From: mrh@centerline.com (Mike Huben)
Newsgroups: alt.politics.libertarian
Subject: Re: Paying for education
Date: 6 Jan 1993 23:24:39 GMT
Organization: CenterLine Software, Inc.
Distribution: inet
NNTP-Posting-Host: 140.239.2.36

In article <63161@mimsy.umd.edu> leonard@mimsy.umd.edu (Leonard Dickens) writes:
>Mike Huben writes:
>>Considering that room, board, and tuition at most top-notch universities costs
>>close to the median family income in the US, its pretty obvious that
>>Libertarianism would tie quality of education to family wealth as closely as
>>it is tied in most third world nations
>
>Whenever one sees "of course", or "it is obvious", one should look at
>the statement carefully.  In this case, Mr Huben's "obvious" statement
>does not fly.

That's right: it does not fly in the face of the evidence we can see now in
the world and the historical evidence from our own nation.  The distribution
of capital-intensive education has ALWAYS been predominantly to the wealthiest
EXCEPT where government subsidy occurs.

>The difference between our nation and the third world
>is obvious: money!  We got it.  They don't.  Education -- a capital
>intensive affair -- can be arranged here in ways that could never work
>in the third world due to the far greater affuence of our society.

The rest of your article was sufficiently intelligent that I won't bash you
for using your "obviously" heuristic in your first sentence and then violating
it in your third sentence here.  I'll presume you're joking.

However, subsidies for education do work in the third world the same way: just
not necessarily at the college level.  For example, there are third world
nations without public schools, with free public schools, and (like Ecuador
where I spent 7 months) with public schools with tuition.  In nations without
free public schools, even primary schooling is closely tied to family wealth.

>>My parents were impoverished immigrants.  They, my sisters, and I could
>>never have afforded our educations which propelled us into the middle class
>>without substantial government loans and subsidies.  
>
>The government does not owe you an education, nor is the government
>capable of generating wealth, as you are implying.  The government is
>certainly capable of redistributing wealth -- but that wealth has to
>ALREADY be there, somewhere, to be redistributed.

It is in the interests of a nation to ensure that all its occupants are
well educated to raise their productivity.  Essentially all formal education
is paid for by means of redistribution of wealth, either by government or
within families because most students have little wealth.

>In this case, the
>government took money from many folks to pay for your education.  This
>is a sense fair, however, since you will now be forced to pay money
>until you die, partly for other folks' educations.

Essentially the same situation, and same fairness as parents paying for a
child's education as a way of repaying their own educations.  However there
are several important and beneficial differences.  First, government
redistribution helps ensure access to education for all, whereas family
redistribution doesn't work for the poor.  Second, family redistribution
doesn't work well "fairly" unless you have exactly two children: non-parents
never repay, and parents of many overpay or can't pay enough.  Third, those
who benefitted the most (and there is a strong correlation with amount of
money spent) repay the most under government redistribution.

>An education IS worth it, even at today's prices.  It may cost $60K
>for your four years at Uppity U., but that amount will be easily
>recovered via the increased salary you can expect to command over the
>course of the rest of your life.

Quite so.  Numerous studies have shown this.

>Therefore, it should be worth it for
>students to BORROW their $60K from a financial institution, subject to
>repayment over, say, a ten year "mortgage" starting in four years.
>This would have the pleasant effect of cutting the government, with
>its inherent inefficiency and complication, out of the system.  Also,
>and morally more importantly, it would remove the need for the use of
>force currently maintained by the government in order to force
>"repayment" from the educated and non-educated alike.

Why start at college?  Let everybody graduate high school with a $60,000
debt (that's extremely low compared to many school districts).  :-(
Then we'd be well on our way to restoring indentured servitude.

My feeling is that education should be low risk, rather than a gamble with
a $60,000 loan at stake.  People will gamble almost as responsably if they
have a tenth of that at stake and they receive the rest free.  The actual
effect is as if the entire pool of candidates was gambling with the 9/10ths:
those who win will need to pay back a little more.  This works much the same
way that insurance does.

It's funny that so many libertarians complain about our all owing about $20K
each for the national debt, yet think everybody who wants to get educated
should be saddled with a much larger debt.

>The main problem that our society would need to address before such a
>system could become real is the lack of any system for financial
>institutions (including, sadly, our own government) to recover money
>from ex-students who default repayment on their loans.  It would be
>nice if people could contract with the government to "tax" them
>"extra" at some rate to pay into things like student loans or IRAs.
>(I know taxes aren't LibPC, but insofar as this "tax" is voluntarily
>contracted for, it doesn't count as a tax.)  Lenders could then merely
>stipulate such a contract for their repayment as a term, freeing them
>from worrying about your default except via your own unemployment or
>death, for which they (or you) would get insurance.

This is exactly the purpose of the guaranteed educational loan program.
The government guarantees repayment to banks to encourage risky loans to
students.  I used this program also.  (All paid back for several years now.)

There is a basic problem of anarchistic libertarianism in that little money
will be invested in schemes where it is uneconomic to collect fees from the
beneficiaries.  Such as risky educational loans.  Or public goods.

Another basic problem is generational redistribution: human needs and
earning abilities don't coincide for large parts of their lifetimes.
Every generation (in our culture) starts with large educational and essential
needs and about zero earnings, moves to large family-raising needs and gradually
improving earnings, and then essentially top level earnings and low expenses
until retirement when earnings drop and expenses (medical) increase.  This is
a problem that is not well addressed anywhere except in socialistic systems.
Subsidized education is a redistribution of about $60,000 for K-12 education
from the peak income period before retirement.  To adopt a Marxist expression,
this puts the means for production into the hands of the workers.  And it does
so without enslaving them to debt: they are unencumbered if they wish to move
to another nation.

Mike Huben

"Historians will have to face the fact that natural selection determined the
evolution of cultures in the same manner as it did that of species."
Konrad Lorenz in "On Agression" 1966.