About a year ago Thomas Sowell posited "If the government gave every citizen $5,000 to buy a new car we would expect the price of cars to increase by a comensurate amount. Why has no one drawn the same conclusion from our two most heavily subsidized industries: Healthcare and Higher Education." Well, now we can add two other subsidy-based inflation bubbles to the mix: housing and commodities. The fact remains that subsidies are merely wealth transfers, and usually do more harm than good (I wonder if anyone's done a study on college as a Giffen good).
In that vain Andrew Gillen and Richard Vedder touched on the education topic in an interesting article here:
So what does increasing loans for students accomplish? Just put yourself in the shoes of a college administrator to find out. The 61 percent increase in inflation-adjusted federal loans over the last decade leaves virtually all their students capable of paying more in tuition. The schools can either raise tuition, using the additional money to help build a better (more prestigious) college , or could leave tuition unchanged in an inflation-adjusted sense. The decision they made is obvious from U.S. Department of Education data. Over the last 10 years, after adjusting for inflation, tuition is up 48% at public schools and 24% at private schools.
Will someone please relay my rants to the populist arm of the democratic party so we can make some honest policy decisions?
In other news, the new computer should be here soon. You can expect some more, higher-quality posts then.
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