Peter Schiff on why government intervention causes high college tuition prices

[NendGuy]

Who cares about education? I thought that the reason for a university was to have a second football leage that had players you do not have to pay.

[eumwalls]

This is why I quit school. The final straw: I had a Polish professor trying to teach linear algebra at Auburn U. He handed 7 tests to a row of 6, and could not understand "one test too many". And he's supposed to teach me lin alg? Either Auburn is being rewarded for diversifying its faculty or they can pay him much less than Americans and he still makes much more than he would in Poland (or both). Without govt "help", he would not have been there wasting my money/time, teaching jackshit.

[chowtimer]

This is great - he's saying "Colleges will gorge themselves on all the money they can get - blame the government!".

He's also ignoring that in order for these colleges to learn a lesson, it would require a full generation of students opting out of quality colleges entirely.

[grab1piece]

Harvard is not good at technology? can not get rid of the recording noises?

[getnbusy2nite]

Schiff is a smart guy, and he makes good points that need to be addressed, but like all Austrians he blames government for EVERYTHING rotten, despite the fact that unregulated markets can be just as rotten if left unchecked, and fails to take account real-life methods where government intervention is helpful: 1) Natural Resource Preservation and Allocation 2) Infrastructure and Public Works Projects 3) Economic and Social Justice etc...

Too much regulation hurts but so does too little.

[masterriftsgm]

@getnbusy2nite Natural Resource Preservation? Like MMS who oversees and regulates the oil industry? Oh yeah, government does a bang-up job.

Infrastructure and public works? Like the fact that a tier 1 nation has a 3rd rate power grid and hasn't built a new Nuclear Power Plant in 30 years? Department of Energy--great job!

[masterriftsgm]

@getnbusy2nite

Economic and Social Justice? Yes, sir, they've done such a great job since Johnson's "War on Poverty" that 30 trillion dollars and 40 years later the poverty rate is (drum roll please) THE SAME!

FYI: Those terms you use "Economic Justice" and "Social Justice" are Marxist in origin. If that's okay with you, then fine you're (at best) a socialist and this is all sophistry on your part. If it's NOT fine with you, then you need to do some research on these things.

[getnbusy2nite]

What about other factors: 1) Students also demand more from schools than before, thus schools have to acquire more capital through higher tuition to cover construction/operating costs. 2) Faculty salaries have also increased nearly 5% per year in the past 30 years 3) Much more emphasis is placed on higher education within households than before. You could argue these are the result of government funding but I don't think that's 100%, the dynamics of the desire for education has also changed

[BeaveHolio]

@getnbusy2nite

People want more from their school precisely because they get these loans, they get these huge loans and don't care how they spend the money so university becomes about parties and not about getting a future.

[danhaw1213]

He's wasting his time trying to appeal to college educated people using common sense. All they are thinking through the whole speeh is, "I want a free education though!"

[isoke85]

this guy is an asshole because he's not looking at the social landscape and how that has changed. only white men with wealth were going to college in the 19th century and up until the mid 80s. and they went at their leisure.

it's not simple as he's making it. it's not simple economics.

college prices would be higher and fewer people would go.

[madmack69]

College costs are artificially inflated due to easy credit and government backed loans. Bachelors degrees have become worthless. People come out of school with tens of thousands of dollars of debt and can't find jobs any better than they could get out of highschool. When they default on their loans and Uncle Sam has to pay for the loans they guaranteed, they will quit backing student loans and the bottom will fall out of tuition costs just like the housing market.

I think Schiff is right on.

[BeaveHolio]

@isoke85

There were practically only white men in the country, its like going to japan and complaining everyone in college is asian.

[wunderbeast]

Tsk tsk Peter...you make it sound way too simple...you know what? That's because it IS!! Unfortunately so many are allergic to common sense that comes out of this guy's mouth.

Schiff for Senate

[shaithis45]

The U.S. Federal Govt. that is trying to require citizens to buy a product from a third party is unconstitutional. The fact that any failure to carry insurance or be taxed/penalized is definitely unconstitutional. Also since when does the IRS get into the business of whether or not you have health insurance or levy taxes/penalties for failure to carry insurance. What this all indicates to me after looking at bout Congressional bills is that we have very bad govt. at the moment.

[edisonoside]

Remember SERVITUDE before EDUCATION..No jobs too..Must have a dumbed down society!...Herded with no choice to join the MILITARY..Flocking to serve..Beats the draft don't ya think?

[ltarmenia4ever]

I fail to see your point.

Education and servitude can go hand in hand. It just depends how you look at it.

[edisonoside]

I'm all for balance..I'm just making fun of all the imbalance with sarcasm that's all..

[BeaveHolio]

@edisonoside

Of course lets pay for everyone's liberal arts degree for a truly enlightened society.

[shaithis45]

JIrvingG Fed. govt. doesn't have the power to force a mandate that everyone carry insurance. The House just passed an illegal bill that is unenforceable and if the final bill has that mandate language, it is an unconstitutional act. Do you actually think the Federal govt. has really researched why hospital rates and other life saving procedures have gone out of scope with the rest of the public market. It used to be where college rates/medical rates were reasonable. It's a joke.

[ENGUNI]

Come on Petegovernment intervention causes higher tuition Basic economics tells us the more you pay for your tuition the more money you will earn with that degree. I moved from the US to Sweden, universities are free here and when you graduate you get paid dick. Schiff wrote a good book, lucky bastard I would say as he had been a doomsayer for YEARS. I just hope the people at Harvard recognize he is ignorant.

[norfair18]

You get paid dick because you live in Sweden and it's a socialist pansy nation. Most of your earnings go to pay your income tax. Your example uses (inaccurate) empirical evidence, not theory. Just the simple fact of paying more for your tuition gets you more future earnings with that degree?? Well then sign me up for the college that charges $1 million tuition a year!

[SuperGuitarman69]

@norfair18 Absolute brilliant reply my friend to ENGUNI

[MrDpsummers]

@norfair18 Agreed. lol

[ltarmenia4ever]

The thing is, Peter Schiff has been right with just about every prediction of the financial climate for the last few years. HE predicted the burst of the housing bubble, and sure enough, he was right.

[mrbhave]

Not at all. You thought enough to remark about your recent graduation, so I thought I'd share my background with you, while you're lecturing.

The government is the mafia. Until "we the people" recognize that and take the steps necessary to re-establish our authority over the stewards of our taxpaying dollars, we will continue to be victimized.

Yes, we can agree on corporatism. It could be the downfall of our democracy.

[mrbhave]

I am aware of the FED the Federal Reserve Act. Unlike you, I graduated some time ago, and being a professional educator, I am well-versed at doing my own studying. It's healthy to keep tabs on the likes of Alex Jones and other extreme viewpoints.

The member banks of the FED are all private. If they were not, we taxpayers would have carte blanche access to their financial records.

The upcoming mandate on health care will appear under an "Act," too, but that doesn't make the insurers govt.

[mrbhave]

The FED is a private corporation. It's not a government agency. And you're right that Congress is guilty of culpable negligence for not performing its duties as outlined in the Constitution to print money, interest free.

[mrbhave]

Let me guess... inflationdatadotcom. That article is misleading because it doesn't take interest rates into account.

Go ahead, think what you like. When interest rates get hiked to the hilt to counter the rampant inflation, don't come crying to me that your 1,000 dollars will suddenly cost you 10,000. I told you so.

[norfair18]

Interest rates are irrelevant in the example he provided.

[mrbhave]

If that were the case, everyone in debt would be better off with a rise in inflation. Show me any time in history when that ever happened.

[norfair18]

Yes, everyone in debt would be better off with inflation. Say I had $10,000 in student loan debt 5 years ago. Today I could pay that $10,000 back. I would come out ahead because i just paid my creditor with cheaper dollars than that which i had 5 years ago. So the person who loaned me the money got screwed. That's why loaners charge interest, and it's why the interest % is always larger than the inflation %. Understand?

[mrbhave]

Wrong, wrong, wrong. When money is worth less, it takes MORE money to buy the same things it would have in previous years.

If inflation were a good thing, don't you think everyone would be happy to see it coming?

[mrbhave]

Google: "zimbabwe inflation" In that country (and because of inflation), it costs $10 million for a loaf of bread.

[mrbhave]

Schiff's argument is wrong on its face. If the FED is buying up student loans, we have the FED -- and not government -- to blame for the 7% increase. The FED is a private bank, not a government entity.

Besides, if government intervention causes high college tuition prices, why are private schools so much more expensive? Cost doesn't equal value. Many people are willing to pay more for the social/political connections after graduation. But that doesn't equate to higher academic standards.

[norfair18]

And who created the Fed? The government. So you CAN blame the government for this.

As for why private schools are more expensive? Because they are PRIVATE. They offer extra services public schools cannot. They go out of their way to satisfy you and so you can get into all your right classes, public school's do not.

[mrbhave]

You're referring to the government as if it's some nefarious monster. People make up the government. We can only blame the people who proposed the idea of the FED for creating the FED -- not the ENTIRE government.

Would you agree it's fair to hold private banks accountable for the reason that necessitated the recent bailout and not government?

Extra services such as? That's your opinion. In my personal experience, I got much greater value for my money with a public school.

[norfair18]

Let's hold private banks accountable by letting them fail. Bailing them out only has prolonged the recession, and we will be in this mess for 10, 15 years now. Just ask Japan.

The government can end the Fed anytime it wants! They could do it tomorrow by a single vote to abolish it! And yes, IMO a government whose incompetence brought on this economic crisis, and who has needlessly killed 100,000s innocent civilians in its wars today, and who seizes 3 trillion dollars in taxes is nefarious.

[mrbhave]

Oh, I couldn't agree more! Let's let anarcho-capitalism run freely, without interference from the government.

End the FED. Restore the gold standard.

Wars are good for business. You'll have to remove the profit motive to end wars. But there is one downside to capitalism, which seeks to acquire assets by any means necessary, regardless of morality.

Government is only as corrupt as "we the people" allow it. The time for the wildebeests to turn on the lions nearing.

[norfair18]

Sounds like your catching on a little bit. If we would've followed Peter's advice and let the market set interest rates instead of the Fed, and if we would stop all the stupid Fannie Mays and Freddie Macs from distorting the free market and sending false signals, then the crisis would not have happened. Freedom works!

[mrbhave]

Please. Shiff is right about some things, sure. But if markets drive prices down, why are credit card companies raising the cost of doing business ahead of new government regulation? They're saying that to do business, costs must continually rise. That's a fatal flaw in capitalism (at least, the way it's currently being operated). The nature of business should be to provide more jobs, so more people can buy more stuff. But companies routinely shed jobs in the interest of the bottom line.

[norfair18]

The purpose of an economy is not to create jobs. The purpose of an economy is so we can become more productive, so that we can work less. Work for work's sake (i.e. digging ditches and filling them back up) does not create wealth.

If we had a magic button that if we pressed it we could have any product we wanted, then that would be great! But alas, there would be much unemployment. But it wouldn't matter! Though the government would probably ban the button b/c it creates unemployment lol.

[shaithis45]

mrbhave speaking of domestic jobs, if I may point when you walk into a local dept. store and what not, how often do you see anything that is made in America. Clothing, appliances, etc. etc. I was looking for dress shirts made in America and couldn't find anything. What does that say about the job market as it is today. We need to get a domestic manufacturing/assembling base back here in the states so said people have jobs. Another flaw as people want stuff so cheap. Always a price.

[mrbhave]

Between 70 - 90% of Walmart's inventory comes directly from China. Why? Because China has no problem with slave labor and because Walmart's executives know this and capitalize on it. How can we remedy this? Boycott Walmart. Better still, the government can apply tariffs to companies that import their inventories from foreign labor markets. Capitalism is the acquisition of resources by ANY means necessary. This includes slave labor, trade imbalances, etc.

[shaithis45]

sadly enough that is where the laptop I type on today was assembled in. China!!! Good product though and absolutely no battery fires :) And actually it is slave labor in other parts of the world. It isn't just Walmart. JCPenney, Sears, you name it. Take a look at a dress shirt and see where it was made in. Heck if there is a store that sells American made dress shirts, then plz tell me about it. In fact let me do my research on that one :)

[BeaveHolio]

@shaithis45

There is nothing wrong with employing people in other countries, they make less but they are far better off working than not working.

[mrbhave]

You've got it backward. If inflation rises, your debt will become larger because the dollar will be worth less.

[norfair18]

Dude, this is econ 101. If you had a debt of 1000 dollars 50 years ago, that was a lot of money. Inflation has risen since then. Today if you still had not paid off that 1000 dollar debt, then if you paid it back now you are paying it back in cheaper dollars. That 1000 dollar debt is worth a lot less because of inflation!

[mrbhave]

Dude, you obviously missed econ 101. Assuming ten-fold inflation in the last 50 years, that 1000 dollar debt now requires 100,000 (in today's dollars) to pay off, since today's dollar is worth 10 times LESS than 50 years ago.

[mrbhave]

I'm off one decimal point: it would take 10,000 (not 100,000) of today's dollars to pay off that debt.

[sunnyjong1]

peter is talking crap. all schools are distintive and unique. all teachers need to be pay well in order to teach well to our future generation. peter is against all and any government ( anti-government idiot )

helps ( intervention ). peter is comparing

our school systems with hamberger stand. idiot!

[ch1kusoo]

i just laugh at people working for the school admin and tricking students into thinking getting a college education, even with a loan is worth it because they can pay it back by getting a high salary job after graduation.

I'm sure kids who are graduating now would totally disagree because the job market is crap.

[jwinter228]

So true - eventually these costs will catch up with the students (they are already). Costs can't keep rising 7% annually.

[limitedgovt999]

Would love to hear the questions...