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Jewish World Review May 12, 2000 / 7 Iyar, 5760

Thomas Sowell

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Too much "education"?

http://www.jewishworldreview.com -- COLLEGE AND UNIVERSITY TUITIONS have been going up in countries around the world -- and student protest demonstrations against rising tuition have broken out in countries around the world. But is this the way to settle a serious issue?

The Chronicle of Higher Education, trade publication of the academic world, says the problem is that the job market requires higher and higher levels of education while "in most countries, public financing of higher education hasn't kept pace with that need, because of declining budgets and competing national goals."

Actually, a big part of the problem is due to the kind of confused thinking shown by The Chronicle of Higher Education. First of all, competing goals are inescapable in human life. Nor does any society have one bit more resources available to meet those goals, whether the government spends billions of dollars or not one cent. The only thing the government can spend is what it takes from the people. Subsidies are a shell game, not a net addition to national wealth.

As for the "need" for more education, there is no given amount of education that is needed. As with everything else, we want more when someone else is paying for it and less when we are paying hard cash out of our own pockets.

As for rising education requirements, this is not necessarily due to new high-tech jobs. Many old, low-tech jobs now demand diplomas and degrees. It is a handy way to sort out applicants -- cheap to the employers, but costly to the taxpayers.

In other words, so long as the government keeps increasing the amount of money it will pay to subsidize higher education, more and more people will go to colleges and universities -- and more jobs will require diplomas and degrees. Trying to meet that "need" with more government spending is like a dog running faster in a circle, trying to catch its own tail.

None of this is peculiar to higher education. All the things we think we need add up to far more than any society ever has. In a capitalist economy, the fact that we have to sacrifice our own money to get what we want forces us to make trade-offs.

When such decisions are not made through the marketplace, then third parties with political power make such decisions for us. But neither the prices nor the power creates the scarcity of resources, which exists under any political or economic system.

Those who believe that third parties -- like themselves -- ought to be making our decisions for us often invoke "the poor" as a reason why we cannot rely on the economics of the marketplace to sort things out. But this can be a red herring.

If we go back to the 19th century, we find a lad of 16 who decided that he was fed up with farm work and who walked 8 miles to Detroit, looking for a job there. His name was Henry Ford. How could someone who couldn't even afford a ride to Detroit from the nearby countryside have enough money to manufacture millions of automobiles?

Obviously, he used other people's money. That is what capital markets are all about. You can finance all sorts of things with other people's money. It happens every day when you put things on your credit card. Some bank picks up the tab for what you bought and you pay the bank later. The same thing happens when you buy a house with a mortgage.

This is nothing new or mysterious. In colonial America, it was common for European immigrants to have someone else pay their way across the Atlantic by agreeing to work off the debt after they arrived. It is certainly not beyond our capacity today to have students borrow someone else's money to pay for their own education and repay the money after they graduate.

How does that differ from having the government pick up the tab? Both the students and those who advance money to them will be forced to make some serious judgments about how much education is really "needed" when it is their own money on the line. When it is only the taxpayers' money, then it is easy come and easy go, as far as both the politicians and the students are concerned.

That is why so many campuses have so many people whose desire for education is considerably less than urgent, and who go on to take jobs for which degrees are "required" only in the sense that employers choose to require them. Moreover, government subsidies make it easier for colleges and universities to raise tuition. Here again, we can end up like a dog chasing its tail.


JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author, most recently, of The Quest for Cosmic Justice.

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