Echoing what I've said in Leverage on the higher education mess (look to the right for a link to the book if you've not yet acquired a copy), The Cato Institute has put forward an interesting paper in conjunction with testimony to the Senate:
As I testified to a Senate panel earlier this week, the evidence is powerful that there is massive overconsumption of higher education, and cheap federal aid ultimately fuels the college price skyrocket while encouraging students to tackle programs and debt they often can’t handle.
Yep.
The solution is really pretty simple:
Get the government out of providing "aid" entirely. If you want to borrow money, go do so in the private market.
Remove the preference that prohibits student loan debt to be discharged in bankruptcy. This would force lenders to evaluate the wisdom of the degree path you're on and the amount of borrowing you're doing based on the probability of being paid back.
Do those two things and the bubble deflates immediately, taking the ridiculous cost escalation with it.
It is time to stop financially raping our young adults and if we don't, we will all deserve what they do to us in just a few short years' time.
Our policy on reciprocal links: Send us an email with your
information and why you think your blog or news site would make a
good addition - in most cases reciprocal link requests will be
granted.
Legal Disclaimer
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.
The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Looking for "The Best of Market Ticker"? Check out Ticker Classics.
Visit the forum to discuss this and other investing-related topics; see the FAQ on the forum for information about Gold Donor status including access to our technical analysis video server.
Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.
Market Ticker content may be reproduced or excerpted online provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media.
Submissions may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.
Leads on stories of current economic and political interest are always
welcome. Our fax tip line is 850-897-9364; please include contact information
with your transmission.
It is time to stop financially raping our young adults and if we don't, we will all deserve what they do to us in just a few short years' time.
Oh, we are going to deserve what they do to us over the SS and Medicare debt bombs we are leaving them and somehow expecting them to pay. They are going to kick our asses to the curb so hard the curb will say OUCH when we land.
The student loan program will merely get us a moderate poke in the ribs for good measure.
I've said it before and I'll say it again; I am guilty of sitting back and complaining for 30 years but not taking any action. I need to get busy reseaching my representatives voting record and start calling him out where necessary.
Does anyone know of a good website where I can look up my rep's voting record on the major issues without having to search through every single vote?
Flap
----------
Here are my predictions for everyone to see: S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu. "You can't build a house of cards on a shaking table." - Tony Johns The January 2015 AMZN put at $130 (cost $4.25) will be a winner.
Well yeah, but be serious...free cash is only to enslave the dullards, and provide blood to the ticks - I'm fascinated by those who think otherwise.
But hey, work OT to pay the tuition of your kids... LOL . Literally 20 percent of the men I work with continue to work 50 hour weeks to pay tuition when they could cut back or retire.
Little aside to you tick feeders...people in my class aint be gonna payin' - no matter wat. So run you face c&nt...we won't pay. We won't even pretend to try.
Every day I'm Shuffilllllin!
----------
I have never wished to cater to the crowd; for what I know they do not approve, and what they approve I do not know. - Epicurus Oderint dum metuant - Caligula & Police State USA
The gubberment is promoting excessive leverage and malinvestment to create bogus growth. The bubble strategy is what you've got when you don't have enough. It's either that, or pay folks for doing nothing. Oh, wait... But at least with bubble growth, some legitimate investment also occurs versus paying people to sit around and do nothing. And nobody goes back and subtracts bogus consumption and investment out of past bogus GDP so everything looks great, even though its not.
----------
I have a reading comprehension problem and the owner banned me for repeatedly displaying it after being warned.
I basically agree with you Karl, though I'd like to add a few thoughts. Having the government subsidize education can be a worthwhile endeavor, provided that the education thus gained is a genuinely marketable skill (as opposed to providing a 4-year subsidized vacation for kids who want to "find themselves").
For example, you've talked about building thorium nuclear reactors. We will need good engineers to do that, so it's probably in society's interest to subsidize those students who are majoring in nuclear engineering. On the other hand, it's probably not in society's interest to fund more students majoring in art, history and philosophy.
Many students should actually not be pursuing bachelor's (or master's, Ph.D.s) at all. They should be studying something vocational at a junior college. That could be electronics, plumbing, auto repair, etc. Again, it could be in society's interest to help fund this.
Biggest problem, of course, is deciding what to fund, what not to. I'm more than a little distrustful of bureaucrats making these decisions. Even more distrustful of politicians. It was Franz Kafka who wrote: "Every revolution evaporates and leaves behind only the slime of a new bureaucracy."
The irony is that the level of economics knowledge to figure out that federal college loan guarantees are a scam could easily be taught in high school. The democrats can wave the "everyone goes to college" wand, but I'd like to see them find a wand for "there are plenty of jobs in the future requiring all these degrees we're selling you, and they all pay well enough to justify the debt".
They can't promise that, so if you graduate and there are 2x more of your degree than there are jobs in your field, you have made a bad investment. Bad investments can be hard to avoid, especially in this case as you have no way of knowing how many more of a given degree the government will end up handing out.
To prevent the rise of serfdom a free society uses a bankruptcy system to clear debts when they become mathematically impossible. Non-dischargeable debt removes the only barrier, even in the "modern" U.S., that prevents feudalistic economic relationships from beginning to form.
(edit)After Rome invented serfdom following a familiar period of idiots in charge debasing the currency, that economic status was eventually made hereditary. Given the federal backstop on the loans we're actually further along that road than the Romans were at that point. Ask your kids if they feel like paying your college loans.
Fear of govt IS the government.. Statism is a pack of unbacked threats; If govt gets out of control, ignore it and go about life as you see fit. Where's your crown, King Nothing?
Let the industries who benefit from the talent 'subsidize' education, either directly or indirectly (by offering big rewards for working in the industry.)
All this frantic subsidizin' got us where we are now. Enough.
----------
When I hear central bankers are blowing bubbles, I like to picture a large, happy and well-endowed male chimp named 'Bubbles'...
Tesla
Posts: 15541
Incept: 2008-04-03
State of Disbelief
^^ this x1,000,000
"Society" doesn't need anything...individuals and organizations do. Let those who "need" it or want it, fund it.
----------
"Even a dog knows the difference between being stumbled over and being kicked." -Justice Oliver Wendell Holmes
"Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." -Samuel Adams
Bagbalm
Posts: 4251
Incept: 2009-03-19
Just North of Detroit
I can't see in the Constitution that education is any business of government. If it is at all it would be the business of state and local government. The earlier form of education support - granting land to build a school seems entirely sufficient.
Jstanley01
Posts: 8176
Incept: 2008-07-30
San Antonio, Texas
I've long appreciated a lot that CATO produces. But the organization is going through some serious in-fighting of late. Looks like the Kochs may be attempting a hostile takeover...
Quote:
Conservative infighting - Kochs v. Cato Institute "the nest" bulletin board 03-07-2012 at 1:08 PM by "epphd"
Koch Brothers, Cato Institute at Odds Over Direction of Think Tank
The Cato Institute, a venerable think tank in Washington, D.C., known for its sometimes unorthodox libertarian positions, is in the midst of a battle with one of its founders, billionaire Charles Koch, over its future direction, the New York Times reports.
According to Cato officials, the rift has its roots in a long-running feud over efforts by Koch and his brother, David, to install their own people on the institute's sixteen-member board and establish a more direct pipeline between Cato and the family's conservative political outlets. Last week, the Kochs filed a lawsuit in Kansas, where Koch Industries is based, challenging the institute's governing structure...
I'd have no problem with government grants for needed things, nuclear science etc. Govt can pull out all the stops going after things like LFTRs for example. But when you hand out grants and guarantees for EVERYTHING you have no control over the malinvestment disaster you're creating. Nondischargeable too.. (enter serfdom, stage right)
----------
Fear of govt IS the government.. Statism is a pack of unbacked threats; If govt gets out of control, ignore it and go about life as you see fit. Where's your crown, King Nothing?
Biggest problem, of course, is deciding what to fund, what not to.
No, it's not a problem at all...it's not up to anyone to decide who they are going to steal from and to whom they will give the stolen goods.
You want...you fund. Period. End of story.
----------
Once you admit that the individual is merely a means to serve the ends of the higher entity called society or the nation, most of those features of totalitarian regimes which horrify us follow of necessity. --F.A. Hayek
