Educational Redistribution

An economist, Dr. Richard Vedder, Ohio University Economics Professor, testified before Congress that federal spending on higher education is one of the primary causes of rising tuition costs, illustrating the principle known as the Law of Unintended Consequences.

Most people mistakenly believe that “federal aid” helps students keep up with rising tuition costs. This simply isn't the case. And Congressional good intentions are ill-advised.

Colleges used to have to keep tuition low in order to attract students. However, federal student aid makes this unnecessary by subsidizing the schools. This allows colleges to attract students whether or not the college makes itself affordable -- after all, your tax dollars will make up any difference. Poorer students get financial aid and wealthier students are able to handle the rising costs, but the middle class gets stuck with higher costs and huge debts.

In our market economy, the universal tendency -- virtually without exception -- has been for products to increase in quality, decrease in price, and steadily become more widely available to more people. However, it is no coincidence that the two areas of the economy where the government is most involved -- health care and education - are the two areas with the greatest price inflation. In both cases, the solution to runaway prices is not more central control and subsidy, but less.

The inflation-adjusted cost of college tuition today is just about triple that of the 1970s. The average tuition increase in 2005 was eight percent—down from the previous two years' double-digit hikes, but still daunting nonetheless. Since 2002, the average tuition rate is up 36 percent, while consumer prices rose less than nine percent. Tuition is rising substantially faster than family incomes, a trend that will cause many problems in the near future, not the least of which is “affordability.” What happens to the economy when affordibility prices most citizens out of the home market? What will happen to education achievement of nation as a whole, and our national economic future, when affordability prices out most students out of a secondary education - all because of government subsidy?

One of the reasons is simple: federal aid has increased in double-digit percentages for years.

As Vedder noted, "When someone else pays the bills, we become less sensitive to price." If tuition is $10,000 and the federal government pays $8,000, it won't be long before tuition is $18,000 and we'll just expect a larger scholarship next year.

As usual, the solution lies in limiting Congress’ role in "helping" to constitutional limits, which means no more "help" at all.

If you remember nothing else about a government subsidy of education:

• Without exception, a government subsidy of any commodity causes prices to rise.
• Because of exorbitant cost, many of the best and brightest in the “middle class” will be prevented from getting the education that would benefit Team America.
• Because of socialist ideology, an education will be given (as a form of income redistribution) to those classified as somehow disadvantaged, or members of arbitrary social classes designated as minorities.
• Those with wealth will pay whatever it takes.
• Those in the middle class who do obtain an education will have to mortgage their future in most cases with insurmountable levels of debt.
• Debt repayments reduce individual disposable income that otherwise would be spent on goods and services.
• Subsidy of education eliminates the need for suppliers of education to compete.
• The academic institution simply sets the “going rate” and the government pays with your tax dollars.
• Tax dollars withdrawn from the economy and channeled into education subsidies further reduces consumption expenditures for economic goods and services, reducing national economic demand.

When was the last time you heard of a state or the federal government lowering subsidies to public education?

Whatever the problem, Congress and state legislatures think more money for more programs and more subsidies for students will somehow magically provide a solution to the American crisis in educational achievement. And the crisis becomes worse.

The unintended national consequences of the redistribution of education, another form of income redistribution within the ideology of liberal socialism, will result in denying many of the best minds of America from receiving the education that Team America so desperately needs. How else are we to compete in the world market place of industry, technology and innovation?

If that were not enough, government subsidy of education will have a profound long term deleterious effect on the national economy proportional to tax dollars collected (and available to be redistributed).

As educational achievement goes, so goes America. On the current trajectory, “third-world” status is a foregone conclusion, and the intellect of the average American will finally descend to that of the average Congressman.

Red State Patriot

Posted September 25, 2005 03:17 PM
Read more on Economics and Business ~ Education