INVESTING IN PUBLIC GOODS VS. TAXES
As a high school sociology and economics teacher, I often find myself in the unenviable position of advising seniors on how to prepare for their futures. This is understandable, as my 17-18 year old Juniors and Seniors are on the cusp of choosing the direction that they may be travelling for the rest of their lives. The stakes are pretty high, because they also need to fund this decision and will be burdened by the debt of doing so for a significant portion of their lives.
The typical scenario looks like this. Suzie loves art and is really interested in how art has evolved and has been influential throughout history. She would love to major in Art History because that is her passion. However, she must answer the question, “what are you going to do with an Art History major?” It’s not a matter of doing something that she loves. She must choose a major through which she can make a living. Furthermore, she does not have time to develop her passion for Art History into a profession that might pay off in the long run, because six months after she graduates, Sallie Mae is going to insist that she start paying back the onerous student loans needed to purchase here degree, a degree that is necessary if she is to be competitive in the American job market.
Suzie’s decision is influenced heavily by market forces. The more she is dependent on these market forces, the less influence her passions have on her ultimate choice of profession.
So, Suzie is thinking about going into hospitality management specializing in travel. Hospitality is a growing industry. That way, if she’s able to get a day off she might be able to visit some art museums. Or maybe she might get a job where she can travel and see some of the art she loves so much as part of her job. She’s not passionate about hospitality management, because who’s really passionate about hospitality management, but it’s something she thinks she can do without incurring too much of an expense and is likely to result in a job out of college that will help her pay her debts.
According to American political culture, Suzie is free. Sure, she’s free to choose Art History if she’s willing to take that economic risk. Maybe it will work for her. Who knows? But the safe money is on a job that serves elite capital. It’s her choice. That’s freedom.
I’m describing “Suzie” as a longing art historian intentionally.
My family and I travelled to Italy this year and met many interesting young people. One such young woman was Marta. We hired Marta and her partner in Venice as personal chefs to lead us through an authentic Venetian meal from purchasing the ingredients to scraping the last bite from the dish. They were great. Cleaning cuttlefish wasn’t my favorite thing, but Marta showed me how to do it efficiently.
As we were enjoying some wine and mostly watching her and her partner at work in the kitchen we asked her how she came about starting this successful business.
Well, Marta went to University in Italy and majored in…yep…Art History. Art History is, and remains her passion. To be fair, Venice is a pretty good place to apply an Art History major.
When she graduated, however, while looking for work that might engage her academic skills, she took a job in…yep…hospitality management. While working in hospitality management she realized that she also had a talent and love for cooking. She gained skills working in hotel kitchens. Eventually, she and a like-minded friend decided to start their own catering business.
In Italy, the stakes for deciding upon a major are not quite so high as they are for American students. Tuition is, on average, about 1500 Euros ($1800) a year. That’s a year, not a class or a credit hour–a year. So, Marta didn’t graduate with tens of thousands of debt overhang weighing on her. When she wanted to start a business, she could access the capital she needed without having to account for excess debt.
Furthermore, there was no disincentive for pursuing her passions, nor pressure for her to be able to turn that passion into a lucrative job upon graduation. In fact, she is currently working on her Masters Degree in…
…Art History. That’s her passion.
Italy has its problems, to be sure. Marta as a young woman and an economic agent, however, is arguably far more free than Suzie, my not-so-fictional American comparison. She is free to pursue her passions, even when those passions do not lead directly to a lucrative job. At the same time, she can avail herself of economic opportunities as they come because she is not burdened with crippling debt.
One could argue that she is paying for this through higher taxes. That’s true. The taxes she pays goes into ensuring that others like her continue to have the opportunities that she received.
Suzie, on the other hand, is free of these burdensome taxes. Instead, she’ll be paying interest on her student loans.1 The interest payed on student loans could be described as a tax paid to a bank. Seen in this way, interest on her student loans is a regressive tax that places the highest burdens on those making the least money and taking the most time to pay back the promissory note. This “tax”, however, is not used to pay forward to the next young Suzie with a dream. Rather, it is distributed among stockholders.
Yeah, Andoscia, but she’s paying it. I’m not paying for her to get her stupid Art History degree. I’m free to spend my money elsewhere–most likely Amazon on some cheap plastic junk. And Suzie didn’t have to go to college. She could have made other choices. Why should I have to pay for her choice to go to college and major in art history.
This is a reasonable argument. This argument hinges on how we define education. Is education a personal investment in our individual future prospects, or is education a public good? The first perspective identifies education as a market decision guided by the vicissitudes of the market. After all, the market does not need Art Historians as much as it needs, as Sen. Marco Rubio would remind us, welders. The other identifies education as an endeavor of personal fulfillment, guided by human agency. Whether or not the society in question needs welders or Art Historians is not a factor in the decision making process.
When looked at like this, it’s clear which approach leads to greater individual freedom.
If education is a personal investment, then individual choice is constrained by the so-called invisible hand of the market. One is only as free as they are independent of market forces. In this case, Suzie has the most freedom money can buy. If she comes from a family with means and connections she is free to get that Art History degree, or Rubio’s reviled Philosophy degree, with little concern. But if she is like most people and must take on debt and the concerns for repaying that note, then it’s hospitality management. She may be an exceptional art historian who can make significant contributions to her field and expand our understanding of the culture in which we live. Her safe bet, however, is to become a mediocre hospitality manager.2 And she’ll need to get that management position quick. She won’t have time to tinker around in the kitchen and develop a love of cooking. She has loans that are due.
If she later on decides to go into culinary arts, well…that’s a whole nuther degree.
When education is a public good we all pay into young people pursuing their individual passions. We all pay into overall human freedom. Higher education is not an investment guided by market forces. It is an exercise in personal fulfillment. Marta can pursue her passions in school, and her economic opportunities in the market. These two elements of her life may not align. Marta, however, is free to build a meaningful and satisfying life–which she has. In the process, she also brings a great deal of satisfaction to a handful of tourists who are looking for the Venice experience.3
For Suzie, however, if her passions do not align with her economic opportunities, she is free to choose her passions, or her economic opportunities–not both. Any satisfaction that Suzie may bring to a handful of tourists is purely accidental and certainly coerced. Maybe, if she works really hard…and is lucky…Suzie may be able to enjoy a satisfying and fulfilling life someday. After her loans are paid.
- Also, because of her students loans, she’ll also pay higher interest on other debt obligations such as car loans and mortgage rates.
- I remember when I was in school learning the difference between good ol’ American democracy/capitalism and evil Russian socialism the teacher took great pride that in the United States I could become whatever I wanted. I could choose my own career and future and nobody would tell me what I had to do. In the Soviet Union, however, kids were assigned jobs based on their academic accumen. The state decided that it needed engineers, and you were good at math, you became an engineer. If the state needed welders, they assigned you to welding. I often think about this lesson in Mrs. Perillo’s sixth grade social studies class when folks like Marco Rubio make comments about philosophers and welders. They sound awfully…um…soviety.
- And let’s remember, the hospitality industry was not without her labor for a time.