AUSTRIAN ECONOMICS ADDICT

President Obama wants to make tuition free at 2 year community colleges. Here is an excerpt from the White House Fact Sheet: Free Community College For Responsible Students, at whitehouse.gov: “Today the President is unveiling the America’s College Promise proposal to make two years of community college free for responsible students, letting students earn the first half of a bachelor’s degree and earn skills needed in the workforce at no cost.”

WHAT IS AN ECONOMIC GOOD

College education can’t have “no cost”, because it is an economic good. No matter how much the Presidents utopian vision of the world tries to tell us it isn’t an economic good, it is. What is an economic good? It is a good that is scarce and/or has to be brought to the market by the use of labor and capital. In other words it has to be produced. Air and sunlight are examples of non economic goods because they exist in abundance without having to be produced by anyone. There are very few non economic goods.

Someone has to pay for an economic good. The producer pays the original cost for the production of an economic good. If the good can’t be exchanged at a price that covers the cost, plus a profit, it tells the producer that there is no market for the good and the producer will cease production and absorb the loss.

I love the phrase “AT NO COST“. There is no such thing as, at no cost, in a world ruled by scarce resources that have alternative uses. Economic goods always have a cost and no amount of rhetoric can escape this reality. Political rhetoric is an attempt to shift the cost to someone else. I suspect we, the tax payers, are going to be forced to pay the cost for this new “free” good. Let’s take a look at this from another angle. Instead of shifting the cost of community college to the tax payers, lets see if we can shift the cost to some other individuals.

LET’S MAKE EVERYTHING FREE!

If educating our children is so important that we need to make it free, let’s make the professors volunteer to teach at no cost. Let’s make the workers at the colleges provide their services at no cost. Let’s make text-book companies provide their books at no cost. Let’s make businesses who support the infrastructure of the college provide their good of service at no cost. This would lower the cost of college significantly or possibly make it free if we went far enough down the chain of production.

What would happen if Government bureaucrats mandated that every good and service was free? Would you continue to work as many hours at your job, or would you spend some of your time doing other things that are now free? Anybody with a degree of common sense knows that this wouldn’t work. No one would provide their good or service for free. People trade their good or service for money, and then exchange this money for other goods (food, clothing, shelter, etc.) that allow them to survive every day. If everything was free they wouldn’t need to work.

When you went to the grocery would you choose the ground beef you’ve always purchased, or would you upgrade to ground sirloin or a T-Bone steak? When it was time to get a new car would you choose a used car like you’ve always chosen or would you get a new car?

Do you see the problem? People will choose to consume more things and different things than they would have when there was a price on goods. People will also produce less because they know they can get what they want for free without any corresponding production. We can’t escape the reality of the world we live in. We live in a world of scarce means that have to be used to satisfy the unlimited ends desired by all individuals. Scarce resources, time, labor, and capital have to be rationed in some way. There are three ways to ration scarce resources: 1) through prices in a free market economy, 2) by bureaucrats in a centrally planned economy, 3) or by fighting over them. Voluntary cooperation in a price coordinated free market economy uses scarce resources in the most efficient way possible. It also satisfies a higher amount of ends out of the unlimited number of ends that exist among all individuals. There is no other way of rationing scarce resources, that currently exists, that can come close to what the free market has produced.

Free college isn’t free, the cost is just shifted. Obamacare is an attempt by Government to shift the cost of healthcare to the taxpayer. Welfare, food stamps, and subsidies to big businesses are other examples of shifting costs to the tax payer. As more is made free by Government officials, less will be produced in the free market. Central planning ultimately leads to a lower standard of living, or as F.A. Hayek has said, it’s “The Road to Serfdom“.

OTHER OBSERVATIONS ABOUT THE FACT SHEET

Here is another excerpt from the fact sheet; “Responsible.. students who attend at least half-time, maintain a 2.5 GPA while in college, and make steady progress toward completing their program will have their tuition eliminated.”

Why is the President going to discriminate against students who, through no fault of their own, are irresponsible. Why should they be made to pay? Why should there be a cut off at a 2.5 GPA? Why not 2.2 or 2.0? What heartless bureaucrat arbitrarily chose 2.5? Shouldn’t it be more like our graduated income tax? Wouldn’t it be “fair” to gradually increase the amount a student would pay at each incremental point they receive below a 2.5 GPA? The President is being mean and unfair, which are the very qualities he paints his political opposition with.

Read the fact sheet. It is a piece of political propaganda that would make Joseph Goebbels blush.

This entry was posted on January 20, 2015 at 12:35 am and is filed under Econ. 101, Government and Politics. You can subscribe via RSS 2.0 feed to this post's comments.

Tags: At No Cost, Economic Goods, Free Community College, Make Everything Free, Political Propaganda, President Obama, Scarce Resources, White House Fact Sheet