HIGHER EDUCATION BUBBLE UPDATE, INTERNATIONAL EDITION: Australian Work Force ‘Over Educated.’ “Politicians and university chiefs in Australia are keen to sell the benefits of ever more degrees, but the labor market isn’t buying it, according to a study that shows large numbers of overeducated workers. Economists Ian Li and Paul Miller found that almost 50 percent of surveyed graduates were doing jobs that did not demand their qualification.”

When you subsidize something, it will be overconsumed.

UPDATE: Reader Brock Cusick emails:

Although there are diminishing returns at some point, I really doubt that Australians are “over educated”. It’s much more likely they are miseducated. I bet if you checked with Australian employers you would find numerous unfilled openings in roles like “master welder”.

The important point here is this: government spending (including subsidies) frequently buys the wrong things.

Good point. If I correctly understand how the Australian system works, you don’t have to pay back your educational costs if you earn below a fairly generous threshold. This probably encourages a lot of majors that don’t do much for employment and earnings.

ANOTHER UPDATE: Reader Bek Wright emails:

Your understanding of the Australian student loan scheme (HECS) is spot on. The income test for repaying the degree conceals the critical question any student must ask. Is this degree going to give me a qualification of real material and intellectual benefit in the job market?

HECS distorts the link between the quality of the degree and the benefits it may confer in the job market. The real cost of a students’ choice of major is hidden, via HECS. Thus, when they graduate and the consequences finally hit them, they are left with a sizable debt, and no qualification of significant earning potential.

I believe in simplicity and transparency. And crunchiness over sogginess.