Frankly, Thiel's rhetorical "Why aren't there 100 Harvard franchises?" question is a reasonable one to ask. By its own admission, Harvard turns down hundreds -- maybe even thousands -- of students each year who are qualified to attend Harvard. There simply isn't enough space, and at the highest tiers, it becomes a crapshoot. Kid A and Kid B could be equally qualified, and both could have made it through the gauntlet and down to the wire, but Kid B wins out in the end through a process verging on picking straws. For the rest of his life, Kid B is "Harvard-educated," while Kid A is deemed by many folks in society to be Kid B's intellectual inferior.

But what if Harvard had enough capacity to admit everyone who met its admissions standards? It's a question worth asking. Would Harvard cease to be "Harvard" if that were the case? Thiel's point is that it would -- which is indicative of a problem with our valuation of Harvard.

Be that as it may, your overall point is sound. Harvard may have some mystique baked into its valuation, but most of us still hold the valuation -- mystique and all -- in high esteem. We accept it at face value. So long as we continue to do so, the bubble stays afloat.

In order to test Thiel's thesis, we'd have to go a step further and ask ourselves: what would, in theory, cause the bubble to pop? What would it take? Given that this bubble (for lack of a better word) has been propped up for hundreds of years, and is still going strong, what straw would break the camel's back?

I'd argue that it's Stanford. Or, rather, everything the proverbial Stanford represents: Silicon Valley, something approaching new-money meritocracy, and so forth. If enough Stanfords emerge across the world, suddenly the time-honored value of the Harvard degree seems less shiny than it once was.

[Interestingly enough, Harvard does a pretty darned good job at being a Stanford, too. But, for the set of Harvard attendees who are there to collect the credential and not to start up a company, the value of that credential-qua-credential would decrease in a bubble-deflating scenario].