Austrians on the Environment

You need to dig a bit deeper into economics to understand that while it may appear that we are spending more on economic needs through taxation by government, the manipulative ability of a fiat currency allows it to be inflated and deflated at the whim of those who represent us, without the will or approval of the people. 

Since the Gold Standard was abandoned in the US, the dollar has devalued to about 4% of it's strength, during which time the wealth gap has increased to a point never before seen. I believe we still have potential to see environmental needs met, but only if we can prevent complete corruption by having a large portion of the population concerned and active in the ecology that sustains our lives. 

Austrian economics and free market theories always attract my attention for the way they deter corruption by preventing government from becoming so great that it consumes such a large portion of the spoils of labor. More from Mises;

Fundamentally, “sustainable development” is a notion of… disciplining our current consumption. This sense of “intergenerational responsibility” is a new political principle, a virtue that must now guide economic growth. The industrial world has already used so much of the planet’s ecological capital that the sustainability of the future is in doubt. That can’t continue.

The concepts of valuation, capital, and income only take on valid or coherent meaning in the context of individual action, private property and market exchange… The critical goal of legitimate sustainability is to establish an expanded system of private property rights that allows the owners to manage resources as capital assets. (p. 21)

…the ethics underlying the acquisition of private property is not even acknowledged in the economics of intergenerational sustainability. The entire resource base of the world’s society is implicitly under the control of some government making allocative decisions. (p. 22)

Without private property, monetary exchange, and capital accounting, no rational economics of asset maintenance could exist… The extent that individual business plans may conflict and be incapable of mutual success creates a barrier to aggregation or “macro-reckoning.” Hence, society or a government as its agent has no aggregated measure of capital for which it can legitimately presume to make decisions. (pp. 28,29)

…public control of resources in the name of “sustainability” is not only contradictory but also self-defeating. (p. 41)

Austrians on the Environment - Mises Economics Blog - Ludwig von Mises

Intellectual Property and Libertarianism

I was involved in a discussion on a forum regarding a plug-in to YouTube that allowed the user to download a MP3 of the video, and the legality of using such technology. Here is my perspective:

It's not the plug-in that is illegal, though the RIAA and MPAA would argue that position, but that the content is made available publicly in a way that people can download a copy to their computer. As with file-sharing networks, it is the sharing of unlicensed content which is illegal, not the method. I know the plug-in of which you speak and have always held that anything you can view on your computer (like television and radio before the Internet) is being transmitted and stored on your computer via streaming technology. By using the plug-in, I believe that converting it to a format you can use is fair use (again, the MPAA and RIAA would argue this to the end of the industry), though distribution beyond your use would infringe upon the copyright of the original owner.

There is unfortunately a lot of grey area and morality involved in these ideas, so if you feel that you are stealing the work of someone else, that would create a conflict and you are responsible for determining what is right in your mind. Conflict is a cornerstone of Libertarian and free market concepts, which are in stark contrast to the rigid capitalist system that has allowed these industries to overtake artists rights in the industry's efforts to focus on profits over the art itself.

Many libertarians abandon minarchy in favor of anarchy when they realize that even a minarchist government is unlibertarian. That was my experience. And it was like this for me also with IP. I came to see that the reason I had been unable to find a way to justify IP was because it is, in fact, unlibertarian. Perhaps this would have been obvious if Congress had not enacted patent and copyright statutes long ago, making them part and parcel of America's "free-market" legal system — and if early libertarians like Rand had not so vigorously championed such rights.

But libertarianism's initial presumption should have been that IP is invalid, not the other way around. After all, we libertarians already realize that "intellectual" rights, such as the right to a reputation protected by defamation law, are illegitimate.[4] Why, then, would we presume that other laws, protecting intangible, intellectual rights, are valid — especially artificial rights that are solely the product of legislation, i.e., decrees of the fake-law-generating wing of a criminal state?

But IP is widely seen as basically legitimate. Sure, there have always been criticisms of existing IP laws and policies. You can point to hundreds of obviously ridiculous patents, and hundreds of obviously outrageous abuses. There are absurd patents on ways of swinging on a swing, faster-than-light communications, and one-click purchasing; there are $100 million- and billion-dollar patent-lawsuit awards; there are millions of dollars in copyright liability imposed on consumers for sharing a few songs. Books are even banned — quite literally — in the name of copyright.[5]

Intellectual Property and Libertarianism - Stephan Kinsella - Mises Daily

There is nothing wrong with incrementalism. Advocates of private property and free markets want patent, copyright, and other forms of IP to be abolished, but we are also in favor of measures short of abolition that move in the right direction–shortening terms and penalties, etc. Still, it’s frustrating when some commentators identify real problems with IP law but fail to make a more fundamental diagnosis. A case in point is free market economist Alex Tabarrok, who has good criticisms of the existing patent system but who nonetheless resists calls for patent abolition and advocates other statist measures to supplement or replace the statist patent system, like multi-billion dollar taxpayer-funded innovation prize systems.

In the field of copyright, we have Google attorney and copyright lawyer William Patry, whose recent book is How to Fix Copyright (see his recent Volokh post, How to Fix Copyright, Part I). Our mutual publisher, Oxford University Press, sent me a copy a while back. Unfortunately, although Patry makes some useful criticisms of the existing copyright system, his diagnosis and prescriptions are confused (though not as bad as those of Dean Baker, who, like Tabarrok in the field of inventions, recommends taxpayer funded multibillion-dollar “artistic freedom vouchers” to promote artistic creation).

Patry realizes the current copyright system is rife with problems. But he is not willing to support copyright abolition. It is not for failure to understand the law. He is a renowned copyright scholar, author of the seminal Patry on Copyright treatise. Legal credentials are not enough, however. One must have a firm grasp of economics, and one’s political views must be rooted in the propertarian principles that inform libertarian analysis. Given a grounding in Austro-libertarian analysis, it is easy to see that the only legitimate laws are those that enforce individual property rights, and that the purpose of property rights is to permit productive and conflict-free use of scarce resources. The function of law is to make peaceful, productive use of scarce resources possible, by assigning owners to these resources based on Lockean homesteading principles. Copyright law, like patent law, is a grant of monopoly privilege–the remnant of mercantilism and censorship regimes of the past and is antithetical to the free market, competition, and private property.

In the end, Patry’s latest book is not much different than his previous Moral Panics and the Copyright Wars, which I criticized here. On p. 5 he says copyright law is “necessary”; on p. 11 that “copyright laws can serve valuable purposes” (whatever this means); on p. 262 he says that “Going after the very small number of those who are doing most of the harm is entirely justified.” Why? Elsewhere he derides the proponents of stronger copyright for failing to provide evidence that stronger copyright law is needed. Where is Patry’s evidence that any copyright law is “needed”? Where is his normative argument that these laws are justified? He has none, and does nothing to produce such an argument other than repeat commonplace bromides. And so his recipes for change are tepid: reduce the term, but not to zero!

William Patry on How to Fix Copyright

Sam Konkin and Libertarian Theory by David Gordon

US Debt Nearly Surpassing Economy

The soaring national debt has reached a symbolic tipping point: It's now as big as the entire U.S. economy.

The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.

Those creditors include the US taxpayers and those collecting retirement, social security and other entitlements.

That's roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December — a level the debt is likely to surpass this month.

"The 100% mark means that your entire debt is as big as everything you're producing in your country," says Steve Bell of the Bipartisan Policy Center, which has proposed cutting nearly $6 trillion in red ink over 10 years. "Clearly, that can't continue."

That's a very Libertarian direction, well worth considering, since nations that apply Austrian economics tend to maintain economic stability, something we fail to do in the US.

Long-term projections suggest the debt will continue to grow faster than the economy, which would have to expand by at least 6% a year to keep pace.

President Obama's 2012 budget shows the debt soaring past $26 trillion a decade from now. Last summer's deficit reduction deal could reduce that to $24 trillion.

Gee, who else saw this coming during last year's debt ceiling debates?

Many economists, such as the Brookings Institution's William Gale, say a better measure of the nation's debt is how much the government owes creditors, not counting $4.7 trillion owed to future Social Security recipients and other government beneficiaries. By that measure, the debt is roughly a third less: $10.5 trillion, or nearly 70% the size of the economy.

That is still high by historic standards. The total national debt topped the size of the economy for three years during and after World War II. It dropped to 32.5% of the economy by 1981, then began a steady climb under President Reagan, doubling over the next 12 years. The combination of recession and stimulus spending caused it to soar again under Obama.

During WWI, the economy didn't collapse to this point because government spending was at a significantly lower level, and individual liberty was much higher. Also consider that there was no income tax during that time. As government increases it's scope and appetite, taxation increases.

Among advanced economies, only Greece, Iceland, Ireland, Italy, Japan and Portugal have debts larger than their economies. Greece, Ireland, Portugal and Italy are at the root of the European debt crisis. The first three needed bailouts from European central banks; Italy's books are monitored by the International Monetary Fund.

The White House and Congress agreed in August to cut about $1 trillion from federal agencies over 10 years. An additional $1.2 trillion in automatic spending cuts looms beginning next year if lawmakers can't agree on a better way to do it.

Economist Mark Zandi of Moody's Analytics says reaching the 100% mark shows "the grave need to address our long-term fiscal problems."

US Debt Is Now Equal to Economy

Trillions of dollars are difficult for many to wrap their heads around. To put it into perspective, just hack off the extra zeroes;

Income; $15,170
Debt; $15,230

Now think of it as household income and debt. What are the chances that our nation can get out from under that debt without cutting unnecessary spending, like military and entitlements? Would a household be able to sustain that level of debt indefinitely? Can we realistically believe our nation can?

I don't expect to see any significant growth in our economy as long as the bloated government siphons off an ever-increasing amount...

Mises: The Higher Education Bubble

Read by Steven Ng. B.T. Donleavy is a foreign-exchange specialist in New York City. He has worked at several Fortune 500 companies and he advised Michael Moore on the effects of loose monetary policy for the film "Capitalism: A Love Story".

From: Audio Mises Daily , Wednesday, May 12, 2010 by B. T. Donleavy

The Education Bubble

In the advent of the worst financial crisis seen in decades, there is much to be learned. Many economists agree that creating false demand will eventually create a bubble and crush a market much faster than the natural economic cycle. Take for instance the student loan market. Student loans, subsidized and unsubsidized, allow an 18-year-old to finance some or all of the next four years of his or her life, including living expenses. Morally, is it right to allow our children to start their lives immersed in debt?

In 1992, Congress increased the amount of money a student can borrow from the federal loan program with the reauthorization of the Higher Education Act. The act also enabled students defined as "in need" easier access to funding. Now we see student loans dominating the higher-education industry and accounting for 50% of all financial-aid packages.

According to FinAid.org, the average range of tuition inflation is normally 8% annually, and prices have not fallen or stabilized once since 1977, regardless of economic climate. In 2004, the Census Bureau released a report saying private university and college tuition are "up 93 percent from 1990." This symptom may be attributed to cheap and accessible money, and it is becoming an issue now because tuition is still rising but wages have been flat for a decade.

The Department of Education reports having a $63.7 billion budget in appropriations for 2010. It has also received $96.8 billion from the American Recovery and Reinvestment Act of 2009. The department's website states that "department programs also provide grant, loan, and work-study assistance to more than 14 million post-secondary students." That is roughly 4 million short of every college student in the country. Does this mean that only 22% of students in the United States have adequate means to pay for college? Based on America's economic model, this statistic should theoretically be impossible. This means that over 3/4 of Americans attending higher-education institutions are "in need."

There are benefits to the industry being able to increase prices. Colleges and universities need to be competitive. New revenue means that a college or university can afford better professors and improve infrastructure. It can create new dorms for incoming students and build new facilities to allow better access to labs and campus centers. The overall quality of a school and the educational services it offers will increase.

Loans and grants are not necessarily a bad thing, but when the amount of money flooding the industry drives up the demand to the point of the former becoming a market essential, there is an influx of risk. Similarly, healthcare has also enjoyed the fruits of easy money because of the insurance industry. The added funding for research and development has aided advances in medication and technology. But third-party funding usually drives prices up because consumer decision is weakened in the economic equation. Now healthcare is often unaffordable to the independent purchaser.

In most cases, student aid is an immeasurable liability. The individual's risk at 18-years-old cannot be accurately quantified even with a cosigner. Realistically, no private institution would lend this kind of capital to such a young demographic without credit history. It also should be noted that reports have shown average college students to carry 4 credit cards and an average balance of $3,000 that they cannot pay off in full. This is a small sum compared to the amount they will inherit after a four-year tenure, but it shows that credit is being handed out indiscriminately. A massive amount of speculation is being placed on the payees with no indication of them being able to afford repayment.

"The risk associated with loan obligations are shifted to the taxpayer. Consequently, the act removes obligation and creates a moral hazard with the creation of a virtual backstop."

A boost in educational funding for financing may come at a price. If the current trend continues, students will increase the amount financed and they will be paying for the majority of their education in loans. As the January 14 edition of the Economist notes, "only about 400,000 more Americans were employed in December 2009 than in December 1999, while the population grew by nearly 30m." With an unemployment rate of 10% (real figures are closer to 17%), matters look only more ominous.

Millions of students will graduate with the same popular majors and compete for fewer jobs because a significant amount of manufacturing and industry has left the United States. The supply of students entering the job market will be endless, and businesses will lower the base pay of new employees because of their abundance.

The other scenario is that businesses will not hire them at all because they are fully staffed, thus creating a bottleneck in the job market. Unemployment, Social Security, and Medicare will all suffer from the supply and demand effects of this type of crisis.

State and city universities will not be able to handle every student but they may remain the most inexpensive way of obtaining a diploma. City University of New York has reported a 77.5% increase in transfer students in the last year. This is a sign of education becoming unaffordable. Without major state funding or tuition increases CUNY's infrastructure will not be able to handle the capacity of incoming students.

It is difficult to come to a reasonable assessment on how to address an impending student-loan crisis. Candidates running on a platform of limiting financial aid or reducing the Department of Education will be writing a political death sentence for themselves. The recent Health Care and Education Reconciliation Act of 2010 will end subsidies for student aid to private lenders. This will make it easier for students to shop for a loan by going directly to the source but will only address who controls the market and has no effect on the economics of tuition cost.

Payments will have a threshold of 10% of a graduate's disposable income and will be forgiven after 20 years while a public servant will be forgiven after ten. The risk associated with loan obligations are shifted to the taxpayer. Consequently, the act removes obligation and creates a moral hazard with the creation of a virtual backstop. With the combination of this backstop and decreasing wages because of an oversupply of workers, the result can only perpetuate default. This bursting bubble will be massive and will affect other major industries such as housing, auto, and credit.

Because of the ease of obtaining these types of loans and leniency in repayment terms, the postsecondary education industry may possibly raise tuition at a faster rate. There lies no risk for a college or university. As long as prices are met, schools can charge whatever the market is willing to pay. Keeping up with the rising costs will be difficult to do because public funding will have to increase exponentially relative to tuition.

In conclusion, we see that the theory of scholastic financial assistance through government intervention does not perform as advertised. The program will actually only hurt the people it is trying to help.

Parents are no longer able to save for their child's college years because postsecondary education price inflation is exponentially higher than the savings rate. This forces more and more students to go into debt before they earn their first professional dollar. It will eventually be disruptive to the economy and will have a massive impact on other industries. Furthermore, debt forgiveness is a moral hazard that means that the debtor has no real obligation and the taxpayer is now responsible.

Whether the student-loan industry is run by the American government or by subsidized lending institutions, the business model is flawed and will continue to force prices upward regardless of whether it makes economic sense.

The Education Bubble

Would you like your college education to be free? Sure, who wouldn't? Well, the people of Tunisia and Egypt are learning that whenever the government supplies something, it is never really "free."

In Tunisia, "free" university education is guaranteed to anyone who passes the government's exams at the end of high school. Largely as a result of this, the number of Tunisians who graduated college more than tripled in the last ten years. This may sound like a good thing, but it has produced a glut of graduates.

Fifty-Seven percent of young Tunisians entering the labor market are college educated. This is while only 30 percent of Americans earn a college degree by the time they are 27. Recent Tunisian college grads have an unemployment rate approximately three times higher than the national average of 15 percent. This is up ninefold from 1994.

The reason for this is not necessarily because having a college education hinders people in getting a job, but because so many college grads are entering the labor market at a time when there are few jobs.

Additionally, government domination of the educational system discourages economic growth. The Tunisian Ministry of Education decides what major students will have. Students are not allowed to change fields during their course of study. This control reduces the type of expertise necessary to create successful businesses.

The Tunisian educational system is also enormously expensive. Of Tunisia's GDP, 7.2 percent is spent on education, more than any European or North American country beside Denmark and Iceland, which also spends 7.2 percent of its GDP on education. Tunisia's educational results, however, appear to be horrible. A 2002 UNESCO report puts its graduation rate at about 30 percent.

Having such a large number of unemployed youths can be dangerous. As George Mason University sociologist Jack A. Goldstone notes, "Educated youth have been in the vanguard of rebellions against authority certainly since the French Revolution and in some cases even earlier."

In fact, the Tunisian protests began after a recent graduate killed himself because government authorities confiscated his fruit stand when they discovered he did not have an "official" permit. The BBC reported that most of the early protesters were unemployed recent graduates.

Like Tunisia, Egypt also has a massive youth-unemployment problem. Unsurprisingly, it also has a system of "free" college education.

In Egypt, enrollment in tertiary education increased from 14 percent in 1990 to approximately 35 percent in 2005. Yet this has not helped the unemployment rate among recent grads. The national Egyptian unemployment rate is 9.4 percent, comparable to the United States, but the unemployment rate for people between the ages of 15 and 29 is 87.2 percent. College graduates, largely because of their age, have a ten times higher unemployment rate than for those who did not attend college.

The Egyptian government also rigidly controls the educational system, just like in Tunisia. A centralized government committee controls decisions regarding curriculum, program development, and deployment of faculty and staff for institutions of higher learning across the entire country. Private universities were only legalized in 1992, and enrollment is very small.

In Egypt, educational expenditures were 3.7 percent of GDP in 2007. By most accounts the Egyptian education system is underfunded. Its educational standards were called "abysmal" by the Economist. Fewer than half of all students graduate, and many universities are viewed as diploma mills.

Although the Egyptian government may have avoided some of the economic costs of "free" higher education that the Tunisian government has incurred, it has not avoided the social costs.

We, in America, might not be as far away from the problems of Tunisia and Egypt as some may be inclined to think.

From 1997 to 2007, full-time enrollment in US tertiary education increased 34 percent. The average college student graduates with $24,000 in debt, a 40 percent real increase from 1997. In 2008, only 57 percent of students enrolled in a four year college graduated within six years. The unemployment rate for 16 to 24-year-olds is 52 percent. The underemployed as a group may be as large as the unemployed in America. For example, in 1970 only 3 percent of mail carriers had a bachelor's degree, while today the number is 12 percent.

Although our case may not be as extreme as that of Tunisia or Egypt, we are headed in the same direction. And just like in Tunisia and Egypt, our education bubble is fueled by governmental policy.

Government accreditation laws keep potential institutions of higher education out of the market, which allows the institutions already in the market to raise their prices. Accreditation institutions can also force institutions of higher education to make changes that increase costs. For instance, the American Bar Association forced the University of Colorado Law School to increase the number of electrical outlets in the library and to construct an instructional court room, which the university claimed caused them to increase tuition.

Government aid also helps institutions of higher education inflate prices. For instance, although the cost of higher education in real dollars increased by 68 percent between 1986 and 2006, when increased government aid is accounted for the real cost to the student increased by only 29 percent. The ceiling of how much students are able to pay is artificially raised, allowing the colleges to charge more.

Also, if a student defaults on a loan backed by the government, which is by far the most common kind of loan, the lender does not bear the loss, the government does. This obviously encourages the lenders to lend more freely than they otherwise would. Enormous losses have been socialized. There is currently $730 billion of outstanding student-loan debt, and the overwhelming majority of losses will be borne by the government if it is not repaid. Only 40 percent of all student debt is being actively repaid.

There are more causes to the revolutions in Tunisia and Egypt than just the higher-education bubble, but the effect it has had cannot be ignored. We could be bringing ourselves dangerously close to the point when all the people of our country have to learn, one way or another, that nothing the government provides is ever free.

The Education Bubble Is Fuel for Revolt

A college degree once looked to be the path to prosperity. In an article for TechCrunch, Sarah Lacy writes, "Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe."

But the jobs that made higher education pay off during the inflationary boom, kicked into high gear by Nixon waving goodbye to the last shreds of a gold standard, came primarily from government and finance.

In 1990, 6.4 million people worked for federal, state, and local governments. By 2010, that number had grown almost 6 times — to 38.3 million — with many of these jobs being white-collar.

In 1990, the financial sector was less than 7.5 percent of the S&P 500. By 2006, this sector had grown to 22.3 percent of the S&P, and that year the financial sector constituted 45 percent of the index's earnings.

"Prices and wage rates boom," writes Mises.

Everybody feels happy and is convinced that now finally mankind has overcome forever the gloomy state of scarcity and reached everlasting prosperity.
In fact, all this amazing wealth is fragile, a castle built on sands of illusion. It cannot last. There is no means to substitute banknotes and deposits for nonexistent capital goods.

Times have changed.

Last week, HSBC Holding Plc announced plans to eliminate 30,000 jobs worldwide by the end of 2013. The job cuts will affect "support staff where we believe we have created an unnecessary bureaucracy in this firm over a number of years," HSBC chief executive officer Stuart Gulliver said.

Goldman Sachs plans to cut 1,000 positions. Bank of America is laying off 1,500 employees and closing 600 retail branches.

At the same time that banks are trimming their fat, according to a Labor Department report released earlier this month, from May 2010 to May 2011 local governments shed 267,000 jobs and state governments 24,000. Local government employment in May, at 14.165 million jobs, was the lowest since July 2006.

An increase in the amount of real savings, which induces a fall in the interest rate and a lengthening of the production schedule, increases an economy's productive capacity, creating genuine growth brought about by the investment in higher-order goods such as factories and other production assets.

"Like all booms, higher education has been fueled by credit."

Conversely, easy, cheap credit fools entrepreneurs into believing that society's collective time preference has fallen, enticing them into investing in higher-order goods, such as land, factories, and the like — when in fact the collective time preference hasn't changed, and the demand for higher-order goods is merely a mirage. The result is booms and busts rather than genuine growth.

College degrees are similar to what the Austrians call higher-order goods. It's thought that a student will gain knowledge and seasoning in college that will make him or her more productive and a candidate for a high-paying career. The investment of time and money in knowledge pays through higher productivity and is translated into higher income. Higher education is the higher-order means to a successful career.

PayPal founder and early Facebook investor Peter Thiel, questioning the value of higher education, tells TechCrunch,

A true bubble is when something is overvalued and intensely believed. Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It's like telling the world there's no Santa Claus.

The excesses of both college and homeownership were always excused by a core national belief that, no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

The New York Times' David Leonhardt even claims,

Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.

Using data from the Center on Education and the Workforce at Georgetown University, Leonhardt asserts that dishwashers with college degrees make $34,000 a year while those without make $19,000.

No employer in their right mind would pay nearly double for a dishwasher with a college degree. However, there are plenty of fresh college graduates cobbling together multiple low-level jobs just to make ends meet.

"More college graduates are working in second jobs that don't require college degrees," writes Hannah Seligson in the New York Times, "part of a phenomenon called 'mal-employment.' In short, many baby-sitters, sales clerks, telemarketers and bartenders are overqualified for their jobs."

Nearly 2 million college graduates were mal-employed last year, up 17 percent from 2007. Nearly half of all college graduates are working at a job not requiring a degree.

In the United States, 80,000 bartenders as well as 317,000 waiters and waitresses have college degrees. Nearly a quarter of all retail salespersons have a college degree. In all, 17 million Americans with college degrees are working at jobs that do not require a bachelor's degree.

"Young college graduates working multiple jobs is a natural consequence of a bad labor market and having, on average, $20,000 worth of student loans to pay off," said Carl E. Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers.

"The median starting salary for those who graduated from four-year degree programs in 2009 and 2010 was $27,000, down from $30,000 for those who graduated in 2006 to 2008, before the recession," Seligson writes, adding, "Try living on $27,000 a year — before taxes — in a city like New York, Washington or Chicago."

Like all booms, higher education has been fueled by credit. In June of last year, total student-loan debt exceeded total credit-card debt outstanding for the first time, totaling more than $900 billion.

"Not only are the returns poor, but the quality of the product is poor."

All of this credit has pushed the average cost of tuition up 440 percent in the last 25 years, more than four times the rate of inflation. But while the factors of production on campus have been bid up, just as they are in any other asset boom, the return on investment is a bust. In 1992, there were 5.1 million mal-employed college graduates. By 2008, the number was 17 million.

Not only are the returns poor, but the quality of the product is poor (as in the case of new-construction quality in the housing boom). According to the authors of Academically Adrift: Limited Learning on College Campuses, 45 percent of students make no gains in their critical reasoning and thinking skills, as well as writing ability, after two years in college. More than one out of three college seniors were no better at writing and thinking than they were when they first arrived at their campuses.

Many projects contemplated and started during the real-estate boom are never completed, as prices are bid up, and owners run out of capital. Such is the case for many attending college, as over 45 percent of those who enroll as freshmen ultimately give up, realizing they lack the disciplinary and mental capital, and do not graduate.

Similar to the government push for increased homeownership, government is foursquare behind having more young people attend universities. One of President Obama's top goals is to increase the number of Americans attending college.

But why? "Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted," reported the Times recently. "That compares with 90 percent of graduates from the classes of 2006 and 2007."

And because they can't find jobs, 85 percent of college grads move back in with their parents after they graduate. According to a poll by Twentysomething Inc., a marketing and research firm based in Philadelphia, that rate has steadily risen from 67 percent in 2006.

Perversely, while the market tries to clear away malinvestments in finance and real estate, plus the jobs that supported them, colleges continue to turn out more business majors than any other discipline. In 2007 and 2008 there were more than 335,000 business degrees granted — 100,000 more than a decade before, according to the National Center for Education Statistics.

At the same time as law schools have a building boom underway, many new law grads can't find work or are working temporary jobs at $15 an hour.

David Segal reports for The New York Times,

As other industries close offices and downsize plants, the manufacturing base behind the doctor of jurisprudence keeps growing. Fordham Law School in New York recently broke ground on a $250 million, 22-story building. The University of Baltimore School of Law and the University of Michigan Law School are both working on buildings that cost more than $100 million. Marquette University Law School in Wisconsin has just finished its own $85 million project. A bunch of other schools have built multimillion dollar additions.

And while law grads can't find work, law schools are enrolling more students than ever before at tuition rates of $40,000+ a year. Segal explains that law-school tuition has increased at 4 times the rate of undergraduate education, which itself has increased 4 times the CPI. "From 1989 to 2009, when college tuition rose by 71 percent, law school tuition shot up 317 percent."

Students and their parents are investing in the higher-order good of a college degree, in the mistaken belief that plenty of jobs await college graduates at the end of four or six or seven years. However, time preferences haven't changed. The demand for consumer goods remains, and that's where the jobs are. The boom in demand for bankers, barristers, and bureaucrats is over.

The Higher-Education Bubble Has Popped

On Liberty, Economics

To change the world for the better, to really change the world, we can not believe that one candidate for public office will save our society. True salvation lies in the people, changing their hearts and minds. If we start from the ground and work our way up, we can realize a future that functions for the greater good; not for the benefit of those who govern, but for the governed. I see Anarcho-capitalism as one of the most likely solutions, abandoning our failed system of crony government that benefits those in support of ever-increasing government, but working to free the individual people to live life as we are meant to. Libertarian politics are a step in the right direction for the government, but a small step at best for that governed majority. Economics will always be tied at the hip to politics as long as those who govern believe that we must control private exchanges between individuals and organizations for the benefit of those in government.

Philipp Bagus: Currency and Economic Collapse

Jeffrey Tucker interviews Philipp Bagus, Assistant Professor of Economics at the University Rey Juan Carlos in Madrid, and discusses Philipp's academic life and his two recent books: 'Deep Freeze: Iceland´s Economic Collapse' (co-authored with David Howden) and 'The Tragedy of the Euro'. Recorded at the Ludwig von Mises Institute in Auburn, Alabama, on 10 March 2011 [16:05]

Currency and Economic Collapse | Philipp Bagus - YouTube

Currency and Economic Collapse - Mises Media