brandonrobison.net

I saw an ad on some website tonight (Facebook, I think) saying something along the lines of, “Obama wants you to go back to college!” Like many political promises, it sounds appealing… but of course, I’m always skeptical. My gut reaction to seeing the ad was something along the lines of “Oh jeeze… how stupid.” But I wanted to work through my thoughts and write them in a semi-formal format. Thanks go to Larson and Vince for letting me type at them my initial speculations.

Before we delve into this topic, I should let it be known that I am a strong believer in the law of unintended consequences, so my evaluation may be skewed in the direction of skepticism. Moreover, I have no data to work with, so this is an entirely theoretical discussion.

Since the motivation for providing more people to get a college education is that college-educated individuals generally earn more money, the main question we should ask is: If the government offers free college education to all citizens, what will happen to average wages?

First, we must assume everything else remains the same; the only thing that has changed in the world is that people who previously had no college degree are now relatively more educated. If you were to draw a graph showing the supply and demand for educated workers, an increase in the number of college-educated people would simply shift the supply to the right, causing wages for college-educated people to fall.

The green line shows the work force before everyone gets an education; the blue line shows the increased number of people in the educated work force. Looking at the left axis shows that wages will fall.

However, wages for the previously uneducated will rise. Thus, by educating everyone, the wealth is more evenly distributed; at least in the short run, the poor will get richer, and the rich will get (relatively) poorer.

But education is not the only factor that plays a role in how much one earns in wages. Since everyone is equal as far as education is concerned, other sifting processes will occur. I speculate that, on average, people who are currently less educated are also less skilled and capable overall. As the more adept individuals find other ways to progress and advance, while the less adept remain merely “educated,” wages will tend to return to how they were prior to everyone being educated.

In the short run, as the relatively less productive (albeit equally educated) new employees take jobs that would have previously been filled by more able individuals, total output for the nation may sag. After the above-mentioned sifting process begins to occur, output will again return to its previous state. In fact, now that people are more educated, it is likely that total output will actually increase in the long run, since all other things equal, people are generally smarter.

Unfortunately, this potential long term output increase would probably be offset by the cost of the government program to educate the masses. Our increased long term productivity would be gobbled up by the increased taxes and interest we would have to pay off. My guess is that, for various reasons, the costs would end up far outweighing the benefits.

In conclusion, it seems that a government program to subsidize college for society would, at best, put us in the same situation we are already in (inequality between the rich and the poor) or at worst, would cost incalculably more than any benefits we would hope to reap.

(My assessment may be completely incorrect, so I welcome any comments/critiques.)