Quick Debate Thoughts

I am exhausted by my rage, both over the last post, and the debate.  Here are my initial reactions:

McCain
He knew the notes (tax cuts, free trade) but when it comes to defending freedom, the music isn't that beautiful.  This is not surprising considering, with the exception of his support for free trade, he hasn't demonstrated any deep affinity for freedom.

Obama
I really believe he is a socialist.  There is just no way he is pandering, because there is no way the body politic has shifted this far to the left. He demonstrated an enthusiasm for:
-  Supporting dieing inefficient industries and engaging in trade wars with countries which can provide to us for less the goods those industries produce
-  Choosing which industry "should be the driver of our economy for the next century" and using taxpayer dollars to support that industry
-  Denying domestic consumers access to cheaper foreign goods to protect uncompetitive domestic labor
-  Requiring national service from all children aged 11 to 18
-  Increasing taxes on the most productive 5% while reducing taxes on the rest in order to facilitate "spreading the wealth"

Considering that he is as far in the lead as he has been, and his rhetoric is as hostile to freedom as ever, I am pretty scared for what he might do without opposition in congress.

Comments

[CRose]

I like your last post on the police union action Christian - couldn't agree more.

However, I don't think Obama is proposing compulsory service for all children 11-18. In fact, I believe you are referring to his proposal to link service to federal financial aid dollars - which is admittedly problematic on its own, albeit for more subtle reasons. Josh Goldberg, an Op-Ed columnist for the LA Times, wrote an Op-Ed in opposition to this proposal back in July. He makes some interesting points in the column, the most interesting is the way in which he compares the proposal to slavery.

I think you'll like it -
http://www.latimes.com/news/opinion/la-oe-goldberg8-2008jul08,0,368008.column

I don't agree with him on many of the points he makes in this article, or all of his justifications for why this proposal is similar to slavery...however, I definitely see where he is going.

My take is that we can probably all agree about how crucial higher education is when trying to break through one income bracket to another. Over an adults lifetime a high school graduate can expect, on average, to earn $1.2 million; those with a bachelor's degree, $2.1 million; and people with a master's degree, $2.5 million. It benefits indviduals, as well as our economy as a whole, to have a well educated public. However, the price of college has risen faster than inflation for several decades and thus the poorest in this country sruggle to find ways to finance college and affordable education moves farther and father away from them each year. In the meantime the federal government has fallen behind on needs based aid and the poor often drop out of school because they become saddled with too many loans to continue - a double whammy because they graduate without increased earning potential and with accumulated debt. So Goldberg's point - that there are limited financial aid dollars and that to then to further attach them to service mimicks slavery for the poorest - is well taken.

On the flipside Obama's underlying goals - get kids involved in their community and help them get to college at the same time - are laudable. I certainly hope he is proposing this as a NEW aid program, rather than attaching it to the piddly crap that is already available. Furthermore, one could argue that if we (the taxpayers) are going to help the poor (the non-taxpayers) to get to college then we might as well get an immediate return on our investment in the form of community volunteer work. Right? But maybe you are opposed to federal financial aid in principle...not sure.

[Christian McClellan]

I heard the comment about “every student, every year, in exchange for some form of community service, whether it’s military service, whether it’s Peace Corps, whether it’s working in a community” and then went to his website to read:

Obama and Biden will set a goal that all middle and high school students do 50 hours of community service a year.

Looking back it seems as though I am conflating two programs, but I see serious problems with each.

First, with respect to the tuition assistance vis a vis rising costs of undergraduate education. These subsidies have the unintended consequence of driving up the cost of education. For those who are college apt but truly can’t find funding, a private market could do much better, although I think innovations could improve it. Just as any business who can put physical capital to a really productive use can find funding from investors interested in a return – so too should students who can put human capital to a productive use. Imagine a world in which private investors sponsor liquidity challenged but promising students for a share of their after school income.

However, I think it is fallacious to observe results among those who attend university, and reason that we need to send more people so more people can have those results. I bet the returns to schooling you site are diluted by those who wouldn’t otherwise go to university and therefore get fewer benefits (in other words, those who choose to go without government encouragements do so because they stand to gain enough to outweigh the costs). That we have decided a four year bachelor track is the right path for everyone is emblematic of the broader lack of flexibility nationalized schooling has brought about. Maybe if we had more technical and vocational education the manufacturing middle class politicians romanticize could begin to flourish.

Second, with respect to service, Jonah is a contributor to Reason and I think his points are all well formed. Part of this is a disagreement in principle, but I should further explain so we can get to the point. My views on the donation of time and effort are analogous to my views on charity more generally. It is laudable to want to help the poor, or to help ones community, it just doesn’t justify coercion or government involvement. Just like with monetary charity, I believe the government tends to crowd out private generosity. I agree with Obama we should care for our fellow citizens and want to insulate them from hardship to a degree, I just think it is our job, not the government’s job. Just like I believe private charity can be more responsive and more resistant to political influence, I believe private service is superior for the same reasons.

Finally, with regard to intention, I disagree with your favorable assessment of Obama’s goals. While McCain’s service in the military was relatively apolitical, Obama’s service (community activism) was intensely political. Additionally, as I understand them, Ayers’ views on education with which Obama agrees, involve the teaching of activism within schools. This is the manifestation of the political influence I mention above. If you define political activity as community service, and make community service compulsory, whichever party is in power may use our children to attempt to advance their goals and extend their influence.

[CRose]

"Imagine a world in which private investors sponsor liquidity challenged but promising students for a share of their after school income."

Couldn't you argue that by "subsidizing" the education of poor students through government sponsored financial aid we, as the taxpayers, are in the end essentially getting a share of their after school income? We directly benefit from their increased purchasing power as a result of higher education. And they are likely to become tax payers - rather than sit in a low tax bracket that doesn't pay taxes, but is likely to use the social programs that taxes pay for. If you go to college you are less likely to go on welfare - so someone who is college educated is less likely to take taxpayer dollars in the form of social programming after school.

[Christian McClellan]

I think you mistake financing and subsidizing. When government assists with loans, it is financing the students’ acquisition of productive (human) capital just as a bank who loans a baker money for a new oven is financing the purchase of productive (physical) capital. As Friedman discusses in the link you site, a government role is justified (if it is justified at all) because there exist structural difficulties to private financing. The private institutions I envision, or the government role which might be justified, only addresses the financing problem, but does not encourage those who otherwise would not acquire the capital to do so (distort the market).

With respect to justifying the subsidy with an appeal to public good, the argument you employ falls victim to an error too common on the left: that all goods, or at least all goods for the poor, are public goods.

We certainly don't benefit directly from their increased purchasing power, they do. If I were to give you a hundred dollars you would get the direct benefit (purchasing power). If you turned around and spent it on goods or services I provide, it would be the most direct of indirect benefits. Yet still, my benefit would be reduced by the costs of any inputs (including my time) and the taxes taken. If we run the same $100 purchasing power program through a government agency, it is further reduced by its administrative costs. If I pay for $100 of your schooling, it is further affected by uncertainty of your outcome.

Your second public good to justify subsidy to education is the reduced burden on welfare rolls. It is negated by the fact that government will always find an alternative use for the money (I have never heard of a budget surplus being returned in the proportion it was taken). Setting this aside, imagine instead of government welfare, courts looked the other way while Robin Hood(s) took from the rich and gave to the poor (do it yourself welfare if you will). The argument would be that we should pay to enhance the productivity of some so we are not robbed in the future.

This discussion exposes the moral hazard of generous welfare in the first place. If someone is sufficiently educated to benefit from college level education, we should respect their choice not to seek that education in the first place (if they want to go but can't finance it, that is different, see above), and in the second, should not subsidize their high school graduate wage if they make that choice.

Here I think Coolidge’s quote is applicable. If you are unable to provide for yourself because of inherent disability, the government can care for you (although for reasons cited, I prefer private charity). If you are able to care for yourself, your choice between leisure and consumption, instant gratification and delayed return, etc., is your own. Whatever your choice, their can be no subsidy. Such a subsidy would be a direct inducement to inefficiency and fruitlessness, clearly no benefit to society.

[Christian McClellan]

To be clear, as that was long and at times tangential.

To the extent anyone wants to invest in their own human capital, they should not "struggle to find ways to finance college". If the education provides benefits that sufficiently exceed the cost, it is a sound investment and should be undertaken. The only government role is to ensure these investments are financed if market failure prevents private market funding.

"Affordable education mov[ing] farther and father away" and "needs based aid" are non sequitors. The cost rising faster than inflation is irrelevant, as you demonstrate the net benefit far outweighs the cost and as Cato points out, government subsidy encourages this growing cost.

The example of someone dropping out due to too much debt is particularly interesting. Nobody would drop out for too much debt if further financing is available, as attaining the degree and accompanying higher wage is the best way to address the debt problem. If financing dries up, it is puzzling as whoever financed the first three years has a better chance of recovering their investment through financing the additional year. The case is analogous to a building taken to 75% completion and left unfinished - such low hanging fruit is rarely left unpicked.