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Free Stuff Can Turn Out to Be a Bad Buy
Townhall.com ^ | October 30, 2015 | Michael Barone

Posted on 10/30/2015 7:39:17 AM PDT by Kaslin

Free college! That's what the Democratic candidates were offering in their presidential debate. And it's likely that, if the subject had come up, they would have offered something like free home mortgages as well, to judge from Hillary Clinton's statement that she had urged Wall Street to stop mortgage foreclosures. Sounds a lot like free houses!

Free stuff sounds good to many people, and it's not just Democrats who promise it. Republican candidates have been talking about reducing college costs, too, and George W. Bush was as passionate a supporter as Bill Clinton of encouraging home ownership for blacks and Hispanics.

Such policies are not necessarily examples of political demagoguery, though some are. They are based on observations of undisputed facts. College graduates over the years tend to make more money than non-graduates. Homeowners over the years tend to accumulate wealth and to build communities more than renters.

From these observations policymakers have drawn the following conclusion. If we just get more people -- especially minorities -- into college, they will make more money. If we just get more people -- especially minorities -- to become homebuyers, they will accumulate more wealth. And what easier way to do that than to make these things free, or close to that?

This argument has special appeal to those oldsters born in the 1940s -- Bernie Sanders, Bill and Hillary Clinton, George W. Bush, Donald Trump. Back then most Americans did not own homes, and only a small minority graduated from college.

These politicians saw how public policies such as the FHA and VA home loans and the GI Bill of Rights, together with unexpected postwar prosperity, changed that. By 1960 more than 60 percent of Americans were homeowners. By the 1970s most high school graduates were going on to some form of higher education. If old public policies could increase college attendance and homeownership, shouldn't new public policies be able to increase them still more?

Over the last quarter-century we have had such policies, with some unhappy results. By 2007, 69 percent of American adults were homeowners. In 2009, 70 percent of young Americans went on to some form of higher education. But those numbers have slipped down since.

Government grants and subsidized loans have enabled many people to afford higher ed. But they haven't guaranteed that recipients graduate or that graduates find satisfactorily remunerative work. The availability of government subsidy has prompted colleges and universities to raise tuitions far more rapidly than inflation, with much of the proceeds going into administrative bloat. That has left many borrowers with enormous debts that they cannot shed in bankruptcy.

Government policies, aided and abetted by Fannie Mae and Freddie Mac, promoted low- or no-down-payment mortgages for buyers, especially Hispanics and blacks, previously considered not credit-worthy. Policymakers, lenders and buyers all assumed that housing prices would always rise so that homeowners could always refinance any money problems away.

Oops. Housing prices fell sharply starting in 2006, and financial firms ended up with mortgage-backed securities that regulators classified as safe but for which they suddenly could find no buyers -- and the economy crashed. Mortgage foreclosures soared, and by my estimate about one-third of those foreclosed on were Hispanics in California, Nevada, Arizona and Florida, whose recent low- or no-down-payment mortgages left them deep underwater when prices plummeted.

In response, many politicians, mainly Democrats, are calling for iatrogenic policies: more of the medicine that caused the malady. Free college (actually, just free tuition) falls in this category, giving colleges and universities a more direct pipeline to government funds but not guaranteeing better results for students. Junior college is already largely free, but most enrollees don't graduate.

And the Obama administration is seeking to reinstate Clinton and Bush administration policies providing low- and no-down-payment mortgages to blacks and Hispanics who do not meet traditional credit standards. What could go wrong?

Recent experience should tell us that college and homeownership are not for everyone. Many people lack the cognitive skills for higher education but have other abilities that can make them productive and successful adults. Many people, like those who move frequently, are better off renting than paying the transaction costs of buying a home.

Maybe policymakers got causation backwards. Increased college and homeownership, they thought, would upgrade people, and for a long while it did. But we seem to have reached the point of diminishing returns, when making things free will hurt the intended beneficiaries more than help.


TOPICS: Culture/Society; Editorial; Government; Politics/Elections
KEYWORDS: education; housing

1 posted on 10/30/2015 7:39:17 AM PDT by Kaslin
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To: Kaslin

It’s a free country.

Let the professors teach for free!


2 posted on 10/30/2015 7:45:08 AM PDT by null and void (We are AmeriCANs. We CAN learn, and learn from history, if we choose.)
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To: null and void

Exactly


3 posted on 10/30/2015 7:50:09 AM PDT by Kaslin (He needed the ignorant to reelect him, and he got them. Now we all have to pay the consequenses)
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To: Kaslin

If you want to make something more expensive, subsidize it.


4 posted on 10/30/2015 7:52:03 AM PDT by fruser1
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To: Kaslin
“Let's all just not work and have the government pay us $60,000 a year!

Yay!!

Hoorah! NO more scrapping the snow off the windshield in the winter at 6:45. Huzzah!

...wait a minute...

...Who's going to pay the taxes so that we can all get our $60,000 a year.

Maybe we didn't think this through.

Oh well, what we need is to bring in some bloodthirsty muslims and some lawlesss folks from South of the Border.
That’ll fix everything!”
~Your friends at the DNC

5 posted on 10/30/2015 8:00:52 AM PDT by PATRIOT1876 (The only crimes that are 100% preventable are those committed by illegal aliens)
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To: Kaslin
Increased demand without increased supply = higher prices.
Economy 101, which apparently all our elected officials must have flunked.

I can't help but think about this quote:
"I'd like to live just long enough to be there when they cut off your head and stick it on a pike as a warning to the next ten generations that some favors come with too high a price. I'd look up at your lifeless eyes and wave like this. Can you and your associates arrange it for me, Mr. Morden?"
  -- Vir to Morden in Babylon 5:"In the Shadow of Z'ha'dum"

6 posted on 10/30/2015 8:03:24 AM PDT by BitWielder1 (I'd rather have Unequal Wealth than Equal Poverty.)
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To: BitWielder1

Vir got his wish didn’t he?


7 posted on 10/30/2015 8:06:45 AM PDT by wally_bert (I didn't get where I am today by selling ice cream tasting of bookends, pumice stone & West Germany)
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To: wally_bert
Vir got his wish didn't he?

He did. That was a darn good show, very prophetic.
The President Clark scenario is eerily similar to what we see now.

8 posted on 10/30/2015 8:12:05 AM PDT by BitWielder1 (I'd rather have Unequal Wealth than Equal Poverty.)
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To: Kaslin

Totally government controlled higher education. What else could go wrong.


9 posted on 10/30/2015 8:21:58 AM PDT by huldah1776
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To: Kaslin


10 posted on 10/30/2015 9:06:23 AM PDT by Foolsgold (Those who are too smart to engage in politics are punished by being governed by those who are dumber)
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To: BitWielder1; wally_bert

Love that show, I watch it every now and then and need to see it again actually with the spinoff crusade, say what you will about the director of the show for he was non-spiritual but some of the things spoken in the show has bearing on what is going on in todays world, and yeah one of them was President Clark and his out of control power.


11 posted on 10/30/2015 9:16:34 AM PDT by the_individual2014
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To: the_individual2014

JMS for being an atheist/non religious type was far kinder and fairer towards religion in general than later ST ever was.

It wasn’t pro or anti military either, he wrote both sides of the coin.

I have his screenwriter’s book which is very good reading. I keep toying with the idea of writing something but getting in gear is the hardest part.


12 posted on 10/30/2015 3:35:20 PM PDT by wally_bert (I didn't get where I am today by selling ice cream tasting of bookends, pumice stone & West Germany)
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To: BitWielder1

B5 is still king of the mountain as far as sci-fi TV goes. Firefly if it had been allowed to live might have given it a run for it’s money.


13 posted on 10/30/2015 3:36:18 PM PDT by wally_bert (I didn't get where I am today by selling ice cream tasting of bookends, pumice stone & West Germany)
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To: the_individual2014

Crusade started out good but the suits played with it too much and it got watered down. I thought it was an excellent concept. There was so much opportunity in the B5 universe.


14 posted on 10/30/2015 3:37:46 PM PDT by wally_bert (I didn't get where I am today by selling ice cream tasting of bookends, pumice stone & West Germany)
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To: huldah1776

“Totally government controlled higher education. What else could go wrong.”

What “higher” education? The average recent college graduate could not pass his great grandfather’s eighth grade final if his life depended on it. I don’t know if higher education even exists in this country any longer.


15 posted on 10/31/2015 10:38:04 AM PDT by RipSawyer (Racism is racism, regardless of the race of the racist.)
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To: BitWielder1
The President Clark scenario is eerily similar to what we see now.

Would it be too much to wish for that Obie's reign ended the same way as Clark's (minus the attempt at 'scorched Earth, of course)?

16 posted on 10/31/2015 10:42:27 AM PDT by hoagy62 (Timid Men prefer the 'Calm of Despotism' to the 'Tempestuous Sea of Liberty'. ~ T. Jefferson)
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To: RipSawyer

Good point. I wonder why though, besides indoctrination. The amount of knowledge is so much greater, hence, specialists. It seems our education is now like speed dating. LOL


17 posted on 10/31/2015 2:32:49 PM PDT by huldah1776
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To: huldah1776

I think first you have to define education! I like the idea that education is about how to make a life, not how to make a living. Once you accept that it is easy to accept the idea that classical education has been thrown out in favor of a lot of indoctrination combined with a certain amount of job training. Students who have no background in History, Literature, Language, Geography, Civics or Economics may have learned a way to make a living but they are not educated in my view. We do not call someone who has gone from high school to welding school and become a master welder “highly educated” in spite of the fact that welding is a very technical profession and requires many years of study and practice to master. Why do we call someone who has gone from high school to a college where he learned to program computers highly educated? Is it simply because he got his job training at a college or university rather than at a technical school? When I was a public high school student anyone who did not know how many feet were in a statute mile was considered dull and slow but most college graduates now cannot tell you how many feet are in a mile. That is a trivial matter but when I meet college graduates who majored in history but cannot tell me the answer to history questions I had to answer by eighth grade to get into high school that is not so trivial in my opinion.

People who are really educated have enough understanding of history and of human nature to know better than to believe a word that comes out of the mouth of someone who is pushing collectivist government because they know it has never created anything but misery in the long run and they understand the world well enough to know why it never will create anything but misery in the long run. Anyone who claims to believe otherwise is either a liar who is simply pushing that type of government for his own benefit or he is ignorant and or stupid, not educated. No one who actually believes in that sort of thing is truly educated. People like Hillary Clinton certainly don’t believe in it, they push it because they are in the minority who receive the riches stolen from productive people. This is why the left has always depended on two groups who don’t seem to really belong together, those with graduate degrees and those with less than a high school diploma. The advanced degree holders are usually benefitting in one way or another from big government and those with little education are voting for giveaway programs, those in between know who pays the bill. Many of those who benefit the most are in the “higher education” racket. It definitely has become a racket. People routinely require degrees for jobs of the sort that would have been done in the past by high school dropouts, as an example front line supervisory jobs used to go to people who had at the most a high school education, now they routinely require a degree.


18 posted on 10/31/2015 7:56:31 PM PDT by RipSawyer (Racism is racism, regardless of the race of the racist.)
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To: Kaslin

I guess Bernie will Jail all those One Percenter College Professors that get paid $200,000 a Year and never Teach a Class.

He can start with Lizzie Borden Lieawatha Warren. She made a killing at her no show Teaching Job at Harvard to the tune of $300,000 a Year.


19 posted on 10/31/2015 8:00:57 PM PDT by Kickass Conservative (Republicans hold Debates while Democrats hold Auctions.)
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