Recently, the outstanding economist Richard Vedder penned a column in the Wall Street Journal on the problems of higher education in America. He titled it: “College Wouldn’t Cost So Much If Students and Faculty Worked Harder.”
The piece was a preview of his book on the subject, Restoring the Promise: American Higher Education Today to be published May 1. From his summary and from reading his previous writings on the subject, I’m certain the book will be outstanding
His analyses have coincided with my own as a Nevada legislator, higher education regent, college teacher and state controller, and he has brought good data to illustrate issues I have observed in those roles. So, here, I’ll present a summary of his WSJ piece, and in future column I’ll detail from my experience and his book some major issues and solutions to the serious challenges U.S. higher education faces.
Vedder begins: “One reason college is so costly and so little real learning occurs is that college resources are vastly underused. Students don’t study much, professors teach little, few people read most of the obscure papers the professors write, and even the buildings are empty most of the time.”
As a regent and part-time community college instructor for four years, I observed all these phenomena and more first hand. They are some key reasons higher education costs have increased faster in real terms than the incomes of students and their families while those students are being ever more poorly prepared for life and the job market. And taxpayers are shorted.
His first observation is that surveys show college students today spend about 27 hours a week in class and studying, while taking classes only about 32 weeks a year. Or, fewer than 900 hours a year on academics – “less time than a typical eighth-grader and perhaps half the time their parent work to help finance college.”
He notes other researchers have found that in the middle of the 20th Century students spent 50 percent more time – around 40 hours weekly. Grade inflation has vitiated their incentives to work hard because the average grade received has risen from B-/C+ in 1960 to B/B+ now.
Vedder notes that on some campuses students study much more. And, “Engineering majors probably work much harder than communications or gender studies majors.” Ditto, law and medical students. As a sometimes engineering major at Illinois, recipient of a masters from Stanford in Engineering Economic Systems and later law student, I know all that’s not new.
But neither he nor I are suggesting that students responding to the changing incentives is the only problem. Vedder confesses: “I’m part of the problem: I’ve been teaching for 55 years, and I assign far less reading, demand less writing, and give higher grades than I did two generations ago.” Most other professors are less demanding and productive in teaching and useful research than he is, while mostly hard-sciences instructors put in similar teaching and productive research time.
When I taught 15 years ago, I told my community college students at the start of the semester I would teach them just as I would at any four-year college, including the same reading, writing, homework and testing. However, I felt guilty because I succumbed to the grade inflation trend. On the other hand, because a third of them needed remedial English, writing and math skills (having been shorted by their grade and high schools), I provided that service.
Another point he makes is that objective measures show the results of college education today are underwhelming. Similarly, I noted in my controller’s annual reports that American K-12 students’ achievement scores in international tests are in the middle ranks of those for advanced countries, while our per-student spending is among the highest.
A major point I learned as a regent is that much of higher education’s problem is the proliferation of administrative and other non-teaching staff relative to all instructors. Because colleges and universities work hard to cover up this phenomenon, I had trouble getting data on it, and I look forward to his book for more information here.
When we understand the full dimensions of the problem, we can begin crafting remedies. Stay tuned.
So, Sunday morning, I opened the electronic version of the only local newspaper I subscribe to and trust, the Las Vegas Review Journal, and I see, buried on page A8, a story headlined “Poll shows Democrats more trusted with health care”
Which was true…sort of. Because I’m pretty sure the story reported the numbers of the poll accurately.
The “poll” was an “Associated Press-NORC Center” poll which, you had to read seven paragraphs to the bottom of the story—by the Associated Press—to find out that “The poll of 1,108 adults was conducted April 11-14 using a sample drawn from NORC’s probability-based AmeriSpeak Panel. The margin of sampling error for all respondents is plus or minus 4.1 percentage points.” Let me be the first to ask the question: If that factoid had been in the headline or in the first paragraph, would anyone take this seriously? What if the story read like this:
“A poll of 1,108 adults paid for by the company selling this story to news outlets says that Democrats are more trusted to handle healthcare in the United States. The pollsters say that the 1108 adults can predict the sentiments of the 128,824,246 voters who cast a ballot in 2016 with a margin of error of 4.1 percent.”
Would anybody actually believe—especially after the 2016 election—that a sample of .0000086 percent of the voting electorate has a margin of error of 4.5 percent? But, in my favorite local newspaper, it is presented as fact. If this kind of polling were accurate, why did virtually every pollster predict Hillary by 7 points on the day of the 2016 election.
Polling used to be easier because, for most purposes, you could at least get a sample which was demographically sound. We could tell roughly where you lived by your telephone number and who you were. Today, with the advent of cell phones and cheap VOIP services, we cannot even tell with certainty what state you are in. Further, there is the built-in bias of many news organizations which sponsor such polls. If you believe that the AP is some kind of neutral news behemoth, guess again. Ditto for CBS, NBC, CNN, ABC and, yes, even Fox. They all come at stories from a predominately liberal viewpoint (with the occasional exception of Fox) so why would you believe that their polling selections would be much different?
Then, there’s the “if you see it in the media it must be true” school of thought. It’s today’s version of Hitler’s propaganda minister Joseph Goebbels’ Big Lie theory which, simply stated, says if you tell a lie big enough, many people will have to believe it. Inevitably, these “polls” are presented by the same people who populate organizations like the White House Correspondents Association and are soooo offended by the term Fake News and the President’s assertion that those who willfully present Fake News are the enemies of the people.
But the truth is not only is President Trump correct, but the average voter knows bullcrap when he or she sees it. Journalists have a tendency to see themselves as more knowledgeable and more important than average voting citizens. Many times, in conversation, journalists use terms like “them” and “those people” to describe and differentiate average voters. As if journalists, somehow, fall into a different category. Like Hillary and the word deplorable.
Want some proof? Watch those panels on FNC and CNN. Watch the Sunday morning shows.
It’s that sort of hubris which allows them to write headlines and lead paragraphs like the one I referred to above—even in my favorite local newspaper. (And I’m not kidding about that.) I’ve been in this business since I was 12. But I live about 2,600 miles from Washington and my neighbors remind me daily that I’m pretty average. I would hate for it to be any other way.
Intensified by the early fight for money and backers among Democratic presidential hopefuls, Medicare for All and similar single-payer insurance programs have been promoted with increased volume. While there are differences among the “I’ll give you more for less” sales pitches, they share the common central premise that such plans have far lower administrative costs than private insurance, so their version of reform will produce a massive infusion of available resources.
However, the “proof” offered for those administrative cost savings claims mainly consists of constant repetition, with candidates then quickly moving on to the free lunches they would supposedly enable. But given that claim’s central place in their proposals, we must question that premise and with it, the glib answers claimed for it.
How Should We Measure Administrative Efficiency?
For health care plans, the standard measure of efficiency is administrative costs as a percentage of total costs. And in those comparisons, Medicare appears substantially more efficient. But that does not mean there would be savings if people were moved from private insurance to Medicare for All.
The primary reason is that Medicare beneficiaries are far older and less healthy than the population. That makes health care costs far higher per Medicare beneficiary. In fact, before Obamacare, medical expenditures per Medicare beneficiary were routinely more than double those for the privately insured. However, nonmedical administrative costs are only slightly related to total medical expenditures. They are primarily related to the number of persons covered. This causes the standard measure to grossly exaggerate Medicare’s relative administrative efficiency.
Consider an example. Say both Medicare and private insurance beneficiaries had identical administrative costs of $500 each, but the Medicare patient received $5,000 in benefits, while the private patient received $2,500 in benefits. Medicare would show a 10 percent share of administrative costs, and private insurance would show a 20 percent share. In other words, despite the same administrative cost per beneficiary—that is, the same actual efficiency—the standard measure makes private insurance administrative costs look twice as expensive as Medicare.
Simply ask what would happen to administrative expenses if one private insurance beneficiary was moved into Medicare in the example above. Despite Medicare supposedly being half as costly in that regard, administrative costs would not change. No resources would be freed up. And given that the administrative cost per Medicare beneficiary is actually higher than for private insurance, the shift of someone into Medicare would increase administrative costs—leaving fewer resources, rather than more—available for medical care.
What Should Be Included in Medicare’s Administrative Costs?
The public-private comparison also typically compares the administrative costs of private insurance to those that show up in Medicare’s budget. But many of the administrative costs do not show up there. They appear in other agencies’ budgets. The costs of collecting taxes appear in the IRS budget. The costs of collecting premiums appear in Social Security’s budget. Many of the accounting, building, and marketing expenses appear in the Health and Human Services budget. Including those costs would roughly double Medicare’s reported administrative costs.
How Should We Count Taxes on Private Insurance?
Private insurance administrative costs are generally defined as premiums paid in minus claims paid out. However, that means everything except claims payments are counted as administrative costs whether or not they have anything to do with administration. For example, many states impose a premium tax (averaging about 2 percent) on health insurers, and those tax payments are incorrectly categorized as administrative costs. This also makes Medicare, which is exempt from such taxes, look relatively more efficient than it really is.
How Should We Count Disease Management and On-Call Consultation Services?
As with taxes, counting private insurance administrative costs as total premiums minus claims paid introduces other measurement distortions, as well. Insurance companies offer disease-management and on-call nurse consultation services. However, those services do not generate insurance claims. Consequently, those costs are also counted as administrative rather than medical.
How Should We Count Fraud and Fraud Prevention Efforts?
Waste, fraud, and efforts at their prevention also complicate administrative efficiency comparisons. Consider what happens if Medicare (estimates of whose excess spending exceed $50 billion yearly) spent less on prevention efforts. It would look more efficient because its administrative costs would be lower and because undetected excess spending would be counted as medical expenses, not waste. In contrast, insurance companies, whose bottom lines are at stake, are much more diligent about eliminating such excess spending. But those efforts, even though they can generate very large overall savings ($1 of fraud prevention has been estimated to reduce those costs by as much as $15), raise their measured administrative cost percentage, making them look less efficient.
How Should We Treat the “Excess Burden” Caused by Switching to Single Payer Systems?
In addition to all these biases exaggerating private insurance administrative costs and understating Medicare’s administrative costs, another large difference should be noted. When people pay more to get better private insurance coverage, they don’t treat it as a tax, but as part of their employee compensation. Under Medicare for All, however, higher payments into the system will not provide greater benefits. That means that Americans will rationally start treating those payments as taxes in exchange for nothing.
It will, therefore, act as a large income tax increase with correspondingly large economic distortions. Those distortions, created by the wedges taxes impose between what buyers pay and what sellers keep, reflect the wealth destroyed by the reduction in mutually beneficial market arrangements that result, which economists call excess burdens. While not incorporated in official comparisons, they are very large added costs of single-payer systems compared to private medical insurance.
One study found that even the “lowest plausible assumption about the excess burden engendered by the tax system raises the true costs of delivering Medicare benefits to about 20-25 percent of Medicare outlays,” imposing costs far higher than any supposed private insurance administrative cost deficiency.
It is striking how much single-payer promoters rush past their repetitions of administrative cost savings claims before quickly turning to their vote-buying promises in large part funded by them. It almost seems that they don’t want voters to think carefully about those claims. And that might reflect an accurate judgment. If people questioned the basis of those promised solutions, it would reveal supposed administrative cost savings to be the opposite once the compounded mismeasurements are deciphered, and it would not be anyone’s ticket into the White House.
Gary M. Galles is a professor of economics at Pepperdine University and a guest columnist to the Penny Press. His recent books include Faulty Premises, Faulty Policies (2014) and Apostle of Peace (2013). This piece was originally published on fee.orgm then pennypresslv, reprinted here in full, with permission.
One joy of studying history, especially the 20th Century, is to see how life has changed. To my great satisfaction, our daughter Karyn has a fondness for the subject and especially the aspect of it that shows how people lived then versus now, particularly as reflected in popular culture.
As some folks know, I still collect sports and non-sports cards. I believe in the adage that he who dies with the most baseball cards, wins. Such cards and related ephemera are a great reflection of the times when they were produced and a deep insight into the real history and culture of their eras.
Recently, I acquired a reprint set of the first issue of football cards, which included 35 National Football League players and the immortal Knute Rockne, who had coached at Notre Dame and shaped much of the early game.
The original set, produced in 1935 by the National Chicle Co. of Cambridge MA is too expensive for a non-corrupt former elected official, because it includes the most valuable football card ever, number 34 Bronko Nagurski, as well as number 9 Rockne. They can command five-figure prices in near-mint condition. My reproductions, easily distinguished from the real items, cost a few dollars.
Among other things, all the players are pictured in actual football poses, not with fur coats, bling and shades as some stars have been in recent years. The front sides are art, not photographs, and they use very bright colors, attractive compositions and simple designs with football backgrounds.
The text on the back of the cards, written by Eddie Casey, then coach of the Boston Redskins and formerly Harvard, shows how real sports and life were then as compared to today.
A few things really struck me. The first was the line in Nagurski’s biography on the back that said: “A product of the wheat farm country, he stills works the soil between action on the football field and professional wrestling mat.” This is a great example of a feature of many cards even into the middle-1950s: the discussion of the player’s off-season job.
Their pay was so modest that many had to hold an off-season job for a decent living. Quite the opposite of the sometimes multi-million-dollar guaranteed levels even for rookies in some professional leagues now and the long-term contracts with mid-eight-figure annual pay for some stars.
After baseballer Carl Furillo won the National League batting crown in 1953, he returned to his winter job as an elevator repairman for Otis Elevators, according to one of his cards. Perhaps more than any other fact, that illustrates what I mean about life being real then.
Another item is that the text on the first 27 cards is essentially a tutorial for kids and adults on how to play certain positions and actions, as depicted by the player on the front. From all aspects of kicking, passing, receiving and handling the ball both in the open field and when plunging into the line to the need for defensive ends on kickoffs to stay in their lanes and turn the ball carrier to the middle of the field, etc.
These cards were meant for real fans of the time, not for kids ripping open packs to find a rare insert or special card.
A third aspect of how real everything was then is the height and weight statistics. Only one of the 35 players tipped the scales above 220 pounds (number 11 Turk Edwards at 250) and none were taller than 6’ 3.” Some colleges today have all their starting linemen at 300 pounds plus.
Perhaps the most endearing thing is that coach Casey knew his football, as shown in the final text on Nagurski: “He is as much a tradition to [his alma mater] Minnesota football today as Red Grange is to Illinois.”
The text on the next card ends: “Now, reaching the end of his professional career as a player he is following the footsteps of Red Grange in becoming an assistant coach to the bears.”
Illini fans then and now have always known that Grange was the greatest college football player ever.
Now, if only my daughter Karyn would develop a taste for card collecting.
Ron Knecht is a contributing editor to the Penny Press - the conservative weekly "voice of Nevada." You can subscribe here at www.pennypressnv.com. His column has been reprinted in full, with permission.
Here is a message to Democrat dim bulbs everywhere who, after the Mueller report’s release, cannot, as one of their favorite organizations is so aptly named - move on.
On November 8, 2016, Donald John Trump whupped your collective ass.
On April 18, 2019, your collective ass got whupped again—this time by your own designated agent, Robert Mueller.
You still don’t understand that the average American voter thinks you are full of crap. That the reason Hillary lost was not the Russians but that she called half of America, “deplorable.”
No, you want to get rid of the President by any means possible - or impossible.
Go ahead and impeach the President. Please. Let cocky little jerks like Jerrold Nadler and Adam Schiftless rule the day with their pseudo-intellectual bullcrap. Paraphrasing the immortal words of the late George Wallace, I’ll bet they couldn’t even park a bicycle straight. Both of these clowns are like the freshman in college who got beat up every day by the seniors and now, they’re going to show us.
Meanwhile, we DO have a crisis at the border.
And the economy IS doing quite well.
A classic episode of a TV show, WKRP in Cincinnati, ends with the station manager saying, “As God is my witness, I swear I thought turkeys could fly.”
Who would have thought that the writers in 1978 could have imagined today’s Democrats 41 years later.
We know a few things.
One is that turkeys CANNOT fly.
Two is that Democrats in the House of Representatives are auditioning to be turkeys.
In 448 pages, (available on pennypressnv.com) you see a President who has little or no patience for fools and has never been afraid to say so to anyone who paid attention.
The fact is that Donald Trump is the President of the United States. If the President wishes to fire anyone in the executive branch at any time for any reason, it may be a political firestorm, but not a legal one. Richard Nixon fired Archibald Cox. The firing stuck because Nixon was the President and in charge of the executive branch.
Had Trump fired Mueller or Jeff Sessions, it might have caused him political agita, but I’d put money on this Supreme Court ruling out obstruction of justice if it ever got that far.
And, as far as these clowns - yes, clowns - who chair various committees in the House go, if I were the Attorney General I would not answer their demands with nice letters. I would call a press conference and tell them to blow it out their…anal orifices. Or something like that. But that’s just me.
Although, I would observe that many of my fellow average American voters tend to feel the same way and use the same or similar language in their unguarded moments.
And as far as impeachment goes, the aforementioned clowns are playing with the possibility of going years before Democrats ever win an election in many places again. If they’re that stupid.
First, we know for a fact that impeachment would just be a symbolic gesture. There is NO WAY they get 67 votes in the Senate to remove the President. And if Indian imposter Elizabeth “Pocahontas” Warren thinks her call for impeachment will help her run for the Democratic nomination, we sure hope the Democrats ARE that stupid.
Having spent 20 years of my life in Las Vegas, I wouldn’t put any money on either side of that proposition.
Jack hates Trump. Jill hated Obama. And thus, Jack and Jill now cannot stand each other. This is today’s America, where lines are drawn and the population is bifurcated. We are somehow losing our love for each other, sharing common bonds of freedom as a nation. Is it because of the polarizing nature of Trump? Or Obama? No. Our collective angst has been misdirected towards the wrong culprit—the ire belongs with the unfettered growth of the power of government over our lives.
Would Jack hate Trump as much if the government was vastly less impactful on his life? Of course not. The emotional highs and lows of 2016 were extreme. We hear ad nauseum that every election is the most important of our lifetime. This last one, though, should have been no more extraordinary than any other. Sadly for our mental, emotional, and financial well-being, each election becomes progressively more polarizing, and more anger-inspiring—at least on one side. The reason is simple: the government becomes incrementally more gargantuan.
American Elections Have Become the Prisoner's Dilemma
Contemplate the prisoner’s dilemma that has become our elections. In a traditional prisoner’s dilemma problem, two people that together perpetrated a crime are given a choice to either stay silent or betray the other. If they both stay silent, they will both go to prison for a short period of time. If one stays silent, and the other betrays, the betrayer stays out of prison, and the silent one goes to prison for a long time. If they both betray the other, they both go to prison for a medium length of time. If they both act rationally, yes—an oxymoron for a criminal, then they will each betray the other.
Our elections are analogous because we are trapped in a scenario in which it seems impossible to behave rationally and have a positive outcome for all, or even most. Presume we live in a roughly 50-50 country, where people are split down the middle. After an election, half of the people are ecstatic, half the people are devastated, and all of the people can barely stand each other. There is, however, a way to solve the dilemma problem. It is a solution in which both sides are at least better off: limited government.
Our federal government is a behemoth. The fiscal year 2019 budget stands at $4.5 trillion, which is 21.3 percent of GDP. The current federal debt, on paper, exceeds $22 trillion and has grown on average nearly a trillion dollars a year over the last decade. Off the balance sheet, the unfunded liabilities could add at least another $50 trillion, depending on how it is estimated. The federal government employs approximately 2 million people.
There are 15 executive departments, and the number of agencies depends on who is counting, and how. As citizens, we experience an ever-growing expanse of government, impacting virtually every aspect of our lives. Thus, elections become commensurately impactful. Those who win elections direct this bloated mass of resources and power in a manner which the losing party inevitably finds antithetical.
Of course, emotions are not some mathematical game theory problem. The results are real and impactful. They have become rather binary, and we have become vastly forked along political lines. But there is a correlation in our prisoner’s dilemma puzzle between the severity of outcome and the power of the government. The less impactful government is on our lives, the less a binary election matters. The more impactful government is in one’s life, the more extreme the results of an election will be. Is everyone willing to simply flip a coin to be extremely happy or extremely bitter? That is where we currently stand.
Perhaps, instead, we can limit government. By reducing the magnitude of government, we can move our country to the point where elections are vastly less impactful on our well-being. We can reduce the animosity we currently have for each other, and instead bask in the glow of the freedoms we have been bestowed. Government has a natural tendency to metastasize. It is our duty as citizens to curtail that.
Abraham Lincoln declared our government to be of the people, by the people, and for the people. Sadly, our reality is a government that no longer derives its power from our consent. The simple fact is that Obama was your President, and Trump is your President. Instead of #notmypresident, how about #limitedgovernment?
Dave Sukoff is an advisor to the investment management community and previously co-founded and ran a $500m fixed income relative value fund. He is also the co-founder of a software company and inventor on multiple patents. Dave graduated from MIT, where he majored in finance and economics. This piece appeared on pennypressnv, reprinted in full with permission.