Education is Business . . . Education Run By Government is Communism
Education at its roots is a business. Educators provide a service in which they are compensated for their service. In the beginning of the country’s educational system, the county or city provided a teacher often for a single roomed schoolhouse. It was understood that a foundation of literature, writing and arithmetic was critical to the success of free men and woman. Overtime, education paired up with the state on many levels and soon state sponsored education become the norm driving higher taxes, additional forms of taxation and an archaic one-size-fits-all education system.
Failures of One-Size-Fits-All
The central problem with the one-size-fits-all system is that everyone is different and has different requirements. The education system could look like the modern American automobile climate of innovative designs and functions yet it looks more like the original assembly line model T Fords. Internally driven research has constantly been shown since early on that those with more education make more money. What they fail to show is they make more money in a wage capacity. Wages are not the essence of the American dream. The American dream and spirit is innovation, productivity, equity and so what really needs to be shown to the masses is not the returns on education, but instead the returns on running a successful business or creating a successful product or being promoted quickly based on ability to function in a high capacity.
The Government as a Bank
One reason banking works well in a capitalistic society is that default and bankruptcy are real and present threat to the banks as well as to the borrower. This mature and consensual relationship between one institution wanting their money back and the other institution wanting to be successful allows for the engine of society to work hard and efficiently. One of the worst outcomes is the Government entering banking. The state does not look for wise investments, they look for obedience to the gun, badge and uniform. So when the state, acting like a bank, decides everyone needs an education, they freely and equally hand out large amounts of public treasure to all who meet the low bar requirements.
Required Educational Price Inflation
Remember, at its heart, education is a business. Education, like business, seeks to maximize its revenue to the fullest. Altruism, or artificial suppression of tuition rates when the supply of payment is available, is impossible even if it is the state receiving the money and lending the money. Because of the skewed “banking” practices of the state, a large amount of surplus money was made available almost overnight, money, educational institutions reason, is better spent on education than other frivolous ventures. So naturally, the cost of education inflated as aggressively as possible to capture as much of the excess capital from its students as possible before they could spend the large amount of loan money made available to them.
Because institutions raised their rates and cost in order to capture excess money, students no longer had the large surplus to power a luxurious lifestyle. Even with the readily made loans, they didn’t have enough to not work and live small. The state, seeing that students didn’t have as much money as they used to, met the trend with issuing more debt to its citizens to alleviate the pain of the educational years.
Rapidly Expanding Degrees
Institutions realized they could only capture so much of the surplus in terms of price increases per year so a second method of capturing the excess money was to rapidly create more degrees and expanding the level of students that could be accepted each year through rapid building projects.
Deflating the Worth of a Degree
Before the government acted as a miss-incentivized bank, education had a proper role in life. Those who wished to be in the academic world went to college and those who enjoyed earning money through work didn’t. When everyone begins to get a degree, and degrees expand into non essential genres, then the market is soon flooded with college grads well above the needed amount of additional labor. When there is a lot of labor, businesses can lower the amount they are willing to pay especially for beginning positions since there will always be a graduate willing to take the job. One reason a non subsidized degree had value was because of its relative scarcity and more targeted application.
Summarizing the effects of government intervention into the educational world is simple. Debt is freely made available, prices skyrocket to capture the available debt, more individuals enter the market based on available debt, additional degrees and space is made for the added entry into the market, degrees are made increasingly worthless in terms of net return on investment and in the end the economics become reversed . . . The degree seeking college student now pays much, much more for much, much less.
Government Created Market Decline
The reversed outcomes create a bubble. A huge amount of graduates entering a non-existence workforce carrying massive amount of unsustainable debt quickly realize that not working, getting on welfare and declaring bankruptcy are a much more suitable option. Even those who are working find themselves with less income and more expense and are able to engage in much less consumer activities all of which leads to a long and drawn out decline in overall market activities. When the news speaks of a disappearing middle class, well, this is exactly what a disappearing middle class is . . . less income with more expense.
The Government-Acting-Like-a-Bank Bubble
Lending massive amounts of unsecured debt at some point has to end. Trillions in unfunded liabilities will rise and as the state runs out of credit the lending has to end. If the lending ends as fast as it began, then there would be an overnight crash in the now massive educational complex. Universities, expanding to receive double the students hiring double the instructors building double the buildings suddenly would no longer have the students to fill their halls and with instructors spoiled on the riches of government lent debt in terms of high salaries most will be unable or unwilling to take massive cuts. All around businesses who still require degrees will find the degrees are not as plentiful, students who planned on college now work flipping burgers and a true depression could easily result from the cutoff of the free flowing debt stream.
The Coming Full Federalization of Education
The federalization of education is not new as many are seeing all lower level education taken over by the federal government through programs such as common core. The next level of Federalization includes a complete takeover of higher education. Once the student loan debt amount becomes heavy enough a burden, politicians and pundits alike will begin to call for the forgiveness of student debt. There will be a great possibility this will happen. If this does happen, then out of necessity, the federal government will have to offer all additional funding as a grant. Grants are accounted for differently and in order to pay for it, both taxes will have to be raised and prices will have to be suppressed. Control of the university pricing will be switched to federal control and from their education will increasingly become a federal directive.
In theory, education is a positive externality. It is something that benefits all of society when its members are educated and so therefore, there is a need for ways to promote more people to be more educated. The problem is that the State is not the answer, it skews the incentives, it perverts the market and it creates both dependency and intrusion.
With as much vigor as a writer can add to a sentence, unplug from the public education paradigm and do all that is possible to avoid public schools and public funds; the sooner the federal government gets out of education, the sooner great calamity can be avoided down the road.