Iowa’s Unimpressive Tuition Cut

The University of Iowa College of Law’s tuition cut for resident students is getting a slew of good press, so I can’t resist the temptation to be a contrarian buzz-kill. Of the five tuition cuts I’ve been able to document, Iowa’s is only less trivial than Arizona’s. Next year resident tuition at Iowa will cost about as much as it did way back in … 2007-2008. Behold.

Public Law School Tuition Cuts (2012 $)

Yeah, I think I’d go with the $15,000 law degree Iowa was offering in the mid-1990s, thank you very much, but those days are gone with state subsidies of higher education, which, I editorialize, aren’t necessary for law schools anyway.

As for the other schools, in general cuts for non-residents mean the most for schools that take in large numbers of out-state students, e.g. Michigan or Virginia, particularly because out-state 1Ls usually establish residencies for their subsequent years. Cincinnati already offers a discount to some Kentucky residents, so it might not be that big a deal. I’m guessing most of Akon’s 1Ls are already Ohio residents too.

The only big cut here is Penn State’s $20,000 renewable grant to entering resident students. I won’t poo-poo it; it’s big. The question is how many Pennsylvanians who would otherwise go to Pittsburgh ($29,468 in 2012) will be motivated to go to Penn State instead for $21,088. Will applicants see it as a deal or desperation? I’m seeing it as the latter because I can’t see how the school will entice enough 1Ls to cover its losses. (Temple is the most selective Pennsylvania public law school but also the cheapest.)

Part of the problem with price deflation is it’s self-sustaining. Even if a school can successfully signal a price cut to applicants, and that hasn’t been established, then potential purchasers are motivated to hold back and wait for its price (or its competitors’) to drop again. Even if you (wrongly) believe that law school significantly increases people’s productivity—and tuition cuts raise the question of what previous students were really paying for—a drop in costs is an increase in the earnings differential per se and therefore worth the wait in many cases. Law schools need students more than potential applicants need law schools.

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21 Responses

  1. A kudo and a caveat…

    First, the kudo.

    Thank you for piercing through the “big cut” baloney that law schools (and governments, ahem) traffic in.

    Measuring “cuts” in absolute dollars (after years/decades of supra-normal inflation) is incredibly misleading.

    Almost as misleading as stacking future years’ worth of prospective/contingent cuts and calling them “catastrophic” (a federal favorite).

    (“Slashing” also appears to be an adjective that must be appended to *any* reduction in spending reported by the MSM…)

    Much better to compare (as you do) “post-cut” cost/spending levels with an equivalent earlier year.

    Only then do “slashed” cost/spending levels stand revealed as dragging us back to the benighted Dark Ages of…2008.

    So, kudos.

    On the *other hand*, you seem to fall prey to the current deflationista fiction that any reduction in product/service prices dooms us all to a hellish landscape of downward spiraling demand as prospective purchasers/applicants indefinitely delay consumption – an outcome supposed to inevitably follow from *any* price decline…*ever*.

    Because god knows, there hasn’t been a computer purchased over the last 35 years of continuous price decline, right?

    This is the Krugmanite perspective that lobbies for an engineered inflation (“controlled”, ahem) because prior Krugmanite policies haven’t worked (or, in fact, have been destructively counterproductive – see 2002-2006 housing bubble and enabling ZIRP).

    • Cas127, I think delayed purchasing caused by deflationary expectations is pretty mainstream econ., e.g. Japan for the last decade+. I also think you’re mischaracterizing the deflationista position. Krugman, for example, has clearly stated that he’s surprised that we’re experiencing low inflation rather than deflation and argues it’s due to sticky wages. He’s not blithely ignoring the data and screaming shrilly about how deflation is coming. Link here.

      Perhaps I should have said that given that law schools need students more than people need law degrees, and fewer people are applying, price deflation is beside the point.

      • ML,

        I’ll leave aside my antipathy for the Krugman disingenuity engine for a moment (“you endorsed Obama’s economic projections! No, I didn’t” – correct but misleading as Krugman was in the “Greater Cowbell” camp, lobbying for *greater* hypothesized levels of government-goosed aggregate demand – a la 2002-2006, circa 2009, than even Obama) and focus on computers and Japan.

        1) First, computers.

        Basically the paradigmatic example of deflationistas (Krugman or not, although I don’t get why K is an inflationista if he “really” isn’t a deflationista) getting things wrong.

        Bottom line, if expectations of falling prices significantly impacted demand, there would have been many, many, many, many fewer computer (and cell phone, and DVD machine, etc.) sales over the last few decades.

        Expected price declines play only a small part in affecting current demand.

        The “economists’ consensus” on this depends entirely on which economists a person reads…

        But that won’t stop K and Larry Summers from dreaming of “negative interest rates” (read, wealth taxes on accumulated savings) in order to “save the labor market” (read, DC’s self-inflicted debt-to-GDP problem).

        2) Second, Japan.

        In long-term stagnation and/or decline for 20-22 years (vs. the US’ 10-12 years, unless the 2002-2006 “ZIRP Spring” is thought of as “progress”).

        But it seems to me that the rise of superior export competitor China (who has been kicking our *ss too) has a *lot* more to do with Japan’s woes than any “expectation of falling prices” – one that “government experts” tell us must be met with radically ZIRP’ed interest rates.

        In fact, under ZIRP, the wholesale transfer of spending power from personal-utility-focused saver/consumers to the political-vote-buying political class (try running a 200% debt-to-GDP government on anything other than ZIRP’ed rates…) may *in itself* greatly worsen the crisis of consumer confidence.

        If “your government” more-or-less imposes an effective 100% tax on your interest income (due to the ZIRP suppression of interest rates – thank you, government printing press) then you just might be shell-shocked into *further* reducing aggregate demand.

        *Especially* if your job salary/production prices have been 80% undercut by a country of 1+ billion.

        The Keynesians are making things worse not better because their sandbox assumes a closed system, not an open international one.

        Demanding “more cowbell” in government spending is going to do very little to change the production cost curves of US/Japan v. China – in fact, by obscuring the underlying true economic situation, government spending has hugely *delayed* the necessary deflationary (yes, deflationary!) adjustments.

        Electronics buyers in Brazil (and the US) aren’t buying American, not because of expected future price declines, but rather because they can get their goods 50% cheaper from China – *today*.

      • And here I was enjoying your Krugman antipathy.

        As to computers, it’s an interesting example of consumption in spite of deflationary expectations, but I’m not convinced. For one, there’s a difference between declining prices and increasing quality. Also, most computer buyers could reasonably expect their incomes to improve so the deflation wasn’t that big an issue.
        Two, computers are a means to the end of running software for tasks that exist at the time of purchase. The tasks that computers can execute have broadened but not so quickly that typical consumers need to replace their computers frequently or chronically delay purchases. Consumers can gauge their future processing needs and plan accordingly.

        Part of it, I think, has to do with the elasticity of demand for the machine. For example, I got my first PC before I went to college, and waiting another six months, for example, would have meant writing papers in the labs for a semester rather than my dorm room. Big difference in convenience, and it’s not like those extra six months would’ve made any difference on the backend of the machine’s life. In all the years I had it, I didn’t feel it was underpowered for what I wanted to do by my senior year. I suspect a lot of the computer market depends on people like college students who simply cannot go without a computer, which is why they can’t wait for prices to drop forever.

        I’m not sure where you get your info on Japan, but its private sector has been slowly deleveraging its bubble-era and post-bubble-era debts for many, many years. This has reduced investment and GDP and built in deflation expectations.

  2. While I can understand where your coming from Matt, I have to disagree and this is why.

    When the government offers subsidizes for higher education for everyone, this pushes up the cost of education and lowers the value of everyone’s degree.

    While there should be the possibility for everyone who wants to get a higher education should be there, it shouldn’t be forced on everyone. There are enough skills and talent in America where everyone can do a job that they’re interested in and still have a great living to support a family.

    When you strain the population through the education filter, distortions are created that cause some people to be failures when while they might not be successful in a university can be successful in other avenues if they had the chance.

    I would agree that we need to cut back most if not ALL of the education budget from the government.

    Even with all this money being poured into education most people in The United States today read on a elementary school level and math is even worse.

  3. Hi Matt

    My apologizes if I wasn’t clear.

    I’ll just quote this paragraph below:

    As for the other schools, in general cuts for non-residents mean the most for schools that take in large numbers of out-state students, e.g. Michigan or Virginia, particularly because out-state 1Ls usually establish residencies for their subsequent years. Cincinnati already offers a discount to some Kentucky residents, so it might not be that big a deal. I’m guessing most of Akon’s 1Ls are already Ohio residents too.

    Now earlier this year I was in Cleveland Ohio passing through. The city offered lower tuition because of locals paying taxes, that part I can understand. But, there were also a lot of other subsidies to local’s not available to out of staters or foreigners.

    For example a local was paying about $60 per credit hour while out of staters were paying about $95-100 and foreigners from other countries were paying about $120-135

    Now all of these students sat in the same classes and listened to the same teachers and for the most part came from the same area of town or lived in the dorms.

    So whatever the city is doing no matter how good hearted is really well…. I’ll let you formulate your own ideas on what it is.

    • owen hogarth,

      I’m still not following you. How does cutting non-resident tuition help local residents, especially when non-residents obtain resident status after their 1L year?

  4. “I’m not sure where you get your info on Japan, but its private sector has been slowly deleveraging its bubble-era and post-bubble-era debts for many, many years. This has reduced investment and GDP and built in deflation expectations.”

    I’ll take you word on *private sector* deleveraging since the early 90’s – but Japanese government leverage has been going the opposite direction big time – it is in the 200%+ Gov Debt-to-GDP range (essentially unmanageable unless Treasury interest rates are systematically suppressed – even a slight hike in rates would send Japanese interest servicing costs (ie, necessary tax receipts) soaring.

    So private sector deflation is going one direction and government inflation is going the other – pretty much what you would expect of a Keynesian government (semi-related side note – in Japanese media you can occasionally catch a glimpse of seemingly odd Anglophilia – perhaps a shared appreciation of Keynes is also a common trait of resource poor island states with shrinking overseas economic influence…).

    But back to deflationary expectations as the lead villain of reduced aggregate demand. (With the concomitant “remedy” being government engineered inflation by various means…).

    1) I’m not sure how to prove or disprove this point – I just wish a *lot* more attention were paid to Chinese competitive ascendancy (and the required – but heretofore wholly ignored – response required by American policy, population, and industry) as a *major* factor behind the last 10 years of American stagnation (at best – the 25 to 54 employment to population ratio actually being at multi-decade lows).

    Krugman, NYT et al is supplying us with plenty of inflation/”inadequate” aggregate demand talk – what we need is more international competitive positioning talk.

    2) I just have a *lot* of trouble trusting a Federal government asleep (or dead) at various switches over the last 50 years, with the destructive power implicit in open-ended Keynesian hole-digging (or political pyramid building), QEternity, or “negative interest rates”/savings tax sufficient to liquidate the kulaks, er, “excess” savers.

    “Spend or be liquidated” is not a phrase I am comfortable hearing (implicitly) from a Constitutional US government.

    • Two readings for Japan:

      Mystery of Japan’s Private Debt Levels (Solved?)

      Financial Repression, Japanese Style

      Japan’s net public debt-to-GDP ratio is only about 150 percent. Not great, but not 200000000% or whatever number the media like to use. The Japanese government buys a lot of its own debt and still doesn’t get much inflation for it. Pundits and credit rating firms have been downgrading Japanese government bonds forever but its interest rates are still <1% (negative in real terms).

      You're right that it won't last forever, but as Noah Smith writes in the second link, it's mainly because Japan has a Europe-style welfare state at a U.S. tax level. It just raised its consumption tax again, which should raise revenue and/or reduce commerce. I'm sure the folks who own the land under Ginza are doing just fine…

      As for its Keynesian Abenomics plans, so far they've worked: the yen is weaker and real GDP per capita is up, though inflation is still low.

      1). “Chinese competitive ascendency” is simply confiscating exporters dollars and handing them a bond for RMB to keep the dollar strong. If you want more “international competitive positioning” then you want a strong domestic energy policy (solar, wind, integral fast reactors) and a weaker dollar relative to other currencies. That requires printing money. Strong dollar and higher/non-zero interest rate policies lead to international uncompetitiveness and unemployment because they make imports cheaper when we need to export.

      2). Keynsianism isn’t open-ended; it goes on until the private sector recovers enough that government crowding-out starts to manifest via rising interest rates, Krugman’s proposals are mainly rehiring schoolteachers, not building Towers of Babel (not that that wouldn’t technically increase velocity and help the economy anyway). As of right now, people are still willing to lend the U.S. government money at a loss for the next five years. We need bondholders to sell bonds and invest in equities, not raise rates and draw more people to bonds. That just causes unemployment.

      Keynesianism is not “spend or be liquidated,” it’s “‘invest or lose your money to inflation’ because the alternative is no one spending or investing and mass unemployment.” This policy worked during/after WWII. If you bought a Series-E war bond in 1944 for $18, the $25 you got back from the gov’t in 1954 was worth less than the $18 you lent it. However, people I know who lived through the 1950s don’t complain about the mass unemployment and privation to pay off WWII gov’t debt. Nor do I hear of savers at the time complaining about having jobs instead of living in Hoovervilles. Fire-bombing Japanese cities might not be the most moral or productive stimulus, but it worked.

      Sure I’d prefer a Georgist land tax because it punishes “land savers” over “dollar savers,” but to an 18-year-old high-school graduate who’s got zero savings and is staring down the barrel of a lifetime of chronic underemployment, the choice is obvious. The majority of Americans are in similar positions, and majority rules.

  5. ML,

    You’ve supplied a meaty response but my time constraints are going to require me to respond in stages…

    1) “The Japanese government buys a lot of its own debt and still doesn’t get much inflation for it. Pundits and credit rating firms have been downgrading Japanese government bonds forever but its interest rates are still <1% (negative in real terms)."

    I would argue that the first sentence ("government buys it own debt") explains the second ("but its interest rates are still less than 1%") – this is the heart of the Japanese government (US too) anti-inflation "magic trick" – higher debt-to-GDP figures lead to *lower* (or stable, rather than logically rising…) interest rates.

    This is because the monetary left hand of government (the Fed) doesn't give a damn what interest rate/risk premium the right fiscal hand of government "deserves" (proportional to debt-to-GDP in non-bizarro world) – the Fed *will just print* however much money is required to keep the fiscal side of government paying low (wholly government engineered) interest rates.

    But to believe this is consequence-less long-term is the biggest economic gamble in the history of the United States.

    Anybody who has heard the term "Quantitative Easing" knows (after 3 closed, and one open, rounds) that their dollar denominated savings are being heavily diluted (one measure of the monetary base going from about 900 billion to 3.6 trillion – and rising – over 5 years).

    But the real world asset base has not proportionately quadrupled in the same 5 years – therefore the ratio of US monetary base-to-real world assets has necessarily soared (a definition of inflation).

    So why isn't there consumer/retail inflation?

    Well, it sort of matters where you look and what you call inflation.

    And how consumers react to government money printing.

    Looking at reflated stock prices (mainly due to PE expansion and not huge earnings increases) and California real estate prices (whose employment levels in some famed markets – such as San Jose – are still below those of *1997*) is to find plenty of "inflation"

    But we don't call "asset" inflation, "inflation" – just like we didn't in 2002 to 2006.

    Until the Fed easy money bubble popped. (Actually, "easy" doesn't begin to describe it…the Greenspan/Bernanke Fed is "porn star easy".)

    So there is plenty of "asset inflation" that is wholly divorced from earnings and employment fundamentals.

    Also, American *savers* (a distinct personality subset of the Government-led public at large) hear QE and ratchet down their "Aggregate Demand" (TM-Keynes and Krugman…) in preparation for the inflationary apocalypse to come.

    So there is some inflationary offset there too.

    But have no "fear" – Zimbabwe Ben's Fed (soon to be Yellen's House of Shovels) has a "plan" to offset the reckoning of that 4 to 1 monetary base to real world asset hike of the last 5 years.

    Well, I'm sure the Fed had some sort of "plan" in 2002 to 2006.

    But all we get today by way of explanation/expiation are interviews with Greenspan in the "home", uttering "Who am I, what am I doing here, what bubble, is my pudding ready yet?"

    • cas127,

      To limit the meatiness of my response, I’ll try to keep things concise.

      I am not following your arguments, and I do not understand your ideology. Any sources for your thought-processes would be appreciated.

      For example, you write:

      Anybody who has heard the term “Quantitative Easing” knows … that their dollar denominated savings are being heavily diluted… But the real world asset base has not proportionately quadrupled in the same 5 years – therefore the ratio of US monetary base-to-real world assets has necessarily soared (a definition of inflation).

      This is not a definition of inflation. Inflation requires an increase in *prices*. Banks are hoarding money in their vaults, not dumping them on the market like QE proponents want them to.

      The only prices that are increasing are asset prices. For dollar savers, this is good!!! They buy now, and their assets appreciate and they get wealthier! The S&P 500 is at a record high, and land prices are rising! The criticism of QE, which you cogently acknowledge elsewhere, is that the price increases don’t trickle down to the poor, especially in wages—*not* that QE confiscates wealthy people’s assets.

      Next:

      Also, American *savers* (a distinct personality subset of the Government-led public at large) hear QE and ratchet down their “Aggregate Demand” (TM-Keynes and Krugman…) in preparation for the inflationary apocalypse to come.

      This contradicts the wealth effect. People consume more as they get wealthy, not less, e.g. HELOCs. You’ll have to provide evidence.

      If I’m interpreting your general argument correctly, you’re saying that at some point the dam will burst and all the new base money sitting in banks vaults will flood the economy. My response:

      a). When? By what mechanism? Give me a falsifiable, testable hypothesis. With people still willing to loan the government money at a loss, this must still be a long way off.

      b). If I’m a debtor or a zero-asset American, why is this my problem? Inflation erodes my debts, and the net present value of my labor rises as my employment prospects improve. My Social Security benefits are indexed to inflation. I am the clear majority of the country.

      c). If I’m a net creditor, why will my assets, especially land, suddenly decline in value when the general inflation you predict comes along? Land is still land; stock is still stock; human capital is still human capital.

      I get the impression that you believe the right to own T-Bills is sacrosanct and that government efforts to encourage people to sell their bonds violates that right, even if they come out ahead as a result.

  6. “This is not a definition of inflation. Inflation requires an increase in *prices*. Banks are hoarding money in their vaults, not dumping them on the market like QE proponents want them to.”

    Hmmm.

    1) Perhaps “latent” or “big honking potential” inflation would make everybody feel better. I agree that the vast, unprecedented expansion in the money supply is largely being locked up in bank reserves – for the moment.

    1)A) But this begs the question of *why* – what does the Fed think it is accomplishing by hugely spiking the money supply (vastly out of proportion to any increase in real world goods that money is suppose to represent – raising the very, very ugly specter of very high inflation at some point).

    It is all simply an elaborate, dangerous ruse to recapitalize the banks under the guise of helping the American economy?

    (Perhaps…perhaps the banker-populated Fed thinks those two things are one and the same – as Louis the XIV said, “I am the State”. The Fed may think NYC bankers “are the State” so to speak…or at least utterly indispensable to the State)

    I know the Fed has “a plan” to stop hyper-inflation due to QEternity – interest paid on reserves.

    But I’m sure the Fed had an anti-bubble “plan” circa 2002 – 2006.

    And look how well *that* turned out.

    And what do we get by way of explanation/justification from Greenspan today?

    Not damn much.

    He is in the “home” writing his thinly justified memoirs and looking for his pudding.

    1) B)

    “The only prices that are increasing are asset prices. For dollar savers, this is good!!! They buy now, and their assets appreciate and they get wealthier! ”

    Not if asset price spikes (driven by QE-caused interest rate collapse/supression) are divorced from economic fundamentals (such as comparable earnings growth, supporting employment growth, etc.).

    All we are getting is Fed empty calories – asset price spikes primarily driven by interest rate manipulations downward. They are unsustainable almost by definition.

    And the stock market/housing price spikes are causing much more economic mis-allocation of resources as naive momentum investors pile in soaring sectors that are really only goosed by artificially low interest rates – not true underlying demand.

    We’ve just finished seeing this horror movie – in the 2002 to 2006 housing bubble.

    Now we getting “Fed 2 – The Bubble Lives!!”

    Those millions of 2002-2006 excess SFH homes were built in lieu of Keynes “empty holes” – “work” was created but vast resources were misdirected as a result of idiotically blunt Fed interest rate policy.

    (Continued in next semi-coherent rant…)

  7. “This contradicts the wealth effect. People consume more as they get wealthy, not less, e.g. HELOCs. You’ll have to provide evidence.”

    The wealth effect.

    Sure…but the Feds aren’t the only ones capable of “contra-cyclical” action – WSJ subscribers and small savers (which I’ll define as those holding 100k to, say, 500k) are fully capable of looking at the extreme policy measures being utilized by a central government they don’t trust and/or believe is competent – and they sit on/*increase* their savings.

    The Fed goes ZIRP (again…pretty much for the last decade) and Bob and Marge Kulak in Peoria *don’t* buy the new car.

    I know this makes no sense to the Fed (“Don’t these dummies know we are expropriating them…why won’t they spend!…or at least invest in a biotech stock selling at 200 P/E pushing anti-depression medication for pets! Or a 500 foot condo in San Fran selling for 10 times the local income!…Maybe those morons need to get a taste of negative interest rates/wealth taxes! That’ll learn ‘em! – Think of it as Keynesian Fascism.)

    But in the *real* world the Kulaks are pretty sure (they have *lots of evidence*) that DC is run by deranged, incompetent sh*tbags.

    And the only realistic thing they can do (other than bury gold in the back yard – and they are considering that) is to *further* hoard their savings – *reducing* AD.

    Granted, this is a seemingly perverse effect.

    (I mean, after all, who controls the “stable value” Treasuries the Kulaks kling to – along with their guns and religion – if not the loathed Feds…but household economic risk is relative…Treasuries look a lot more reliable than repeatedly imploding equity and housing markets)

    And DC’s track record of the last many decades inspires perversity.

    I don’t have direct, causal evidence – I would simply point to the vast policy measures undertaken (dangerously in my opinion) and the meager AD result.

    (Continued in next post – “Revenge of the Rant”

  8. “you’re saying that at some point the dam will burst and all the new base money sitting in banks vaults will flood the economy….When? By what mechanism? Give me a falsifiable, testable hypothesis. With people still willing to loan the government money at a loss, this must still be a long way off.”

    You are perceiving my concern correctly.

    1) If QE money isn’t intended to be spent at some point, what is its purpose? (Stealth bank recapitalization/Fed overconfidence in its powers to negate inflation discussed above)

    2) While the American Kulaks might have been scared into a shriveling Aggregate Demand (see above) – therefore undercutting inflation risk despite QEternity – we have put ourselves in a position where the Chinese can destroy us with a flip of the State-run switch.

    *The Chinese simply embargo/greatly reduce exports to the US – shifting production output to their domestic market.*

    Perhaps using our ZIRP’ed, toilet paper Treasuries as an excuse.

    (The US has been playing checkers – the Chinese have been playing chess.)

    The supply of real world goods in the US collapses (since the Chinese have been supplying a larger and larger share for over a decade now) and **the latent QEternity funds in banks come rushing out in order to bid for the very limited supply of remaining US produced goods**.

    The Kulaks have been able to forgo buying a new US made car, scared sh*tless of DC – but they may not be able to forgo suddenly evaporating Chinese imports – which make up a *lot* of goods in their weekly Walmart shopping basket.

    So the Kulaks are finally *forced* into spending more.

    Just as a long de-industrialized America has less to supply.

    Result – out of control inflation, as the vast mismatch between hyperabundant QEternity money meets 21st century American de-industrialized supply.

    Testable?

    No, not really. Until it happens, if it happens.

    But I think the huge (and growing) global imbalances have to be treated with more respect, fear, caution, and honesty than DC has been supplying (for a long, long, long time).

    (continued below)

  9. “b). If I’m a debtor or a zero-asset American, why is this my problem? Inflation erodes my debts, and the net present value of my labor rises as my employment prospects improve. My Social Security benefits are indexed to inflation. I am the clear majority of the country.”

    All true – but completely toxic to the middle class/small saver, property-rights, de-centralized ethos that built America.

    (Btw, there is nothing new under the sun…a lot of this is starting to sound like William Jennings Bryan and the Cross of Gold…with some freaky inversion of roles – I’m in the hard money camp on behalf of the vanishing band of yeoman middle class savers, you’re in the easy money camp on behalf of impecunious/suckered debtors…like law school grads…of which I am one…)

    In *theory*, DC could come in, command-economy the sucker and lead us all into an low-Gini, inflation-indexed utopia.

    But, I mean, have you *seen* DC?

    Do you know it by its works, rather than its stated/promised intentions?

    By its accomplishments, rather than its alleged ambitions for us?

    Look at one very small example – how have unfettered law school loans from the Feds worked out?

    Sunny uplands of full legal employment or toxic stew of 50% graduate employment and regulatory capture by law school administrators/bag men earning a raft of six figure salaries for six hour work weeks?

    Where the Feds aren’t corrupt…they are often incompetent.

    Trusting them with a fiat money supply is like handing a crack-addled hobo your car keys.

  10. “c). If I’m a net creditor, why will my assets, especially land, suddenly decline in value when the general inflation you predict comes along? Land is still land; stock is still stock; human capital is still human capital.”

    The mis-allocation of capital resulting from artificial/manipulated interest rates has its revenge – even without the general inflation I am also worried about.

    We’ve just seen that movie in Housing Bubble/Bust 2002-2006 and Stock Bubble/Bust 1996-2000.

    *Lots* of waste gets incurred (Keynesians label this “economic activity” – Non-Keynesians label this “waste”).

    “I get the impression that you believe the right to own T-Bills is sacrosanct and that government efforts to encourage people to sell their bonds violates that right, even if they come out ahead as a result.”

    Sorta – not really.

    By heavily manipulating interest rates (by means of QEternity) the Fed is expropriating savers (and, to my mind, people with a saver/investor mentality) in order to (theoretically, *very* theoretically) spike employment.

    (And, also, perhaps not so coincidentally, save the bacon of people with a debtor/spender/gambler mentality – which the US government has bred into a majority of the US population, agreed.)

    (And, hey, I sympathize…I am a lowly corporal in that vast reserve Army of the unemployed, 25-54 year old Division).

    But interest rate manipulation is the sugar fix solution – quick to hit and sure to crash.

    America’s underlying competitive weakness and educational system failures/corruptions have to be addressed *directly* – otherwise all we are doing is papering over a growing fire.

    • cas127,

      Yours is not a concise response.

      I asked for sources for your views. You did not provide any. Until you provide me with sources, I will not reply to any more of your comments.

  11. “Sources for my views”

    Like most people, my “sources” are a synthesis of numerous sources and my own empirical experience.

    I understand the posts are getting very long and potentially off-blog-topic – so of course you are free to not respond.

    (But as the blog itself seems to veer more into macroeconomics, readers are going discuss macroeconomics more).

    I guess I just place more emphasis on empirical observation than Krugmanite “appeals to authority” (“I’m a Nobel Prize winner – Who are you to question me! I *am* Macroeconomics!” – “Now, kneel before Zod”).

    Bottom line, looking at the economy around us, I’m not overly impressed with the economic Establishment that led us here – so I’m not hopping on board any particular “School”

    • Like most people, my “sources” are a synthesis of numerous sources and my own empirical experience.

      So you are a Zero-Hedgie! I had high hopes that you’d lead me to some insightful thinker I’d never heard of. Disappointing.

      I guess I just place more emphasis on empirical observation than Krugmanite “appeals to authority” (“I’m a Nobel Prize winner – Who are you to question me! I *am* Macroeconomics!” – “Now, kneel before Zod”).

      cas127, more so than your multi-comment rant, this passage encapsulates your views. On the one hand, it’s terribly funny. On the other, it’s totally dishonest—so much so that I feel it necessary to call you out on it.

      For one, Krugman never appeals to his authority as a Nobel laureate, as an economist at a prestigious university, or as a Times columnist, and he always backs up his claims with the best evidence available.

      For another, you have never presented any evidence for your views, and often your statements are contradictory. In particular, you fancy yourself as advocating for a class of American Gothic-type Americans (“dollar savers!”) whose numbers and identities you’ve never deigned to substantiate, and whom you’ve conceded are probably in the minority anyway. For whatever reason, in your mind these dollar savers are legally barred from selling their government bonds and buying higher-yielding equities. You then simultaneously claim that QE is expropriating these people’s savings even though you concede the QE money is sitting in bank vaults gathering dust and therefore not causing any inflation.

      If you’re going to continue spamming my blog with dishonest, unsubstantiated ranting, I may unashamedly mock your discredited, pseudo-scientific, self-contradictory inflation-is-the-evilest-thing-in-the-history-of-evil dogmatism.

  12. […] Five schools have already announced across the board tuition reductions. Over the next few years, we’ll see an increasing number of schools openly cutting tuition. So if you wait, then it is very likely that you will get a bigger tuition discount. […]

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