The invaluable Tim Carney of the Washington Examiner is an expert at exposing the corruption of big government, and his article about for-profit colleges and government-subsidized tuition shows that everybody involved in this fight is sleazy. Unfortunately, no matter who wins, the taxpayers lose. It’s also worth pointing out that the main effect of government-financed tuition payments and loans is to drive up the cost of college – another example of the third-party payer phenomenon.
Here are key passages from Tim’s column.
For a case study in the tawdry and twisted world of Washington policymaking and lobbying, you can’t do much better than the current fight over the subsidies and regulations for for-profit colleges. Behind every argument is an ulterior motive, around every corner is a conflict of interest, and in every pocket there is cash procured through government policy supposed to serve the public good.
…don’t confuse “for-profit” with “capitalist.” Without federal subsidies in the form of Pell grants and federal loan guarantees, the for-profits might not exist. At the very least, they would be much smaller. About 87 percent of the revenue at the biggest for-profits comes from federal taxpayers, according to the Chronicle of Higher Education. They belong to a class of company that I call Subsidy Sucklers.
Sen. Tom Harkin, D-Iowa, earlier this year declared war on the for-profits, ordering the Government Accountability Office to investigate these schools’ marketing techniques. The GAO produced a scathing condemnation.
…But a closer look revealed a murkier picture. The GAO last month corrected the paper, modifying 16 of the report’s 28 findings. At Education Week, Rick Hess wrote, “all 16 of the errors run in the same direction — casting for-profits in the worst possible light.” The credibility of Harkin’s star witness in his August hearing, Steven Eisman, was also called into question.
Eisman is a short-seller who reportedly stands to make big money if the stocks of for-profit colleges collapse. He also is a vocal lobbyist for new regulations that would cripple these colleges. The term for Eisman is Regulatory Robber Baron.
… Bill Clinton’s former special counsel Lanny Davis first flagged Eisman’s role in a Politico op-ed, and liberal ethics “watchdog” Melanie Sloan followed up, criticizing Harkin for allowing Eisman to testify, sparking the liberal American Prospect to ask in a headline, “Why Are Progressives Fighting Student Loan Reform?” The answer: money.
On September 17 — about three months after Davis’s op-ed — Davis registered as a lobbyist for the Coalition for Educational Success, a trade group of for-profit colleges. Then in November, Sloan announced she was joining Davis’s lobbying firm. Also lobbying for the for-profit colleges are six former Democratic congressmen and three former Republican lawmakers.
This tale has no good guys, but it does have a moral: When you inject government into an industry, you get some pretty unsavory results.
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Previous posts on this blog have featured charts showing that Obama’s policies are not working (see here and here). I even showed a cartoon making the same point.And I cited a column with data comparing Reagan and Obama.
The Heritage Foundation has a very powerful addition to this genre, a chart comparing job performance during the Reagan and Obama Administrations.
This is a remarkable image, but let’s start with some disclaimers. There are lots of factors that impact economic performance, and many of them are outside the control of politicians. Moreover, it is impossible to know what would have happened in the past two years or in the early 1980s if Obama or Reagan had chosen different policies.
But even with these caveats, it is difficult to look at this chart and not conclude that Obama’s big government policies are much less successful than Reagan’s small government policies.
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Like most federal agencies, the Federal Aviation Administration is a costly bureaucracy. Its $16.4 billion budget is enormous, but that is just the direct cost borne by taxpayers. The indirect costs, such as inefficiencies imposed on the air transportation system, also are significant. This has nothing to do with the TSA, by the way. The FAA is responsible for the air traffic control system, things like airport towers and radar systems that tell planes where to fly and when to land.
The Canadians have a much better approach. They privatized their air traffic control system back in the 1990s. So instead of having to rely on a clunky and incompetent government bureaucracy, our neighbors to the north have a private company that is generating very impressive results.
Not that this should be a surprise. Other nations have made remarkable gains through privatization, including Social Security personal accounts in Chile and 30 other nations, education choice in places such as Sweden and the Netherlands, and privatized postal service in Germany.
Reforming government monopolies should be a priority in the United States. Robust economic growth requires more than just low tax rates. It means getting rid of policies that cause resources to be misallocated. Privatization is an unsettling concept for some people, in part because they’ve always assumed certain things should be run by the government. This is why international examples are so important. Canada’s 14 years of experience with a private air traffic control system clearly shows that there are very successful alternatives to inefficient and costly bureaucracies.
Here are some excerpts from a story in Canada’s Financial Post about Canada’s remarkable reform.
A once troubled government asset, the country’s civil air traffic controller was privatized 14 years ago and is now a shining example of how to create a global technology leader out of a hulking government bureaucracy. Nav Canada’s efforts have flights moving more efficiently than ever through the skies above the country.
Many of the changes implemented by Nav Canada in recent years have gone unnoticed by the flying public. Certain flights are now shorter than they once were; aircraft no longer circle airports awaiting a runway; descents start further out and planes reach cruising altitudes more quickly; and flights to Asia now spend less time by jaunting over the Arctic than endlessly cruising the Atlantic or Pacific Oceans.
…Nav Canada estimates its efforts to modernize the aircraft navigation system in the country since it was privatized in 1996 have cut the fuel bill of airlines flying into Canada and above it by an estimated $1.4-billion collectively…
Meantime, Nav Canada has won the respect of airlines for keeping its fees steady, and in some cases, like in 2006, even reducing them when it can.
…John Crichton, Nav Canada chief executive, makes no bones about why he thinks his organization has been able to make these improvements and emerge as a global leader.
I don’t think there’s any question that the privatization was the best thing that ever happened,” he said. “That really unleashed all the innovation.”
…Calin Rovinescu, Air Canada’s chief executive, commended Nav Canada for its efforts to modernize the country’s navigation systems during a speech in Montreal earlier this year, while condemning the United States and the European Union, which still operates as a patchwork of nationalized systems, for their lack of leadership on the issue. Nav Canada also won the International Air Transport Association’s Eagle Award earlier this year for its efforts, in particular its constant consultation with the industry.
My Cato colleague Chris Edwards has more analysis, including a call to privatize the Federal Aviation Administration as well as some useful links.
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Too bad the gift-giving season is already over. Thanks to this story about three men who were arrested by Japanese police for providing coffee enemas without regulatory approval, I now know that I could have purchased a “rectal infusion kit” for only $110. But since Senator Reid will still be around next Christmas, let’s focus on the public policy angle and ask ourselves why Japan’s government has licensing rules for coffee enemas?
In almost all cases, licensing rules are imposed by governments to protect politically powerful providers in a certain industry. The Institute for Justice has done heroic work on this issue, and they are always fighting to break up government-sanctioned cartels that limit competition, lead to higher prices, and make it hard for new providers to enter the market.
I’m sure these Japanese rules exist to unfairly enrich that nation’s medical profession. I can’t help but wonder, though, whether Japan’s bureaucrats have covered all the bases. Are tea enemas also covered by the regulations? What about if you use “fair trade certified” coffee from Starbucks? Are people allowed to buy toilets with built-in enemas? And what about bidets? Surely regular people can’t be trusted to operate such equipments without some sort of government involvement!
So many…um…fascinating questions to ponder. Anyhow, here’s a blurb from the story.
Police in Chiba Prefecture arrested three men this month on suspicion of violating Japan’s Medical Practitioners Law by providing coffee enemas without the proper medical qualifications, according to local media reports. Chikayoshi Hishiki (55) and two associates offered coffee-based enemas as a beauty treatment at their now-defunct alternative medicine clinics, according to leading daily Sankei Shimbun. The three suspects denied any wrongdoing, claiming they only provided the equipment and cleaned up afterwards, while the clients themselves administered the procedure, the report said. Some Japanese have become interested in filling their bums with java, believing they have discovered a secret dieting technique used by celebrities in the US and Europe.
CYA Disclaimer: Just because the Internet is a handy way of accessing information, that doesn’t mean that everything you read is true. So I make no claims that this story is 100 percent true, though governments are so stupid that I’m guessing it is accurate.
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You wouldn’t expect any positive developments from California when it comes to schooling, but this video shows that parents now have the ability, for all intents and purposes, to fire the incumbent management of a government school.
I don’t think this is nearly as good as what’s being proposed in Douglas County, Colorado, but it’s a big step for a union-controlled state such as California.
And the parents of one failing school have pulled the trigger and are forcing good reforms.
2011 could be a very good year for school reform and improvement. That’s bad news for politicians and teacher unions, but great news for parents and kids.
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