Posted in Access to healthcare, big government, Economic Issues, Government Spending, Government Stimulus, Health Insurance, Healthcare financing, Medical Costs, Medicare, Organizational structure, Philosophy, Policy Issues, Uncategorized

5 Charts That Explain the Student Debt Crisis – Foundation for Economic Education

The commonality between the insatiable rise in both healthcare costs and college tuition, post 1965, should be obvious:  Massive amounts of other people’s money in the form of government programs, payments, subsidies and loan guarantees; which economists call the 3rd-party payer effect.

As exposited in the FEE article below, the U.S. Higher Education Act introduced “incentives” into the market for higher education, encouraging both the supply side and the demand side to make decisions that they would not be as likely to make under “non-stimulated” market situations.

Similarly, the passage of Medicare in 1965 sent huge surge of money into the healthcare system. The predictable consequence of this massive revenue stream was an incentive for healthcare providers to enter the market and expand services at an unprecedented magnitude and rate.  Essentially, demand was spurred by new source of financing.  Amy Finkelstein, et.al have done excellent work in this area.  Her work indicates that Medicare funding may have allowed hospital to spend 6-fold more than what individual levels of insurance would have predicted.  And that the spread of 3rd party insurance from 1950 – 1990 may explain about 50% of the increase in real per capita spending over that time period. https://economics.mit.edu/files/788

 

 

“As Bernie Sanders tweeted last year, the cost of education, in nominal dollars, has increased by roughly 3,800 percent since the mid 1960s.

What Sanders didn’t mention was that this was when the US Higher Education Act was passed (1965), which directed taxpayer dollars to low-interest loans for students pursuing college. This increased accessibility to higher education, but the flood of federal money also caused a surge in demand and costs.

The problem isn’t unsolvable, but it will require significant changes to universities and the federal loan program. “Free” tuition and student debt forgiveness will only make the problem worse.

Instead, as University of Maryland economist Peter Morici recently argued, market discipline must be brought back to our institutions of higher learning as part of any debt forgiveness.

While policy wonks offer no shortage of proposals for tweaking the federal loan program to improve it, perhaps the best solution would be to get the federal government out of the loan business all together.”

https://fee.org/articles/5-charts-that-explain-the-student-debt-crisis/

Posted in American Exceptionalism, American Independence, American Presidents, big government, Economic Issues, Free Society, government incompetence, Government Spending, Government Stimulus, Job loss, Leadership, Liberty, Patient Safety, Philosophy, Policy Issues, Rule of Law, Uncategorized, Unemployment

Panic Has Led to Government “Cures” That Are Worse than the Disease, History Shows – Foundation for Economic Education

Smoot-Hawley and the New Deal are hardly the only examples of government actions making a panic worse.

Thomas Sowell recounts several instances in which governments turned small problems into major ones by using blunt force—often price controls—to respond to public panic about rising costs of a given commodity.

One of the more famous examples of this is the gasoline crisis of the 1970s, which started when the federal government took a small problem (temporary high costs of gasoline) and turned it into a big one (a national shortage).

As Sowell explains, however, there was not an actual scarcity of gasoline. There was nearly as much gas sold in 1972 as the previous year (95 percent, to be precise).

Similar examples kind be found throughout history, from the grain shortages in Ancient Rome brought about by Diocletian’s “Edict on Maximum Prices” to the mortgage crisis in 2007.

It is no coincidence that crises—foreign wars, terrorist attacks, and economic depressions—have often resulted in vast encroachments of freedom and even given rise to tyrants (from Napoleon to Lenin and beyond). In his book Crisis and Leviathan, the historian and economist Robert Higgs explains how throughout history, crises have been used to expand the administrative state, often by allowing “temporary” measures to be left in place after a crisis has abated (think federal tax withholding during World War II).

Like an economic panic, pandemics incite mass fear, which can lead to flawed and irrational decision making.

https://fee.org/articles/panic-has-led-to-government-cures-that-are-worse-than-the-disease-history-shows/

Posted in Education, emotional intelligence, Free Society, Government Regulations, Liberty, Philosophy, Policy Issues, Progressivism, Uncategorized

Two Ways Our World Resembles “1984” – Foundation for Economic Education

Welcome to another edition of Friday’s Philosophical Foray beyond Healthcare.  Today’s foray comes to us via a thoughtful article by Jon Miltimore, managing editor at Foundation for Economic Education.

 

“Truth, we see, does not exist in Oceania, the totalitarian nation-state that serves as the setting of 1984. The absence of truth is shown at various times in various ways, but it most famously is depicted when Winston Smith, the book’s protagonist, reflects that it’s only a matter of time before the Party would insist that two plus two makes five.

“It was inevitable that they should make the claim sooner or later: the logic of their position demanded it,” Smith tells us. “Not merely the validity of experience, but the very existence of external reality was tacitly denied by their philosophy. The heresy of heresies was common sense.”

It’s not just that Big Brother is hostile to truth, logic, or facts (though it is). It’s that truth, logic, and facts will at certain times inevitably conflict with its sole goal: control.

This brings us to a second observation about Oceania. It’s a land steeped in politics. It’s force-fed to people. They consume it, whether they wish to or not. It is pumped out of telescreens day and night. It comes from indoctrinated children and neighbors. Some of the people reciting the Party’s cliches believe it, others may not. But there is no escaping the Party’s dogmas.

Politics, few today would deny, saturates most aspects of our lives. It’s in our school systems and collegesFootball gamesblockbuster films, and America’s churches. This was not always the case, and the development is not a healthy one.

And then there is the matter of truth. Last year the Rand Corporation published a report. It essentially said our civilization is suffering from a strange condition: Truth Decay.

Truth Decay is defined as a set of four related trends: increasing disagreement about facts and analytical interpretations of facts and data; a blurring of the line between opinion and fact; an increase in the relative volume, and resulting influence, of opinion and personal experience over fact; and declining trust in formerly respected sources of factual information.

Truth decay might help explain why many people—even intelligent sensible, grounded ones—seem to feel like Alice after she tumbled down the rabbit hole.

“We are living in an era when sanity is controversial and insanity is just another viewpoint,” the economist Thomas Sowell recently stated.

Few Americans today would deny, I think, that truth is under assault. It’s one of the few ideas on which Left and Right can agree. The disagreement arises over who are the greater transgressors of truth.

This is not a trivial matter. As FEE president Lawrence Reed recently observed, truth and freedom are inseparable.

“The first casualty on the slippery slope to tyranny is the truth,” wrote Reed. “If you wish to live in freedom, you must first commit yourself to truth in all things.”

Our future need not be as bleak as that of 1984. The first step to making sure it is not is to reclaim the cherished principle of free speech, and not strictly in a legal sense. Rather, we must remember that the free expression of ideas is essential to and inseparable from the search for truth.

The great American writer Walter Lippmann once explained why freedom of discussion is essential to not just freedom, but truth itself.

“…if we truly wish to understand why freedom is necessary in a civilized society, we must begin by realizing that, because freedom of discussion improves our own opinions, the liberties of other men are our own vital necessity,” wrote Lippman, one of the founding editors of The New Republic. “This is the creative principle of freedom of speech, not that it is a system for the tolerating of error, but that it is a system for finding the truth.”

The truth will not prevail in a world that prevents the conflict of ideas by suppressing speech.

“Freedom is the freedom to say that two plus two makes four,” Winston Smith tells us. “If this is granted, all else follows.”

When I read this line 25 years ago I didn’t understand what Orwell was saying. Now I do.

Source: Two Ways Our World Resembles “1984” – Foundation for Economic Education