3014

This must have happened at some time.

You either can or can’t disentangle this effect from the stated hypothesis in the paper, where a specific rule change occurred in 2011 which caused some schools to have a DIFFERENT fraction of students who were ineligible for loans, so you had a nice control for other factors you’d want to control for to do this analysis more cleanly.

Yours is more of a hand wavy “i said shit happens, so this article is wrong.”

Cool. (I’m pretty sure I’m wasting my time.)

3015

You replied too fast. Read the article.

Or, it’s a way of saying that I’m not convinced it’s the totality of the cause, and that there are other factors, which other factors are also well documented.

3016

Welp, Andrew Yang made it easy for me to cross him off my list.

One thing that got Trump elected was the GOP’s belief that they could run amok without facing any serious consequences. (And no, losing an election and then spending a time-out on the bench as a commentator on Fox is not a serious consequence.)

3017

Ah, the ‘look forward, not backward’ philosophy emerges. I thought it would wait until at least after the election.

3018

I think he gets the causality wrong. It’s the struggling democracies that elect criminals as President. Throwing a former President in jail is a symptom of that (or at least it would be in this case).

3019

Today I learned that France, Italy, and South Korea are developing countries.

3020

This article seems relevant (as basically very few people could pay those costs without loans. If there were no loans, would costs go down?)

Likely. A subsidy like this will increase the price of the good. The argument is more the magnitude of the tuition increases as a result of the student loans. Not many analysts/experts will argue that the loan program hasn’t increased tuition.

Tuition is also increasing as a result of the college-wage premium. The returns to college are huge and as a result the demand to attend college has increased a great deal. I believe the returns to college are falling a bit especially compared to skilled trades and the fact that companies are valuing skills over the signaling effect of a college diploma.

State support for public state universities has fallen and will continue to fall as a result of other budgetary pressures and some from crowd-out from more federal funding to higher ed.

3021

All three areas are also impacted by major government subsidies that drive up demand for those products, mainly dealing with preferential tax treatment like mortgage tax credit or HI tax deduction (largest US tax expenditure). Those were put in place to increase the demand of those products so there should be no surprise that those areas grew faster than the economy. They were/are some of the most heavily subsidized parts of the economy!

Different take than yours based on facts.

3022

Isn’t this all part of the shift to living through indebtedness which is the inevitable consequence of wanting 1) to freeze wages forever, while 2) increasing consumption?

3023

So in terms of giving people free loan forgiveness, how do we prevent moral hazard? Also, how do we justify forgiving someone’s loans when they went to a terrible private college for an English degree and racked up $200,000 in debt, versus someone who went to an in-state school and lived at home and came out with $30,000 in loans?

What incentive is there for the student to not just take as much as possible? What incentive is there for the university to not charge as much as possible? If my debt is going to be forgiven, why would I care about how much debt I take? Why would I care about selecting a school with a lower tuition/room and board cost?

3024

Thanks. The point that loans have an impact, but that it may be marginal compared to other effects helps clarify my understanding.

3025

So if we remove all the subsidies, under your theory, then the prices of these things will come down? The market imperfections, which I described and you completely ignored to blame government subsidies, just go away?

Government subsidies did facilitate these trends, as I indicated in the context of tuition, but government subsidies are in no way the underlying cause. The underlying cause is market imperfections, combined with the attitude by many in the US that the market can never fail, it can only BE failed.

I don’t know why I’m so angry at wahoo, but flippantly disregarding market realities to focus all blame on the government, it’s like a microcosm of why we can’t have nice things.

I will agree that merely subsidizing things that “cost too much” is not necessarily a good idea and can exacerbate the problems. In my view, you need to look at the underlying reasons why the market is not effectively functioning as a tool to achieve the performance we want from the market.

In the current context, taking away the subsidies in these areas, without addressing the underlying market imperfections, will worsen the overall problem, not improve it. In the long run, properly addressing the underlying market imperfections will probably make the subsidies unnecessary.

But blaming the subsidies, that’s like blaming the blood pouring out of a gunshot wound without doing anything about the wound itself. I mean yes, the blood loss will kill ya, but it’s the wound that’s the problem, not the blood flow by itself.

3026

I think the idea would be that you introduce loan forgiveness at the same time as a plan to reduce costs, like pushing state college costs to $0. That’s it, everyone with current debt gets paid off, everyone in the future either goes to state college or pays their own way through private school.

I’d love to see it also coupled with a solution for folks who don’t really need to go to college. A nationwide apprenticeship program, vocational schools boost, or something like that. Tons of people are being pushed through the college system who don’t want or need it.

3028

Hi everybody! How about some election posts?

3029

Odd… four of the top five candidates (by polling) are on the second night. I’m not sure if that’s good for Warren or bad.

3030

Regarding college costs, I’ve got to believe that demand is part of the problem. Tertiary school enrollment for people just out of high school approaches 80% in the U.S., up from near 50% in 1980. This has the effect of making such education more expensive and necessary while simultaneously reducing the economic value of it.

3031

Yglesias remarked on Twitter that he thought she had the easier of the two brackets…but I think I also see merit in Nate Silver’s remark that Warren would’ve loved to have had Biden in her group.

3032

Also having a lot of people in your group who don’t have much of a chance and so may be willing to say crazy things to get noticed may be a thing that happens. It’s hard to tell because everyone in the Democratic party is a lot more like an adult then the opposition.

3033

So if we remove all the subsidies, under your theory, then the prices of these things will come down? The market imperfections, which I described and you completely ignored to blame government subsidies, just go away?

Yes. But not just my theory. Theory of CBO, Federal Reserve Economists, heck just about all the economists. The cap on the ESI enacted under the ACA was praised by bipartisan economists as a way to limit health care growth. Capping mortgage interest deduction was a big bipartisan step forward as it was a regressive subsidy that decreased homeownership and increased prices. Ditto with education.

The only question is how much would the price changes be? These changes aren’t monocausal and hard to disaggregate impact of effects.

There is a slew of academic literature that finds that govt tuition subsidies is the dominant factor in high ed costs (for example: https://www.nber.org/papers/w21967.pdf). Quite frankly, I don’t understand your model for higher ed/scalability. If it’s lack of supply at the elite universities, why are non-elite private universities also rapidly raising tuition? How does your proposal to increase money to public schools going to reduce overall tuition costs, especially give your theory on supply reductions at elite schools.

As for housing, I agree with you. Government regulations in many locales have constrained supply with zoning regulations. Not sure why you call that a market imperfection when the market would be very happy building more high density housing in LA/San Fran.NYC.DC but government regs won’t let them! Zoning restrictions are government imposed regulation on the marketplace! Areas that have more freedom from govt have seen more housing booms. I think the housing subsidy in tax code is a bigger problem but I you are absolutely correct that by removing government regulations will lower housing costs in many urban areas.

3034

Specifically, you mean re-zoning for higher density. Because let’s say what we mean. No one is advocating for removing all housing regulation. Markets have to be regulated to work properly. Government isn’t interfering with market operation here; it’s just not guiding the market properly to desired outcomes.