Like healthcare, education is a sclerotic, overexpensive, underperforming industry. Both have strong parallels: they’re dominated by government subsidies and controls, though not entirely socialized; they’re perhaps the only growth industries in our moribund economy; and they dominate the thought life of the nation. As Arnold Kling and Nick Schulz pointed out in 2011:
These are our foremost growth sectors — the ones most central to employment and consumption; the ones that, increasingly, drive our economy. And it is in precisely these two sectors that the case for extensive government intervention and planning, if not outright control, is dominant — and becoming ever more so.
If there is to be any hope of reversing this trend, champions of market economics must come to see these two sectors as the front lines in the battle for capitalism. At stake is not only an ideological or theoretical point, but also American prosperity. The historical record makes this clear: In the nations where it was practiced, government control of the old commanding heights of the economy made those industries less efficient and less innovative — bringing overall economic performance down with them.
Today, Hillary Clinton is touting her plan for Obamacare-izing higher education. Competing Democratic presidential candidates Martin O’Malley and Bernie Sanders have already proposed essentially socializing college straight up. Clinton’s proposal, like Obamacare, is also collectivist and unjustified wealth redistribution, but with a more complicated, less direct, crony capitalist flavor. In other words, it’s not direct socialism, but it might as well be.
By mucking around this way, Clinton gains the benefit of deception: She can argue that “both the left and the right” (by “right,” she of course means the craziest of Republicans, not actual conservatives) have proposed elements of her plan. So she gets to smear her Frankenstein with pretty “bipartisan” makeup. And the average voter won’t care, because the average voter doesn’t give jack about enslaving his children (or other people’s children) to the unseen but growing monstrosity of federal debt, as long as he gets feel-goodies now, regardless of whether they actually benefit anyone. But it’s still a Frankenstein.
What Does Hillary Clinton Propose, Exactly?
Before we get into the mud-slinging, let’s do what most journalists do not and give some actual hard facts about Clinton’s proposal. (Do any of you also scan news articles looking for actual facts instead of paid spokespeople’s lying spin? It’s hard to find those, isn’t it?) The full proposal doesn’t seem available (probably so they can tweak its details in response to initial criticism); reporters have gotten “three fact sheets,” MSNBC says. Inside Higher Ed kindly posted them. A news summary of the major points:
- “Under the plan, which was outlined by Clinton advisers on Sunday, about $175 billion in grants would go to states that guarantee students would not have to take out loans to cover tuition at four-year public colleges and universities. In return for the money, states would have to end budget cuts to increase spending over time on higher education, while also working to slow the growth of tuition, thought the plan does not require states to cap it.” (NYT)
- “military veterans, lower-income students and those who complete a national service program, like AmeriCorps, would go to school for free in the Clinton plan” (AP).
- “She would also expand income-based repayment programs, allowing every student borrower to enroll in a plan that would cap their payments at 10 percent of their income with remaining debt forgiven after 20 years.” (AP)
- “Student borrowers would be expected to work at least 10 hours a week to contribute, while their families would continue contributing under the current income-based model. Clinton’s plan would also expand a tax credit from $1,000 to $2,500 for families paying for college.” (MSNBC)
- “Her campaign says she will create a dedicated fund for Historically Black Colleges and Universities, and will expand AmeriCorps from 75,000 to 250,000 members.” (MSNBC)
- “Mrs. Clinton would pay for the [supposedly $350 billion] plan by capping the value of itemized deductions that wealthy families can take on their tax returns.” (NYT)
So more income redistribution and more federal micromanagement—because, clearly, central planners know better how to manage college costs than colleges and families. Topped off, of course, by (what else?) playing self-appointed Robin Hood against people who earn lots less money than she does. Envy and greed are our society’s favorite sins, after all.
Federal Meddling Is the Problem, Not the Answer
The most expensive portion of Clinton’s proposal involves bullying states into following federal marching orders in order for them to receive cash the feds scooped from taxpayers.
“We haven’t dealt with crux of the problem: How do we actually stem the cost curve?” an unnamed Clinton campaign official told Politico. If federal lawmakers and bureaucrats knew that and weren’t players in our broken political circus beholden to special interests, believe me, baby, they would have done it already. Reducing college costs would memorialize a politician for eternity. But all the good ideas, the ones research suggests (like getting the feds out of education), are political nonstarters. In other words, there ain’t nothing politicians can do to fix this sucker.
Let’s breeze through why this is. In the first place, research has shown two major drivers for college costs that directly result from federal meddling. The first is that spending other people’s money makes colleges and students more reckless with it. We call this “moral hazard,” and it’s one reason forcible wealth distribution doesn’t actually benefit individuals or society. A recent Federal Reserve study showing college tuition increases 55 to 65 cents for every dollar in federal “aid” is only the latest to demonstrate this reality.
Another exhibit of this reality is that colleges accept students who simply are not prepared for actual college work. They do this because kids can get taxpayers’ money for college with little to no proof they deserve the money by having produced an exemplary academic record. Once they enter college, these kids realize they’re not prepared, and drop out, leaving them with debt and wasted time and the college with taxpayers’ money. As one of Clinton’s fact sheets notes, “At 4-year public colleges, more than four out of every ten students do not graduate within six years. The statistics are even more depressing for 2-year institutions.”
This is atrocious. Kids’ ACT and SAT scores, as well as their high-school grades, can predict their likelihood of college success long before they enter the doors. Colleges ignore this evidence, lowering admissions standards because they profit from screwing kids. Clinton’s plan would increase this by giving colleges more money for enrolling more low-income and minority kids, whose academic records are on average of worse quality (we can debate whose fault that is, but that’s the simple reality). Far better would be to telegraph to young people long ahead of time that hard work throughout school is required to get into and graduate from college. That’s an incentive. Free money for candy-ass work is not. Taxpayers should not be forced to pay for failure.
Second, the federal government is for some unfathomable reason deeply involved in determining whether colleges can stay in business by overseeing college accreditation, upon which depends a college’s ability to accept federal student subsidies. The direct result of this has been a massive increase in costly, paper-pushing college administrators in the past several decades. Politicians like Scott Walker like to complain about tenured professors getting high pay for little work, and that does happen, but at least an equal if not worse problem is the rise in the bureaucrat class that exists to satisfy ineffective, politically correct, and counterproductive federal mandates, such as those stemming from Title IX.
Hillary Clinton’s Plan Will Make Higher Education Worse
Hillary Clinton’s higher education plan demonstrates a massive misunderstanding about both the causes and the solutions to higher-education’s price bubble. Start with this statement, from one of Clinton’s fact sheets: “Too little has been done to address the lack of accountability for colleges and universities that do not deliver on the promise of a degree.”
Think about that everpresent education weasel word, “accountability.” To whom should colleges be accountable for delivering a good education? Clinton’s proposal assumes it should be to the collective, represented, of course, by the federal government. No. Colleges should be accountable to their students. These are the young people shelling out time and money for what they hope will benefit them. Yes, a college education can benefit society, but its prime benefits accrue to the individual, as Clinton’s fact sheet even underlines, noting that college grads, on average, earn $570,000 more in their lifetimes than do high-school grads.
Milton Friedman made this point in his seminal essay,”The Role of Government in Education“: “vocational or professional education has no neighborhood effects of the kind attributed above to general education. It is a form of investment in human capital precisely analogous to investment in machinery, buildings, or other forms of nonhuman capital. Its function is to raise the economic productivity of the human being. If it does so, the individual is rewarded in a free enterprise society by receiving a higher return for his services than he would otherwise be able to command.” His broader argument, throughout the paper, is that it is unjust to force taxpayers to subsidize training destined to increase individuals’ take-home pay.
Public education should focus on citizenship, not job training, he says because we all benefit from having virtuous neighbors but we do not all benefit as directly when our neighbors earn more money. (Okay, so that person will pay higher taxes; but accepting this argument assumes that people’s economic potential belongs to government, a proposition I flat-out reject but don’t have space to go into here.) The people directly benefiting from higher incomes that may come from job training should bear the cost of that training themselves. That’s only fair. If government forces everyone to pay for job training, more people who are not good candidates for it will pursue it anyway because they’re not paying the bill. This ultimately drives down the quality of the training and forces everyone to pay for other people’s bad decisions.
That’s precisely what Clinton’s plan, and our current higher-education system, do. College is a bit like the lottery. Kids for whom it’s a good risk really make bank: they get the degree and a higher lifetime income. Kids for whom it’s not really get screwed: they come out with crushing debt and often no degree. The problem with these “free college” plans or their Republican incarnation as tuition welfare is that they assume everyone will benefit equally from a college education. This simply isn’t true. Different people have different aptitudes and interests. So what socialized college amounts to is a tax on the poor to subsidize the rich.
Clinton’s plan skirts right around this contradiction. It points out that college grads have higher lifetime incomes, then ignores the obvious conclusion: If college is such a great, equal income-booster, why do people who go to college deserve even more money taken from the public at large, the majority of which do not have a four-year degree? This is taking from the poor to give to the rich, cleverly disguised as the opposite with Clinton’s (laughable) plan to pay for her machinations by reducing tax deductions for Americans above an arbitrary income threshold.
If we really want to help the poor and give all Americans equal opportunities to better themselves, we will not meddle with the diverse arrangements they can much more capably make for their own well-being. We will trust families and young people to know how to make the most of their strengths far better than politicians who pretend to have sympathy for them but can’t even describe, let alone address, their unique situations. We will stop colonializing the minds of folks for whom college is not a good option with the elitist insistence that it is the only path to personal fulfillment, the great white economic hope for everyone. And we will remedy rather than reinforce the true barriers to the middle class: minimum-wage laws, overregulation, terrible public schools, a welfare system that incentivizes family chaos, and the voracious administrative state.