You Know You Only Used To Get Juiced In It

-- By AlexKonik - 03 Jun 2012

Always Go to College

There are few things that remain unquestionably true in American life. One, Americans are special in the world. Two, your kids will have a higher standard of living than you. Three, number two is only true if they go to college.

Without doubt, K-12 education is very important. It certainly benefits students. In 13 short years supposedly all Americans (we can set aside varying school quality for now) are transformed from walking and talking little monsters into actual citizens. They can read, do basic math, dissect a frog, and have a basic contextual knowledge of human history and how government functions (sort of; many people still think voting is important). The benefits to society likely even outweigh the benefits to the individual. When everyone can read a stop sign, trucks can bring avocados into New York from California safer and cheaper.

This type of good calls for government provision or subsidy. Like road and mail access to the country and the ghetto, high-output power plants, internet access, and arguably healthcare, the total societal gain is not captured by the price offered for these items.

The Creed

This logic sometimes extends too far. America is captured with a creed that a college education is your ticket up. Investment in education, no matter the school, your area of study, whether you are truly interested, or how hard you will work, is worth the cost. You should not consider whether to go to school; you should consider where to go. This belief may have been true, ironically, when attending college was a signal of luxury and truly privileged status. Today it is just as true but for another reason. The signal has been diluted: lacking a degree serves instead to bar one from a large segment of the most gainful employment. This is not because of the skills learned in college. It is because “colleges are part of the American institution; everybody respects them. They're very rich and influential, but they have nothing to do with survival. Everybody knows that.” (Bob Dylan, responding to questions about dropping out of college). The assumption of college attendance is the product of a creed of indulgent luxury and it should be abandoned.

The Alternative

College does serve some functions that are important. First, it is a great way of investing in human capital. Learning a skill, field of expertise, or profession may be a wise investment decision, depending on the value of the knowledge and the cost in time and foregone opportunities. Second, it can be a luxury good for the academically interested. Third, like K-12 education, it socializes and informs citizens, providing externalities that price does not entirely capture. It is this third function only that warrants government subsidy. But this third provision is as successfully achieved in other ways. Many European countries have a mandatory period of service for people of this age group comparable to AmeriCorps? . Although mandatory service does not fit into American custom, shifting the creed to support this service is not inconceivable. A young person could actually contribute to society and earn rather than spend money while acquiring the same socialization benefits. When asked to name a better use of four years than college, Dylan replied: “Well, you could hang around in Italy; you could go to Mexico; you could become a dishwasher; you could even go to Arkansas . . . Everybody thinks that you have to bang your head against the wall, but it's silly when you really think about it.” After all, “out of all the people who just lay around and ask 'Why?', how many do you figure really want to know?”

The luxury angle is certainly legitimate. The wealthy may want to read Heidegger and drink at fraternity parties. This is not an investment; it is a vacation. As Dylan said, “I certainly wouldn't advise somebody not to go to college; I just wouldn't pay his way through college.”

The Sliver of Truth

College as an investment, though, is the sliver of truth shouldering the American creed. In a world of the economist’s assumptions this purpose would not warrant subsidy. Unsurprisingly, the assumptions fail and there are consequently many good reasons for the government to subsidize undergraduate educations. Foremost is that college has, as lamented above, become a prerequisite for most gainful employment for cultural reasons alone. Facing a total bar, people must go. The poor are at a particular disadvantage because education is not collaterizable the way a house is. Without assurance of repayment, the poor will face rates that will keep promising investments from capitalizing. A government loan program can spread risk and write defaults off as the cost of operating a system that provides net social gain.

If it isn't a Luxury, You are the Commodity

This justification for subsidy is lost once one reaches graduate or professional school. By then both the student and investor have (or have no excuse to lack) adequate information about future prospects to make an informed investment. Subsidies here are pure market distortion, and we should not lament the recent abandonment of Stafford Loan subsidies to graduate students. The loans disguised the price of advanced education and incentivized over-investment in training that was not worth its actual cost. (Admittedly, tuition is likely chock-full of producer surplus for related reasons, but this does not justify society paying).

The Reconciliation

Appreciating the abandonment of government subsidy for education at any level is a violation of our creed. Education is inherently good; it can only help you; there are no opportunity costs to pursuing it. Education is synonymous with freedom and with choice. Because it is at once a luxury and an investment, the creed disguises the legitimate reasons for education in a shroud of mystic reverence and necessity. When we are happy that the subsidy is cut, we must collide head-on with those “Who despise their jobs, their destinies / Speak jealously of them that are free / Cultivate their flowers to be / Nothing more than something they invest in.”

(I would like to continue working on this paper, but please prioritize my first paper ahead of this for edits.)

-- AlexKonik - 03 Jun 2012