David Boaz

We’ve been debating for three decades the question of whether federal student aid leads to higher college tuition. Now a new and well‐​placed voice has weighed in.

In 1987 then‐​Secretary of Education William J. Bennett argued that “increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase.” The higher education establishment indignantly denied the claim.

But there was no doubt that tuitions were rising faster than the inflation level. And while some people insisted that federal and state aid to higher education was being cut back, that was hard to credit. Bennett pointed out in 1987 that federal student aid had risen 57 percent since 1980, while inflation had been 26 percent. A 2020 study by the Congressional Budget Office brought the numbers up to date: “Between 1995 and 2017, the balance of outstanding federal student loan debt increased more than sevenfold, from $187 billion to $1.4 trillion (in 2017 dollars).”

A 2017 study from the Federal Reserve Bank of New York found that the average tuition increase associated with expansion of student loans is as much as 60 cents per dollar. That is, more federal aid to students enables colleges to raise tuition more. Salaries rise; bureaucracies expand; more courses — from “History and Analysis of Rock Music” to “Ultimate Frisbee” — are offered; dorms, dining halls, and recreational centers become more lavish. Even with all this spending, employers don’t find that new grads are well prepared for the workplace.

But now, in addition to academic studies, we have an insider’s testimony. For a new book and a lengthy Wall Street Journal article, reporter Josh Mitchell talked to Al Lord, former CEO of Sallie Mae, then the quasi‐​government enabler of federal student loans. At the time Lord viewed student debt as a good investment for families, and he made Sallie Mae the biggest student lender. But now, in retirement, he has a confession to make.

He joined the board of Penn State, and, Mitchell writes,

he had an epiphany: Colleges were incredibly inefficient businesses, and the student‐​loan program enabled them.

He was stunned to learn how big Penn State’s budget was, about $5 billion [in 2014], and how quickly it grew. (Penn State’s budget is currently $7.7 billion.)

He was also stunned to discover how much his grandchildren’s college educations were costing, as much as $75,000 a year per child. He had known that colleges were raising their prices faster than inflation, but he figured it would have to stop. But it hasn’t. “They raise them because they can, and the government facilitates it,” he told Mitchell.

“Schools were able to hike tuition since students now had expanded access to loans,” Mitchell summarizes.

Federal student loans went up. So did tuition, college budgets, and the debt that students carry for years. This system isn’t working.

Kevin Drum is a progressive blogger who was at Mother Jones until early this year. He caused a stir two weeks ago with a blog post titled “If you hate the culture wars, blame liberals.” Taking issue with most of his ideological compatriots and with much of the mainstream media, he wrote, “over the past two decades Democrats have moved left far more than Republicans have moved right.…Almost by definition, liberals are the ones pushing for change while conservatives are merely responding to whatever liberals do.” He cited such “hot button social issues” as same‐​sex marriage, immigration, abortion, crime, “defund the police,” cancel culture, and wokeness. Drum stressed in a followup post that he was generally “all on board with most progressive change”; he just thought moving too far too fast would hurt Democrats electorally. Nevertheless, left‐​liberals were not happy with the column, but conservatives loved it. Peggy Noonan got a whole Wall Street Journal column out of it.

Tim Miller, a former Republican operative turned anti‐​Trump strategist, wasn’t having it. Sure, he said, the data showed that Democratic voters had shifted more than Republican voters. But culture wars start at the top:

But when it comes to the actions of politicians, the aggressive, top down Culture War is being driven overwhelmingly from the right. And the shift rightward among Republican politicians on culture war issues is as dramatic—if not more so—than the leftward shift among Democratic voters on policy.

So who’s right? As in so many issues, they both have a point. The cultural trends of the last generation and more have been leftward — in many cases we might say they have been classically liberal — and in the Trump and post‐​Trump eras the leftward pressure has picked up steam. Republican politicians have shifted their focus from fiscal conservatism and national security to angry tweeting about football players’ knees and the threat to Mr. Potato Head. Rather than creating a good climate for economic growth, Republican legislatures are banning “vaccine passports” and Critical Race Theory.

But some of this right‐​wing culture war is in response to real social and political changes that have upset many voters. Civil rights, feminism, and gay rights all created a backlash, and right‐​wing politicians in earlier eras capitalized on that backlash. Now strong majorities support most of the outcomes of those battles, so politicians have moved on. But progressives are now pushing new measures: chasing down every baker and florist in the country who declines to use their talents for a gay wedding and forcing them to comply; pushing K-12 school curriculum based on thinkers such as Ibram X. Kendi who are well to the left of the mainstream on matters of race; imposing a national policy, never passed by Congress, on local school districts to guarantee transgender access to school locker rooms and sports; and more.

Miller is right: it’s Republican politicians, not Democrats, who raise hell about these issues. But that’s because they represent the voters who see themselves losing these battles. And most Democratic politicians don’t want to be vocal advocates of these policies. Think back to gay marriage: most Democrats, including Barack Obama, Joe Biden, and Hillary Clinton opposed it or avoided the subject until the polls turned positive. Right now Democrats prefer to focus their messaging on populist economic issues, not controversial social issues, especially when the social policies are being effectively advanced through bureaucratic impositions and court decisions. (Speaking of courts, I noted a few years ago that the federal courts prevent conservative states from being as conservative they’d like to be.)

As a libertarian, I wish Republicans and Fox News would spend less time on critical race theory and more time on Biden’s latest plan to spend $4 trillion the Treasury doesn’t have or the troubling use of executive orders and the administrative state. And like Drum, I often sympathize with liberals more than social conservatives on the expansion of equal rights and personal freedoms. But I’m not surprised that conservative voters and politicians push back when they feel — rightly or wrongly — that their traditions and values are under assault. Conservatism at its core is the opposition to change, for better and for worse, and especially relatively rapid change. Republicans, unlike Democrats, have little success in getting the policies they want on social issues from the courts and the bureaucracy, which leads to a greater focus on doing it through popular agitation and elected politicians.

On Monday, LGBT activists in Tbilisi, Georgia, called off a planned Pride March after hundreds of violent counter‐​protesters attacked activists and journalists.

On Tuesday, WeChat, China’s most popular social media service, shut down dozens of accounts on LGBT topics run by college students and nonprofit groups as part of a tightening of political control by the Communist Party.

Three weeks ago, Hungary’s parliament passed legislation that would ban the dissemination of content in schools deemed to promote homosexuality and gender change.

And all these assaults on human rights reminded me of a column written in 2013 by the British journalist Michael Hanlon. Hanlon wrote about a “morality gap” in the world that could be seen most clearly in attitudes toward gay rights. His column is worth quoting at length:

It is now clear, though not much talked about, that humanity, all 7.1 billion of us, tends to fall into one of two distinct camps. On the one side are those who buy into the whole post‐​Enlightenment human rights revolution. For them the moral trajectory of the last 300 years is clear: once we were brutal savages; in a few decades, the whole planet will basically be Denmark, ruled by the shades of Mandela and Shami Chakrabarti.

And there’s some truth in this trajectory — except for the fact that it only applies to half the planet. The other half resolutely follows a different moral code: might is right, all men were not created equal and there is a right and a wrong form of sexual orientation.

You can identify those countries in the dark half of the divide by their attitudes to homosexuality and women; to honour killings, race, disability, mental illness, religious minorities and to crime, torture and punishment, even animal rights and the environment.…

Let’s start with attitudes to gays, not because gay rights are the most important issue, but because attitudes to homosexuality show the morality gap in sharpest relief.…

A look at the timeline of gay rights shows a seemingly unstoppable barrage of permissiveness, with state after state passing laws first legalising homosexuality, then going further: permitting gay marriage and gay adoption and formalising gay relationships in terms of pensions and property rights. It’s tempting for those of us in this enlightened half of the world to think of this as a great wave of progress that rose up in the mid‐​20th century and will sweep across the world.

Tempting, but wrong. In fact, in much of the world, received wisdom on homosexuality appears to be going into reverse.

Of course, this divide in the world is well known. It’s been discussed and analyzed in Pew Research studies, examined at Human​Progress​.org, and included in the rankings of the Human Freedom Index.

Martin Luther King, Jr., often said, “The arc of the moral universe is long, but it bends toward justice.” There’s certainly evidence that’s true, but it’s cold comfort for the gay, lesbian, bisexual, and transgender individuals living stunted lives in so much of the world today.

As Americans enjoy the Fourth of July holiday, I hope we take a few minutes to remember what the Fourth of July is: America’s Independence Day, celebrating our Declaration of Independence, in which we declared ourselves, in Lincoln’s words, “a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.”

The fireworks would be today if John Adams had his way. It was on July 2, 1776, that the Continental Congress voted to declare independence from Great Britain. On July 4 Congress approved the final text of the Declaration. As Adams predicted in a letter to his wife Abigail:

The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.

The Declaration of Independence, written by Thomas Jefferson, is the most eloquent libertarian essay in history, especially its philosophical core:

We hold these truths to be self‐​evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Jefferson moved smoothly from our natural rights to the right of revolution:

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

The ideas of the Declaration, given legal form in the Constitution, took the United States of America from a small frontier outpost on the edge of the developed world to the richest country in the world in scarcely a century. The country failed in many ways to live up to the vision of the Declaration, notably in the institution of chattel slavery. But over the next two centuries that vision inspired Americans to extend the promises of the Declaration — life, liberty, and the pursuit of happiness — to more and more people. That process continues to the present day, as with the Supreme Court’s ruling for equal marriage freedom last year.

At the very least this weekend, if you’ve never seen the wonderful film 1776, watch it at 10 pm on July 4 on TCM.

The Chinese Communist Party is going all‐​out to celebrate the 100th anniversary of its founding on July 1. Movies, music, theater, elaborate wedding ceremonies. Fireworks, of course. And, in keeping with the party’s roots, repression. As the New York Times reports, nothing is being left to chance:

The Ministry of Civil Affairs is leading a nationwide crackdown against “illegal” nonprofit organizations, including religious and social groups, as part of efforts to ensure a “good environment” for the centenary.

Officials have also warned of consequences for those who “distort” party history or “defame” Communist heroes ahead of the centenary. The Cyberspace Administration of China, which regulates the internet, recently unveiled a website and hotline for citizens to report “historical nihilists” and encouraging the public to help root out those who “deny the excellence of advanced socialist culture.”…

The campaign against such dissent reflects concerns among China’s top leaders that the party must do more to strengthen public loyalty and fortify its control of society.

Mr. Xi has long warned that Communist rule could disintegrate if the party does not assert control across society, including the private sector, schools and the news media. Party organs at the national and local levels are hosting study sessions on party history for cadres. Chinese military officials say they are using the centenary to “forge absolute loyalty” to the party and Mr. Xi.

Apparently, after 70 years of absolute rule, independent thought has not been completely snuffed out.

This is entirely in keeping with the experience of communist rule elsewhere, and with the historic mission of the CCP. The party was formed in 1921 with an official ideology of Marxism‐​Leninism. On July 1, 1949, as the Communist armies neared victory, party leader Mao Zedong made an important speech titled, “On the People’s Democratic Dictatorship.” Instead of life, liberty, and the pursuit of happiness, Mao spoke of “the extinction of classes, state power and parties,” of “a socialist and communist society,” of the nationalization of private enterprise and the socialization of agriculture, of a “great and splendid socialist state” in Russia, and especially of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.” That was the CCP’s founding vision.

Tragically, unbelievably, this vision appealed not only to many Chinese but even to Americans and Europeans, some of them prominent. But from the beginning it went terribly wrong, as really should have been predicted. Communism created desperate poverty in China. The “Great Leap Forward” led to mass starvation. The Cultural Revolution unleashed “an extended paroxysm of revolutionary madness” in which “tens of millions of innocent victims were persecuted, professionally ruined, mentally deranged, physically maimed and even killed.” Estimates of the number of unnatural deaths during Mao’s tenure range from 15 million to 80 million. This is so monstrous that we can’t really comprehend it. What inspired many American and European leftists was that Mao really seemed to believe in the communist vision. And the attempt to actually implement communism leads to disaster and death.

Since Mao’s death in 1976, China has changed a great deal. In far‐​flung parts of the country, villages and communes had already begun recreating markets and individual plots of land. Mao’s old comrade Deng Xiaoping, a victim of the Cultural Revolution, had learned something from the 30 years of calamity. He began to implement policies he called “socialism with Chinese characteristics,” which looked a lot like freer markets—decollectivization and the “responsibility system” in agriculture, privatization of enterprises, international trade, liberalization of residency requirements.

The changes in China over the past generation are the greatest story in the world—more than a billion people brought from totalitarianism to what we might call “capitalism with crony characteristics.” Imperfect as this system is, it has lifted some 800 million people out of poverty.

Whatever its official ideology, China can hardly be regarded as Marxist anymore. But it remains Leninist. The CCP still rules China with an iron fist. There is no open political opposition, and no independent judges or media. President Xi Jinping has become more authoritarian, and has concentrated more power in his own person than any ruler since Mao. Some say China is becoming “the perfect dictatorship.” As Jude Blanchette and Evan S. Medeiros write, Xi Jinping has moved not only to make himself and the party more powerful but also to make the party more ideological. New guidelines for party membership “required all individuals entering the CCP to ‘possess a belief in Marxism and in socialism with Chinese characteristics’ as a basic criterion. So too must members ‘place political standards above all else,’ which entails priority to Party commands and ideology.”

China’s economic reforms since 1976 have dramatically reduced poverty, increased economic growth, and made Chinese companies some of the world’s largest. In recent years China has intensified repression and begun to play a larger role in regional and world affairs. But the country faces many challenges: slowing economic growth, a rapidly aging population, and increasing hostility from people and governments around the world. China is trying to defy the lesson of the past two centuries, that liberal countries are more prosperous and more secure. President Xi’s rush to lock down party control of the country is unlikely to succeed in the long run. No dictatorship, even the Chinese Communist Party’s, is perpetual.

Scott Lincicome points out that “U.S. law and regulation are littered with attempts to ‘fix’ problems caused by other government policies—not by reforming or eliminating those policies but through even more subsidies, tariffs, regulations, or waivers.” He focuses especially on industrial policy proposals that propose to use government action to counter existing government policies — not to repeal those existing policies but to pile on new interventions. But that’s not the only place where we can see the phenomenon.

Take, for instance, the California legislature’s vote to spend “$100 million to rescue its struggling legal marijuana industry,” as the Los Angeles Times headline puts it. The money isn’t going directly to marijuana purveyors. Rather, it will go to cities and counties to help them hire staff to assist businesses in completing the cumbersome environmental studies needed to get the required license. Three years ago I wrote that the costly schedule of regulations and taxes would squeeze out small farmers and entrepreneurs, ensuring that only a few big firms that could afford legal and compliance costs would dominate the market. Turns out, compliance is so costly that even the big firms “continue[] to struggle to compete with the large illicit pot market” of farms and retailers that presumably just aren’t trying to make themselves legal and registered.

Or how about President Biden’s $213 billion federal program for affordable housing? He proposes to build 500,000 affordable units. And upgrade others. And also “an innovative, new competitive grant program” to encourage cities and states to reform or eliminate exclusionary zoning rules. So that part is good, but why do cities and states need a federal grant to change their laws? Meanwhile, Amazon is planning to spend $2 billion to encourage affordable housing. But why spend all this taxpayer (and shareholder) money? Just fix the original problem: zoning and land‐​use regulations drive up the cost and complexity of building housing. All these new affordable‐​housing programs are trying to fix a problem caused by existing government programs.

Lincicome concludes:

So the distortions created by entrenched economic policies can get papered over with new government actions, often making things even worse, and can undermine new economic policies that might in theory have a more legitimate justification. These old policies, moreover, are difficult to reform and—in many cases—actually become more entrenched over time.

Before we create new policies, it would behoove us to eliminate the policies that may have caused the very problem we’re trying to solve.

The Cato Institute offers lots of great Christmas gifts -- Pocket Constitutions (also a good gift for Bill of Rights Day!), books, apparel, even Cato-branded Lands' End merchandise. But I have my own holiday recommendations that I've made before.

I decided one year to give a young colleague a post-graduate course in political science and economics — P. J. O’Rourke’s books Parliament of Whores and Eat the Rich. So I went to my local Barnes & Noble to search for them. Not in Current Affairs. Not in Economics. No separate section called Politics. I decided to try Borders (RIP). But first — to avoid yet more driving around — I went online to see if my local Borders stores had them in stock. Sure enough, they did, in a couple of stores just blocks from the Cato Institute. Checking to see where in the store I would find them, I discovered that they would both be shelved under “Humor–Humorous Writing.” Oh, right, I thought, they’re not books on economics or current affairs, they’re humor.

Yes, P.J. is one of the funniest writers around. But what people often miss when they talk about his humor is what a good reporter and what an insightful analyst he is. Parliament of Whores is a very funny book, but it’s also a very perceptive analysis of politics in a modern mixed-economy democracy. And if you read Eat the Rich, you’ll learn more about how countries get rich — and why they don’t — than in a whole year of econ at most colleges. In fact, I’ve decided that the best answer to the question “What’s the best book to start learning economics?” is Eat the Rich.

On page 1, P. J. starts with the right question: “Why do some places prosper and thrive while others just suck?” Supply-and-demand curves are all well and good, but what we really want to know is how not to be mired in poverty. He writes that he tried returning to his college economics texts but quickly remembered why he hated them at the time–though he does attempt, for instance, to explain comparative advantage in terms of John Grisham and Courtney Love. Instead he decided to visit economically successful and unsuccessful societies and try to figure out what makes them work or not work. So he headed off to Sweden, Hong Kong, Albania, Cuba, Tanzania, Russia, China, and Wall Street.

In Tanzania he gapes at the magnificent natural beauty and the appalling human poverty. Why is Tanzania so poor? he asks people, and he gets a variety of answers. One answer, he notes, is that Tanzania is actually not poor by the standards of human history; it has a life expectancy about that of the United States in 1920, which is a lot better than humans in 1720, or 1220, or 20. But, he finally concludes, the real answer is the collective “ujamaa” policies pursued by the sainted post-colonial leader Julius Nyerere. The answer is “ujaama—they planned it. They planned it, and we paid for it. Rich countries underwrote Tanzanian economic idiocy.”

From Tanzania P. J. moves on to Hong Kong, where he finds “the best contemporary example of laissez-faire....The British colonial government turned Hong Kong into an economic miracle by doing nothing.”

You could do worse than to take a semester-long course on political economy where the texts are Eat the Rich and Parliament of Whores. So, bookstore owners, leave them in the Humorous Writing section for sure, but also put copies in the Economics, Politics, and Current Affairs sections.

Still time to buy them for Christmas and educate all your family and friends while they think they're just being entertained!

Today is a great day for freedom. On this day in 1933, the 21st Amendment was ratified, thus repealing Prohibition. My former colleague Brandon Arnold wrote about it a few years ago:

Prohibition isn’t a subject that should be studied by historians alone, as this failed experiment continues to have a significant impact on our nation.

Groups like the Women’s Christian Temperance Union, a key force in the passage of Prohibition, survive to this day and continue to insist that Prohibition was a success and advocate for dry laws.

Prohibition-era state laws, many of which are still on the books today, created government-protected monopolies for alcohol distributors. These laws have survived for three-quarters of a century because of powerful, rent-seeking interest groups, despite the fact that they significantly raise costs and limit consumer options. And because of these distribution laws, it is illegal for millions of Americans to have wine shipped directly to their door.

The website RepealDay.org urges celebrations of the "return to the rich traditions of craft fermentation and distillation, the legitimacy of the American bartender as a contributor to the culinary arts, and the responsible enjoyment of alcohol as a sacred social custom." It's easy! You don't have to hold a party. Just go to a bar or liquor store and have a drink.

RepealDay.org says that "No other holiday celebrates the laws that guarantee our rights." I think that's going too far. Constitution Day and Bill of Rights Day do exactly that. And in my view, so does Independence Day. But that's quibbling. Today we celebrate the repeal of a bad law. A toast to that!

Cato celebrated the 75th anniversary of repeal with this policy forum featuring Michael Lerner, author of Dry Manhattan: Prohibition in New York City; Glen Whitman, author of Strange Brew: Alcohol and Government Monopoly; Asheesh Agarwal, Former Assistant Director of the Federal Trade Commission’s Office of Policy Planning; and Radley Balko, Senior Editor, Reason.