The Free College Fraud

One of the big promises the Democratic party is making these days is that they are going to make college “more affordable” or even “free” for Americans at public colleges and universities. Clinton is proposing $350 billion in new spending to basically replace student loans. Bernie Sanders wanted to make tuition free at public universities, which is a big reason for his support among young people. Matt Yglesias, one of the few liberals who was previously skeptical of this idea, has now come along for the free ride.

Now, never mind that we are already spending a lot of public money on higher education. States are spending more money than ever, over $80 billion, supporting their universities (per student spending is down because enrollments have swelled). Pell Grants alone have tripled over the last 15 years. And we have made a series of moves to try to make college loans more available.

The result? Higher costs, more spending, more debt. Tens of billions pumped in without college becoming one cent more affordable. Is there any reason to believe that another $35 billion a year or $50 billion a year or $100 billion a year will suddenly achieve that the previous trillions of have not?

No. Because economics exists.

Let’s imagine that you run an industry making sprockets. Let’s say that the American people are willing and able to pay about $100 billion for your sprockets. What would happen if the federal government came in and said, “Sprockets are too expensive! We will give the sprocket industry $50 billion to lower prices!” Unless they actually force you to lower prices, you’re going to now charge $150 billion for those sprockets — the $100 billion that Americans are willing to pay out of their own pockets plus the $50 billion you’re now getting from the government.

Indeed, this is what almost every economist has concluded about the cost of higher education. Massive government subsidies — through grants, state spending, scholarships and undischargeable loans — has massively increased the cost of higher education. It has resulted in universities hiring armies of administrators to do everything under the sun. It has resulted in a bloated overweight industry in which faculty hires are flat and much of the actual teaching is done by poorly-paid adjuncts.

So what’s going to happen when Clinton pours another $350 billion into that pool? Colleges will just raise the cost of higher education by about $350 billion, mainly by increasing enrollment.

And what will happen if Bernie Sanders guarantees “free” college? What’s to stop Michigan State from charging $100,000 a year for tuition? What’s to stop Georgia from enrolling 200,000 students? Even if half of those students fail, there are plenty more who will jump at a “free” education. And do you think North Carolina or Tennesee or any other university will care if they’re admitting semi-literate idiots as long as they get their money? (answer: no).

Bill James:

Anyone who believes that this program is actually going to reduce the cost of college, pardon my pointing this out, is an imbecile. Why? Because the price of anything depends on a) how much of it is purchased, and b) how much money is available to purchase it … When you make more money available to purchase anything, it simply drives up the cost of whatever is being purchased. Certain portions of our voting population, for reasons that baffle me, seem unable to learn this. Anything and everything that the government “helps to make more affordable” automatically becomes dramatically more expensive. The government makes money available to purchase health care; the cost of health care skyrockets. The government makes money available to purchase education; the cost of education skyrockets. These are, in fact, the two main things that the governments wants to pour money into, and the cost of both of them has been skyrocketing since the moment the government decided to make them “affordable” … There was a study about 15-20 years ago about the costs of various surgical proceedings; it studied about 20 different common surgeries. The study found that the normal price of every surgery that the government paid for — such as coronary bypass surgery — had gone up tremendously during the period of the study, while the price of every surgery that the government would NOT pay for, such as liposuction, laser eye surgery, and cosmetic dental repairs, had DROPPED dramatically in the same period. My memory is that every surgery that the government refused to pay for had dropped in price by at least 70% over the course of the study, while other health care costs were increasingly rapidly. Well, OF COURSE it would. Anyone who has ever taken Economics 101 should KNOW that that is what would happen, and would expect it to happen … And yet, cynical politicians like Hilary Clinton keep INSISTING, generation after generation, millions after millions, billions after billions, trillions after trillions, that they are “making health care affordable” when they pour more money into its purchase! It is unbelievable to me that anyone actually believes that this is true … Look, if you want the cost of college to drop, STOP POURING MONEY INTO ITS PURCHASE. Of course we have to help poor people get access to education; of course we have to help minorities get a fair shake. But the rest of us are NOT being helped by this insane policy.

As James noted in later discussions, the only way government have stayed out of this trap is by rationing and price-controlling. In the case of healthcare, limiting the number of procedures performed or capping doctor’s fees; in the case of higher education, limiting the number of students who go to college or limiting what universities can charge. No sane government would create a system where colleges could admit as many students as they wanted and charge whatever they wanted with a federal guarantee of payment.

Indeed, countries that guarantee “free education” send way fewer students to college than we do and limit what their colleges can spend. The problem is that this would never happen in the United States. It would never happen because academics are one of the most reliable sources of Democratic votes in the universe (95%, a level of party loyalty only seen among evangelical Christians, which make sense given that some academic sounds like they’re speaking in tongues). And it would never happen because public universities and colleges are state-controlled institutions.

Again … this is not rocket surgery. This is basic economics. No one would with an IQ larger than Donald Trump’s jock size thinks that just handing over money to an industry is a good idea. Clinton is not an idiot (Sanders might be). She certainly has people around her who understand this. The Democrats have repeatedly called for price controls or rationing in federal healthcare (they don’t call it that; they call it “negotiation”; but that’s what it is).

But when it comes to the cost controls necessary for “free” education, both candidates are oddly silent. Sanders’ “plan” is just a vague promise of free education with no sense of cost control. Clinton’s is more detailed but, if I understand it, would subsidize the states on the promise that they would control college costs. Even if the states controlled costs, they would do so by cutting their own subsidies to higher education so that they could spend it on something else (the same way that they used the lottery to fund K-12 education).

So why are Democrats pushing this nonsense? Why won’t they admit that the only this would make education more affordable is by forcing universities to cap costs or enroll fewer students? Part of this is to avoid pissing off their base of support among young people and academics. But there’s something else going on here. James again:

I refuse to believe that Hilary is actually stupid enough that she doesn’t realize what she is doing. She (and her cohorts) are deliberately driving up the cost of education in order to make the middle class dependent on the government

Give that man a cigar!

Remember a few years ago when the Obama Administration put out “the Life of Julia”? It depicts a woman going from cradle to grave with government subsidy after government subsidy directing her life. It created such a backlash that I can’t even find the original to link it. All the top links are mockeries, debunkings and parodies.

What creates more dependence? People paying $10,000 out of their own pockets for a $10,000 higher education? Or people paying $10,000 out of their pockets and getting $30,000 in government grants for a $40,000 education?

This is the Democratic vision for America — total dependence upon the state from cradle to grave with every election being an auction between two big parties promising ever greater baubles.

The bad news is that, at this point, it seems that Clinton is very likely to be the next President. And if she isn’t, Sanders might be. And if he isn’t, Trump might be and God know what Trump will do. The good news, however, is that none of this can get done without Congress.

This will be a recurring them with me for the next eight months. It would be nice if the Republicans won the White House. But is absolutely vital that they retain the House, if not the Senate as well. It’s the only way to keep a cap on this madness.

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  1. AlexInCT

    What better way to own people than to allow slackers to believe you back their dreams of wasting the first 3 decades (or more) of their lives “studying” on someone else’s dime, huh? Free education is worthless. Just look at the quality of what comes out of our already free public schools these days. And when you tell the morons that now have to pay of the equivalent of a mortgage and can’t find any job with their stupid “studies” degree their debt will also be forgiven, its a double bonus.

    Of course those of us that don’t have the luxury of pretending we don’t live in the real world know there is nothing that is free. If anything, it would rock to watch the barons of academia be told they are no longer going to rake in the big bucks and will have to work for peanuts (like they have started doing to doctors) because education is a a right and is now free!

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