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Monday, July 16, 2012

Peter Schiff: Why the Government Should Not Be in the Student Loan Business...

BE SURE TO READ THE COMMENTS ON YOUTUBE FOR A FEW LAUGHS...



Check out these comments from Economic Policy Journal...

AnonymousJuly 16, 2012 6:25 PM

The government doesn't care what your high school grades were. It doesn't care what major you choose. It doesn't matter what your grades are in college so long as you don't flunk out. It doesn't matter what the job prospects are in that field.

The schools know exactly where students are getting the money to pay for tuition.

If Tina spends $15,000 a semester to study pottery, the school knows that she got the money from the federal government. Well lets see, if the government was willing to give Tina that much money for this semester, odds are they will give her the same amount next semester.

What incentive is there for the school to try to lower tuition to $14,500? Absolutely none. The school would be voluntarily forfeiting $500 when the government is more than happy to give it to them. In fact, there is a perverse incentive to raise prices as much as possible. What, is the government going to cut off a student's loan in the middle of earning his degree because the college raises prices 9% a year? Yeah right.

That is how you wind up with the bubble in college tuition dwarfing the housing bubble.

http://www.intellectualtakeout.org/library/chart-graph/college-tuition-cpi-vs-us-home-prices-vs-cpi-1978-2010

Peter gives a great explanation here:
http://www.youtube.com/watch?v=OwEbO_t30cg&feature=player_embedded

He is absolutely right. If we ended federal student loans tomorrow what would happen? Would every college permanently close its doors? Of course not. They would see their enrollment rates plummet. Why? Its too expensive. They would SLASH prices like crazy to gets butts in the seats.



AnonymousJuly 16, 2012 10:19 PM

Um hello? She not only understands basic economics, she has a PhD in the subject. The subject is Liberal Economics.

It was established long ago in the land of the bleeding hearts. It is championed by those who are short-sighted. Their emotional arguments have been amassing thoughtless drones for centuries.

It is truly humbling to witness such a spectacular demonstration of mastery Liberal Economics. Her reasoning is flawless:

1. I think that X is a good thing.

2. Because I think X is a good thing, it is therefore a right.

3. Because X is a right, the government needs to make sure that everyone that wants X can get X.

4. I know that without government providing X, the free market would fail to provide X as I see fit.

5. I know the market would fail to provide X as I see fit because free markets are based on greed and profit motive.

6. Greed and profit are evils that produce inequality; something only government can remedy.

7. The benefit of getting X will be Y, and even though recent people to get X in the exact method I am advocating are unable to get Y, there is obviously no connection between my method of providing X and the current failure to obtain Y.

8. Because there is no connection between the government providing X and the current inability to obtain Y, I therefore know that the private sector is to blame for the lack of Y.

9. If you disagree with me then you must want to deprive people of X. No one can disagree with me for any other reason.

10. Because you want to deprive people of their right to X in the manner I am advocating, I will not listen to your reasons for your disagreement because I know (a priori) that they are wrong.

There you have it ladies and gentlemen. Earn your phd in Liberal Economics in ten short steps.

If you run into difficulty remembering the ten steps, keep the bonus step in mind:

11. Because X is a good thing and I am demanding that the government provide X to everyone I can claim moral superiority.


Link:
http://www.economicpolicyjournal.com/2012/07/peter-schiff-tries-to-school-confused.html#comment-form

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