Cascade in the Capitol: Opposition to more subsidies of student higher education costs

State Treasurer Ted Wheeler has proposed that the state obligate its citizens to repaying hundreds of millions of dollars in General Obligation bonds to subsidies student higher education costs. Below is the prepared testimony that I gave to a House committee last week and will give to a Senate committee tomorrow, setting out my objections to the plan:

I oppose HJR 6, SB 11 and SJR 1 for several reasons.

First, as Professor Richard Vedder, author of the book “Going Broke By Degree: Why College Costs Too Much,” says, higher education prices are rising rapidly because of the predominant role of third-party payments, including federal and state support for institutions and students. “When some else is paying a lot of the bills, students are less sensitive to the price, thus allowing the colleges to care less about keeping prices under control.”

So, rather than help keep college costs and student debt levels down, Treasurer Wheeler’s proposal will likely do just the opposite.

That would be bad enough, but it will be worse because even if the investment assumptions for his proposal work out, taxpayers will be on the hook to repay hundreds of millions of dollars of bond principal, plus interest decades into the future.

Worse yet, there is evidence that more government funding of higher education actually translates to slower state economic growth. That’s likely because individuals know their needs better than politicians do, so leaving the money in private hands produces better economic results.

Further, academics such as Charles Murray and Carl Bankstron join Dr. Vedder in arguing that four-year degrees aren’t what they used to be, and that state funding may simply waste precious financial and human resources.

All that said, if increasing the percentage of Oregonians who earn two- and four-year degrees is a good goal, you should step back and look at efforts in other states to significantly reduce the cost of those degrees. Arthur Brooks recently noted in the New York Times that one idea gaining traction is the $10,000 college degree, which public universities in several states are moving toward right now. That’s $10,000 total direct costs for four years. According to Brooks, this “is exactly the kind of innovation we would expect in an industry that is showing every indication of a bubble that is about to burst.”
In conclusion, whatever the value of a college degree to an individual, it’s becoming clear that state funding of those degrees is likely to cost taxpayers more than they gain. I urge you to reject HJR 6, SB 11 and SJR 1.

Thank you.

About Steve Buckstein

Senior Policy Analyst and founder.
This entry was posted in Cascade in the Capitol, Cascade Website, Oregon Economic Opportunity, Steve Buckstein, Tax and Budget and tagged . Bookmark the permalink.

6 Responses to Cascade in the Capitol: Opposition to more subsidies of student higher education costs

  1. Neil Huff says:

    Amen to all Mr. Buckstein’s remarks. He is spot on in every particular. A four liberal arts degree will possibly get one a job at WalMart, or Safeway. A spate of recent articles discussing inequalities of income between developed and under-developed nations suggest that the Luddites may have been correct in opposing machines that made certain professions obsolete.

    Robotics and computerized industrial machines of every description employed on a global scale by international corpoations are replacing every type of manufacturing job. Industrial farming and even industrialized logging are all working to deminish manual crafts and professions everywhere, including Oregon. I would bet that today a logging operation uses only about a quarter of the number it once would have employed. Name any kind of production today almost anywhere and the story is the same. So, what do we do with a global polulation of six billions? or seven billions? If the trends toward robotics and computerized manufacturing continues?

    More to the point. How many college educated engineers and computer techs can the global economy employ? China and India are alone ginning out about a million engineers a year. A four year degree in what is going to be worth the $40,000 it now costs?

  2. Steve says:

    Mr. Huff, while I understand your concern, I shudder to think what our world would look like today if the Luddites really had succeeded in breaking the machines that make our lives so much more comfortable and extend our lifespans so much beyond what they were just a couple hundred years ago.

    As to what “we do with a global population of six billions? or seven billions?” my answer is that we let them alone to live and learn without Luddite and government interference. The history of mankind in recent times has been one of creative destruction. Some jobs are destroyed, but better, less physically taxing jobs are created. Of all the current mistakes governments are making, believing that four-year college degrees should be the goal for many people is one of the worst. It will be terribly expensive, and as you note, result in little economic benefit to many workers and employers. Again, let people alone to live their own lives and I have no doubt that human progress will expand and benefit most people far more than any government intervention ever could.

    • Neil Huff says:

      It may have been in a Vance Packard book about 40 yrs ago where I read this. It stuck in my mind. It was an imaginary factory, where 9/10s of the production of this plant was hauled around to a disassembling facility and the parts reduced to raw material and this was recycled in the production facility. This process provided as much of the product as could be sold and the recylcing meant everyone had a job. Granted this is hyperbole.

      Still, manufacturing anything today frequently runs up against the EPA or the Green forces. With much of the Third World vying with the industrialized nations for markets and scarce resources and with robotics and computerized manufacturing techniques available to all, the only way the US will compete is to reduce the cost of all factors of production, including labor and compromise existing regulations protecting the environment.

      Employment and nothing else will be political arena of tomorrow. Finding some means within the tightening constraints mentioned, for providing close to full employment will take the place of the various wars we currently fight abroad. Our politicians have no intention of stopping immigration, so legal citizens will be contending with an unceasing flow from the south for this same shrinking job market. Creating the necessary jobs within the constraints to forestall rebellions at home will give the Pentagon something to do right here.

    • Neil Huff says:

      I wonder if you are familiar with the work of the late Prof Garrett Hardin? His Tragedy of the Commons and Lifeboat Ethics are worth reading and pondering as we consider such question as entry into a era when full employment is no longer considered normal or an economic goal? We are at cusp of this phenomenon. Some ‘think tanks’ should be figuring out how Govt, community and private enterprise is going deal with the human consequences of a nation where perhaps as many as 25% of the adult work force is permanently without remunerated employment. Any remedy starts by halting all immigration which is even now pulling into the nation more job seekers and hungry mouths..

      In the depths of the Great Depression 25% was the unemployment figure. God alone, and maybe some gov’t bean counter somewhere knows the real current unemployment numbers. I don’t believe the figures released by the Labor Dept are anywhere close to correct.

      • Steve Buckstein says:

        I am familiar with Hardin’s concepts. I’m not sure how Tragedy of the Commons applies here, but I think his Lifeboat Ethics does not at all justify halting immigration into the US. Here is an interesting rebuttal to that concept:

        For those interested in more rebuttals to Hardin’s Lifeboat Ethics, check out the late Julian Simon. “Julian Simon debunked this idea 50 years ago, yet it’s still being trotted out regularly. The reality is that for the human species, effectively no resources are finite. As one resource become economically limiting we simply move onto an alternative. Always have, always will.

  3. Neil Huff says:

    What do you think of the current and uncontrolled flood of illegals coming into the country by every means? I think the Lifeboat tale hold even more relevance with each passing day. I understand that groups are now massing in some places to physically oppose the purposeful dumping of these untrained, uneducated Latin American invaders. We will see if Mr. Simon’s Pollyanna idea that the world has an infinite capacity to provide jobs and sustenance to all is founded in reality. I saw scant evidence of its validity in the countries where I worked. Thus immigration or escape to the few countries still with capacity.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>