Friday, November 11, 2011

Occupiers Are Blaming the Wrong People

Margaret Wente writing in Canada's Globe and Mail:

"It’s not the greedy Wall Street bankers who destroyed [the Occupiers'] hopes. It’s the virtueocracy itself. It’s the people who constructed a benefit-heavy entitlement system whose costs can no longer be sustained. It’s the politicians and union leaders who made reckless pension promises that are now bankrupting cities and states. It’s the socially progressive policy-makers in the U.S. who declared that everyone, even those with no visible means of support, should be able to own a home with no money down, courtesy of their government. In Canada, it’s the social progressives who assure us we can keep on consuming all the health care we want, even as the costs squeeze out other public goods.  

The Occupiers are right when they say our system of wealth redistribution is broken. But they’re wrong about what broke it. The richest 1 per cent are not exactly starving out the working poor. (In the U.S., half all income sent to Washington is redistributed to the elderly, sick and disabled, or to those who serve them, and nearly half the country lives in a household that’s getting some sort of government benefit.) The problem is, our system redistributes the wealth from young to old, and from middle-class workers in the private sector to inefficient and expensive unions in the public sector.  

Among the biggest beneficiaries of this redistribution is the higher-education industry. In Canada, we subsidize it directly. In the U.S., it’s subsidized by a vast system of student loans, which have allowed colleges to jack up tuition to sky-high levels. U.S. student debt has hit the trillion-dollar mark. Both systems crank out too many sociologists and too few mechanical engineers. These days, even law-school graduates are having trouble finding work. That’s because the supply has increased far faster than the demand."

12 Comments:

At 11/11/2011 12:32 PM, Blogger Buddy R Pacifico said...

Will the Occupiers move to the campuses of medical device makers?

Stryker Corp. has just announced 1000 jobs to be cut.

Stryker is eliminating jobs to cope with the 2013 Medical Device Tax. This tax will be levied on revenue and not earnings so, even money losing companies will pay the tax. This tax will help fund the Affordable Care Act.

 
At 11/11/2011 1:32 PM, Blogger Larry G said...

doesn't this imply that the company had workers it did not need to start with?

If a company actually needed the employees to maintain production, wouldn't the tax just be added to the cost of the product?

If you lay off people, it ought to hurt production - unless of course - you've got excess production.

do companies really keep employees they don't need ...until and unless their products are taxed?

 
At 11/11/2011 1:33 PM, Blogger Larry G said...

This comment has been removed by the author.

 
At 11/11/2011 5:41 PM, Blogger Don said...

Actually spoke with an "average Canadian", a truck driver, Wednesday. He was telling me how great it was being Canadian because he didn't have to pay for health care and college.

It was like having a conversation about credit cards with my 4 year old, "Just put it on the your credit card, I want it!"

 
At 11/12/2011 6:50 AM, Blogger Manuel said...

Superb article, thank you very much Mr. Perry.

 
At 11/12/2011 8:32 AM, Blogger VangelV said...

Both systems crank out too many sociologists and too few mechanical engineers. These days, even law-school graduates are having trouble finding work. That’s because the supply has increased far faster than the demand.

Most Canadian university students have the same problem understanding economics as Americans. They still believe that there is such a thing as free lunch and that market forces do not matter. When they find that is not true they also blame the 'rich.'

 
At 11/12/2011 8:40 AM, Blogger Larry G said...

I don't know about Canada but the problem in the US is fairly simple.

The govt should NOT be offering subsidized guaranteed loans at all or if they must ONLY on the basis:

1. - loans ONLY for curricula associated with AVAILABLE Jobs

2. - cost-match basis... for every dollar the applicant provides - one dollar of loan is available.

we have the same problem going on with college loans that we had with the housing market - and that is govt guarantees of the loans that basically encourage people to borrow money - and those in the business of lending money - loved it and made the most of it - because they knew the govt would end up backstopping even idiotic behaviors.

What would be interesting:

A poll of the occupied crowd to see how many:

1. - have jobs
2. - have mortgages
3. - have student loans

 
At 11/12/2011 1:47 PM, Blogger Ron H. said...

"The govt should NOT be offering subsidized guaranteed loans at all or if they must ONLY on the basis:"

You started off well by suggesting that government shouldn't offer subsidized, guaranteed loans. Government absolutely shouldn't be in business competing with other lenders, using money taken from those who had no wish to invest in lending money to students, nor should government be in the business of social engineering.

The role of government should be to act as an agent of the people, not as their master.

"1. - loans ONLY for curricula associated with AVAILABLE Jobs"

Do you realize you are recommending blatant discrimination on the basis of - not race, not gender - but on the basis of something else students have no control over?

What about students who change majors in mid stream? Will their loan be called if there aren't enough current job openings?

Affirmative action for students who wish to be nuclear physicists, if there are jobs available four or more years before they will enter the workforce, and no help for architecture students if there aren't jobs available four or more years before they are ready.

In reality there are almost certainly SOME jobs available in any field, just not enough to accommodate the number of applicants at any given time. This could change dramatically before a student finishes their studies.

"2. - cost-match basis... for every dollar the applicant provides - one dollar of loan is available."

This idea favors wealthy students over those with fewer means. I thought the whole purpose of providing student loans was to do just the opposite.

"we have the same problem going on with college loans that we had with the housing market - and that is govt guarantees of the loans that basically encourage people to borrow money - and those in the business of lending money - loved it and made the most of it - because they knew the govt would end up backstopping even idiotic behaviors."

That's basically correct, except that government guarantees encourage the lenders, not borrowers, who don't care whether the lender is protected from loss.

But, as in the housing market, the availability of easy money drives the price of education higher.

 
At 11/12/2011 5:33 PM, Blogger Larry G said...

" But, as in the housing market, the availability of easy money drives the price of education higher"

that's why a targeted approach is better IMHO.

if you are a student and want to pursue a course of study of which there there is little need for nor the prospect of need - then you are certainly free to pursue it but loans should be on your own dime.

The cost-share suggestion had to do with having students put some of their own skin in the game .... and I still think no matter what your financial status - that's always a good thing as opposed to no skin in the game.

 
At 11/12/2011 7:36 PM, Blogger VangelV said...

I don't know about Canada but the problem in the US is fairly simple.

The govt should NOT be offering subsidized guaranteed loans at all or if they must ONLY on the basis:

1. - loans ONLY for curricula associated with AVAILABLE Jobs

2. - cost-match basis... for every dollar the applicant provides - one dollar of loan is available.


You still have way too much of a role for government when it should have none. Let the universities actually compete and let the students pay their own way. There is no reason why education costs could not decline by 75% if the government got out of the way.

 
At 11/12/2011 8:50 PM, Blogger Ron H. said...

"if you are a student and want to pursue a course of study of which there there is little need for nor the prospect of need - then you are certainly free to pursue it but loans should be on your own dime."

You are missing the point, and have ignored most of my comment.

Only an individual student can decide what they want to study, based on their talents, aptitude, and interests.

Only businesses can determine what types of skills they need, and there is no way for anyone in government to match these four years in advance.

Government doesn't know what "we need". Unless you are an admirer of total central planning, you may want to rethink this. Your plan will produce a worse mismatch of jobs and skills than exists now, as students study what they can afford, rather than what they want to study.


"The cost-share suggestion had to do with having students put some of their own skin in the game .... and I still think no matter what your financial status - that's always a good thing as opposed to no skin in the game."

You havent addressed the fact that your plan helps the least needy most, and helps the most needy least.

There is no reason why taxpayers should be subsidizing higher education in any case.

 
At 11/12/2011 9:54 PM, Blogger Larry G said...

"Only an individual student can decide what they want to study, based on their talents, aptitude, and interests.

Only businesses can determine what types of skills they need, and there is no way for anyone in government to match these four years in advance."

we do know what the employees need as they say so and if more jobs open up..then it's your lucky day to qualify for a loan that you did not before.

you are always free to pursue a private sector loan but if the govt is going to assist then it's up to the govt to set the rules and the govt should not be subsidizing loans for occupations IT THINKS are not viable.

if you as a student disagree with that -then pursue other paths.


"Government doesn't know what "we need". Unless you are an admirer of total central planning, you may want to rethink this. Your plan will produce a worse mismatch of jobs and skills than exists now, as students study what they can afford, rather than what they want to study."

private industry does know what it needs and it says so.



"The cost-share suggestion had to do with having students put some of their own skin in the game .... and I still think no matter what your financial status - that's always a good thing as opposed to no skin in the game."

You havent addressed the fact that your plan helps the least needy most, and helps the most needy least."

you can means-test it.

There is no reason why taxpayers should be subsidizing higher education in any case.

I mostly agree but I take a somewhat more middle ground and put restrictions and qualifications on it.

I also agree that by providing these loans that what it really results in - is jacking up tuition fees ....

my stance on this is one in which I think from a practical point of view it has a chance to be implemented whereas the "no loans - period" approach has almost no chance - at least on a first cut basis.

 

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