Democracy Dies in Darkness

Post Partisan | Opinion

‘Up or out’ goes sideways

By Megan McArdle

July 19, 2018 at 3:13 PM

Graduates at Yale University’s commencement ceremonies in May 2013. (Jessica Hill/AP)

Question: Major law firms. Universities. The military. What do these institutions have in common?

Answer: Their labor model.

All three operate on what is variously known as “the tournament model,” “the pyramid” or “up or out.” Workers come in at the entry level, labor for some years to make it to the top and, mostly, never get there. When they fail to be promoted, they’re formally separated from the organization, often with dire career consequences.

Eric Weinstein, a mathematician and the managing director of Thiel Capital, argues that these labor models are one of the most damaged elements of the U.S. economy. They are predicated on steady growth, he says, and when reliable growth wanes in an institution or an industry, the models break down — badly.

Weinstein is a denizen of the “intellectual dark web,” a phrase he coined half in jest to describe the loose-knit group of heterodox thinkers who were recently profiled by Bari Weiss in a New York Times opinion article. The group’s roots, origins and the degree to which its speech is being suppressed have been much discussed on the Internet of late. Much less attention has been devoted to their ideas.

Let’s look at Weinstein’s thinking about the “up or out” labor model, which he outlined last month during an interview with Vox. In the post-World War II era, “growth hypotheses” were embedded in nearly every institution that thrived, Weinstein said. Around 1970, an era of “exponential growth in science, technology, and economics” came to an end, he noted. And when organizations such as “law firms or universities or the military” realize that they must “reckon with steady state” — an economy with mild fluctuations in growth and productivity — they respond by “by running a Ponzi scheme, or by attempting to cannibalize others to achieve a kind of fake growth to keep those particular institutions running.”

It’s an interesting idea. But is Weinstein right? I’m not sure he is.

Branches of the U.S. military have used “up or out” for more than a century, and the model has survived many rounds of waxing and waning in the officer corps. Why? Because officers leave the military with leadership skills that are valued by businesses, even if technical expertise in shooting guns and blowing stuff up is not.

Weinstein’s critique might be more apt when applied to law firms. Using “up or out,” major law firms expanded rapidly during the postwar era, but now their growth seems to have slowed. That doesn’t mean the model is unsustainable: If megafirms take the military’s approach and push lawyers into other reasonably desirable careers, then the model might survive without the firms’ cannibalizing their competitors’ business. Otherwise, some Weinsteinian destruction is likely.

Which brings us to universities, which really do closely reflect Weinstein’s critique. And they really are in deep trouble.

The model of professors creating other professors, ad infinitum, worked fine during the decades-long education boom, when the U.S. population was growing, the economy was growing and the demand for educated workers was growing. Even as economic growth has slowed and birthrates have fallen below replacement, universities have continued to churn out PhD graduates, more than could ever be absorbed by college teaching ranks.

The “one professor, many graduate students” model is built into the modern university’s economic structure. Graduate students enable faculty research, either directly as research assistants, or indirectly by shouldering some of the teaching duties. If graduate students fail to secure a tenure-track position, they often join an army of adjuncts that does much the same thing, resentfully.

Some disciplines place PhD graduates in government, industry or finance; if those students get better jobs because of their doctorates, then the system would be sustainable. But the glut of PhDs in many disciplines — including STEM fields — indicates that this not happening. Rather, many programs are, as Weinstein says, running a Ponzi scheme — duping academic hopefuls who devote a decade or more of their lives to pursuing academic jobs they’ll never get.

Universities are aware of the problem, but instead of sensibly cutting back their programs, they murmur hopefully about “alt-ac” careers that seem mostly to involve jobs that students could have found without sacrificing years of career-building and earning opportunities in a PhD program.

Luckily, most industries are not run the way academia operates. Yet the U.S. economy is starting to resemble the academic job tournament. As more and more people have gotten BAs, the college degree serves a role once played by the high-school diploma: a signal to employers that you are conscientious, conformist and reasonably bright. Arguably, a college diploma is less about preparing for a job than about buying a ticket to a better labor market tournament.

If that were true, the result would be declining mobility and reduced prospects for people without degrees, and plenty of people with degrees complaining that their student loan burden leaves them little better off than they would have been without the degree. That’s exactly what’s happening, which suggests that something here is deeply broken.

This argument is not unique to Weinstein (or to me); Bryan Caplan makes it at length in his new book, “The Case Against Education: Why the Education System Is a Waste of Time and Money.” But it’s an argument that needs to be aired as widely as possible. Which is, in turn, a good argument for listening to the Intellectual Dark Web.


Megan McArdle is a Washington Post columnist and the author of "The Up Side of Down: Why Failing Well Is the Key to Success."

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Post Partisan | Opinion

‘Up or out’ goes sideways

By Megan McArdle

July 19, 2018 at 3:13 PM

Graduates at Yale University’s commencement ceremonies in May 2013. (Jessica Hill/AP)

Question: Major law firms. Universities. The military. What do these institutions have in common?

Answer: Their labor model.

All three operate on what is variously known as “the tournament model,” “the pyramid” or “up or out.” Workers come in at the entry level, labor for some years to make it to the top and, mostly, never get there. When they fail to be promoted, they’re formally separated from the organization, often with dire career consequences.

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