Little fuss has been made about the Democratic presidential candidates’ views on higher education spending. The Higher Education and Lifetime Learning Act — proposed last year by Democrats Evan Bayh and Rahm Emanuel and now mired in Congressional committees with other pieces of political profligacy — is a helpful harbinger of their agenda.
Under the Act, an additional $1,000 tax break would be given to college students. Clinton and Obama strongly support these measures, even though the federal government already spends around $68 billion on education every year (more than inheritance and gift taxes put together), including close to $20 billion on post-secondary education.
Education is a “motherhood” area, like health, where sensible analysis is difficult and moral outrage is easy. After all, who doesn’t want our kids to get a good education?
But whether policies affect inquisitive “youth” or endearing children, public spending requires sober analysis. Such analysis, however, is generally not to the liking of the indiscriminately-caring, who like to foist the cost of their pet projects on others.
In fact, economic arguments for additional education spending are hard to make. Rather, a total withdrawal of federal subsidies and a tax on college students may be the best way forward.
THE OLD ARGUMENT for spending public money on education goes back to Adam Smith, who noted in 1776 that “the state derives no inconsiderable advantage from educating the common people.” Left to their own devices, people would not get enough schooling. Even Milton Friedman conceded that in a “stable and democratic society … a minimum degree of literacy and knowledge” might leave a role for government.
A literate, numerate, and civic-minded population will yield a public dividend of lower crime rates, enhanced democratic participation, and higher labor productivity. Indeed, since Smith’s time state subsidy and compulsion of education has helped pull the vast bulk of society from inert ignorance to 99 percent literacy in the U.S. today, up from around 50 percent at Independence.
However, private incentives to read and write have strengthened considerably since mandatory education was imposed in the U.S. in the mid-19th century, even among the poor. Back then, the state interfered with poor parents’ desire to send their skinny children to work. Today it is difficult to succeed at the supermarket, let alone find a job, without basic literacy.
I doubt whether all today’s “poor” parents would avoid educating their obese children if government did not insist, especially if income taxes extracted from the working classes were cut by an amount equal to total federal and state education spending, about $600 billion, or $13,000 annually for each of the poorest 40 percent of U.S. households — child or no child.
Nevertheless, for children of the very poor or very careless, state compulsion and provision of basic education remains necessary even today, if only to ensure the truly brilliant among us are not hampered by an unfortunate birth. Smith’s and Friedman’s arguments carry weight for primary and secondary education.
BUT DOES THE OLD public benefit argument apply equally to college education? In my experience, university students fall into two broad camps, the studious and the typical. The former go to increase their own earning potential and study diligently, often in vocational fields like law, medicine, engineering, or accounting. They don’t need any subsidy. The latter go to enjoy themselves and delay finding a job, often stumbling through alcohol-fueled semesters in search of the next party or conquest, and reading the occasional book on the side.
Maybe the studious deserve a subsidy for their determined efforts and higher future tax payments. But frankly, where is the public benefit of middle and upper-class children writing their desultory, unoriginal thoughts down twice a term, and drinking themselves silly for four years (and let’s not kid ourselves about the demographic whose children make up the bulk of typical college enrollments)? The only public dividend these students provide flows directly from alcohol and nightclub companies to private stockholders. Yet public money is poured into the education and maintenance of both.
But this analysis surely neglects the intangible benefits of a less vocational college experience. After all, college years offer the chance to become self-aware, to experience diversity and engage, to be empowered, and learn how to use a library. Can we value these benefits?
It’s difficult, but we can easily value the costs. Having the equivalent of Australia’s entire labor force, around 11 million American adults, idle on college campuses around the country, “studying” subjects of dubious vocational merit at public expense, results in significant waste.
The U.S.’s 146 million-strong labor force generates almost $8 trillion of income every year. We could theoretically increase U.S. annual income by up to $600 billion dollars (Australia’s approximate annual income) by transferring idle college students into the workforce.
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