There is a law in economics, it deals with artificially propping up businesses, “goods” politicians deem necessary, production, etc. George Gilder notes this in a clip I isolated in an interview:
“A fundamental principle of information theory is that you can’t guarantee outcomes… in order for an experiment to yield knowledge, it has to be able to fail. If you have guaranteed experiments, you have zero knowledge”
R-PT’s note: this is how the USSR ended up with warehouses FULL of “widgets” (things made that it could not use or people did not want) no one needed in the real world. This economic law enforcers George Gilder’s contention that when government supports a venture from failing, no information is gained in knowing if the program actually works. Only the free-market can do this.
This applies to the real world in many ways, one being the co$t of college. Here is a very short video explaining this well:
OF course, one of my favorite videos of ALL TIME shows how students “benefit” from a subsidizing of college majors when in reality if they had to pay for college themselves it would be (a) cheaper, and (b) they would go into careers other than their majors… like sign flippers and bartenders (or other fields that are hurting):
The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor force at the same time we have businesses desperately trying to find workers. As an example, the American Transportation Research Institute estimates there are 30,000 – 35,000 trucker jobs that could be filled tomorrow if workers would take these jobs–a shortage that could rise to 240,000 by 2022.
While the jobs market overall remains weak, demand is high for in certain sectors. For skilled and reliable mechanics, welders, engineers, electricians, plumbers, computer technicians, and nurses, jobs are plentiful; one can often find a job in 48 hours. As Bob Funk, the president of Express Services, which matches almost one-half million temporary workers with employers each year, “If you have a useful skill, we can find you a job. But too many are graduating from high school and college without any skills at all.”
The lesson, to play off of the famous Waylon Jennings song: Momma don’t let your babies grow up to be philosophy majors.
Kids commonly graduate from four year colleges with $100,000 of debt and little vocational training. A liberal arts education is valuable, but it should come paired with some practical skills.
Third, negative attitudes toward “blue collar” work. I’ve talked to parents who say they are disappointed if their kids want to become a craftsman–instead of going to college.This attitude discourages kids from learning how to make things, which contributes to sector-specific worker shortages….
(For full disclosure, my degree — theology — is one of the lowest paying degrees out there, and the lowest in employment opportunities.) In a short debate of the issue, Peter Schiff notes this “propping up” of useless degrees:
In the above discussion, Diana Carew seems to want jobs created by the government to fit the degrees earned. Otherwise, how would you force the private sector to create such opportunities unless you artificially demand [create] such opportunities? ~ There was zero unemployment in Soviet Russia, but all this “opportunity” collapsed due to economic laws… “this is how the USSR ended up with warehouses FULL of “widgets” (things made that it could not use or people did not want) no one needed in the real world. This economic law enforcers George Gilder’s contention that when government supports a venture from failing, no information is gained in knowing if the program actually works. Only the free-market can do this.” (Peter Schiff gets into the weeds a bit in this video.)
Here is another great PRAGER U video discussing the issue:
This is one of the areas Gary Johnson was correct — supply and demand:
FORBES notes well that most on the Left-end of the spectrum “don’t hate entrepreneurship and innovation,” but that their Econ 101 “part of the brain that deals with economics tends to shut down when discussing sectors like higher education (or healthcare).”
A WASHINGTON FREE BEACONpost relates findings from a Federal Reserve Bank (NY) study showing that the federal student loans have increased the cost of college tuition while at the same time college enrollment did not increase:
The expansion of federal student loans has caused tuition prices to increase without increasing college enrollment numbers, according to a report from the Federal Reserve Bank of New York.
The report evaluated student financial data as well as federal student aid programs “to identify the impact of increased student loan funding on tuition.”
According to the report, yearly student loan originations grew from $53 billion to $120 billion between 2001 and 2012, an increase of about 126 percent. During this time frame, average sticker-price tuition nearly doubled, rising from $6,950 to $10,200 in constant 2012 dollars.
The report found that for each dollar of federal aid applied, tuition increased as well.
“We find that each additional Pell Grant dollar to an institution leads to a roughly 55 cent increase in sticker price tuition,” the report says. “For subsidized loans, we find a somewhat larger passthrough effect of about 70 percent.”
The report makes reference to a hypothesis put forth by William Bennett, the Reagan-era secretary of education. The so-called “Bennett Hypothesis” holds that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase.”
Many have compared the market for postsecondary education to the housing market…. [see video at the top]
Which brings me to finish this post with a humorous look at the hipster douche-bags scratching his or her head in regard to high tuition costs via REASON-TV:
When Ben Bernanke announced that the Federal Reserve’s Open Market Committee was going to continue its monetary expansion program it calls Quantitative Easing, almost everyone in the financial media was taken by complete surprise. According to the mainstream media, the non-taper “surprised almost everyone out there.” Well it did not surprise me, nor anyone who had been paying attention to what I had been saying. As I said repeatedly over the past several months, the Fed knows that the appearance of economic health would evaporate if its stimulus were withdrawn, or even diminished. The Fed understands, as the market seems not to, that the current “recovery” could not survive without the continuation of massive monetary stimulus. In fact, the Fed’s next big move will likely be to increase, rather than taper, its monthly QE dosage! One reporter on this video said that its time for the Fed to take the training wheels off the economy. As I have been saying for years, QE is not the training wheels, its the only wheels the economy has. Take it away and the economy stalls. However, as the economy is now headed toward a cliff, taking the wheels off is much better than leaving them on and going over that cliff.
Stick with it. It’s a good 5 minutes long. But it will have you splitting your sides with laughter. My personal favorite, the guy about 1 1/2 minutes in working at a Pizzeria with a 4-year degree. Schiff is a hardline libertarian economist who frequently appears on Fox Business and CNBC.
“That’s pretty much every bartender in this city,” and she would probably know.