Subsidizing STEM Education

Thanks for the debate LF! {{{ Weighing mechanism }}} I would have thought this went without saying, but since the resolution is asking what the *United States* should do, it's asking us to weigh the debate based on which outcome best serves US interests. Nations are supposed to prioritize their own interests. I'll start by attacking LF's case. {{{ "Free market" solution }}} Problem 1: Contradicting advocacies LF never bothers responding to the argument that his tax proposal and his free market solution contradict. In economics, taxes are said to cause *just as much* market distortion as subsidies. LF argues that supposedly, in a free market, non-socially optimal college majors would be disincentivized with higher interest rates on student loans. Adding a tax on top of this would create another, non-free market, disincentive to attend college. The tax would distort the market and caused a sub-optimal number of people to attend college. So LF's insistence on arguing for a tax takes out any advantage he claims from solving market distortions. And I would argue that it's better to distort the market to create too many STEM majors than too few. Problem 2: College isn't a free market Even if we implement LF's proposal for student loans, college still won't be a free market because tuition rates are all fixed at the same price for each major. Thus, tuition rates are not responsive to labor demand. If there is a labor shortage in a specific field, tuition rates for that field don't drop. Thus, the free market cannot solve labor shortages. We need tuition subsidies to solve labor shortages. Essentially, colleges have created a market distortion through "price fixing," and only government intervention can solve this distortion. Student loans are not a large enough part of the picture because not every student needs loans, and the cost of tuition matters more than interest payments. Paying 10% interest on a $40,000 loan (for tuition at a public university, where education costs are subsidized by the state) is cheaper than paying 5% interest on a $120,000 loan (for a private university). Tuition affects the size of the principal on the loan and thus the size of interest payments, but is not determined by the free market, even under LF's plan. Since we *don't* have a fully free market in college education, we are forced to intervene in the market to solve for market distortions. I prove that the market is undersupplying STEM majors, so we need to subsidize these majors. Problem 3: Collective Action Problem The free market cannot solve labor shortages because there is a collective action problem. I *did* explain why there is a collective action problem. Theoretically, if there is a projected shortfall in the supply of STEM graduates, employers would want to take measures – like subsidizing education - to ensure they could secure workers in the future. However, not every employer will subsidize college, since employers can free ride on the employers who *do* subsidize college. And because students can choose to go to any employer they want upon graduation, *no* employers will subsidize education because students could go to a "free riding" employer. Subsidizing STEM education doesn't guarantee your individual firm more workers. This is "collective action problem 101": a benefit that accrues to everyone is not achieved because of free riding. Only the government can overcome a collective action problem. {{{ Tax plan }}} Problem 1: Not quantifiable Not a single economist has been able to quantify signaling cost. If the IRS cannot quantify signaling cost, they don't know what tax rate to charge people. LF has the burden to show that his counter-proposal can actually be implemented. A theoretical but impractical solution doesn't do employers any good when the labor shortage hits. Problem 2: Raising taxes LF is willing to argue that we add this tax on top of current taxes. A massive tax increase during a recession would cripple our economy. Plus, you can't charge someone more than a 100% tax rate, and LF himself says that his tax could be as high as 80% for some types of majors. How would you add an 80% tax to the current 35% federal income tax? Impractical. Problem 3: Decreases STEM graduates The tax makes getting a STEM degree, or any college degree, less lucrative. LF admits this would decrease the number of STEM graduates. Thus, if I prove *any* benefit to STEM graduates, I win. {{{ Shortage explained }}} LF keeps extending his C4 without responding to any of my responses. True, some STEM majors switch to easier majors. Some people switch because STEM is too hard, but some people switch because they are lazy, prioritize their social life in college, etc. If getting a STEM degree were significantly cheaper than other degrees, people would think twice before switching and would be more likely to "tough it out." In addition, even if STEM is too hard for some people, we need to graduate an additional 100,000 STEM majors so they can teach STEM courses in K-12. A subsidy is required so we have enough good STEM high school teachers, who can ensure their students enter college better prepared. Now on to… == MY CASE == {{{ The Looming Shortage in STEM Workers }}} LF concedes the President's Council of Advisors evidence – that over the next 10 years, there will be a shortfall of 1 million STEM graduates in the US. His only response to this in the last round is that we can meet this demand with foreign workers. LF even agrees that the foreign workers won't even *come* here anymore (between the Zakaria evidence and the lack of H1B visas). LF agrees that American companies would have to "close shop" in the US and relocate to where the engineers are (India, China, etc). He says that we can just import the products they make. However, if US companies leave, we lose jobs and corporate tax revenue. How can we afford to buy these products if Americans don't have any jobs? In addition, education subsidies would most definitely be cheaper than the lost tax revenue from losing our STEM firms. Just losing Apple and Microsoft would mean losing upwards of $20 billion a year in tax revenue. Thus, subsidizing STEM would be a net positive for the US. LF seems to agree, at times, that his proposal will hurt American prosperity, but asks why we should prefer American prosperity to Chinese prosperity. The answer: nations are supposed to prioritize the interests of their own citizens. When debating US domestic policy, we must adopt a weighing mechanism that puts US interests first. So we face a shortage of 1 million STEM workers over the next 10 years. STEM fields account for *half* our GDP growth. If STEM companies relocate abroad, our economy will stagnate or even shrink. STEM jobs are key to American prosperity: they pay 26% more and have triple the job growth of comparable jobs. LF also makes a mistake dismissing my Department of Defense argument without answering it. With the Baby Boomers retiring, we will lose 70% of our DoD STEM workers, all at once. If our military can't do R&D, the US cannot maintain military superiority. Most international relations (IR) scholars agree that US military superiority (unipolarity) is essential to maintaining world peace. Without enough STEM workers, the international system becomes more chaotic and dangerous. Since LF can't claim to solve for this with foreign workers, his only response to my shortage arguments goes out the window. You can vote on this argument alone. {{{ Conclusion }}} LF has merely cited generic economic theory that does not apply to the special "market" for education. LF has proposed two impractical solutions that won't even solve the looming STEM shortage. And by his own admission, voting Con leads to a mass exodus of tech firms from the US. Prioritize US interests by voting Pro.