Obama gave a speech on higher education at my erstwhile employer, the University of Michigan. It is noteworthy for two reasons.
First, it gives further proof, as if further proof were needed, of his economic incoherence. The Smartest Man in the World is as thick as a sequoia stump when it comes to economics:
Appearing before a raucous student crowd in Michigan — a potentially critical swing state this year — Obama outlined plans to boost total federal spending on Perkins loans from $1 billion to $8 billion. He also announced plans to push for the creation of a $1 billion competition encouraging states to contain public tuition rates, among other things.
. . . .
Noting that student loan debt now exceeds credit card debt, the president said Washington is “putting colleges on notice. You can’t assume you’ll just jack up tuition every year.”
“We should push colleges to do better,” he said. “We should hold them accountable if they don’t.”
. . .
Obama warned Friday that rising tuition costs are now threatening to surpass the ability of government to help pay for them. Between 1999 and 2010, inflation adjusted prices for undergraduate tuition, room and board rose 37% at public schools and 25% at private colleges, according to the National Center for Education Statistics, part of the Education Department.
“We can’t keep subsidizing (skyrocketing) tuition,” he said. “Sooner or later we’re going to run out of money.”
Uhm, think that tuition might be skyrocketing in large part because college attendance is so heavily supported by government funds? Is it really a surprise that prices for a good go up when demand for it is stimulated by targeted federal largesse? If you are, I have a large sum of money I would be willing to share with you: all you need to do to collect is share your banking details.
And note also the all too typical dialectic. Stimulating demand leads to higher prices, which are politically unpopular. But rather than ending the demand stimulus, the progressive mind thinks it far better to prevent the price rises. Here it starts, as it usually does, with the progressive leader jawboning, threatening, and cajoling those who have the temerity to raise prices in response to demand subsidies to abstain from doing so.
If that works, the result is predictable. There will be shortages, more crowded classes, and a decline in quality on all dimensions.
If it doesn’t work, the progressive will conclude that threats are insufficient, so government coercion must be employed to prevent the adverse, though entirely predictable, effect of the initial policy. There will be price controls or some other constraint on universities’ ability to charge market clearing prices. At which time the shortages, crowded classes, and decline in quality will occur.
So regardless of whether Door #1 or Door #2 opens, quality declines. Yeah. That will create loads of human capital that will contribute to growth and higher incomes. (Not to mention that all too much of the money in these progras is completely wasted in subsidizing useless degrees, thereby creating a new wave of recruits for Zuccotti Park.)
We have seen the same dynamic before, in health care. And we ain’t seen nothing yet. Just wait until Obamacare kicks in.
No, when geniuses like Obama conclude, after flooring the accelerator, that the car is going too fast, they do not ease up on the gas. No, no, no. That would be to admit a mistake of pushing it too hard in the first place. Rather, they keep the gas pedal floored–and then jam on the brakes. Like I say. Pure Genius.
The other noteworthy aspect of this speech is that Obama apparently decided that it was impossible to pander to two of his constituencies: those employed in higher education (a heavily Democratic group), and 18-22 year olds in college or with ambitions to go. He is opting to pander to the latter, which is quite interesting.
Back in ‘08, Obama merely had to mouth soaring pieties about hope and change yadda yadda and the college-age crowd swooned. They were energized, at virtually no cost.
Evidently Obama doesn’t think that the old magic is sufficient to catalyze the intense support from this demographic. He has to promise goodies. Billions in goodies.
Potentially very revealing.