Sorry, Bernie: Tuition Free ≠ Debt Free

With the 2016 New Hampshire Democratic Primary just around the corner and scores of college-aged voters up for grabs, affordable public college education has become a key selling point for Bernie Sanders. The Sanders plan to “Make College Tuition-Free and Debt-Free proposes offering free tuition at public colleges and universities, lowering interest rates on current and future student loans, meeting 100 percent of low-income students’ financial needs, and tripling the federal work-study program. As with most government handouts, the Sanders plan will likely cost more and deliver less than it promises.

Let’s start with the cost estimates for free public higher education. Virtually every advocate of free tuition references an article in The Atlantic from January 2014, which estimates the cost at roughly $62.6 billion. Sanders, factoring in his additional proposals, predicts closer to $75 billion. Two-thirds of his plan would be federally funded via new taxes on Wall Street speculators, with states contributing the remainder.

The problem with these calculations is that they are based on static projections for tuition costs. If this assumption proves faulty, the actual cost of implementing the Sanders plan will balloon. And there are three good reasons to expect an increase in tuition costs.

First, history suggests that tuition will continue to rise. Tuition rates have been gradually increasing over past decades, with students now paying 3.22 times more than in 1985 [See Figure 6, p. 18]. The Sanders plan will likely exasperate this trend because it will remove any incentive for public institutions to slow these increases.

Second, any reduction in current sources of revenue would likely require increases in tuition rates to cover the shortfall. For example, a large portion of public college budgets are governmentally funded through grants, tax benefits, and work-study programs. In 2014, state aid and local taxes cumulatively contributed $81.6 billion in these areas. Cuts to state or local budgets could result in less revenue for public colleges and universities, which would have to be offset by higher tuition rates.

Most public institutions also depend on revenue from hospitals, auxiliary enterprises, private gifts, investment income, and other educational activities. These sources contributed $80 billion—or one-third of total revenue—to public institutions (four-year, two-year, and less than two-year) in 2012. Although these programs are generally self-sustaining, the amount of revenue they generate is not guaranteed. Unexpected revenue deficits in these areas could also result in tuition hikes, costs ultimately saddled onto the taxpayer under the Sanders plan.

Third, the advent of free tuition will provide a powerful incentive for students to enroll in public colleges and universities. Whether motivating those who never before considered college to finally enroll, or incentivizing private college students to switch to the public sector, or a combination of both, the result will be the same—a significant increase in the cost of offering free tuition, well above estimates based on static enrollments in public institutions.

As faulty as Sander’ cost estimates appear, perhaps the more troubling aspect of his plan is its false promise of eliminating student loan debt. The cost of college attendance includes far more than just tuition. In fact, fully half of public college students’ expenditures remains room and board. The College Board reports the average published tuition rate for public four-year in-state students as $9,410, while the corresponding price of room and board is $10,138. Textbooks are another significant cost of attendance, with the average public undergraduate student paying $1,200 annually.

Admittedly, many public institution students attend a community college or commute, which minimizes room and board costs but does not eliminate them entirely. If only tuition is covered by government, students will still require loans to pay for their textbooks, room, and board, and many will remain weighed down with debt. While promising to provide a post-secondary panacea, Sanders merely increases government spending without lifting students’ financial burdens.

Before enacting a new federal entitlement, the American people deserve a more careful accounting of its costs. As currently written, the price tag of the Sanders plan is simply not as affordable as its proponents claim. College-aged voters would do well to look past the tirades against Wall Street speculators and demand more details—details such as exactly what services will be “free,” meticulous analysis of the plan’s financial assumptions, and specifics regarding how unexpected costs will be funded. They might be surprised to learn that the so-called free lunch they are being offered costs far more than suggested—and it doesn’t really taste that good, either.

– See more at: http://www.visionandvalues.org

Ouch: Watch Ted Cruz Perfectly Reveal Who Obama Is With Two Words

Asked during a presidential forum on Thursday to address critics who point out that he is, like Barack Obama, a first term U.S. senator with no foreign policy experience, Ted Cruz explained that he could do so in two ways.

The rising GOP primary candidate first noted that he finds it odd when reporters bring up his supposed similarity to Obama as though it is a negative.

“When the media asks, ‘Gosh, aren’t you like Barack Obama?’ My reaction to reports is, ‘I thought you thought that was a good thing,’” he said. “Last I checked he won two presidential elections.”

It was not Obama’s resume, Cruz said, that made him a bad commander in chief – it is the fact that he is an “unmitigated socialist.”

The line earned him some social media praise among fellow conservatives.

Cruz continued his answer to cover the “broader point” that there is one key characteristic behind the nation’s most transformative presidents. Over the last half century, he said, the “two moments that had the greatest impact on human liberty” were the elections of Ronald Reagan and Barack Obama.

He noted that, though they represented opposite ends of the freedom debate, they “shared one thing in common.” According to Cruz, both Reagan and Obama “believed profoundly in their principles [and] had they courage to fight for them.”

In order to correct the nation’s course, he concluded, “we need to nominate a candidate for president as committed to conservative principles as Barack Obama is to liberal principles.”

The Campaign Needs A Radical, But Sanders Isn’t It

We could use a radical in the presidential race — someone who really challenges the status quo — but Bernie Sanders isn’t it. Sanders of course calls himself a democratic socialist, but that tell us almost nothing. One gets the impression the socialist label was pinned on him and, after resisting it, decided socialist sounded romantic and embraced it.

Nevertheless, whether you like socialism or not, Sanders is not a socialist: he calls neither for nationalizing the means of production nor for replacing the market economy with central planning. Yet that is what socialism came to mean in the mid-20th century. Democratic socialism meant that socialism would be achieved through the ballot box.

It is worth noting that in late 19th- and early 20th-century America, socialism was an umbrella term that was also used by radical free-market, or individualist, anarchists like Benjamin R. Tucker and Francis Dashwood Tandy, who called his 1896 book Voluntary Socialism. A socialist then was anyone who objected that workers were cheated out of their full reward and that prices of goods were fixed above the cost of production; in contrast to state socialists, free-market socialists attributed these evils to “capitalism,” by which they meant the system of government privileges for well-connected owners of capital.

What Sanders favors is an expanded welfare/regulatory state, i.e., more of what we have. When asked about socialism, he praises Medicare. Medicare, however, is not socialism, nor would single-payer for all be socialism. Under state-socialized medicine, government would own and operate the hospitals, and doctors and nurses would be government employees — like the post office without competition. Under single-payer, government would pay the bills for private-sector medical care and impose controls that powerful interests would inevitably manipulate to their advantage. Sound familiar?

The welfare state was established by western ruling classes to tamp down discontent among the powerless that had the potential to turn revolutionary. The father of the modern welfare state, Otto von Bismarck, intended government-administered social insurance to keep the Prussian working class loyal to the regime and out of the Marxist and liberal (libertarian) camps. In England, workers initially resisted the welfare state because it was seen as a move by the aristocracy to co-opt the labor movement, which sought to redress its grievances directly.

Sometimes Sanders says that being a socialist means merely that he’s neither a Democrat or a Republican. That’s not terribly informative. At other times, he says it signifies concern about gross income disparities, the high cost of college, and the lack of access to medical care. Again, this doesn’t tell us much since radical libertarians share those concerns. What matters are the solutions. Two people can look at the same social problem and argue over whether the best approach is more government, less government, or no government at all. Sanders’s preference, more government, would mean expanded bureaucratic control and special-interest “capture,” i.e., more of what already ails us.

In 1986, Sanders said, “All that socialism means to me, to be very frank with you, is democracy with a small ‘d.’ I believe in democracy, and by democracy I mean that, to as great an extent as possible, human beings have the right to control their own lives.” Considering that Sanders’s program would empower bureaucrats rather than people, one could consistently endorse Sanders’s objective while opposing his proposals. (See my “Free-Market Socialism.”)

He also said, “What being a socialist means is … that you hold out … a vision of society where poverty is absolutely unnecessary, where international relations are not based on greed … but on cooperation … where human beings can own the means of production and work together rather than having to work as semi-slaves to other people who can hire and fire.”

Again, these are objectives that any radical free-market libertarian could embrace. Where Sanders goes wrong is in aiming to empower bureaucrats and politicians.

Sanders cannot or will not see that expanding the welfare/regulatory bureaucracy would not help those outside the ruling elite. Beefing up the state won’t liberate us. Despite his intentions, Sanders is an unwitting defender of the status quo.

Where is the radical who will make the case for individual liberation and purely voluntary social cooperation through freed markets?

Sheldon Richman keeps the blog Free Association and is a senior fellow and chair of the trustees of the Center for a Stateless Society. Become a patron today!

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

Why We Need Private Property To Deal With Scarce Resources

Scarcity of resources exists in many forms and is the problem in economics. If resources were not scarce, there would be no need to economize. The existence of scarcity is true of all resources (such as time, human energy, and natural resources). However, it is not necessarily intuitive that allowing scarce resources to be owned privately is the solution to this problem.

Consequently, socialism appears attractive to many, and they turn to having all resources owned collectively for the “common good.” Unfortunately, a society which spurns private property — and hands resources over to government planners instead — often learns the terrible lessons of central planning and the tragedy of the commons (i.e., commonly held resources will be plundered to extinction).

If society spurns allowing private ownership of resources, it must find some other means to prevent the tragedy of the commons and to allocate goods. Historically, the means chosen is the use of force and central planning. Throughout history, most of mankind has been divided into a hierarchical system of masters and slaves with some gradations between the two extremes. The masters (pharaohs, emperors, kings, sultans, warlords, etc.) devised complex rules-based systems for resource distribution that were decided by a small number of people and not by markets. And ultimately, these plans depended upon pure terror for enforcement. But this so-called solution to the problem of scarcity — restricting the people’s liberty through the use of force — does not work.

Problem 1: We Can’t Economize Without Effectively Ordering Our Preferences First

The gradual growth in the understanding of what we now regard as basic economics eventually ended thousands of years of subsistence existence for the masses in the West. Modern economics explained that without private ownership of resources, there was no mechanism for observing or acting on ordinal preferences in which persons prioritize desires from highest to lowest. Without a way to allocate goods according to ordinal preferences, there is no rational means to economize for the betterment of society.

In other words, without markets and prices, there is no way to know what people really want or need, so the masters never really knew what to order the slaves to produce, what technical means to use, what alternative materials to use, the quality desired, or how much to produce. Thus, the commissars of the Soviet Union ordered the production of inefficiently produced, shoddy goods. The Soviet empire collapsed, despite the fact that Russia is blessed with vast natural resources and an industrious population.

Problem 2: Few Raw Materials Are Ready to Consume

A second fatal problem with common/government ownership of resources is that few readily available, consumable resources actually exist. There are no resources on the planet that do not require at least a minimum of effort to transform into a consumable product. Even edible berries growing in the wild must be harvested, meaning that someone must transport himself to the berries’ location and pull them from the bush at just the proper time. The cost of doing so is the value one places on forfeiting his leisure. Of course, other natural resources require much more effort to convert to consumable products, passing through many stages of production.

For example, timber and minerals must be extracted, harvested, etc. and then molded into something that can be consumed. Consider a hiker lost in the wild. It matters not at all to him that great stands of timber lie within easy reach or that valuable minerals lie under foot. These natural resources require great effort over very long time periods to be converted into something consumable, as is the case with converting timber into a shelter or crude oil into gasoline. A lost hiker does not have the knowledge, time, or previously produced means to convert these basic resources into consumable products to ensure his survival. All this is far beyond anyone’s autarkic abilities.

Now let us assume that someone did harvest trees by felling them, transporting them to a lumber mill, milling them, storing them in a ventilated and dry place for many months before kiln-drying them (all processes that are required to turn trees into useable lumber), advertising their availability to contractors, keeping sales records, sending out bills, and collecting the bills, only to have a socialist call him a plunderer and confiscate his lumber for free distribution to whomever the masters deemed to be politically advantageous to their continued privileged position. No one other than the favored cronies of government would ever harvest another tree. In other words, production of usable lumber would be monopolized; and as with all cases of monopolies, prices would increase and quality would decline. Moreover, with no voluntary market at work in timber and forest land, there would be no means of knowing if these resources were being used in a way valued by those who valued them most.

At the same time, the central planners could not let just anyone harvest the trees or access the land. If the trees had no owners, great forests would be denuded in short order because there would be no social mechanism to prevent what would amount to a tragedy of the commons by order of the state.

Problem 3: We Need Private Property to Build Capital

Without the ability to profit from privately owned property, there would be no incentive to provide or withhold capital for any endeavor. Also, a system of private ownership is necessary to determine if that capital is being used in a way the consumers value. The consequences of ignoring this fact of economic science is most evident today in China’s ghost cities, where resources, both natural and human, have been expended for no observable benefit except to advance the careers of politicians who can claim to have met the requirements of the latest Five Year Plan. Timber and other resources were provided to build ghost cities, not because the owners of the resources sought to be economical with their resources, but because government edicts required that timber, concrete, gasoline, and more be used to produce what are now empty cities.

The opposite case of resource waste comes from special interest groups who capture the political apparatus of the state and prohibit exploitation of resources by private individuals. In the name of protecting Mother Gaia from being plundered, modern environmentalists have convinced the political class that most progress is unsustainable, dangerous to our health, or any number of other specious claims. Society is prevented from benefiting from their conversion to consumable products. The poor suffer the most from these policies as the prices of raw materials — and thus finished consumer goods — are driven up.

Private ownership insures that valuable resources will never be plundered to extinction, because their value will have been capitalized. Instead, private owners will seek to make resources as widely available as possible without endangering the long-term prospects for future harvesting of resources. The process of determining a resource’s capitalized value is impossible absent free-market capitalism with strict defenses of property rights.

Despite both the theoretical and empirical evidence to the contrary, socialists tell us the opposite; i.e., that state ownership of all resources will prevent their plunder and ensure prosperity for all. As Ludwig von Mises explained, though, socialism is not an alternative economic system of production. It is a system of consumption only, and a system of economic ignorance and economic plunder.

This commentary originally appeared at Mises.org and is reprinted here under a Creative Commons license

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

Rush Just Revealed The ‘Over-The-Top Unbelievable’ News That Took Him To ‘Twilight Zone Territory’

On Monday, Rush Limbaugh discussed Microsoft’s founder and his recent comments on climate change.

Limbaugh was very clear that there was madness in Bill Gates’ recent pronouncement that capitalism cannot save the world from climate change. He was also clear that there are ulterior motives beneath Gates’ words.

“This is one of the craziest, nonsensical things I have ever in my life heard,” Limbaugh said. “I understand why he said it. But it is just over-the-top unbelievable. Bill Gates says that capitalism cannot save us from climate change. Bill Gates says that socialism is the only thing that can save us from climate change.”

Limbaugh also quoted Gates as saying, “Since World War II, U.S.-government R&D has defined the state of the art in almost every area. The private sector is in general inept.”

“This is just mind-boggling to me,” Limbaugh said. “This is Twilight Zone territory for me. This is surreal.”

Limbaugh went on to explain the evidence linking the most polluted nations with socialist governments.

The talk show host said be believed that for Gates it was not about global warming but money. He noted that as long as there have been men with riches, those men have feared having their money taken away. “Gee, I hope the peasants with pitchforks leave me alone and don’t storm my castle,” Limbaugh said.

To avert that, some super-billionaires embrace feel-good causes, Limbaugh said.

“It is that belief of mine, that theory, which I have come up with to explain why people like Gates and Buffett and a number of these other super billionaires talk like Marxist liberals all the time. It is to keep people away from their money,” Limbaugh said.

He said that Gates and others seek to manipulate public opinion.

“Get the geek, nerd crew on your side loving you and supporting you, it’s a bunch of Millennial young leftists and then keep the peasants with pitchforks away from you by removing your billions as a threat to them ’cause you’re a good guy,” he said.

“It is to send the message, ‘Hey, we don’t threaten you, leave me alone. I’m spending all my money on philanthropy. I’m giving money to AIDS. I’m giving money to Africa. I’m giving money to global warming. I’m giving money to the arts. I’m giving money to support gay marriage and transgenders. Leave me alone,’” Limbaugh said.

h/t: TheBlaze