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Thursday, May 05, 2005

I disagree with Matt Yglesias

I decided not to post for a bit so that solerte Italian magistrates will notice that anything Indymedia did I did sitting right here in Italy (magistrate guardate il post sotto questo).

I almost resisted reporting a disagreement with Matthew Yglesias who opposed giving money to college students here.
I'll also note that anyone who thinks the Liberal Democrats have gotten to Blair's left by opposing fees for university students needs to think harder. Free college tuition is a subsidy to the upper middle class, not to the poor. Given the availability of student loans, the main barrier to higher education for working class kids isn't tuition, per se, it's primary and secondary school systems that don't let them compete on a level playing field in the admissions sweepstakes.

I think that this shows that he has not completed his transformation into an economist (congrats Matt). To me as a regular guy, his argument makes sense. However, as an economist I must note the alleged relevance of supply and demand in possibly affecting relative prices. The economist's argument is that egalitarians should be very eager to subsidize university education, because that will cause an increase in the supply of graduates and a decline in the wage differential between Universtity graduates and non graduates. Thus if you want to take money away from a group of people, you should give money to others in order to convince the others to become like the people you want to hammer.

There is strong evidence that US wage inequality is closely related to the return to diplomas, which is strongly influenced by exogenous factors like the war in Vietnam (which caused the most amazing people to discover an interest in studying the most amazing subjects just ask the revs David Stockman doctor of divinity and Gary Hart doctor of divinity) and the GI bill. The periods of declining or stable inequality in the USA have a lot to do with sudden incentives to go to university. Of course the fact that the curriculum in the late 60s and early 70s had an arguably excessive focus on smoking pot and occupying the deans office might also have had an effect on the decline in the economic return to higher education.

I say pay people to go to college to soak over priveledged college graduates like Matt and me.

1 comment:

Anonymous said...

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