William E. Fleischmann outlines why Warren’s plan to eliminate student debt is worse than you think — to bad his case won’t be made to nearly enough people:
The elimination of monetary incentives can hardly have anything but a material detrimental effect on the quality of education provided in the US.
“There ain’t no such thing as [a] free lunch” –from the El Paso Herald-Post, June 27, 1938
Politicians Competing to Offer the Most “Free” Stuff
Presidential candidates and campaigns have been offering “a chicken in every pot” for at least 90 years now, but this election cycle seems to be all about offering more “free” stuff than the other candidates. Some have even gone so far as to claim it’s not a problem that the government prints money to cover such things, as if the concept of Modern Monetary Theory (MMT, or, more accurately, Mindless Magical Thinking) makes it okay. This is beyond the scope of this discussion but is more than adequately covered here, here, here, here, here, and here.
One point relevant to this discussion is that MMT is based on the premise that government can allocate resources more efficiently than the alternative had their exercise of monopoly power over the currency not taken place—a premise without a single example in all of human history.
The latest salvo in the Free Stuff Wars comes from Elizabeth Warren and her plan to cancel (most) student loans and offer free college to everyone. Some have even suggested, most notably the Levy Institute at Bard College (affiliated with self-described socialist Joseph Stiglitz), that such a plan would “super-charge the economy.” The premise, as we shall see, is absurd on its face. Surely, this is an effective way to woo millennials with college debt. As George Bernard Shaw noted, “A government which robs Peter to pay Paul can always count on the support of Paul,” but that hardly makes it a sound idea economically.
Read more: Foundation for Economic Education
Image credit: www.fee.org.