When I was in college, I depended on financial aid to afford America’s astronomical tuition bills. Every summer break, I had a long fight with the administration, because they worked very, very hard to stop me from getting any. They demanded hundreds of pages of financial documents, from me and both of my parents, which was quite hard as my parents are divorced and did not get along. Once they received the documents, they would take weeks to process them, then reject them for the slightest mistake. Even rounding errors. At one point, they convinced a rich donor to award me a “scholarship”, then used that to cut my financial aid, because I was “already funded” (for all of $500). They then told me to write the donor a letter, asking that he give the college more money. I politely declined.

I found this very frustrating, so I wrote about how absurd and unfair it all was. And many people defended the college. They told me: it’s their money. It legally belongs to them. You’re not entitled to any of it. It’s their right to give any amount they want, to whoever they want, for any reason or no reason at all. Who are you to complain? You have no more right to their money than a street hobo has to any of yours.

I believe strongly in private property rights, so this argument must be addressed. My college was a private institution. They were privately run and organized. There are lots of other colleges to choose from. Why shouldn’t they be able to set whatever financial aid policies they want? Or charge whatever tuition they want? If the local Toyota dealer started charging $10,000,000 for a Corolla, nobody would complain. They’d laugh, and then take their business elsewhere. What’s the problem?

One answer is that colleges don’t disclose their policies until after enrollment, which is arguably fraudulent. (The Toyota dealer can’t sell you a car, then suddenly double your monthly payment two years later.) But more importantly, if you really believed the above – colleges are private organizations, they can set whatever terms they want – you wouldn’t think a degree mattered. If colleges charged $10,000,000 and offered no aid, then getting in would mean absolutely nothing, except that your parents were rich. Likewise, if colleges said on their websites that they chose based on height, or eye color, or whether the admissions person had a tasty lunch, degrees would become worthless. What good is a selection process if the selection is totally arbitrary?

The problem is that colleges want everyone to “doublethink”, to borrow a term from Orwell’s 1984. To “doublethink” is to hold two contradictory ideas in your head, and believe both of them, simultaneously. Colleges want people to believe that, as private institutions, they have the unfettered ability to admit any person or group, for any reason (such as legacy students, or athletes). But they also want to believe that their degree is a fair and rigorous test of students’ abilities, and that people have degrees because they earned them. In reality, you can have one or the other, but not both. If you give trophies to whoever you please, then having a trophy doesn’t mean anything. Having one doesn’t make you different from everyone else. But if you claim that trophies are important, that having a trophy makes you the best (for some meaning of “best”), you now have a responsibility to actually do that. You can’t, ethically, just hand out trophies to all your cousins anymore. That’s hoodwinking people. If you promise fairness, you have to deliver.

College is behind me, but I now see a very similar phenomenon in Silicon Valley. When a new founder starts a company, and asks for advice, one of the first things mentioned is to not give up when investors reject you. Investors, people say, are arbitrary, and will judge based on silly things; rejection means very little. “Startups always have to adapt to the whims of investors. Ask any founder in any economy if they’d describe investors as fickle, and watch the face they make”, to quote Paul Graham. And there’s plenty of evidence of this. Elizabeth Holmes, as a 19-year-old dropout with no experience, raised eight hundred million dollars for a fraudulent company whose technology had never worked. (Largely on family influence.) Her investors certainly weren’t good judges; they lost everything. And while that’s an extreme case, any experienced founder has seen dumb companies get huge investments, or good companies get rejected for the most trivial reasons.

While that’s annoying, the real problem comes when fundraising is then simultaneously seen as the main metric of success, status, and ability. Before her indictment and arrest, and before her company had made any significant revenue, Holmes was lauded internationally because of her massive investment round and $9 billion valuation. Time included her in “Most Influential People in the World”; Forbes named her one of the “Most Powerful Women”; Fortune named her “Businessperson of the Year”; she was awarded “Woman of the Year” by Glamour, of all people.

If one really believes that investment decisions are mostly arbitrary, and that investors can’t judge companies well, then a $9 billion valuation is meaningless. It doesn’t imply that the company will be successful, and it doesn’t mean that Holmes is smart, a capable CEO, or anything else. On the other hand, if one believes that VCs are wise and have good reasons for what they do (Theranos, presumably, being an anomaly), then any investor who consistently makes bad decisions is responsible, and should be called out. They aren’t just losing their own money, in this framing; they’re dragging down the reputation of investors as a class. Either investors are responsible for making good decisions, or else they (and the press, and many others) are responsible for not treating arbitrary decisions as significant. “In doublethink, you forget, and then forget you have forgotten. In singlethink, you notice you are forgetting, and then you remember. You hold only a single non-contradictory thought in your mind at once.”