Phi Beta Cons

Re: Education and Entrepreneurship

George, I agree with most of Arnold Kling’s article, “Education and Entrepreneurship,” but I think that Kling actually understates the full effect of government funding of higher education. If most state and federal government money were removed from both higher-education and secondary-education institutions, the result after five years would be much more pronounced than Kling suggests.

Without government subsidies, American higher education would be drastically different from what it is today. It wouldn’t just be a highly-efficient version of the status quo. Although nobody can blueprint what an unbridled free market in higher education would look like after five years, I think it’s a safe assumption that a much smaller percentage of 18-year-olds would be in college than today. And David Frum’s commentary explains why: “The subsidy is the problem.” As Frum cogently notes, when Washington and state governments pay more of higher education’s overall cost – instead of college students and their families – there is much less incentive for colleges and universities to keep costs down. That’s the biggest reason why the costs of higher education are outpacing the rate of inflation, just as in health care, as Frum notes–another industry with a high degree of “third party payment,” with government being the third party.

Partly because of today’s generous government subsidies to higher education, more Americans today go to college than ever before. For example, 28 percent of Americans today have a college degrees, yet in 1920 only 22 percent of Americans possessed even a high school diploma. Many educrats today speak of K-16, this moniker having replaced K-12. So college today for many young Americans is super high school, 13th through 16th grade. American colleges today are truly young folks’ homes.


Yet there is no evidence that an American today with a college degree is “more educated” than an American with a high school diploma in 1920. Apparently, the amount of knowledge transmitted has been extended from 13 years of formal schooling to 17 years.


Finally, the fact that more Americans are enrolled in higher education today than ever before is a result, not a cause, of increased wealth. Essentially, adolescence in America has been extended to the twentysomething years, with most Americans not beginning careers until their mid-to-late twenties. This indulgence is only possible because the country is wealthy enough to afford it.


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