Suppose you strongly desire to drastically increase the amount of education that people consume. What should you do?
The obvious answer: Make education completely free of charge – and have the government pay the the entire cost.
I say this obvious answer is obviously right. As I explain in The Case Against Education, I favor extreme educational austerity, because I think the education system is a waste of time and money. Nevertheless, given the goal of drastically increasing educational attainment, completely shifting the cost burden from consumers to taxpayers is highly effective.
Yes, there is some “crowding out” – when the U.S. government spends an extra billion dollars on education, consumption of education probably rises by less than a billion dollars. Still, total U.S. consumption of education has ultimately increased by trillions of dollars as a result of past government subsidies.
This seems undeniable, but Tyler Cowen now suggests that free college is a way to restrain education spending!
7. College free for all: Would wreck the relatively high quality of America’s state-run colleges and universities, which cover about 78 percent of all U.S. students and are the envy of other countries worldwide and furthermore a major source of American soft power. Makes sense only if you are a Caplanian on higher ed., and furthermore like student debt forgiveness this plan isn’t that egalitarian, as many of the neediest don’t finish high school, do not wish to start college, cannot finish college, or already reject near-free local options for higher education, typically involving community colleges.
Tyler graciously acknowledges that I personally oppose free college. (Come on, my book even has a section called “The Hidden Wonder of High Tuition and Student Debt”!) Still, Tyler thinks that one viable way to achieve my austerian goal is to make college free.
I could understand Tyler’s claim if Warren were calling for draconian price controls on tuition. That would be a wonderful way to shrink the sector, though I’m confident that state and local taxpayers would make up much of the shortfall.
I could understand Tyler’s claim if Warren were calling for educational rationing – to deny access to large swaths of would-be students. That, too, might shrink the education sector.
Warren’s actual proposal, however, imposes neither price controls nor rationing. Instead, she offers mountains of money to both students and states. Students will have extra Pell Grants (not loans!) that pay for not only tuition, but housing, transportation, food, and books. States that agree to eliminate tuition will receive a further bounty:
Warren’s vision calls for the federal government to partner with states that want to invest more in their public universities and match that state investment. While other plans have been dollar-for-dollar, or a 2-to-1 federal match, Warren wants the federal government to kick in two-thirds of the funding, making it a deal states would be hard-pressed to turn down.
Of course, all these plans have a catch; if states don’t want to take the money, their universities are left out of the equation.
Tyler could protest, “The U.S. has the best colleges in the world, thanks to our combination of public and private support. Warren’s plan starves many of our best schools.” This would be a fine argument if Warren proposed eliminating private support while keeping public support constant. What she’s actually proposing, though, is to increase public spending so much that total education spending rises. Probably by a lot.
Given budget constraints, I’d expect Warren’s plan to be heavily watered-down if it happens at all. That hardly shows, however, that the watered-down version will work in the opposite of the original plan’s intended direction. Worse comes to worse, states will turn down her offer and keep tuition where it is.
I know why I oppose Warren’s plan: I love austerity – and so should you. Yet anyone who remains convinced that even more kids should go to college should be intrigued by her profligate proposal.
READER COMMENTS
nobody.really
Jan 21 2020 at 11:52am
Counter-intuitive. But recall that many European nations offer direct subsidies to churches–and church attendance is lower in Europe than in the US. So maybe there’s something to Tyler Cowen’s idea….
Garrett
Jan 22 2020 at 12:17pm
That’s not an interesting comparison unless you can identify the mechanism by which direct subsidies reduced church attendance in Europe, and then explain why that same mechanism would lead to reduced college attendance in the US if subsidies were increased.
Mark Z
Jan 24 2020 at 2:45pm
European governments give churches money, they don’t pay people to go to church. I’ll happily bet you that if (or when) a country stops subsidizing it’s state church it will not have a positive effect on attendance. This phenomenon is mostly cultural I’d say.
Will Durant actually did argue that separation of church and state in the US had a positive effect on religious activity in the US compared to Europe, but I don’t think he had subsidies in mind.
jj
Jan 21 2020 at 12:08pm
I didn’t read Tyler’s comment that way. By Caplanian I understood him to mean only the belief that higher education is primarily signalling, so it would be no great loss if Warren wrecked it. Of course then you’ve spent a lot of money to achieve nothing, which Caplanian or not never “makes sense”.
Mark
Jan 24 2020 at 3:25am
That was my reading as well. “Wrecking higher education (unintended but likely effect of Warren policy) makes sense only if you think the system isn’t valuable in the first place (one aspect of Caplanaian)”. Not “Warren’s entire plan is something that Bryan would endorse.”
Mark Z
Jan 24 2020 at 3:07pm
I don’t think it makes sense even in that sense. For one thing, it’s a gratuitously expensive way to wreck higher ed. Spending enormous sums to demolish something useless is less consistent with the ‘Caplanian’ position than just leaving it alone (the status quo).
Secondly, I think Tyler is wrong that signaling theory suggests that we should want to destroy the signaling value of higher ed. Signaling is useful, it’s just that it could be done much more cheaply and spending more wont improve the quality of signaling the way it might increase students’ human capital if the human capital hypothesis were correct. I don’t think we should want to force all colleges to be equally bad so they can’t signal anything to employers even if we could. The only way that would be beneficial is if everyone just stopped going to college because there was no signaling value. I don’t think this is what would happen. Tyler neglects to mention that Germany (and other countries like it) keeps attendance (and therefore costs) down by rationing it, which Warren would presumably not do.
Aretae
Jan 22 2020 at 12:01pm
Student loan forgiveness with the granting university on the hook would do what you want though.
Mike M
Jan 25 2020 at 10:10am
I would go even further…regulate the market for college loans such that only the university itself could provide loans to students, with loans being dischargeable in bankruptcy. Colleges have little stake in the learning outcomes of the students, nor any incentive to control costs. It’s a recipe for disaster. More creative models of financing are also needed, such as instead of charging tuition, allow colleges to take a percentage of a former student’s salary over the first X years of their career.
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