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Friday, April 15, 2011

It’s Time for Big Ed to Go

"These socialist writers look upon people in the same manner that the gardener views his trees. Just as the gardener capriciously shapes the trees into pyramids, parasols, cubes, vases, fans, and other forms, just so does the socialist writer whimsically shape human beings into groups, series, centers, sub-centers, honeycombs, labor-corps, and other variations. And just as the gardener needs axes, pruning hooks, saws, and shears to shape his trees, just so does the socialist writer need the force that he can find only in law to shape human beings. For this purpose, he devises tariff laws, relief laws, and school laws." — Frederic Bastiat, The Law

On Wednesday President Obama gave his much touted campaign speech on the budget. He talked about cutting defense and rising taxes on the wealthy. He spoke of not allowing children with autism or Down syndrome go untreated. And of course he touted his favorite spending program, investing in education. He believes all youth deserve a college education and he wants to increase spending on K-12 education.

To do this Obama has requested $125 billion for the Department of Education. This is a 18 billion or 17% increase over the 2010 budget of $107 billion for the third largest department in the federal government behind Defense and Health and Human Services. If you extrapolate Obama’s numbers for the next ten years you would get $1.25 trillion with no adjustments for inflation or additional budget increases.

What do we get for this money? We get an overblown bureaucracy that provides jobs for progressives, leftist and union layabouts. The Department of Education, or Big Ed, has educated no one since its inception in 1980. Its first budget was $14 billion and it has grown a twice the inflation rate since then. And you know what, on $0.13 of every dollar of Big Ed’s budget goes to local schools. For that $0.13 local schools get a ton of regulations and rules for running their schools. So you have on bloated bureaucracy on top of another bloated bureaucracy providing jobs for progressives, leftist and union layabouts. All the while our test scores have remained flat and in many districts they have dropped. And it it’s not only a matter of test scores when you have a 50% dropout rate in the urban areas and these studsents don’t even take the tests.

WE spend 2 to 3 times more on education than most of the developed nations of the world and we rank 28th in subjects like math and science, let alone our history, geography, economics, our legal system and Constitution. I would like to see a graph with the vertical axis (Y) representing dollars spent and the horizontal axis (X) representing test scores. I am sure you would see a steep and constant increase in the Y values while the X values remain flat or even dip.

The Department of Education operates a range of subsidy programs for elementary and secondary schools. That aid is matched by rising federal regulatory control over the schools, but federal intervention has not generally lifted academic achievement. The department also provides subsidies to higher education through student loans and grants. Unfortunately, that aid has fueled inflation in college tuition and is subject to widespread abuse.

Big Ed spent $107 billion in 2010, or about $900 for every U.S. household. It employs 4,100 workers and operates 169 different subsidy programs.

Federal grants and loans for college and university students have contributed to soaring inflation in tuition costs. Student grant and loan programs have also been subject to high levels of fraud and abuse.

Stephen Green of claims he attended journalism school at the University of Missouri, a state school, some twenty years ago. He paid $1,100 per semester for books and classes or $2,200 a year. For his four-year degree he paid a total of just under $9,000 dollars excluding room and board. Today the same education will cost $70,000. This is just one example of the education “bubble” created by Big Ed.

Peter Thiel, the founder of PayPal and a dot com entrepreneur writes about the “education bubble”. He states; ““A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

“Like the housing bubble, the education bubble is about security andcollege insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.” “Like any good bubble, this belief — while rooted in truth — gets pushed to unhealthy levels.”

“The idea that attending Harvard is all about learning? Yeah. No one pays a quarter of a million dollars just to read Chaucer. The implicit promise is that you work hard to get there, and then you are set for life. It can lead to an unhealthy sense of entitlement. “It’s what you’ve been told all your life, and it’s how schools rationalize a quarter of a million dollars in debt,” Thiel says.

Thiel isn’t totally alone in the first part of his education bubble assertion. It used to be a given that a college education was always worth the investment– even if you had to take out student loans to get one. But over the last year, as unemployment hovers around double digits, the cost of universities soars and kids graduate and move back home with their parents, the once-heretical question of whether education is worth the exorbitant price has started to be re-examined even by the most hard-core members of American intelligentsia.

So who is to blame for this bubble in education? Like Fannie Mae and Freddie Mac bear most of the blame for the housing bubble and its subsequent collapse Big Ed has to tale the full blame for sky rocketing costs in education. As Big Ed doled out billions of taxpayer dollars the colleges and university, like the reckless home owners, held out their hands and raised tuitions and other costs as high as they could. This allowed them to build those new buildings and hire thousands of progressive, leftist and layabout useless professors. It is a government funded education gravy train.

There are numerous problems with federal subsidies for higher education. For one thing, such subsidies benefit people who will earn higher than average incomes during their careers. Thus, the effect of subsidy programs, in part, is to impose taxes on blue collar workers, who have not attended college, to pay for the tuition of future white-collar professionals. Why should the government subsidize future high earners at the expense of average working people?

Supporters of student aid subsidies argue that higher education is a “public good” that would be underprovided in a free market. However, that is probably not the case. People have a strong incentive to invest in their own education because it will lead to higher earnings. Those with a college degree will earn, on average, 75 percent more during their lifetime than those with just high-school degrees. That is a big incentive for people to save or borrow in private markets to pay for their own college costs. There is no “market failure” here.

Interestingly, the main effect of federal student aid programs may not be to transfer wealth from taxpayers to students as mentioned, but from taxpayers to academic institutions. That’s because the rise in student subsidies over the decades appears to have fueled inflation in education costs. Tuition and other college costs have soared as subsidies have risen.

Once upon a time not everyone went to college and those who did were willing to pay their way by working for the money for tuition, books and housing. This not only gave them a better sense of self, but a greater appreciation for their education and a greater work ethic while in college. After all it was their money and they wanted the best value for their dollars. They did not want to waste it on frivolous classes and protests.

There is nothing wrong with on-the-job training and apprenticeships This is how many Americans entered the job market and became productive citizens paying their way, buying homes and paying taxes.

As for K-12 education we have gone off the chart with Big Ed’s intervention. We have money going to support bad union protected teachers and regulations and programs more focused on the delivery system than the results. Any teacher worth his or hers salt could sit under a tree with a slate and chalk and teach students like Socrates did. In a way this is similar to an apprenticeship program — the delivery system vs. the Socracratic method.

Federal aid to students and higher educational institutions is harmful on many fronts. It drives up tuition costs, encourages bloat and inefficiency, and is an unfair burden on taxpayers. It also poses a threat to the core strengths of American higher education, including institutional autonomy, competition, and innovation. All efforts to impose top-down federal regulations on colleges and universities should be rejected, and federal subsidies to students and institutions should be phased out and eliminated.

For these reason I would like to see Big Ed go away.

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