Saturday, August 24, 2013

President Obama's Plan and Mine for Controlling College Costs

Over at The Chronicle, several articles lay out President Obama's plan to control college costs.  I think a look at the bigger picture is in order. To wit:

1. Make the "job creators" who have had massive tax breaks since 2002--remember those bank bailouts?-- work a little harder at developing and sustaining solid, middle-class jobs in this country. The Dow and NASDAQ keep going up, and Marketplace keeps playing its happy song "We're in the Money," but what does that mean for people who can't get a job? We keep seeing all these worried articles about "the American people aren't spending enough," and then someone speculates, "do you suppose it's because they don't have jobs or don't feel certain about the jobs they have?" Gee, ya think?

2. Do something about the student loan crisis.  I'm not an economist, and surely economics bloggers like nicoleandmaggie are cringing at my naïveté right now, but I fail to understand why large corporations can get virtually 0% borrowing and can declare bankruptcy if they have to pay pensions, but the best we can do for students is temporarily not raising rates to 6.8% and promising that they won't go above 8.25 (and way more for parents).

Students are graduating with the equivalents of unsaleable houses on their backs, mortgage-level debt in some cases, and they do not have the privileges of corporations in borrowing or declaring bankruptcy. If you want to know why young Americans aren't buying cars, here's a tip: it's not necessarily because they're save-the-earth hipsters. They can't afford it.

3. Think before you act on the MOOC model. In what may be an example of tongue-in-cheek understatement, the Chronicle observes that "Evidence for the effectiveness of MOOCs remains thin, if nonexistent." Thomas L. Friedman is invoked as though he actually has a ghost of a clue about what is happening in education.

Again: education is a good thing, and college graduates fare better than those who don't graduate, but simply focusing on flipping classrooms doesn't help with the one-two punch of punishing levels of debt and high unemployment.  


nicoleandmaggie said...

" nicoleandmaggie are cringing at my naïveté right now"

No, no, you're absolutely right. We are nowhere near the downward slope of the Laffer curve, so there's no reason for all this corporate welfare. Investing in education would be good for US productivity.

However, given that corporations have been given even more political power by the Supreme Court, corporate welfare at the expense of long-term prosperity and growth is unlikely to end anytime soon.

I'm not entirely clear why so many of our corporate overlords are so invested in destroying the middle class, but I suppose they must think it's nicer to have their slice of pie to be way bigger than everybody else's than it is for there to be a bigger pie that's more evenly distributed.

Robert Reich is a good person to read/listen to on these topics.

undine said...

Thanks, nicoleandmaggie, for confirming that in this, at least, I'm not crazy. I've liked what I've read of Robert Reich and also Paul Krugman, but even they can't seem to explain why the corporate types seem bent on destroying the middle class. Can't they see that there's a connection between people having jobs and people being able to buy things?

And when you get to the rarefied atmosphere of making 300 or 400 or a thousand times the annual salary of the workers in your company, what can you possibly buy with that kind of money other than bragging rights?

nicoleandmaggie said...

My mom thinks they're depending on supplying the hoi poloi in the rest of the world. But if they're not careful, they'll end up under the thumb of some Chinese business person.

I'm not as crazy about Paul Krugman because he is definitely not a pragmatist. For example, we need Social Security reform (small nips and tucks, starting 20 years ago!) and it's dangerous for us for him to be selling a line that we don't. Reich, I totally trust.