Explaining Southern California's economy

Reportings: College isn't worth it; Silicon Valley is doing great!; Digital Domain goes bankrupt

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Toshifumi Kitamura/AFP/Getty Images

Autobot 'Bumblebee' is shown during the 'Transformers - Revenge of the Fallen' world premiere in Tokyo, on June 8, 2009. The company that did the visual effects has declared bankruptcy after a precipitous stock slide.

Megan McArdle considers the exploding cost of college. "The price of a McDonald’s hamburger has risen from 85 cents in 1995 to about a dollar today. The average price of all goods and services has risen about 50 percent. But the price of a college education has nearly doubled in that time. Is the education that today’s students are getting twice as good? Are new workers twice as smart? Have they become somehow massively more expensive to educate?" (Newsweek/The Daily Beast)

Facebook aside, Silicon Valley is standing out as the place to send your venture capital dollars. "Silicon Valley startups raised $3.2 billion from venture capitalists during the April-June quarter, far more than in any other part of the U.S as tracked by the National Venture Capital Association. Venture capital flowing into Silicon Valley increased by 4 percent from the same time last year, while it dropped 12 percent nationwide." (Businessweek/AP)

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If you want a job in this economy, education is a must

Employment by education

Data: BLS

It isn't rocket science. If you have a college degree, you can get a job in the U.S.

In the wake of this morning's bad jobs report from the Labor Department, there's been some discussion in various media outlets about the gap between the unemployment rate for Americans over 25 with limited education and those with a college degree. This comes from the BLS's breakdown of the monthly data, which you can see here.

I've turned the headline number into a simple chart, above. And I've used the seasonally adjusted numbers, just to simplify.

As you can see, having less than a high-school education is a job-getting disaster. But if you follow the line, you'll notice that having that high-school diploma gets you only to the the current national unemployment rate, roughly: 8.4 percent, while the U.S. level is now 8.2 percent.

"Some college" doesn't even push it down that far: 7.5 percent.

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The crisis in liberal arts college education

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Mark Wilson/Getty Images

College may not be worth it for some students

Kenneth Anderson has a long-ish post about the declining return on a liberal arts — versus a "science, technology, engineering, mathematics" (STEM) — education. The gist of it is that liberal arts isn't necessarily a bad investment, but that the market for lib arts has been weakened by changes in the economy — and by higher ed's inability to educate graduates for what the market actually needs. That is, verbal analysis and basic quantitative skills.

As Anderson puts it: "The traditional promise of the quality humanities or liberal arts major — not a technical skill set, but generalist analytic skills in reading, writing, basic maths, and strong communications skills — has somehow eroded and colleges fail to convey those skills."

There's another problem, which is that if you invest in this unmarketable education, you wind up spending more than you can realistically expect to earn back, because the value of liberal arts skills has been so relentlessly degraded. And guess what? The entire economy is now stuck with a low-growth future. This is fueling the notion — one I find fairly repellent — that too many people are going to college and that we should reshape the university system along more overtly elitist lines.

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