Education: Oversupplied Everywhere?

Contrarian libertarian economist (and Reason contributor) Bryan Caplan says that economic logic tells us education is oversupplied pretty much everywhere, the Third World as well as the wealthy West. His reasoning:

Education's a good like any other.  If people refuse to spend their own money for more education, then it's presumably just not worth it, right?  This is especially clear because governments habitually subsidize education.  Libertarians should believe that there's an oversupply of education for the same reason they believe there's an oversupply of sport stadiums: The status quo is desperately dependent on government funding.  

Note further: This analysis holds in the Third World as well as the First.  The fact that Nigerians and Bolivians don't spend more of their hard-earned money on education is a solid free-market reason to conclude that additional education would be a waste of their money.

Most people will naturally treat these conclusions as yet another reductio ad absurdum of libertarianism.  We can argue about whether the First World is overeducated; but how can libertarians deny that lack of education condemns the Third World to poverty?….If subsidizing domestic automobiles, semi-conductors, and movies doesn't make poor countries rich, why would subsidizing domestic education be any more effective?  Maybe people in primitive agricultural societies get little education because it's a costly investment that fails to noticeably raise agricultural productivity.

Of course, if Third World countries improved their policies and opened up to the outside world, workers might suddenly notice a higher return to education and crack open the books.