of available jobs drives wages down and amongst other things leads to a disenfranchised workforce. Up until the mid 19990's a Degree was pretty much a guarantee of a well paying and secure job; but it seems to me all that it guarantees now is a massive HECS debt and little else.

My boys are just beginning their school years and although they have a long, long way to go I am not so sure that a University education is as essential as it was for me. I am all for further education; but only if the benefits outweigh the time and costs.

So what are other parents views?
An interesting article from BRW on the subject:


Peter Gregory, a character from HBO’s Silicon Valley TV series based on PayPal founder and the first investor in Facebook, Peter Thiel is rabidly anti-college.

Last month, one of Australia’s most senior businesspeople, Catherine Livingstone, made a somewhat unusual claim. Livingstone said that many people are better off not going to university and instead undertaking vocational training. Livingstone’s claim bucked conventional wisdom, which made a fair bit of sense, as often conventional wisdom is pretty dumb and set by people with vested interests.

This is not intended to be a blanket criticism of everyone who attended or works at university (I did a double degree at a leading university). And in some fields, like sciences or engineering, tertiary education is essential. That said, in many areas, especially creative or commercial ones, going to university can be a bad idea.

It can’t be a coincidence that almost all of the world’s most successful people didn’t finish university. Bill Gates (and his business partner Paul Allen) dropped out of Harvard, as did Mark Zuckerberg. Steve Jobs felt guilty wasting his parents’ money studying at Reed and dropped out, as did Oracle founder, Larry Ellison (who actually dropped out twice). Michael Dell, casino magnate Sheldon Adelson, record boss David Geffen, Ted Turner and even Ralph Lauren didn’t make it through college. Nor did Zara founder Amancio Ortega or Ikea founder, Ingvar Kamprad or Asia’s richest man, Li Ka-shing.

Many of Australia’s most successful business people also shunned higher education. Rupert Murdoch fled England’s Oxford University upon his father’s death to save the family’s teetering newspaper business, while Lang Hancock (who created the fortune of Gina Rinehart, Australia’s wealthiest person) never attended university at all, nor did Frank, Kerry or James Packer. Australia’s wealthiest property owner Frank Lowy started a small goods delivery business after arriving in Australia in 1952, while second-placed Harry Triguboff did go to university but studied textiles before becoming a developer.

One of the exceptions is Warren Buffett, who undertook post-graduate study at Columbia under the legendary Benjamin Graham. However, Buffett is a vocal critic of most of what is taught in conventional finance courses.

Not playing by the rules

So how is it possible that so many successful business people didn’t go to or dropped out of university?

I can think of a few reasons. The first is obvious – time. There is huge cost to attending university or college and it’s not only financial. In virtually all cases, the über successful business people mentioned above took a huge risk at a young age. But they didn’t have to face the hard decision of leaving a high-paying job, nor did they have school fees or a large mortgage to pay every month. They weren’t held down by the fear of losing a career track, such as not becoming a partner in a law or consulting firm. Instead, they were able to pursue what would become multibillion dollar enterprises by taking a risk in their business life but not necessarily their personal life. In short, by not taking a more traditional career path, those billionaires had a lot less to lose. (The riskiness of starting a venture is increased given the huge cost of tertiary study, which often means students finish with not only a degree but also a $40,000-plus debt).

The HBO series Silicon Valley perhaps put it best. Peter Gregory (a character in the show based on PayPal founder and the first investor in Facebook, Peter Thiel), said “Gates, Ellison, Jobs, Dell. All dropped out of college. Silicon Valley is the cradle of innovation because of dropouts. College has become a cruel, expensive joke on the poor and the middle class that benefits only the perpetrators of it: the bloated administrators.”

But not only do universities rob students of time, they also teach bad habits. While learning about things such as efficient market hypothesis, students are required to adhere to strict rules. But to become a great entrepreneur you need to operate outside the rules – not by breaking the law, but by creating processes and products which don’t exist. Breaking the rules of how things work – this is completely inconsistent with what is taught at university.

But perhaps the greatest folly of studying is that you’re not doing. Or as author and businessman Bill Bonner noted, “By going to a university you open yourself up to a whole world of knowledge. Yes, perhaps you do gain easy access to a whole world of simplified knowledge and politically correct opinions. But you also cut yourself off from a larger world of real knowledge . . . the kind you get by doing and observing.”

Am I suggesting every student reading this should drop out and create a start-up? Not at all. But an expensive and long tertiary education is far from a guarantee of success, especially in business, and the costs in time will often far outweigh the ever-growing financial burden of university study.

Adam Schwab is the founder and CEO of the AussieCommerce Group, which owns Luxury Escapes, brandsExclusive, TheHome, TheActive, TheGourmet, Cudo, pop and DEALS.com.au.

Offline shack

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Interesting article but there are a few flaws. The examples sited are either technology (dotcom and beyond) or people who made their fortunes way before China (and to a lesser extent India) woke up. Now I can only talk for the dotcom and beyond industries and I can tell you from experience that for every Zuckerberg / Page or Brin (Google)  there are literally 10,000's of failed start-ups. Also if you look at those specifically and Gates and Allen all had started a degree and then dropped out as their business "took hold". So in effect they would have completed their degrees if their business's had failed of they never started one in the first place.

In addition US Tech companies simply don't hire people without degrees. So if you want to work for a US tech company (and believe me you do) you at least need some sort of degree.

So its not a "black and white" issue and there are may paths a person can take but "giving up" 3 years of your life to get a basic degree is no biggy in the grander scheme of things. In addition with a kid in 3rd year (Commerce/Entrepreneurship) I can honestly say he has learn't a HUGE amount and met some great people who may end up being his partners in business one day.

Offline mhh

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I can see both points of view. I've got a daughter at law school but I doubt she'll work as a lawyer. I'm equally sure she's way too green to start a business, and hopefully uni will teach her how to think.  I dropped out, then went back in my 20's to do a business degree (which I find useful constantly btw) but I do feel for the young grads today who have their future careers defined and limited by their study choice and end up in reasonably well paid jobs that will never give them financial freedom - and that's before they have paid off their HECS debt.  My advice to my kids is go to uni if you can but don't limit your career thinking to the course of study you might choose.

Offline amgsl55

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A university degree for the most part creates maturity and discipline. It helps bring financial security to many yet there will be the few who are enterprising enough to create extreme wealth, with or without a degree.

Degrees these days are cheapened by the vast number of students being pumped out just so the uni can get $$$ in their accounts.

Offline Neru

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I personally wouldn't say a university degree is useless however the standard has dropped over the years allowing a lot more people to graduate with a degree. In the end of the day the degree is there to help you to get a foot in the door, connections are a lot more important to be able to get you that first job.

I have 6 friends working within a chemical engineering role, 5 of those friends have gotten jobs through friend/family and only 1 of them through applications. These days companies don't have high expectation of graduates teaching the everything from scratch when they start work, I know I learnt more in 5 months of work than I did at university. My family has been urging me to do further study (masters) since I don't have a job, I consider it being useless cause it just gonna add to the hecs debt (roughly $35,000) especially since I dont have any long term experience.

Offline amgsl55

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I'd go as far to say the high school you go to is just as, if not more important than a university degree

Offline dodger

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I can see both points of view. I've got a daughter at law school but I doubt she'll work as a lawyer. I'm equally sure she's way too green to start a business, and hopefully uni will teach her how to think.  I dropped out, then went back in my 20's to do a business degree (which I find useful constantly btw) but I do feel for the young grads today who have their future careers defined and limited by their study choice and end up in reasonably well paid jobs that will never give them financial freedom - and that's before they have paid off their HECS debt.  My advice to my kids is go to uni if you can but don't limit your career thinking to the course of study you might choose.

A business degree, yes, a mate of mines brother put himself through Harvard, he now runs multiple businesses, and is worth 10's of millions........
Knowing how to choose and run a business seems to be a valuable skill to have.

Offline Joel

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I completed 2 trades at Tafe a cert iv in building and also a cert iv in business management.
I didn't push myself at school so uni was never an option for me.

I want to go to uni and finish some sort of business degree, my issue is getting the time.

Everyone of my mates struggled to get jobs at first as they had no experience what so ever. Eventually they just took jobs where ever they could get them, many were at places that had nothing to do with there degree.

On the other hand most of my mates who left in year 10 shoveled shit and learnt on the job, now a majority of them own there own business and are doing very well for themselves.

Online looney

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I don't use any of my degree's in my job, but I guess that piece of paper gets you in the door.  I guess it also depends on your chosen field.  Like your job Scott, I'd be dubious of a pharmacist without a degree. Lol

Offline Neru

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i thought this was a good article from Australian Financial Review

Are you a light-blue-collar worker? That is, a university-educated employee who earns only a bit more than an unskilled worker after accounting for all your extra hours. Or are you someone who has a seemingly prestigious job that, in truth, is like turning up to a sweatshop each day?

Technology, outsourcing and globalisation are turning some traditional white-collar office jobs into lower-paid labour, more akin to some types of blue-collar work. A crude distinction, I know, but consider how many white-collar jobs are being downgraded these days.

Take university lecturing as an example. Once among the most-revered white-collar jobs, it has become a production line, at least for sessional or part-time academics at some universities who are paid a pittance, despite the great responsibility of teaching young minds. A sessional academic with two masters degrees might earn $320 for a two-hour lecture.

That sounds great, until you realise the academic spent a day preparing the lecture. Do the maths and they might be on $30 an hour – less than the local barista earns on a public holiday, or the water-truck driver at a remote mine.

Then they’re paid $40 an hour to mark assignments, a tedious, manual job if ever there was one, and less than the self-employed barber earns for doing a few haircuts in an hour. If the academic puts in a chunk of “discretionary” time to do a good job on marking, or give students extra feedback, he or she could end up earning a bit more than the minimum wage.
Downwards trend

What about pharmacy? It used to be among the most prestigious degrees when I attended university, often favoured by those who just missed out on medicine. Today, the average pharmacy graduate’s starting salary is $39,000, according to Graduate Careers Australia.

The low salary is partly because they have to do further on-the-job training to be registered.

Even so, young pharmacists probably earn less each year than the self-employed gardener who mows my lawn, despite years of costly education and the responsibility of their occupation. The young pharmacists I see in understaffed discount chains seem to do hard manual labour rather than white-collar work, and are stuck behind a counter all day, in ugly suburban shops.

Even some professions are losing their lustre. The median starting salary for a law graduate in a professional practice was $55,000 in 2013. That sounds promising, until you see young lawyers working 50- to 60-hour weeks and not getting the same pay rises as in years past – and hear stories of young lawyers in some firms churning out work in an almost production-line setting.

Don’t get me started on social workers, aged-care workers, veterinarians, emergency medical workers, teachers and other white-collar jobs. They earn less than many blue-collar jobs that did not require years of training, do not expect as many discretionary hours from their workers, or have as much responsibility and stress.

I know what you’re thinking: it’s always been that way with young workers starting on lower salaries, working hard to climb the ladder, and eventually getting the big dollars. But it seems that some white-collar occupations require employees to work harder than ever, for much slower wage growth, and less prospect of big salaries in coming years.
Large transformation

This transformation in white-collar jobs is more pronounced than is widely realised. Technology crunched many blue-collar jobs and led to a rapid rise in the “casualisation” of the workforce. Now it is having the same effect on a growing number of white-collar jobs.

This trend is just starting. The chronic, scandalous oversupply of university graduates will flood the market with highly educated, highly indebted, white-collar workers this decade, just as technology makes it possible to do away with more workers than ever, or use cheap offshore labour. The result: lower starting salaries, slower wages growth, and fewer prospects for promotion because firms will find it easier to replace dearer workers with cheaper young ones.

Will a law firm still pay the same salaries when there are thousands of unemployed law graduates, many of them quite capable and eager to get a start for less pay? Will an Australian accounting firm pay the same salaries when there is greater scope to outsource work offshore?

My hunch is we will continue to see a blurring of white and blue-collar jobs, at least in some industries. Highly educated workers earning $30 or $40 an hour, possibly less after all the extra hours – and working more like labourers than in cushy office jobs.

Will media companies pay the same wages for journalists and freelancers when they start using software to write basic business or sports reports, or outsource background stories to offshore writers who charge $50 for a story rather than the $500 sought by a local writer?

I don’t know the answers to these questions. I doubt anybody does. What is clear is these trends have huge implications for Australian business, particularly the self-employed.

It’s potentially an awful space. Unlike traditional blue-collar workers, these new workers won’t be able to clock off after an eight-hour shift and leave work behind for the day. Their employers will expect white-collar hours for blue-collar pay.

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