Subsidizing More College Students Won’t Help the U.S. Economy

By George Leef

Governments in the United States subsidize college education heavily. State universities charge students very low tuition rates, and the federal government has a host of grant and loan programs designed to make college affordable to most families. (As politicians make those programs more generous, schools have spent more and raised tuitions, thus creating an upward cost spiral—but that’s another story.)

One of the simplest of all economic lessons is that when government subsidizes something, more of it is produced than otherwise. That’s because subsidies upset the natural calculation of costs and benefits that people make. The subsidized thing becomes artificially more attractive to consumers; as they buy more of it, resources are drawn away from nonsubsidized things. Subsidies cause inefficiency.

In higher education, subsidies have led to a great surplus of young people going to college and a deterioration in academic standards. As higher education has expanded—at the end of World War II less than one high school graduate in ten enrolled in postsecondary education; now about 70 percent do—schools have increasingly drawn in weak and disengaged students. Rather than risk losing such students (and the money they bring in), many colleges have relaxed their admission standards, allowed or encouraged grade inflation, and dumbed down their curricula.

Nevertheless, some politicians and education leaders claim that the nation badly needs to “produce” still more college graduates. In a speech to Congress in February 2009 President Obama declared a national goal of having the world’s highest percentage of workers with college degrees by 2020. One of the nation’s major educational foundations, Lumina Foundation, proclaims that its mission is to get more students through college and maintains that the United States is falling behind other countries in its level of “educational attainment.”

That was the subject of a debate I participated in on February 26. Arguing for the resolution that the United States needs more college graduates to remain an economic power were former Secretary of Education Margaret Spellings and Michael Lomax, president of the United Negro College Fund. Ohio University economics professor Richard Vedder and I opposed it. If you care to watch the debate, which took about an hour and a half, you’ll find it here.

For those who prefer a synopsis, read on.

The affirmative debaters contended that college education:

* raises people’s incomes substantially; graduates on average earn nearly a million dollars more over their careers than nongraduates;

* provides people with the skills they need to succeed in “the knowledge economy”;

* opens up opportunities for people to advance, especially those from poor backgrounds; and

* will help America remain competitive with other nations.

Professor Vedder and I took issue with these claims.

First, we contended that the “earnings premium” argument is fallacious. Even though it’s true on average that people with college degrees earn more, that isn’t necessarily true at the margin. That people with college degrees (many of them earned decades ago when standards were higher) have high earnings on average tells us nothing about the next student who gets a degree. Since many people who obtain college degrees today wind up working in low-skill, low-paying jobs, there is no basis for the assumption that college education raises incomes.

Second, we argued that college coursework doesn’t automatically improve an individual’s skills and knowledge. Although some students benefit greatly from their studies, many others enter college with very poor capabilities and graduate with little or no improvement. Most employers aren’t looking for in-depth knowledge that only a college-educated individual could have; rather they are looking for good basic skills and trainability—and they complain that many students are lacking in that respect.

Third, we argued that having a college degree doesn’t necessarily open up any opportunities because bachelor’s degrees are so common now that having one is no distinction. Moreover, there are other and often more effective ways for people to advance than going to college. Many vocational paths are less costly and offer better long-term prospects than a college degree.

Fourth, we argued that since we already have a glut of college graduates in the labor force, adding to it does nothing to make the United States more competitive. Furthermore, there is no causal link between increasing numbers of people holding college degrees and the creation of high-skill, high-paying jobs.

Finally, we argued that putting more and more people through college exacerbates the problem of credential inflation—that is, employers’ insisting that applicants have college degrees to be considered for jobs that don’t require any academic training. Credential inflation already shuts out individuals who don’t have college degrees from many jobs they could easily do.

In response to our case against the resolution, the affirmative side said nothing.

Perhaps I should just leave the matter there, but there is more to be said against the idea of trying to increase college attendance and graduation through government action.

For one thing, the notion that the country would be better off if it put more people through college is cut from the same bolt of cloth as the notion that the country would be better off if it increased the percentage of people who own their own home. That is another noble-sounding idea that politicians tried to achieve through subsidies and manipulations. Eventually, it proved to be harmful to many individuals who were persuaded to take out mortgages they couldn’t pay off. Similarly, numerous young Americans are today struggling to make the payments on their college loan debt out of incomes far below what they were all but promised. Government planning schemes always have a lot of collateral damage.

For another, if we are serious about improving the productivity of the economy, a marginal increase in the percentage of workers with college credentials is a diversion from policies that would actually matter. Like what? Well, governments channel resources away from productive, competitively determined uses and into wasteful, politically determined uses. Governments’ innumerable laws and regulations interfere with efficiency, the minimum wage and occupational licensing being examples. And governments drive away investors and entrepreneurs with high taxes.

Many policy changes would increase the vitality of our economy. Pushing a few more young people through college is not one of them.

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Britain's toddler curriculum may be scrapped

A controversial Leftist “nappy curriculum” that requires children to hit a series of 69 targets by the age of five could be scrapped in its current form. "Nappy" is British for "diaper"

The Coalition will launch a review of the compulsory Early Years Foundation Stage today amid concerns it is too bureaucratic. It will consider whether to make the curriculum voluntary, giving some nurseries and childminders the freedom to opt-out altogether just two years after it was introduced.

The review – led by Dame Clare Tickell, chief executive of the charity Action for Children – could also lead to a dramatic reduction in the number of targets children are expected to meet following claims they prevent toddlers from developing naturally.

Currently, the framework covers areas such as dressing independently, personal hygiene, using modern technology and understanding other cultures. This is on top of other “early learning goals” covering literacy, numeracy, communication skills and problem solving.

Last night, the review was welcomed by independent school leaders who said the curriculum – which is compulsory in the state and private sector – promoted a “tick-box” culture. David Lyscom, chief executive of the Independent Schools Council, said: “It diverts teaching time from more constructive pursuits and has spawned an industry of local authority moderators. "The curriculum does not stretch higher achievers and restricts parental choice as to how they educate their children.”

Martin Bradley, chairman of the Montessori Schools Association, said: “The early years are now more regulated than any other area of the education system. This review is long overdue.”

Nick Gibb, the Schools Minister, has already described the framework as a “bureaucratic nightmare”. “We have to trust our professionals, not have these forms asking whether a child can tie its shoelaces [and] hold a rattle. Ludicrous,” he said.

The Early Years Foundation Stage has been a compulsory requirement for all nurseries, pre-schools and childminders since 2008. Currently, children must hit 69 targets before they start full-time education. This includes counting up to 10, reciting the alphabet, writing their own name and simple words and forming sentences using basic punctuation.

It also covers personal development, requiring children to “dress and undress independently and manage their own personal hygiene”, as well as understanding that “people have different needs, views cultures and beliefs that need to be treated with respect”.

The curriculum has been criticised for pushing children too far at a young age, undermining the amount of time they spend playing.

Today, Sarah Teather, the Children’s Minister, will set out a “root and branch” review of the framework. It will cover whether or not the curriculum should remain compulsory, as well as analysing the number of targets it covers.

The review will also assess whether it can be overhauled to focus more on children from the poorest backgrounds amid concerns they start school far behind those from middle-class families. Reforms are likely to lead to a reduction in paperwork surrounding the framework amid complaints that it is too bureaucratic.

It has already been blamed for fuelling a decline in the number of childminders in England. The number of registered childminders has dropped from 102,600 in the mid-90s to less than 57,000 this year.

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Australia: Labor government trying to stop school building waste at last

Better late than never. Julia Gillard has chosen the right guy in Simon. He is a true moderate and no fool. Pity he wasn't in charge from the get-go

AFTER 240 complaints about projects in the BER program, the new Education Minister has warned that funding could be withheld. So far, $75 million has been withheld from Building the Education Revolution projects in NSW.

New minister Simon Crean told The Australian 140 complaints had been received by the taskforce set up to investigate complaints about the BER. Another 100 complaints were made directly to the department, he said. Of the complaints, 150 were about projects in NSW, and in her last days as education minister Julia Gillard announced that she was withholding $75m from that state until problems were sorted out.

Mr Crean said 55 complaints were about projects in Victoria. There were fewer than 20 complaints about projects in Queensland. Problems in other states and territories were in single digits.

After months of complaints about waste in the program, the chairman of the BER implementation taskforce, Brad Orgill, wrote to Ms Gillard last month urging her not to make the $75m payment to NSW, which would have been the next tranche of BER funding to that state.

Mr Crean said he hoped that had sent a powerful message to other states. "The $75m is important . . . leverage to drive this argument of value for money," he said. "It sends an important message but it also completely rejects the notion that (we need to) freeze the totality of funds."

Mr Crean rejected opposition calls to halt spending on the program until the Orgill investigation was complete. "What do you say to the contractors and the workers that you put on hold, quite apart from breach of contract, which would open us up, I think, to a bit of litigation," he said.

After meeting with Mr Orgill, Mr Crean said he was confident that progress had been made and he did not need more powers. He said Mr Orgill did not ask for wider powers. "I think the powers are wide enough -- there's a catch-all there," Mr Crean said. "He can initiate inquiries. He has. I'm very impressed with the way he has gone out and done site visits."

Mr Crean said the BER program had been overwhelmingly effective and had provided value for money. He said there was absolutely no reason to hold up all the projects. "Why should you deny schools their entitlement where they've done the right thing?" Mr Crean asked. "I'm not saying those problems aren't of concern. They are, and we've got to try and address those concerns."

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