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Arthur Thomas's picture


on Thu, 05/03/2012 - 13:48

A recent article on the CNN website had this:

“This week President Obama did a swing through some college campuses talking about student loan debt. The immediate issue is the 3.4% interest rate on federal student loans. It's set to double July 1 unless Congress acts. Keeping the rate low in this still weak economy is, as the president said, a no-brainer. Even his opponent Mitt Romney has endorsed it.”

"no-brainer" is a thought terminating cliche. It is what people say so they don’t have to explain something and not because it is so obvious. Our government has been working off “no-brainer” policies for decades. It is time to put brains back into government.

This is more status quo ignorance from both sides. What happens when you pump easy access money into a market?  More people use the money obviously (this is what the central planners want and like), but also more institutions come to take the money and prices go up as institutions grow and demand grows. The problem with what the central planners want is that they are inflating one side of the market. They are inflating a system that may be pumping out people with degrees but there is no demand for it.  The other side effects, like increased costs through loan debt, are a huge burden on people who the market will not support.  This is why you see people with signs saying they want the government to ‘forgive’ their $80,000 in loan debt. They cannot get a job from the market that agrees with their decision to take the debt on. Is that your fault?

All this pumped in money floating around in the system is the reason for the cheap and low value degrees that the central planners also complain about. What did they expect to happen? Companies always find a way to suck up easy to access government money. Especially money guaranteed and backed up by a government promise with little risk. A free market regulates availability of resource, not to be discriminatory to anyone, but because of rational limits of those resources.

Was there an expectation that more students would come out with amazing degrees and find jobs immediately? Where do these jobs come from? Why do these planners not think of the cycle where private money comes from and how it is supported in a market. Companies spend money when they are successful and grow. New companies also start. This creates value and wealth. This value translates into money which is not value itself but a medium of value exchange. One way it moves around is through banks. As an economy is successful (good business environment) then it creates more money for loan availability that banks are willing to risk. It puts a reasonable cap on the availability of loan money and how much risk should be out at any particular time. This is also controlled by interest rates. The students then compete for the loan money. As risk of loan repayment goes up so do interest rates which slows down the loan market. This means that the best and brightest get the money because they will be the successful ones. In turn, for the degrees they earn, they will find jobs in a market that created the opportunity in the first place. When the market is ready to absorb more people the risk will go down with the interest rates. Students will be discouraged from degrees that the market will not support. This doesn't mean they cannot get them, but they will not be punished by a false hope. Central planners think they can take one aspect of this great cycle of resource control and dump money on it and make the whole better. They are ignorant of the systemic processes going on.  I have only given a simplistic view of interactions here but even this seems to be beyond the people created an education bubble that will punish people for generations.

I would also like to point out any detractors that this free market system would be a detriment to knowledge itself. Knowledge and the appreciation of learning should be celebrated by all and not limited to those with degrees. We have vast resources for learning and gaining knowledge without it being tied to a degree. A degree is a level of certification that is more applicable to a market than a general scope of learning for the sake of gaining wisdom and understanding. Loans and their availability never restrict what someone can learn on their own. Only corrupt government can attempt to restrict knowledge.

Good intentions are great, but not realizing the effects of them leads to a pathway to hell. That is exactly where these students are with all this debt. Many end up working jobs they would have without degrees anyway. Allowing these loans to default or 'forgiving' them would be equivalent to giving away our which would be an even greater irony. It would be robbing the market of money it could use to grow and employee people. That money would go to a bank that took no risk and will continue to do so as long as the government allows. Basically in that scenario we would just be feeding back our money.

Instead of

Arthur Thomas's picture

Government Students

on Wed, 11/09/2011 - 16:21

In a recent CATO article they point out how Michelle Obama right about the idea of personal responsibility but wrong about the reality of it. The Obamas do not seem to see that while people should be responsible and are the ones held accountable for their own life, people are only hindered when others are making decisions on their behalf.

Until we have real school choice in Texas then parents will never be fully responsible for children's educations and what goes into their minds. Parents need to stand up for a choice in being responsible for their kids development or decide if they are just having kids for the government.

It time for Texas to take it schools back and for parents to take back responsibility for their children's education.

Lynn and Roger Bloxham's picture

Public Schools: A System Too Big to be Salvaged

on Mon, 10/10/2011 - 14:52

While libertarians have many arguments against the core assumption that the state should determine how ones child is educated, something bigger has developed. The giant dinosaurs is now  past the point where its brain is big enough for its size.  The writing is on the wall for Internet and small personalized groups, all variations of home schooling and puts the responsibility back in the parent's lap. Exactly where it should have always remained.

Pulling so much power to the federal level, while consolidating more and more smaller schools into huge ones, may look good on the surface, but they have created a bureaucracy of huge proportions. Now this behemoth is unresponsive to the local administrations, dedicated teachers, concerned parents and worse, the student's obvious problems. The justification of consolidation was given that the larger entities provide greater opportunities. In reality there  are many avenues for children to get many opportunities and experiences and reap the benefits of the larger geographical area without the full time responsibilities of a huge enterprise funded by the taxpayer.

Though these monstrosities are unequivocally dysfunctional, those who desire a nationally controlled top down system, are ginning up the rhetoric against anything that changes the public education dynamic. They are positioning smaller neighborhood schools as racist. However, that is the direction things are edging toward anyway, and has nothing whatsoever to do with racism. Rather the return to smaller scale and more parental assumption of parental responsibility reflects the realities of cost, safety, administration difficulties, public sector unions and most important, obvious educational failures. The enormous impact and influence of Internet support for learning cannot be discounted. Soon parents will realize the huge school with a rigid schedule is simply not needed nor practical.

Lynn and Roger Bloxham's picture

Market driven education: A Better Idea

on Wed, 07/27/2011 - 00:06

I frequently am sent commentary from the anti free market crowd to prove how cruel the market is and why some form of collectivism is so much better.  The most recent article was from a group called "Truthout" which seems to be a run away favorite with the Democrats.  It  extolled the virtues of "free" public education and  the terrible horrors of decreased funding for public education.  This particular screed by the Truthout group, extolled the value and, most important, the very  necessity of public /government/political education. It was  a classic  example of  the narrow and limited thinking of the majority of the Democrats and even many Republicans.  

This insistence on retaining a bloated, clumsy, inefficient, corrupt and failed manner of education, is reminiscent of the people with whom I became acquainted in the 60's from the Soviet Union. These visitors to America were allowed to come over as exchange teachers. Of course a member of the family had to stay there to be certain they did not defect. We had many interesting conversations about economics and politics. There was no "Libertarian Party" politically, but libertarians were discussing, debating, writing and excited about philosophical, political and economic issues, so having an opportunity to meet and speak with people living in the Soviet Union was an interesting opportunity.
Although these visitors usually hated their fear-based government, nevertheless they could not conceive of any way to have food unless the government provided it. As inefficient as their government was  in providing food and handling distribution, they simply could not grasp any other means of food production and allocation except in a top down, government-directed manner  until they saw it with their own eyes. The abundance and plenty in the three grocery stores in our small college town was utterly astounding to them. 
Even then, several still could not fully comprehend that no one governmental bureau was directing every step in the process from the top. They would insist that  here in this country we had, somehow, figured out how to have a more honest and efficient bureaucracy than the Soviet government. 
Grasping the concept of millions of decisions and choices, all coming together to provide the bounty on our grocery shelves is, indeed,  almost miraculous. This same perception exists now for many areas where government has become the regulator and decision maker.  In education the free flow of price information and voluntary exchange would result in more choices and a greater emphasis on student success.  This multiplicity of schools and types of schools, is almost beyond the comprehension for many people. 
Imagining the results of a market system by removing the  shackles of the chains of government bureaucracy,  is extremely difficult for anyone indoctrinated with the top down model.