The College Gamble

For much of the past century, completing a college education was an accomplishment most students would be proud of.  Today, college training is mostly a joke.  Higher education is, in economics parlance, no longer an investment good (something that will improve future production): it is mostly a consumption good (something that satisfies a current economic want).

To prove that college in the USA is not much of an investment for many students, please read these 21 statistics on college trends: http://theeconomiccollapseblog.com/archives/student-loan-debt-hell-21-statistics-that-will-make-you-think-twice-about-going-to-college.

I hope that article bothered you as much as it did me.  I just would like to note the points that really stood out to me.

First is the insane increase in tuition levels.  The general price level has increased 250% (inflation) since the late 1970's (e.g., eggs today are 2.5 times more expensive than they were in 1979). College tuition has increased over three times faster than inflation (tuitions have increased 900% since the late 1970's).  This drastic increase in college tuition has led to a total outstanding student debt of almost $1 trillion!

The second issue I had concerns the quality of education students are getting.  Only 50% of students have ever taken a single course that made them write more than 20 pages.  32% of students have never taken a course that makes them read more than 40 pages in a week.  Crazy, right?

The third problem that really bothered me is that one-third of all bachelor's degree holders end up getting jobs that don't require college degrees anyway.  What is the point for millions of people to go to college if they will end up with jobs they could've gotten without going to college?  Well, it's just four years of partying and drunken fornication for students (as I will explain), and billions of dollars of revenue for schools' administrators.

The final disturbing fact I found in this article was that 51% of a typical college student's time is spent socializing, while only 7% of his or her time is spent studying.  Additionally, at least 35% of college students spent less than FIVE hours studying every week.  (How does this not sound like a huge adulthood-postponing party?  And, how does this not sound like schools being useless in terms of teaching students and making them work hard)?

It is obvious to me that financing and quality issues need to be addressed immediately in terms of higher education.  I really think my GRP idea is a good place to start in terms of combating student debt (if you missed my post on the GRP, read it here: http://theyoungandthescrewed.blogspot.com/p/solution-to-young-americans-current-and.html).  Or, we could just have the federal government totally subsidize university education like many countries do.  (I prefer the latter option, but, either one works for me.  Under both systems, though, students need to be held accountable in terms of yearly testing and exit exams.  We need to be sure that they are actually learning something).

As for reforming the quality of college education in the USA, I believe it starts with lower education.  If you need any more proof that the level of education in this country is decreasing, check out this Harvard entrance exam from back in the late 1800's: http://graphics8.nytimes.com/packages/pdf/education/harvardexam.pdf.  Honestly, I can only do the math stuff and some of the history stuff.  I never learned Greek or Latin.  But, that is a reflection on the lower education system.  We have lost ground on college applicants from over 100 years ago!

How are we supposed to compete in the global economy when students from China and India study everything they can get their hands on while our students try to avoid studying anything?  Additionally, how can we compete when the few responsible students this country has are getting destroyed by predatory financing while foreigners can come here and study at extreme discounts?

I believe these situations are of the highest national priority in terms of preparing the USA for the future.  I guess media members and the political class aren't addressing our education system's failures because they will not be around to suffer the consequences of the current issues.  Or maybe they're just getting paid off by the few people benefiting from this system (lenders, administrators, and some academics).

One thing is sure, though: our higher education system is not primarily about education anymore.  It is about fun and money.    

America's Disdain for Its Legislators

I just wanted to bring to mind a couple interesting polls recently conducted by Rasmussen Reports.  These two polls address Americans' thoughts on our Congressional Representatives and Senators.

The first poll addresses Americans' views on Congress's competence (see: http://www.rasmussenreports.com/public_content/politics/general_politics/april_2011/43_say_most_members_of_congress_are_corrupt).  Only about 9% of American voters gave Congress a "good" or "excellent" rating; a full 56% of voters gave Congress a "poor" rating.  Interestingly, voters like the much-maligned (at least in main-stream media circles) Tea Party more than Congress (see: http://www.rasmussenreports.com/public_content/politics/general_politics/april_2011/48_say_their_views_closer_to_tea_party_than_congress).

The second poll involves Congresspersons' ethics (see: http://www.rasmussenreports.com/public_content/politics/general_politics/april_2011/43_say_most_members_of_congress_are_corrupt).  43% of Americans believe most Congresspeople are corrupt; only 30% doubt that most legislators are unethical .

What I find interesting is that Americans hate the ineffectiveness of their legislature, and we don't believe our legislators are ethical.  Despite those facts, we keep voting for many of the same people (by my count, 58 Senators have been in office for more than 1 term; over 38 have been in office over twelve years).

I don't understand why we keep hiring useless and untrustworthy individuals to rule over us.  Have we given up hope that Washington, D.C. will one day work on our behalf?

We need fresh and untainted blood in our legislature. Just, decent, and insightful rulers would do wonders for this country.  I guess the people we need are too wise to get involved in the soul-destroying snake-pit that is Washington, D.C.  So, maybe we just have to wait until the current generation of rulers retires (or dies out) and hope America can survive in the meantime.        

Is the USA Headed for a Bout of Stagflation?

Increasing price levels during a period of economic stagnation sounds too horrible to be true, doesn't it?  Well, unfortunately, this horrible economic phenomenon is a reality we Americans may be dealing with soon. 

Stagflation, as economists call it, is an increase in the general price level (inflation) during a period of anemic economic growth (stagnation) and high unemployment.  Obviously, this definition has some ambiguity to it, but let us see if we can attribute any of these characteristics to today's economy.

Let's start with inflation.  Originally, the Federal Reserve believed the 2011 inflation rate would stabilize between 1.3% and 1.7%.  Just today, however, the Fed increased its projected 2011 inflation rate to 2.1%-2.8%.  Obviously, that's a substantial increase, but it is in the typically targeted rate of 2%-3%. 

As for economic growth, the Fed today downgraded its forecast for GDP growth from 3.8% to 3.1%-3.4%.  I don't believe that is considered to be anemic, but it certainly isn't all that great, especially given that the Fed has stated the USA will maintain a high unemployment rate of 8.4%-8.7% for the rest of the year.  

(Here's the article for all of the aforementioned Federal Reserve forecasts: http://www.bbc.co.uk/news/business-13213424).

So, in terms of stagflation, the USA may be able to squeak through this deep recession without getting hit by a stagflation crisis. 

I would like to point out the role oil prices will play in all of this.  While difficult to quantify its impact, it is no stretch to believe that significant oil price increases (it is being said that $6 per gallon is not out of the question) 

could push the fragile economic recovery into a stagflation episode.  Essentially, rising oil prices will contribute to widespread price increases due to the fact that gasoline is used to transport or produce pretty much everything in the country; these price increases will, in turn, lead to consumers cutting back on expenditures.  This decrease in demand will lead to more unemployment and a decrease in GDP growth.  It is a vicious circle and I just hope we avoid it completely.  

    

Few Americans Understand that Today's Public Debt Problems Started Decades Ago

I decided tonight to discuss a recent poll conducted by Rasmussen instead of stagflation and Congress.  I'll save those topics for tomorrow.

Anyway, the reason I wanted to discuss the Rasmussen poll is because it shows how ignorant the voting American is in terms of government entitlements and welfare programs.  Here is the link to the report:  http://www.rasmussenreports.com/public_content/business/federal_budget/april_2011/just_23_realize_deficit_largely_due_to_commitments_made_in_1960s_and_70s.

As the article mentioned (and I have made similar points before) today's entitlement problems are the results of previous generations' failures.  In 1965, President Johnson ordered the creation of Medicare and Medicaid to provide the poor and the elderly with funding for healthcare.  Social Security, created in 1935, was created to be a safety net for poor and down-trodden individuals.  These programs have been allowed to gradually evolve into monstrous, $2.7 trillion government behemoths that are crushing working and younger people while essentially making 60 million Americans dependent on the government (see: http://eaynuf.blogspot.com/2011/04/usa-today-americans-are-incredibly.html).  These entitlement issues are the direct results of our predecessors' lack of leadership and wisdom.

(Note: I do believe these programs have noble goals, but they definitely need substantial restructuring in terms of benefits and funding practices).

What is irritating about our current issues is the fact that these programs have been around for a long time, but, they have not been restructured for the future.  As the aforementioned article pointed out, previous generations of leaders (especially those during the late 60's and 70's) have put today's workers in a bind by miscalculating benefits for retirees and welfare recipients and doing nothing to fix those errors.  Essentially, Social Security, Medicare and Medicaid have been around for about 50 years (Social Security has been around much longer than that), yet, due to the language of the laws, goals of the programs, and lack of political willpower, they have not been reformed.

The shame is that things did not need to go this far.  If small, commonsense reforms (in terms of benefits reductions, age increases, etc.) had been made a few decades ago, I would probably not be writing this post.

An even more-irritating aspect of this report is the lack of understanding on the part of voting-age people.  Only 23% understand the substantial destructive momentum the aforementioned entitlements have been gaining for decades.  Now, those social programs are incredibly massive; their existence is placing an enormous burden on the backs of hardworking, younger Americans, and citizens do not seem to know who to blame.  (It's really simple: blame and punish (financially) those who came before us and did nothing to reign in these government expenditures).

The most irritating part of all this, though, is that the same people who failed to reform these programs will be some of the last ones to benefit greatly from them.  I really cannot think of a more unjust outcome.

Given the general public's ignorance and indifference, I do not see a good end to this situation.  The only way things change is if people (especially us youths) get educated, angry and proactive.    

USA Today - Americans are Incredibly Dependent on Federal Government Spending

Good afternoon all,

Today, the "USA Today" published a somewhat enlightening article on the role the federal government is playing in our economic livelihood. Essentially, only 51% of all income earned by households last year was through wages and salaries; that is the lowest percentage in the USA's history.  Nearly 20% of households' income came through government programs, with nearly 80% of that coming through entitlement and unemployment spending. 

The full article can be read here:  http://www.usatoday.com/news/nation/2011-04-26-government-payments-economy-medicare.htm.  All in all, I think this is a worrisome trend (similar to problems Greece, Portugal, and Italy are dealing with now).  

I will have more to talk about later (in terms of economic stagflation and congressional trash). 

Some Young People May Finally Be Getting It

Hi all,

Apologies for not posting an article yesterday.  I was unable to write anything due to some brutal headaches I got (they seem to be sinus headaches that evolve into super-migraines/possible cluster headaches).  Anyway, I am back to normal so let's get started.

First, I want all of you to watch this video: http://www.youtube.com/watch?v=HcW83yf0Bhg&feature=player_embedded

I understand that many of my readers are not Republicans (I am not a Republican, either) but what the individuals stated in the video about the country's back-breaking public debt is true (as I have posited numerous times on this blog) and truth is all that matters to me (and, hopefully, to you).

Now, I want you all to read this article: http://www.marketwatch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25?link=MW_home_latest_news.

I hope that IMF announcement wakes everyone up.  Our fiscal and economic problems are sizable, urgent, and the results of other persons' failures.  But, our leaders do not care to fix the country's financial issues (probably because they will not be alive to feel the pain of economic stagnation and fiscal devastation).

And, so, I believe our imminent economic usurpation by China and the nation's fiscal debt problems are why we need to stand united (Democrats, Republicans, leftists, rightists, and everyone else) as a generation.  We need to show our leaders that we have no interest in dealing with their screw-ups and that they will be held accountable by us youths.

This current political landscape stinks of partisanship, but, in reality our struggles are much bigger than partisan battles now.  Our struggles can be summarized in one basic issue: generational warfare.  Our leaders in Washington (Republicans, Democrats, Independents, and others) like power and money, and they have sold our futures to pad their pockets and increase their political strength.  Our parents, grandparents, friends, and neighbors have for decades put these irresponsible rulers into powerful positions.  And, now, they all want us to clean up their crap.  Yeah, right.

In terms of uniting as a generation, it is fine for us all to have differences (as I have said before, differences are healthy), but we need to search for middle ground.  And our middle ground, I believe, involves public debt, entitlement and education reform.  Our parents and grandparents could afford the luxury of partisanship, but we do not have the same opportunity.  Financially (look at our debt situation) and socially (just watch this video: http://video.foxnews.com/#/v/4661514/brutal-beating-caught-on-tape/?playlist_id=87287), this country is on the decline.  And, the sooner we act, the sooner we can turn this decline into a great upswing.

So, my fellow young Americans, we have work to do; however, our situation is not hopeless.  We need to toss aside our parents' partisanship, boot out the nation's failed leaders, and grab our futures.  If we do these things, we will be fine.  If not, our great country will fade into the dark depths of history.