Is Education A Waste?

…Mostly.

Take this excerpt from the book Human Action by Ludwig von Mises:

“In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained…. No special education is required for such a display of keen judgement, foresight, and energy. The most unsuccessful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal to their social functions of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership.”

Think of all the successful businessmen in the United States. We often laugh at the stories of famous billionaires who do not have a college degree. Bill Gates, Henry Ford, and John D. Rockefeller to name a few. So then why is it that, as a society, we continue to send children to school after school after school if the true success stories are born from those who have no formal education?

Well, the debate would be that the above men are just outliers. But the truth is they are not. Take for example, my mother and father, they never achieved anything past a high school diploma and now they are more successful than many of their peers with college degrees.

The truth is that the only place you can spend your money, in the United States, tax-free is on education. At the same time, millions of dollars in aid, loans, and scholarships are also being pumped into the system. And for what? So that the future entrepreneurs can be droned into mid-management?

The only advantage that an education can gain you after high school is getting you into an area of profession where the degree is mandatory. No degree is mandatory in most start-up businesses, so I would urge those to reconsider. Careers with some of the most unlikely places like fast food or retail sales can actually lead to very fruitful careers. Imagine putting in 4-5 years in with one of those companies versus a university that you are paying. Something tells me that in those 4-5 years you will be making more than you would with a general liberal arts degree.

And one thing to keep in mind as you roam the halls with the thousands of others who just like you are searching in a university for your career that just like with the housing bubble the government will continuing to subsidize education until the values hit rock bottom…

“John D. Rockefeller freed Willy”


I know it’s a while from now but I am pronouncing July 8th John D. Rockefeller Day. A day for us to look back on how great innovation and business efficiency has brought great success to the United States. Most people might look at me and say you picked a birthday of a monopolist, but Mr. Rockefeller did not have a monopoly.

When Professor Rustici begins his lecture about Mr. Rockefeller, he says who here has heard from their high school teachers that John D. Rockefeller was a monopolist?

Almost everyone raises their hands…

Then he asks who here was shown statistics?

Everyone puts their hands down…

Now lets think: What is a monopoly? Dictionary.com says “exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.”

So if you had a monopoly you would raise the price and reduce output. Lets look at the data:

1870

1890

1911

Market Price

26.4

7.5

4.7

Output/Million Barrels

3.9

28.2

121

# of competitors

200

104

147

% of the market sales

4%

88%

64%

Rockefeller’s company, Standard Oil, actually is lowering the price and making more of the product, but the government wants to break it up. They did in 1911, when he had 147 competitors.

So, you ask why?

Mr. Rockefeller was very efficient. He is the one who actually invented the assembly line to make wooden barrels to put his kerosene oil in. He changed the cost of making a barrel from $2.50 to 90 cents a barrel. After that, he went to the railroads and created oil tankers. He told the RR companies that if they showed up with an engine everyday he would assure them 60 cars. This allowed the RRs to reduce prices. Even after that, he created pipelines.

Rockefeller was always ahead of the technological curve. He put money in research and development while people stole his ideas.

One of the things I find to be amazing is: Gasoline is a byproduct of creating kerosene. Other companies would dump them in the river but not Mr. Rockefeller. He told his engineers to find a use for it. They found over 300 products that we could use with gasoline. Tar, varnish, paint, lube, vasoline, and asphalt were all examples of this.

He became the richest man in the world and had the best paid employees. He completely wiped out 20,000 jobs of whalers. He made kerosene so cheap that everyone switched their lamps from whale oil to kerosene oil.

Rustici said, “John D. Rockefeller freed Willy!”

Mr. Rockefeller cleaned the rivers of gasoline. He donated $550 million dollars (not adjusted for inflation) to charity. This is more than Warren Buffet and Bill Gate combined, not to mention he doesn’t get tax write-offs for it. (There was no income tax then). He funded schools for blacks and handicap. The Rockefeller Institute invented hybrid wheat and rice, that keeps people from starving around the world.

Oh wait, did you ask why they broke him up? I answered it in the first five words. “Mr. Rockefeller was very efficient.”

He wasn’t accused of exploiting workers when you look back at the case. It was said that it was unreasonable to be efficient. His competitors just loved it.

Fact and Figures: from a lecture by Professor Thomas Rustici

Published in: on November 20, 2007 at 1:03 am  Leave a Comment  
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