Monday, February 15, 2016

An Open Letter to Bernie Sanders Supporters

We Millennials make up a substantial percentage of Bernie Sander’s constituents. And what’s not to love about this old man promising free healthcare, a higher minimum wage, forgiveness of student debt, and free education among other promises? Who doesn’t enjoy free money and services? Senator Sanders is being called the “one and only” candidate who understands our needs. However, what are the unintended consequences of such promises? Will these promises benefit us college students and young professionals over the long haul? 

Frederic Bastiat, a French Economist, wrote an essay in the 19th century discussing what is seen and what is not seen. He states, “A law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate and is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.” Far too often, we consider only the immediate consequences of actions, lacking the education and foresight to consider the unseen effects of promises such as forgiveness of student debt and free education. 

According to this article in the Wall Street Journal, the average debt accumulated by 2015 graduates topped 35,000 dollars. Students are drowning in debt, especially those without a highly marketable degree. Some students are even fleeing the country to escape this burden. By forgiving student debt, which now exceeds 1.2 trillion dollars, the seen effect is college graduates would avoid their dire situation.  They would have more money in their pockets to spend on consumer products resulting in a short-term stimulus effect. More spending leads to more jobs, resulting in prosperity for all. 

Nonetheless, using similar logic, why give the money to college graduates? A better approach would be to provide money to the poorest individuals in society, who are more likely to spend a larger percentage of the money they receive. The problem with such approaches only becomes apparent when examining the unseen.  What has happened to the person who lost a percentage of their income due to increased tax rates? Public spending always occurs at the expense of private spending. Money taken from one group and given to another adds nothing to the overall economy. What could be accomplished with the 1.2 trillion dollars that will be taken from the private sector to pay our student debt? This money provides the potential for private spending and investment into companies, innovations, and entrepreneurship. These types of investments result in long-term benefits creating new industries and employment opportunities for us college graduates. Increased taxation forces business and individuals to adapt in order stay competitive. Often their adaptation results in decreasing wages and number of employees. 

Moreover, what is loan forgiveness teaching us?
We were not forced to take loans. This is a voluntary action. Loans are not necessarily bad; education is an investment. The key is selecting degrees with the best returns on investment. Nevertheless, regardless of your degree choice, striving daily to work hard and set yourself apart pays major dividends over the long haul. Have fun while keeping in mind that college is a stepping stone to more than 70% of our lives. 
Regarding the topic of free education, Benjamin Franklin stated, “An investment in knowledge pays the best interest.” Knowledge is a fundamental pre-requisite for taking advantage of the opportunities available. Since knowledge is imperative to a prosperous society, isn’t making higher education free the logical conclusion?

Without considering the cost of free public education to the taxpayer, what are the unintended consequences of free public college? First, free public college would limit choices and possibly eliminate private universities. The majority of the top universities in America are private institutions such as MIT, Stanford University, University of Chicago, and all the Ivy League Institutions (ex. Harvard). These schools produce the highest earning graduates. When you start to limit choices or subsidize universities, you create a rigid, uncompetitive system that doesn’t adapt to the needs of students. When universities do not have to compete for students and money is readily available, there is no incentive to cut costs and increase quality. A centralized system cannot have the personal concern necessary for success. It lacks the experimentation that is essential for progress. Choice allows students to select schools that appeal to the student’s needs. Further, market competition is the best way to improve the quality of education as a whole. One just needs to look at all the problems surrounding our free public education system at the elementary, middle school and high school levels, and the exodus of students to alternatives of private, charter and home education. Why would one think the results would be different at the college or university level?

Summing Up:

We as a generation generally have good intentions, but let’s consider thinking about things differently. We must learn to consider not only immediate, obvious benefits, but how to identify and examine consequences, many which often are unintended. It is vital for us to learn now, before experience, which is typically a brutal teacher, forces our hand. At that point, it may be too late.

Let’s make rational economic choices aligned with our long-term best interests. Encouraging the government politicians, by use of votes, to give us free stuff at the expense of others is not a long term viable option. Nothing is ever free. We must also keep in mind that when one takes more from the private sector, there is a negative impact on economic growth. The higher taxes are raised; the less incentive people have to invest. At a certain point, higher taxes will become such a disincentive that companies/individuals/capital will begin to move elsewhere.  We can see that happening already.

Further, despite what Bernie Sanders or any other politician says, capitalism and the free market are what built America into a prosperous country. The free market system has proven to be the best method for increasing the prosperity of society as a whole. We talk about income inequality but forget that the countries with the highest government regulation in the free market also have the widest disparity of wealth (ex. China and India). Let’s remember, the government does not create anything. It only reallocates capital generated by individuals and businesses.

We are the future of this great nation, and we have the potential to be exceptional people. An extraordinary effort by ordinary people will bring exceptional results. Maybe this all starts by learning a simple truth: there is no such thing as a free lunch.  

Thanks for reading

A Concerned Member of Generation Y
MIDN Matthew Miller
Class of 2017
Marine Engineering and Shipyard Management
United States Merchant Marine Academy

"A government big enough to give you everything you want is big enough to take away everything you have." -Thomas Jefferson 

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