I almost agree, but this: universities are like expensive social clubs, I think glosses over the source of their unique position.
Their monopoly comes from them being the de facto certification authority (not just de-facto - many professions have statutory licensing requirements, making them a government-enforced authority). You don't (normally) go to university to get an education, you go to get a degree.
Universities will grant you the degree, but they require you to buy their in-house very very expensive education packages first, whether or not you need them. If I could ace every final exam tomorrow, I'd still have to pay for all the courses, for all that totally superfluous education, before they'd certify me.
This will not change until universities are no longer both the certification authority and the education provider. Only then will they have to actually compete on whether they are (as they claim) the most cost-effective way of being educated to a required standard.
There's legal restrictions on other forms of competing for jobs, which creates a vacuum that higher education fills.
Consider IQ. It's very relevant for job performance, particularly entry-level. Companies will generally get sued if they try to directly measure and test IQ of job applicants.
On the other hand, companies are generally allowed to look at which university you went to. Those universities make admissions decisions, in part, by looking at your SAT score. That SAT score is highly correlated with general intelligence.
So, as a hiring manager, you have a choice between, say, a Stanford graduate and someone who went to an average state school. You can guess the relative IQ of the applicants, and should have a preference over them.
The funny thing is that this hiring preference is completely independent of anything that Stanford does, outside of its admissions department. It could literally do nothing but put the kind of people who get accepted into Stanford into a room together, and you'd still want to preferentially hire them.
This makes no sense. Companies routinely use SAT scores in hiring. And even if they didn't, a school is under the same anti-discrimination laws (ADA, less relevant ADEA).
> Companies will generally get sued
Presumably you can back this up with cases. The USSC ruling in Griggs vs Duke Power [1] is pretty clear.
IQ isn't used because it is a dubious measure, not 'very relevant' for anything. Actually useful metrics can be and are used.
Your broader point is correct: colleges are, of course, forms of signalling. But IQ is a undifferentiated example. 'Top' schools mostly screen on the basis of wealth and social class. But my point is not about 'top' schools specifically, 99% of graduates are not at Stanford, despite what the valley tries to imply.
That universities are expensive social clubs, and have a monopoly on the certification process are not mutually exclusive. The certification is a stamp of approval from the expensive social club. The value of certifications vary wildly depending on how exclusive the social club.
Their monopoly comes from them being the de facto certification authority (not just de-facto - many professions have statutory licensing requirements, making them a government-enforced authority). You don't (normally) go to university to get an education, you go to get a degree.
Universities will grant you the degree, but they require you to buy their in-house very very expensive education packages first, whether or not you need them. If I could ace every final exam tomorrow, I'd still have to pay for all the courses, for all that totally superfluous education, before they'd certify me.
This will not change until universities are no longer both the certification authority and the education provider. Only then will they have to actually compete on whether they are (as they claim) the most cost-effective way of being educated to a required standard.