Subsidy is the problem
TEXT OF COMMENTARY
SCOTT JAGOW: When the Democrats take control of Congress in January, the buzz in Washington is they’ll try to remove some of the subsidies now going to Big Business. But commentator David Frum says the Democrats are also looking to add some of their own.
DAVID FRUM: Imagine if the Republicans had retained their Congressional majority and the first thing they did was suggest big new subsidies for, say, the oil industry. Would there no public outrage?
But that’s exactly what the Democrats are now offering their staunch supporters in academia. The Democrats are proposing big new subsidies for college tuition: new loans, new grants, new tax deductions.
Nancy Pelosi, the new Speaker of the House, promotes these giveaways as a way to make college more “affordable.”
Just about every economist agrees that federal student aid has the opposite effect: It enables colleges to raise tuition even faster and even higher than they otherwise would.
Now, the average price of U.S. college tuition is rising twice as fast as the overall rate of inflation, according to the College Board. Only the health care sector has raised its prices faster.
As with healthcare, more money does not translate into better results. College seniors on average scored only 1.5 percentage points higher than college freshmen in their knowledge of history, economics and international relations, according to a recent survey.
Worse, the survey showed that seniors at the most prestigious and expensive schools actually scored lower than freshmen. That suggests that the principal effect of $200,000 worth of Georgetown or Yale may encourage students to forget all the AP material they covered to get into those schools in the first place.
While student knowledge declines, academic pay rises. 112 of America’s college presidents now earn more than $500,000 a year.
Most industries deliver constantly-improving products at steadily declining real prices. Healthcare and higher education, the two great exceptions to this rule, are also the two most government-subsidized sectors in the U.S. economy.
More subsidy is not the solution to the problem. The subsidy is the problem.
JAGOW: David Frum is a former speech writer for President Bush and a resident scholar at the American Enterprise Institute. In Los Angeles, I’m Scott Jagow. Thanks for listening and have a great day.
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