This is the third part of a four-part discussion on higher education (start with Part I and Part II), stemming from a presidential speech assuring us (or threatening us) that the government is there to help.
Before we get right to the point, we’re about to take a diversion into the insurance world. Bear with me; there’s a purpose.
There may be an even earlier starting point, but for our purposes, let’s look at the rise of employer-paid health insurance. We have to journey back to the 1930s—during the Depression. FDR wanted to experiment with some form of government-provided universal health care, while he was fiddling around with retirement insurance (Social Security). But there was huge opposition from the AMA as well as the existing insurance industry, so he abandoned that.
Nevertheless, Roosevelt did have an effect on insurance. During that decade, not only did the federal government set minimum wage laws, locking out lower skilled workers from the workforce, thus increasing and lengthening unemployment, but the feds also set upper wage limits. This meant that government interference prevented businesses from competing for the best employees.
So businesses did what they do in a natural free market: they found other forms of exchange. The government said they couldn’t pay a higher wage, so they paid additional benefits that didn’t come under the letter of the wage limit law. They paid for their employees’ health insurance.
Early on, insurance meant what it had always meant—a hedge against unexpected catastrophic costs. No one expected insurance to pay for regular doctor visits, medicines, and other health maintenance costs. Those were neither unexpected nor exorbitantly priced. But as time passed, the benefits needed in order to attract the best workers expanded, becoming more comprehensive, and separating the patient from the costs of the care. That separation means the market doesn’t respond as it naturally would to adjust prices. So prices spiral upward—a direction that still continues.
Meanwhile, the federal government continued incremental inching toward government medical care. Truman suggested universal government medicine in the 1950s, but again the AMA accurately denounced it as socialism.
In 1961, Reagan gave a famous speech against socialized medicine, which was being pushed at that time. It's about 10 minutes long--well worth listening to the whole thing:
· Help the uninsured elderly with Medicare.
· Help the uninsured disabled with Medicaid.
· Help the children of poor parents with State Children’s Health Insurance Program (SCHIP).
· Regulate insurance companies providing benefits for employees.
· Require insurance companies to provide coverage for pre-existing conditions (violating the free market risk taking of the insurance industry).
· Require all Americans to purchase health insurance with full coverage as outlined by the federal government—including contraceptives even when against religious beliefs, and including denying healthy individuals the freedom to pay their own way rather than purchase full coverage….
In other words, power mongers start with an interference that leads to a problem, to which they can respond with another interference, which will lead to additional problems, to which more government interference will be the natural—and intended—response, until tyrants have control over the lives of the people.
So that is the pattern. Now let’s look again at the rising cost of higher education.
If we look very early on at education, we find government interference based on the need to educate poor immigrants (many from Ireland at that point), rather than let them become rabble on the streets. Government assumed, of course, that the vast majority of parents would continue to see to the education of their own children as they always had, while additionally being taxed to pay for the education of the identified poor—and government anticipated no resentment over the double cost for families.
By the last few decades of the 1800s, “free” public (government institution) education moved mainstream. By the mid-1950s, “free” public education became the norm for 1-12. Later, it became K-12. Now it is commonly preK-12.
Before government interference, nearly all US adult citizens could read (well enough to understand the Federalist Papers as editorials in their newspapers) and do basic math, as well as whatever other skill they needed to make a living. Today’s young people are skilled at user-friendly technology (but with decreasing programming skills), but know ever less history, literature, and basic math.
This is what you expect when you separate the parent and student from the responsibility of the learning.
Government schools fail to guarantee an education to those who graduate, but worse than that, high percentages fail to even graduate. Who is most likely to fail? Poor children—children of immigrants, children of single parents. So the initial purpose got the foot in the door. Then what had been working was decayed. And the final result is an exacerbated problem for the initial targeted group with the addition of an ever-growing population of undereducated needy.
For someone trying to “rule,” an undereducated needy populace is ideal. Thinking people can be so troublesome. So it is arguable that the failure was intentional (just like the failure of forced-employer-provided healthcare and exchanges are meant to fail so universal single-payer socialized medicine will be the logical next step).
In the next post we'll deal with the original government interference that led to rising higher education costs.