Entitlement and College Cost Bubble

The costs of entitled positions of power inevitably lead to signature inflationary bubbles – University systems are no exception

I am not anti-higher education by any means.  I suppose I may end my career by teaching physics, economics and trade policy at some level.  In writing a blog such as this I risk having my arguments framed and defined for me, spun by SSkeptics, as being ‘anti-education.’  Nothing could be further from the truth. In addition to having two kids in undergraduate school, I have established an endowment at my alma mater to assist underprivileged kids in paying their tuititon and fees.  I am pro-education.  But I am pro-economy, pro-empowerment, and pro-success as well. My daughter recently completed her college undergraduate experience (actual 4 year cost summary with inflation shown below) and is undertaking the long-suffering task of finding employment in this damaged economy.  It has become clear that powerful and unethical brokers and money handlers in our largest and most hallowed institutions were indeed, in the final equation, corrupt.  Higher education as it turns out, is not a filter which wards off institutional corruption.  SSkeptics bear this manifest; their form of corruption being prima facia intellectual and only indirectly monetary. Several large institutions in our economy made off with the largest heist of wealth in the history of this planet.  They were ‘so smart’ (well trained at the ‘how-to’ and not the ‘why’) that no one really will be held accountable for the crimes.

cost of school nowOur undergraduates and graduates sadly therefore posses a daunting challenge in finding a job in an economy which must inflate and un-employ as a natural systemic reaction to the sudden disappearance of wealth by theft, and the shift of taxation to China through the elimination of businesses by off shore replacements.  Our best and our brightest failed us very badly during the 1993 – 2008 time frame.  I hope this is a cost which we will be long to forget.

Ranking highly among the ‘best and brightest’ category, and a sound contributor to similar economic inflationary activity, are our entitled college elite.  Bureaucratic Social Oligopolies are no different in terms of economic impact than are thefts, heists, unemployment increases, or any other value-diluting economic activity (see the net result in the chart on the right pulled from Bloomberg Visual Data (http://www.bloomberg.com.us/news/2014-08-18/college-tuition-costs-soar-chart-of-the-day1.html) along with the chart on textbook price inflation immediately below it (from The Economist: Bureau of Labor Statistics, http://www.economist.com/news/united-states/21612200-its-economics-101-why-textbooks-cost-so-much?fsrc=scn/tw/te/pe/whytextbookscostsomuch)).

price of textbooks

Several blogs back we spoke about inflation being defined as ‘the dilution of value provided by an infrastructure, service, product or administration’ and not the devaluation of a currency. I advise my client nations on inflation dangers and how to avoid fostering such conditions inside their infrastructure, ministerial and taxation practices. Essentially, if I bill you more money, but do not increase my value provision back to you inside the product you are purchasing, I contribute to Inflation. Similarly, if I add staffing to my administration of an institution, yet do not increase the benefit provision incumbent in that institution’s function, I foster inflation. Everybody then bears the burden I impart on society as a result.  It is like throwing litter on the highway, everyone thinks ‘my little contribution will not hurt in the overall scheme of things.’  The problem begins when the institutions promote this practice themselves.

US Colleges Contribute to Inflation – through entitlement, oligopoly power, and unaccountable control of access to professional circles – All protected by institutional SSkeptics

One of the deleterious effects of Social Skepticism is that it promotes, enforces and fosters an entitled elite academic mindset.  SSkepticism promotes and defends institutional bureaucracies which increase in cost more quickly than their value output would warrant. This is not skepticism.  Skepticism holds all claims to power, accountable for their incumbent value provision.

By holding our kids hostage, by denying them jobs unless they pay the exorbitant and up-front dues demanded by this academic union card-holder monopoly, by sitting in arrogant and unaccountable seats of power crafted under a socialist elite mindset, we do a terrible dis-service to our economy and family economic health.

To put it simply – It would be worth more to invest $250 K in college costs in stocks, live simply on a wage job, and be a millionaire by age 50 from that investment – than to develop $250 K in debt and become a doctor, work insanely abusive hours, and not be a millionaire by age 50.  See my ACTUAL COST SUMMARY to the right, which shows the net inflation embedded inside college costs today.  This is unsustainable, has a negative social impact from a professional standpoint, and we will have to deal with it at some future time.

The average debt burden added to the American Economy is $37,000 per year per student to grant this union card access to the professional workforce – It does not matter whether this expense is actual ‘debt’ or not – as long as it is paid for through the exercise of personal capital wealth – it remains an equal economic drain and damages our economy if the value derived from the education, does not overcome and exceed the capital and taxation drain from the economy.  By having ‘everyone go to college’ we increase the likelihood that this upside down economic circumstance manifests as reality, and we simply serve to increase the power hold of those who protect this process.  Scholarships do not solve this because this infusion of ‘free money’ into the university business vertical, results in skyrocketing costs.  Statistics show that college costs rise significantly in the years immediately following the institution of statewide tuition assistance programs.

I advise my client nations on these (but in more relevant detail of course) principles:

The Ethical Skeptic Economic Laws #5 and #9:

#5 – What You Fund for Free Becomes Worthless

#9 – Entitlement Breeds Inflation

Developing nations heed this and understand it.  But in the United States, our minds have been educated (again the ‘how-to’ but not the ‘why’) to hold hallowed institutions as infallible and unalterable.  This has to change.