Sappy Socialism

Over at Apologus I announced the beginning of my first college course: Economics 104 - Macro Economics. I have my worries about economics. The tendency to make man a rational animal is certainly present. It's to be expected: it's not within the economists field to posit a role for Christian love which supersedes rationality and we should be glad that they don't overstep their bounds. Aristotle and Plato (and no doubt more whom I've failed to read) did well with a loveless-philosophy. Notions of private property are also seemingly continuously attacked by those who are supposed to explain it. After the first day it's been going well though. The book is careful (and never obnoxiously so) to present unbiased truths. At one point they are discussing resource supplies when they say "although some of our energy and mineral resources are being depleted, new sources are also being discovered," and that's the end of it.

I was worried when I read the discussion question:

In our world of limited resources, no one can have all the economic goods and services they want. Therefore, each society must have a way to determine who gets what and how much. In practice, this is often determined by a combination of many different factors. Over the last 30 years, income inequality in the U.S. has steadily increased. There are more poor and more (extremely) rich people than ever. The number of middle-income people has been decreasing.

In your view, what factors determine a person's income in the U.S.? What is the "fairest" way to allocate goods and services? Should we have so many poor people and so many rich people? Should the government use taxes, government spending, and regulations to alter the "free market" results? Briefly explain your ideas.

The door is wide open for the private-property-hating socialists to scream "Bill Gates needs to give up his money because there are kids starving in the slums of Chicago"! But nobody has yet. My offering to the discussion made the claim that "invaluable" skills (such as those possessed by business executives) really do deserve more money and thus equality of goods and services is impossible. True fairness consists in each getting his due.

The only flaw that my classmates seem to be hung up on is that money has to come from somewhere. Outright socialism or capitalism are both intellectual pursuits. Capitalism with a sprinkling of socialism is an emotional pursuit ("but I just feel so bad that he doesn't have a college education"). In as much as I tend to think that most of America is ruled by the latter I think we see how the sprinklings of socialism have showed up throughout the years.

A Mr. S thinks that low-interest government loans should be given to those desiring college education or pursuing legitimate business plans. Miss. E thinks that college education ought to be free. They forget that a college education is over and above "humane" education. It would be inhumane to deny anybody a high school education, but beyond that your going for specialty training. It's inhumane to deny anybody basic nutrition, but T-bones ought to be regarded as over and above the basics. College is not a need, and while our society has faulted us all into thinking so we ought to be careful.

If the cost of sending one kid to college really is $10,000/year then the 220 billion Americans over 19 will be paying 173 trillion dollars a year to send the 17 billion 18-21 year old college students to school. Maybe only 1/3 of them go to college (approximately the number of college graduates 22-25 currently). That's still 60 trillion, costing each American another $250 in taxes a year. And even that number is low. Public universities already get government money to offset the cost to the consumer (that is what we are). Private educations run as high as $50,000 at some colleges. So the price is probobly higher than $10,000/year. More over private donors who provide scholarships, grants and other financial aid to colleges would cease to be as prominent of a reality.

And here is the painful reality of it. Lets say you pay taxes from 22-82. The government gets your money for 60 years. Assuming a flat tax you'd pay $15000 to this college fund anyways. But it doesn't work that way. Those who go to college are going to make more money and pay more taxes, while those who do not go will pay less in taxes. In the end the free education simply pay for itself over 60 years. I suppose it is a low interest, long term loan at it's best, but how's that been working out for America?