To hear the political advocates talk about it, you’d think the
economy had a sadistic grudge against twenty-somethings, torturing
them with spiking college prices, burning housing markets, and
crushing health care costs.
We’ve got “the worst of all worlds” for young adults, declared
the moderator at a recent New America Foundation forum. “Problems
in the labor market, enormous problems with paying for education,
and a level of economic risk that previous generations really
didn’t encounter.”
“Higher degrees mean higher salaries,” intoned American
University graduate student Sui Lang Panoke in a July lament in the
Washington Post. “But…it seems that graduate-level
education is open only to the select few who can afford it.”
Surrounded by such injustice, only one thing seems to console
oppressed young adults: their conviction that if government would
just try hard enough, it could set everything right.
Panoke, for instance, suggested that “a federal need-based grant
program for graduate students” could make graduate school more
affordable. Similarly, a “briefing kit” on “the economic challenges
facing young adults” from the left-leaning think tank Demos
proposes, among other things, more generous federal aid for low-
and moderate-income college students, and a dollar-for-dollar tax
credit on down payments for first-time homebuyers who earn less
than $50,000 a year.
At first glance, these proposals might sound reasonable; a lot
of important purchases are expensive in our economy, so government
should help the young pay their bills. But the problem isn’t that
the economy somehow spawned these problems out of nothing, or out
of some kind of cosmic spite against youth. In reality, government
interference in the economy — exactly the kind of interference
Demos, Panoke, and others wish to increase — is the culprit.
Look at college costs, a lightning rod for lamentations,
especially with the start of a new school year upon us. According
to data from the College Board, over the past 20 years,
inflation-adjusted charges for tuition, fees, room, and board rose
roughly 80 percent at four-year institutions. But aid per
full-time-equivalent student — the majority of which came through
government — rose 163 percent. Any question what enabled college
prices to rise so high?
Comparable dynamics have been at work in the housing market.
Mortgage tax deductions, for instance, have induced people to
demand more — and more expensive — houses than they otherwise
would, thus driving up prices. Similarly, while rent controls have
kept apartments cheap in many cities that are attractive to young
adults, it has also limited the overall supply of rental housing
and made non-rent controlled apartments extremely expensive.
Finally, there is the famously skyrocketing cost of health care.
Its cause is no mystery. According to the Centers for Medicare and
Medicaid Services, in 2002 nearly 46 percent of personal health
care expenditures were covered by the government, and after
insurance only about 14 percent were covered directly by patients.
That’s right: the people demanding the treatments picked up only 14
cents of every dollar spent on them. So long, economizing!
Generation X and Y spokespersons probably understand what’s
going on: when government subsidizes purchases, prices go up. So
why do they insist on blaming the economy for young adults’ woes
rather than the government policies — and the baby boomer parents
— that created them? Because twenty- and thirty-somethings want
the same subsidies their parents got.
Unfortunately, politicians are hungry for new constituents, and
they seem prepared to meet the demands of the young. Indeed, only a
few weeks ago the Democratic Leadership Council introduced the
American Dream Initiative, proposing that the federal government
spend $150 billion over ten years to entice states to keep college
prices down (read: dump their costs onto state taxpayers), and
create a $3,000 tax credit for post-secondary training. The
initiative also promises universal health care for children — a
boon for young parents — and lower patient costs for prescription
drugs.
Twenty-something activists, of course, want all of these
benefits. But to get them, they have to blame the economy, not the
government, for their troubles. Otherwise, at the very least they’d
eventually have to explain to their own children why they knowingly
saddled them with burdens even bigger than their own.
