Monday, October 17, 2011

On how Subsidizing education fully is the least expensive option (with some simple economical analysis), another chat with a friend

I was chatting with a friend in response to a facebook listing today which i lost my temper and went all spock on them. We are both college students, he is a freshman and I am a sophomore on opposite ends of the country.

If people are choosing degrees that don't convert to jobs than that is there fault. For those of us (including myself) that desire jobs that are high in technology in the sciences, or the future programmers, lawyers, and other jobs that give massive payback to society and are looking forward to having to pay back the equal amount in taxes instead of buying things that would stimulate the economy (good economy = money flowing, bad economy = no money flowing) it is a burden and keeps us from giving back to society that we want to. Look overseas and we can see many different solutions to the problem of education debt and compare this number to GDP growth and you will see a positive corrolation (China, Japan, Taiwan, Sweden, among others vs. the USA) of increased government college spending and GDP growth rate. This will take about 15 minutes of your time, are you willing to do that for your country to make a more educated vote?
bam! right to the nose!

Sounds good, but you can make a much simpler economic argument:
1. Education increases income.
2. Income is spent and spurs economic growth.
Conclusion: Education spurs economic growth.

yeah. simple. Some people are so d**n stupid!

Yes. Yes they are.

and lazy
the lazy is the really important part

And horribly ignorant of basic economics.*

yeah.. which you will not learn unless you have the guts to learn them yourself... now that is the real shame
someone else argued on how government spending increases college tuition!
because state schools are massively less expensive than private schools
that is out of state cost

Also, private schools are a competitive market. Even among different "grades," like Ivies, mid-range liberal arts colleges, etc., there's enough competition that anyone charging too much won't get any students. The market price tells you what a college degree is worth to the student.


Now, the economic arguments break down when you say government should pay *entirely* for *everyone's* college.

and the education at state schools is still really, really good in my experience

That's fair.

would those be the economic arguments against a system with full funding
(just to clarify)

No, the arguments in favor of subsidizing higher education. Consider this: there is a higher demand for legal services than there is a supply of lawyers. Therefore, lawyers are ridiculously expensive. If more lawyers are trained, society as a whole benefits because people save a ton of money on legal services.

supply v demand, lesson #2

However, the principle of diminishing returns dictates that the benefit of having 1.5 million lawyers instead of 1.4 million is much greater than the benefit of having 40 million instead of 39.9 million.
In fact, the benefit of each additional lawyer will at that point be less than the cost of educating them. Therefore, paying for it is silly.
However, this is just a rephrasing of the argument from "education is a basic right" to "society benefits when the government subsidizes education in certain industries."

so we would run into a situation where only a certain number of people could sign up to study to be lawyers in any given year which fixes the problem you are talking about of oversupply, by cutting supply

So yay util?

pretty much. It really works
I use it for all my arguments

Oh, you don't need to limit supply. If the wages get too low, people will simply stop going to law school and supply will self-regulate.
Of course, that's not a perfect example because the Bar Association actually does limit supply, and with the very specific purpose of keeping pay high.

exactly, which means it would solve itself and would balance out in, oh, lets say a couple decades
so lawyers is a terrible example

In the status quo, but it illustrates the main point since it is undersupplied.