Biden Bails Out the Price Gougers

Take away the massive system of federal subsidies and there will always be students eager to pay for electrical engineering degrees from Georgia Tech—and private lenders happy to finance an education that is likely to generate earnings power for the borrower. The earnings power comes from the fact that the engineer can make stuff that people want and need.

What cannot exist without government intervention are expensive degrees in ideology and grievance and debt-fueled accumulations of nonmarketable skills. Word has been getting around for some time that many college degree programs aren’t worth the high prices. If the holders of such degrees cannot find a way to finance them even in a historically tight labor market, it means the schools charged too much.

In a normal functioning market, students would demand more value and stop buying such degrees. The schools would have to change their course offerings or cut their prices or both. The Biden bailout prevents this virtuous natural process by making taxpayers rescue the industry that is manifestly mistreating its customers. No reform will be permitted and now taxpayers will have to buy education services that are clearly not worth the cost.

In April this column noted the short, sensible tweets on the subject from

Adam Ozimek

of the Economic Innovation Group:

If we are forgiving student debt because the student got a bad deal, the program that they went to should be banned from student loans.

If the degree they got pays for itself, then they don’t need forgiveness. If it doesn’t, access to that program shouldn’t be subsidized in the future.

Now that Mr. Biden has launched his historic assault on taxpayers, Mr. Ozimek adds:

If student debt is truly a crisis, then we have a crisis of higher ed quality.

Biden administration officials seem to understand the issue well enough to realize they have no good arguments for their bailout of the Biden voters who work in America’s most partisan industry. So as with inflation generally, their basic strategy when asked to justify this outrage is to change the subject. This week Mr. Biden himself responded to a question about the fairness of the plan with a non sequitur about business taxation.

Even officials prone to coherent public remarks are laboring to explain this one. Interviewed Wednesday by Peter Doocy of Fox News, Secretary of Education

Miguel Cardona

said:

Look, this is a good day for America, good day for those who are thinking about higher education in the future, because not only does it provide student loan forgiveness, it also fixes a system that’s broken. And to those who are saying it’s not fair, look, the aim of this is really to address the effects of the pandemic. It’s my responsibility to make sure that people are not coming out of the pandemic worse off than they were at the beginning.

It’s nice to see him acknowledge the system is broken, but this is the most costly effort to prevent a systemic fix in the history of education. Schools remain free to sell the same expensive degrees to the next generation of government-financed consumers. To prevent reform from ever reaching the shores of academia the president is attempting to ignore Congress and unilaterally appropriate hundreds of billions of dollars. As for the education secretary clinging to the last refuge of pandemic excuses, are we all supposed to pretend that Covid is the reason college is so expensive?

This week Harvard Law’s Laurence Tribe tweeted in response to the Biden bailout:

Good news for thousands of my former students. I’m grateful on their behalf, Mr. President.

George Mason University economist Alex Tabarrok responds:

Tribe and Harvard thank the President for taxing workers to pay their student’s bills so Tribe and Harvard can keep charging exorbitant rates.

Laugh or cry. What a joke.

Harvard now lists Mr. Tribe as an emeritus professor so perhaps he’s spending little time in the classroom. But this doesn’t make the Biden bailout any more defensible.

The most expensive joke ever.

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A Castro Revolution?
Jessica Flores reports for the San Francisco Chronicle:

For years, business owners in San Francisco’s Castro District have complained to city officials that homeless people struggling with mental illness and drug addiction have wreaked havoc on the neighborhood. Now, merchants say the situation has gotten so bad that they’re threatening to possibly stop paying city taxes and fees.

The Castro Merchants Association sent a letter to city officials on Aug. 8, urging them to “take action” because the Castro community was “struggling.” In the letter, they said people living on the streets “regularly experience psychotic episodes” and have vandalized storefronts and harassed business owners, employees, residents and tourists…

If their demands are not met, the association is threatening civil disobedience by potentially asking store owners to stop paying taxes and other city fees, said co-President Dave Karraker. He said the association hopes to form a coalition with other neighborhood groups by October to come up with a plan to demand stronger solutions from the city.

“If the city can’t provide the basic services for them to become a successful business, then what are we paying for?” Karraker told The Chronicle on Tuesday. “You can’t have a vibrant, successful business corridor when you have people passed out high on drugs, littering your sidewalk. These people need to get help.”

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Mr. Freeman will host “WSJ at Large” Friday at 7:30 p.m. EDT on the Fox Business Network. The program repeats at 9:30 a.m. and 11:00 a.m. EDT on Saturday and Sunday.

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James Freeman is the co-author of “The Cost: Trump, China and American Revival.”

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