[microarchitect]

The assumption here is that education has a significant component which is "wasteful signalling". If this is true, and that's a pretty big if, what you say follows. If the assumption is not true, reducing funding would result in a poorly educated populace which could spell economic disaster.

My point is: (1) this is not an issue we can decide without looking at the data and (2) making a claim one way or another without carefully looking at the data is not justified.

[yummyfajitas]

Here is a blog post discussing data. After graduation, the sheepskin effect is about 50% of the value of a degree. (Over time, as a worker builds up a track record, this goes down.)

http://econlog.econlib.org/archives/2a012/01/the_present_val...

Unless you believe human capital jumps massively between 116 credits and 120 credits, this is strong evidence in favor of the signalling model.

Another big chunk of the measured returns to education are merely ability bias.

http://econlog.econlib.org/archives/2012/01/correcting_for.h...