Liberals Who Attack Economists Should Check Their Student Loan Hypocrisy

According to University of Michigan sociology professor Elizabeth Popp Berman, progressives like Sen. Bernie Sanders (I-Vt.), Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (DN.Y .) are “grounded in the values ​​of rights, universalism, fairness, and limiting corporate power.

In his book, “Thinking Like an Economist: How Efficiency Replaced Equality in US Public Policy,” however, Berman argues that economists and economic thinking have been the bane of the progressive movement.

One thing is certain: progressives do not think like economists.

Economists, although not homogeneous, are generally grounded in the laws of supply and demand and in the recognition of opportunity costs and cost-benefit analysis. They believe that scarcity exists, incentives are important, and economic efficiency provides vast benefits to society. All of these are dismissed by progressives when public policies conflict with their “values.” Berman says progressives have different ways of thinking.

President Biden’s college debt cancellation, widely supported by progressives, illustrates the difference. Surprisingly, this violates two of their “core values”: universalism and fairness. It worsens income inequality and targets a special interest group that does not need any subsidy. It also creates what economists call a moral hazard problem. Moral hazard can occur when a policy encourages riskier behavior for financial gain. Expect more college borrowing and repayment delays in anticipation of future government giveaways.

Biden’s program also demonstrates progressives’ contempt for opportunity cost. Simply put, could the $1 trillion the program will cost have been put to better use?

“Every dollar spent on student loan relief is a dollar that could have been used to support those who don’t have the opportunity to go to college,” tweeted Larry Summers, the distinguished Democratic economist and former Treasury Secretary.

AOC suggested that opponents of the giveaway are selfish. Take this Larry Summers. She urged Americans to “reject the scarcity mentality that doing something good for someone else comes at the expense of doing something for ourselves.” By the same logic, perhaps we should subsidize indebted yacht owners. Say goodbye to rational talk and opportunity costs.

True progressives, following universalism, support “free” college for all. Yet they are like chess players who cannot anticipate their opponents’ backlash. Their game will not end well.

Sanders supports legislation to “eliminate tuition and fees at public four-year institutions for families earning up to $125,000 a year and make community college free for all.” Exactly how many more people would apply for a “free” university? How much would it cost and how would it be funded? ((Free) college isn’t really free.) Would price controls and rationing eventually be imposed? How many families would reduce their work to fall below the $125,000 threshold? Checkmate!

China in the 1980s not only had tuition-free universities, but in fact, sponsored students to attend, as I observed as a Fulbright professor in China in 1986. Progressives indeed have a different way of thinking , and the laws of supply and demand do not come into play. . Politics and power yes.

The Green New Deal provides another stark example of progressives’ rejection of economics. According to many reasonable cost-benefit analyses, the Green New Deal will generate more costs than benefits. The program will be as economically wasteful as the US war in Afghanistan, no doubt.

AOC will be shocked to learn that the world will not end in 10 years, despite the increase in greenhouse gases generated in large part by the growing use of coal by China and India. But the United States will be poorer, and its low-income residents will be hardest hit by rising heating and cooling costs. So much for fairness.

Moreover, the progressive value of universalism apparently does not apply to the health and environment of Africans who mine all the precious metals needed for our electric vehicle batteries. If progressives have a sacred purpose, no matter how much it may cost, an inconsistency with their “core values” doesn’t matter.

The world benefited greatly from a revolution in the 20th century, when people thought like economists. Even the Chinese have managed to lift hundreds of millions of their citizens out of poverty by doing just that. Nations that follow the thinking of progressives, rejecting basic economic logic, ensure a journey down a darker path.

Burton Abrams is professor emeritus of economics at the University of Delaware and a research fellow at the Independent Institute in Oakland, California. He is the author of “The terrible 10: a century of economic madness.”

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