Tag: Higher Education

It Takes a Village to Waste Money

For a time, it looked like Hillary Clinton might actually end up being the more conservative candidate in the race. Trump has been talking about restricting trade, blowing holes in the debt, opposing entitlement reform and expanding executive power.

Well, no longer. Apparently afraid that Bernie Sanders will bolt the Democratic Party for the Green (this tends to happen when you let people run who aren’t technically members of your party), she has now basically adopted Bernie Sander’s agenda in full.

  • She’s supporting the push for universal Pre-K, proposing a new bunch of subsidies and tax credits, doubling the size of the failed Head Start program and pushing for 12 weeks of mandatory paid leave. I’ve argued before the universal pre-K is a solution stumbling around in search of a problem and documented the complete failure of universal pre-K efforts. Clinton doesn’t care; there’s votes to be bought!
  • Clinton has now abandoned education reform in favor of more spending and more spending. There’s no evidence that this approach does anything but employ more union members. Clinton doesn’t care; there’s votes to be bought!
  • She’s now supporting a $15 minimum wage, a plank taken straight from Bernie Sanders. I’ve pointed out before that the push for $15 is a kind of mass insanity that has gripped the Left, only slightly more scientific than if the Republicans had responded to the Ebola epidemic with prayer. The cruelty of this is that it if the Democrats are wrong, it will not destroy their jobs, but the jobs for the people they purport to care for: the poor, the workings class, minorities, dropouts and convicted criminals trying to straighten out their lives. Clint doesn’t care; there’s votes to be bought!
  • She’s now embraced Bernie’s plan to massively inflate college tuition … uh … “make college more affordable“. As has been pointed out innumerable times, shoveling money at colleges will simply raises costs, increase debt and persuade more people to waste their time in college when they could be working or training. Clinton doesn’t care; there’s votes to be bought!
  • She’s now supporting creating a public option for Obamacare. Obama is now calling for this too, claiming the markets are not competitive enough. You have to admire the gall. First, the crush the insurance market with Obamacare. Then, they refuse to let insurance be sold across state lines. Then they propose a “public option” to bankrupt the insurance companies that remain. Every day, Obamacare looks more and more like a deliberate plan to destroy the private insurance market to create the “need” for socialized medicine. In this case, Clinton does care; there’s vote to bought!
  • She’s now turned not just against TPP but against free trade in general. Never mind that trade has made our country wealthy while almost eliminating poverty in other countries. Clinton doesn’t care; there’s votes to be bought!
  • All of this will be paid for with big tax hikes on “the rich”, who are close to maxed out. Clinton doesn’t care; there’s votes to be bought!

The $15 minimum wage is the issue for me with Democrats. It is so mindless, so stupid, so at variance with economics and so destructive to the future of the people it supposedly helps. If you wanted to create unemployment, make poverty more intractable and condemn a generation of people to lifelong unemployment and poverty, you’d be hard pressed to come up with a better plan than the $15 minimum wage.

I realize that a lot of liberal organizations don’t pay their interns or, in the case of groups like Ralph Nader’s, pay them sub-minimum wage through legal loopholes. But the University of California already fired 500 people to account for the minimum wage. Even the dumbest Democrat can do math. And Hillary Clinton is many things, but she’s not dumb. They must know, on some level, that this is going to be bad. They just Don’t. Fucking. Care.

But it’s worse. As McArdle points out in the link above, Clinton is proposing to pay for all this stuff with the usual litany of Democratic tax hikes: raising rates, eliminating the Social Security cap, closing the “carried interest” loophole, etc., etc. She’a also proposing to eliminate almost all tax deductions for the rich (which will produce 100+% marginal rate in some income brackets). But:

For while it is true that these programs are paid for, that doesn’t mean that the budget math is sound. The government’s spending capacity is, in the end, limited, and every dollar that you spend on one thing is a dollar that cannot be spent on something else. Virtually all of Clinton’s “pay fors” are concentrated on a relatively small number of affluent-to-rich people, and because of that, they represent a large cut of those incomes; if she managed to enact all of her plans, her top bracket would be inching close to a marginal tax rate of 50 percent before you factor in state and local taxes that can easily add another 10 percentage points to that figure.

Even if you think that it would be politically possible to extract taxes at those levels, and that you could do so without causing any unwanted economic side effects, the question remains: What do you do for an encore? After enacting Clinton’s agenda, America will still need to fix Medicare, Social Security, state and local pensions, the disability insurance program, and so forth. And given that Democrats have proven as unwilling as Republicans to raise taxes on the middle class, where are we going to get the money?

I’ve said this many times and I will keep repeating it until it sinks in: you can’t fund a welfare state by taxing the rich. There simply isn’t enough money. European welfare states aren’t funded by the rich. They’re funded with massive taxes on the middle class.

The United States has one of the most progressive tax systems in the world, being very reliant on the wealthy for revenue. The European welfare states, by contrast, are more regressive, having flatter taxes and relying on VATs and sales taxes that are regressive. They have to be that way because you simply can’t finance a welfare state by taxing the 1%.

A welfare state financed by the rich doesn’t even work politically. When everyone is paying taxes, there is more support for a welfare state because everyone is pitching in. The perception is that you’re getting out something related to what you paid in, which is why Social Security and Medicare are popular in this country (both financed by a regressive tax that is denounced by Democrats for not soaking the rich enough). But a system that is dependent on taxing the rich isn’t a welfare state, it’s a plunder state. And as I’ve pointed out before, most people don’t want that. They don’t want to feel like they’re living on someone else’s dime or on stolen property. The Communists discovered this 70 years ago when they tried to “redistribute” estates to the commoners only to discover that the commoners didn’t want that wealth if it was stolen.

But proposing to fund this garbage through a middle-class tax hikes would be political suicide. So — in a situation where we are already half a trillion in deficit, have $19 trillion in existing debt and have trillions of dollars in future unfunded liabilities — the Democrats are proposing to burn our last few sources of revenue on a series of brand new will-o’-the-wisp social spending programs.

(Yes, yes, we once had marginal tax rates of 70%. And we also had a huge number of exemptions. No one ever paid that rate. We are very close the practical limit on marginal rates.)

I understand why Clinton is selling out wholesale like this. She’s afraid Bernie on the Green Party ticket will wreck her chances. But I think this tells you how principled Hillary Clinton is. She has either completely changed her views on several major issues or she is going to betray her campaign promises the second she gets into office. I don’t think she actually cares either way. She just wants to be President. And if she has to wreck the economy to get there, well, she’ll wreck the economy to get there. This is way more of a sell-out to the party fringe than any Republican has ever made. But you won’t see it described as such because 98% of our media are going to vote for Clinton anyway.

This is worst election ever. Two rich leftists are battling to see who gets to the screw the country over and how badly they can screw us. And people wonder why I’ve voting for Johnson:

I will not vote for Trump. And I will not for Clinton. To hell with them both. The only election I really care about is Congress. It is absolutely critical that the Republicans hold onto Congress, preferably retaining a majority in both houses. Look at the agenda. Imagine the damage Clinton could do with a Democratic Congress. And then, whatever you may think of Trump, put that Republicans roadblock in her way.

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.

Generation Eggshell

Judith Shulevitz has a great article up at the NYT about how our colleges and universities have gone to absurd lengths to coddle students’ delicate psyches.

KATHERINE BYRON, a senior at Brown University and a member of its Sexual Assault Task Force, considers it her duty to make Brown a safe place for rape victims, free from anything that might prompt memories of trauma.

So when she heard last fall that a student group had organized a debate about campus sexual assault between Jessica Valenti, the founder of feministing.com, and Wendy McElroy, a libertarian, and that Ms. McElroy was likely to criticize the term “rape culture,” Ms. Byron was alarmed. “Bringing in a speaker like that could serve to invalidate people’s experiences,” she told me. It could be “damaging.”

Ms. Byron and some fellow task force members secured a meeting with administrators. Not long after, Brown’s president, Christina H. Paxson, announced that the university would hold a simultaneous, competing talk to provide “research and facts” about “the role of culture in sexual assault.” Meanwhile, student volunteers put up posters advertising that a “safe space” would be available for anyone who found the debate too upsetting.

The “safe space” was basically a toddler room:

The room was equipped with cookies, coloring books, bubbles, Play-Doh, calming music, pillows, blankets and a video of frolicking puppies, as well as students and staff members trained to deal with trauma.

You really should really the whole thing. It gets into the increasing culture of creating “safe spaces” where students can be sheltered from ideas that might challenge their beliefs or offend them. Only some ideas, of course. If a Muslim student complained that miniskirts made him uncomfortable or a Christian complained that gays “triggered” him, I doubt they would get much sympathy.

As an academic, I want to make one point: most students aren’t like this. Most of the students I deal with are hard-working rational people who don’t really care about political correctness. The problem is that the whiners — the product of increasing helicopter parenting and schools obsessed with promoting “self-esteem” — have the floor. Moreover, the government is aggressively using Title VIII and IX to push schools into compliance with politically correct agendas. And it’s affecting how our schools operate.

I’m old enough to remember a time when college students objected to providing a platform to certain speakers because they were deemed politically unacceptable. Now students worry whether acts of speech or pieces of writing may put them in emotional peril. Two weeks ago, students at Northwestern University marched to protest an article by Laura Kipnis, a professor in the university’s School of Communication. Professor Kipnis had criticized — O.K., ridiculed — what she called the sexual paranoia pervading campus life

Last fall, the president of Smith College, Kathleen McCartney, apologized for causing students and faculty to be “hurt” when she failed to object to a racial epithet uttered by a fellow panel member at an alumnae event in New York. The offender was the free-speech advocate Wendy Kaminer, who had been arguing against the use of the euphemism “the n-word” when teaching American history or “The Adventures of Huckleberry Finn.” In the uproar that followed, the Student Government Association wrote a letter declaring that “if Smith is unsafe for one student, it is unsafe for all students.”

“It’s amazing to me that they can’t distinguish between racist speech and speech about racist speech, between racism and discussions of racism,” Ms. Kaminer said in an email.

Professors are guiding their course work away from anything controversial as well. For example, law professors are shying away from discussing rape law, lest they trigger someone. Entire hordes of administrators are hired to make sure everyone is being sensitive and caring (and then student wonder why college costs so much).

So how can we stop this rising Cult of the Victim? Pushback on the campuses themselves is a big part. But another big help would be for the federal government to affirm its supposed commitment to free expression. A complaint that a university is “unsafe” can trigger a potentially damaging federal investigation. In the past, the government has respected free speech but that commitment has weakened in recent years as universities and the government embrace the Left-wing notion that some speech isn’t really speech, but hostile action.

The recent SAE incident was a perfect opportunity for this. The Department of Education could have made it clear that, as students at a public university, the students had free speech rights. But they let that opportunity pass by. And I don’t see this Administration ever standing up the campus politeness police.


Oh come on. Even Democrats aren’t this dumb:

Forgiving the student loan debt of all Americans will have an immediate stimulative effect on our economy. With the stroke of the President’s pen, millions of Americans would suddenly have hundreds, or in some cases, thousands of extra dollars in their pockets each and every month with which to spend on ailing sectors of the economy. As consumer spending increases, businesses will begin to hire, jobs will be created and a new era of innovation, entrepreneurship and prosperity will be ushered in for all. A rising tide does, in fact, lift all boats – forgiving student loan debt, rather than tax cuts for corporations, millionaires and billionaires, has a MUCH greater chance of helping to rise that tide in a MUCH shorter time-frame. The future economic success of this country is wholly dependent upon a well-educated, prosperous middle class. Instead of saddling entire generations with debt from which there is no escape, let’s empower the American people to grow this economy on their own!

Therefore, we, the undersigned, strongly encourage Congress and the President to support H. Res 365, introduced by Rep. Hansen Clarke (D-MI), seeking student loan forgiveness as a means of economic stimulus.

Throw out any conservative ideas you might have about spending, personal responsibility or budget deficits. Let’s tackle this on the liberals’ own terms. As the Freakonomics blog points out, this may be the worst idea ever. It gives tons of money to college grads — a demographic with high income and very low unemployment; it wouldn’t even work in a Keynesian sense; it will not get more people to go to school, and; it creates a new sense of entitlement among college grads.

This isn’t economic policy. This is a bunch of spoiled rotten kids demanding someone pay for their already subsidized education. There’s little question student debt is a pending calamity — it has quintupled over the last decade because of an open-ended commitment by our government to get everyone a college and post-graduate education, whether they need it or not. But this idea, if anything, would make that problem worse (nothing is more expensive than free stuff).

I mean, at least the Democrats want to take the rich and give to the poor. These guys want to take from the rich and give to the … not quite rich yet? I don’t get it.

The Last Bailout … and the Next


Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.

The Fed has said it had “no credit losses” on any of the emergency programs, and a report by Federal Reserve Bank of New York staffers in February said the central bank netted $13 billion in interest and fee income from the programs from August 2007 through December 2009.

It wasn’t just US banks; foreign banks got tens of billions in this secret TARP deal. The revealing thing for me is not how much the banks got — I suspected the number was in this ballpark. It’s just how scarily close we came to a complete system meltdown.

What really gets me, however, is how little responsibility has been taken for the banking collapse. Yeah, I know — it was all CRA, ACORN and the government forcing banks to lend money to poor people. But it wasn’t poor people who created credit default swaps. It wasn’t the CRA that made banks stupidly (and often fraudulently) pack mortgages into investment vehicles and sell them to each other. The massive leveraging our bank system was not ACORN’s idea. The bankers can take all the credit they want for those “innovations”. Isn’t someone going to go to jail for this mess? The S&L bailout cost a lot of money too, but at least the crooks went to jail.

In the meantime, we can rest easy knowing that this sort of debt bubble will never … what was that?

This chart looks like a mistake, but it’s correct. Student loan debt has grown by 511% [between 1999 and 2011]. In the first quarter of 1999, just $90 billion in student loans were outstanding. As of the second quarter of 2011, that balance had ballooned to $550 billion.

Obviously the number of students didn’t grow by 511%. So why are education loans growing so rapidly? One reason could be availability. The government’s backing lets credit to students flow very freely. And as the article from yesterday noted, universities are raising tuition aggressively since students are willing to pay more through those loans.

Ah, yes. Now this is one we can blame on liberal interests and politicians. They have been pushing harder and harder on the education bubble. And many want to make it worse with direct federal loans (call it Fannie Ed) or “forgiveness” of loans if someone enters a politically-correct industry.

Hang on to you wallets, guys. It’s going to get worse before it gets better.