In the world of finance, there is always talk of bubbles - mortgage bubbles, tech stock bubbles, junk bond bubbles. But bubbles don't develop only in financial markets. In recent years, there's been another one quietly inflating, not capturing the attention of most observers.

It's an education bubble - just not the one of student debt that has graced the pages of the New York Times and so many other publications in recent months.

The problem is not that we are overeducating ourselves as many would have you believe. Rather, it's that we are spending a fortune to undereducate ourselves.

The United States has always been a very educated country. But it is becoming less and less so, especially in the areas that matter to our individual and collective economic futures. Our undereducation begins with a stubbornly high dropout rate among secondary education students. About a quarter of those who begin high school don't finish.

In an educational system where graduation from high school at a minimum level often means no grasp of mathematics beyond basic arithmetic, no training in basic personal finance, and no marketable professional skills, this is an obvious problem We can and should do more to prepare high school graduates for the world they now live in.

The big problems aren't rooted in high school education, however, but with the decisions we as a nation are making in the education we get beyond the compulsory level.

Of those students who do make it through high school, 30% will not go on to any further education. That means 70% enroll immediately in a two- or four-year degree program, a major increase from the about 49% three decades ago. Despite rising college entry rates, we are not graduating any additional college students. That's largely because among those who immediately enroll in college post high school, some 40% are not expected to get their degrees within six years.

The result: our overall college-educated cohort has flatlined over the past 30 years. The number of American citizens aged 25-34 who have attained a college education - including either a two- or four-year degree program - is exactly the same as the percentage among 55-64-year-olds, at 41%. (The US is also the only developed nation where a higher percentage of 55- to 64-year-olds than 25- to 34-year-olds has graduated from high school.)

Thirty years ago that 41% figure led the world in college grads; now we're 16th and trending lower.

Many have suggested that it's because we have a less than stellar college education system. But nothing could be further from the truth. While it has some problems for sure, the US remains a leader in post-secondary educational quality. One need look no further than the increasing number of foreign students pursuing advanced degrees in the US. For the 2009-10 school year, about 690,000 non-US citizens were enrolled at colleges in the US - the highest level in the world and up 26% from a decade ago.

Not only are foreigners attending our schools in record numbers, they are far more apt to pursue high-level degrees than US students. Foreign students constitute 2.5% of bachelor's degree students, 10% of graduate students, and 33% of doctoral candidates.

Despite a top-notch educational system in the US, we're failing to take full advantage of the opportunities it provides. But the bad news doesn't end there.

In the 21st century, intellectual capital is what truly differentiates in the job market and what helps a country grow its economy. Investments in biosciences, computers and electronics, engineering, and other growing high-tech industries have been the major differentiator in recent decades. In order to be competitive in those fields, however, a nation must invest in so-called "STEM" studies (Science, Technology, Engineering, and Math).

During the latter half of the 20th century, as more and more US high-schoolers opted to at least start college and were able to afford to go, their choice of academic pursuits have tended away from STEM subjects and toward the less-rigorous liberal arts.

When fewer students attended college and even fewer jobs required technical skills, private employers, and especially government, could soak up the overflow, putting people to work provided they had a degree, any degree... for a while. English literature, sociology, psychology, communications, fine arts, gender studies, and the like were majors that led, inadvertently, to nontechnical jobs - the blue-collar work of an information economy, marketing, and business, and of course to teaching the increasing numbers of new college students.

However, more careers than ever now require technical skills. Economic growth has slowed and unemployment rates have spiked, making employers much pickier about qualifications to hire. Plus, boomers have chosen or been forced to work longer in those professorships and other jobs.

There is now a glut of liberal arts majors. A classic bubble, born of unrealistic expectations that the investment of a hundred grand (or more) must result in a cascade of job offers. Or at least one.

It's not happening. A study from Georgetown University listed the five college majors with the highest unemployment rates (crossed against popularity): clinical psychology, 19.5%; miscellaneous fine arts, 16.2%; United States history, 15.1%; library science, 15.0%; and military technologies and educational psychology are tied at 10.9%.

Unemployment rates for STEM subjects? Astrophysics/astronomy, just about 0%; geological and geophysics engineering, 0% as well; physical science, 2.5%; geosciences, 3.2%; and math/computer science, 3.5%.

STEM jobs also pay more. The list of the 20 highest mid-career median salaries, by college degree, features no careers from the liberal arts. Instead, according to a survey from PayScale.com, at the top we find: petroleum engineering, $155,000/yr.; chemical engineering, $109,000; electrical engineering, $103,000; material science & engineering, $103,000; aerospace engineering, $102,000; physics, $101,000; applied mathematics, $98,600; computer engineering, $101,000; and nuclear engineering, $97,800.

Liberal arts degrees provide few prospects for graduates. Yet the bubble continues to inflate.

In 2009, 1,601,368 bachelor's degrees were conferred in the US, a 30% increase from 2000, which should be a good thing. But of these, a large plurality, 590,678, or 36.9%, was awarded in one or another of the liberal arts. That's higher than 2000's 36.1%.

Moreover, the next most popular major was business, with 347,985 degrees, or 21.7% of the total (up from 20.7% in 2000). And it was followed by health professions at 120,488 (7.5% vs. 6.5% in 2000); and education at 101,708 (6.4% vs. 8.8% in 2000). The business bulge would be okay if students were trained in how to start their own businesses. But it's more likely that they dream of a lavish Wall Street job, one few will ever attain. In fact, that PayScale survey listed business as only the 59th best-paying college degree.

At the other end, these are the bachelor's degrees earned in STEM subjects, as a percentage of 2009's total, compared with 2000: engineering, 6.4% (down from 8.8%); biological and biomedical sciences , 5.0% (down from 5.1%); computer and information sciences, 2.4% (down from 3.1%); physical sciences and science technologies, 1.4% (down from 1.5%); and at bottom, math and statistics, 1.0% (up from 0.9%).

Americans don't get it. Foreigners studying here do. True, the highest concentration of foreigners is the 21% in business and management. After that, though, comes engineering at 18%, nearly triple the level of US students; physical and life sciences (9%), and math and computer science (9%).

More than one in three foreign students at US colleges are entering these fields. Compare that to to fewer than one in six US collegians. Fine and applied arts, English, and humanities collectively account for only 12% of the foreigners' total.

There are any number of reasons for the emergence of the US's liberal-arts bubble. One is easy money. Students have been encouraged to attend college by the availability of loans, both governmental and private sector, and the disproportionate wealth of their baby boomer parents' generation.

In addition, many companies began requiring a degree - any degree - for entry-level jobs that could adequately be filled by a bright high-schooler.

Institutions of higher learning bear some measure of blame as well. Liberal arts programs are much more profitable than hard sciences - professor salaries are lower as their non-academic options are lower, less equipment is required, and of course, recruiting is easier.

Other factors might include the stigmatization of "nerds" who take on more challenging studies; the lack of quality math and science education in secondary schools (where are they going to get great teachers when there's so much money to be made with the relevant degrees elsewhere?); and the widespread misperception that any college degree will punch one's ticket to an easier life.

As more philosophy B.A.s wait tables, it'd be nice if we could wave a magic wand that populated high school science and math classes with teachers who inspire students and students who want to be inspired. But, alas, this a generational bubble.

Lacking that, high school counselors should begin warning students of the perils of spending four years pursuing an interest for which there is no market and advising their charges where the real opportunities lie.

Would-be liberal arts majors must face the reality that one of their few hopes for a future job is to teach the same subject to the next generation, and that competition for the few such specialized positions is going to be intense.

Furthermore, there remains a wide gap between males and females with regard to math and science. Since three females are now attending college for every two males, this is a vast untapped resource. If females currently are discouraged from becoming interested in STEM subjects from an early age, as much research indicates, that's reversible. If they can actively be guided toward those fields, that's doable, too.

The US has led the planet in scientific research and technological innovation for a long time. But that is changing. Other nations, especially in the developing world, are minting new scientists and engineers faster than we are. Without major changes to our cultural attitude towards math and science, and some pretty serious changes to the educational system to support it, we risk becoming second-class citizens in a techno-society that we largely invented.

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