The Lighthouse^®

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The Lighthouse^® is the weekly email newsletter of the Independent Institute.
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Volume 17, Issue 31: August 11, 2015

1. Love Gov and the College Tuition Scandal
2. Ride-sharing Dynamism versus the Entitlement Mentality
3. Medicaid at 50
4. Greece Signals the Fall of the Eurozone
5. New Blog Posts
6. Selected News Alerts

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Since 1991, the total cost of attending college has doubled at public colleges and risen 63 percent at private colleges—far outpacing the income growth of college grads, especially males, and making it very difficult for students to pay off their student loan debt. Love Gov: Episode 1: An Education in Debt—viewed by over 654,600 people on YouTube at the time of this writing—offers a satirical take on this problem. Independent Institute Research Fellow Craig Eyermann explains how “the government-academic industrial complex” encourages students to go deeper and deeper in debt, in his latest piece on MyGovCost News & Blog. And in a new article at American Thinker, Independent Institute Research Director William F. Shughart II explains how taxpayer subsidies for students drive up college tuition.

Understanding how the swindle works doesn’t require a college degree—just street smarts. The key is to ignore the fact that most U.S. colleges, public and private alike, are non-profit entities. That’s irrelevant in this context. What’s relevant is that they appreciate a good deal when they can get one; and third-party loans to students offer a very good deal for colleges: they enabled schools to raise tuitions and fees. And as student loan programs have expanded, thanks in large part to federal policy, college tuitions have kept rising. Incidentally, schools have spent most of their tuition hikes on their non-teaching staff, according to Shughart.

“Many students meanwhile leave school laden with mountains of debt,” Shughart writes. “Because much of the more than $1 trillion in outstanding loans is federally guaranteed, taxpayers are on the hook for repayment if the borrowers default. The time is long past to end taxpayer subsidies to institutions of higher education and to restore market pricing and market discipline to America’s colleges and universities.”

How Taxpayer Subsidies for Students Drive Up College Tuition, by William F. Shughart II (American Thinker, 8/6/15)

The Wrong Solution to Crushing Student Loan Debt, by Craig Eyermann (The Beacon, 8/6/15)

Video: Love Gov: From First Date to Mandate

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Ride-sharing services Uber and Lyft are transforming everyday transportation—and giving traditional taxicabs a run for their money. Such disruption is all for the better, judging by the recent travails of Independent Institute Research Fellow Art Carden. In an op-ed for the Birmingham (AL) News, Carden compares his characteristically enjoyable ride-sharing experiences to his recent ordeals with traditional cabbies, who have arrived late, failed to keep their car interiors clean, required Carden to provide directions to his destination, and wasted his time (and money) gassing up while the meter was running.

One reason for the stark contrast, according to Carden, is that Uber and Lyft make it easy for riders to share their reviews with prospective customers. Unfortunately, Birmingham officials don’t think the resulting improvements in customer service are worth alienating traditional cab drivers and their allies, and they have refused to accommodate ride sharing. Another opponent of ride-sharing services: labor union leaders and their political supporters, who criticize Uber and Lyft for treating drivers like independent contractors instead of like employees.

But the independent-contractor status doesn’t seem to bother most ride-sharing drivers, according to Independent Institute Senior Fellow John C. Goodman, a frequent Uber customer. In a recent piece with Forbes, he reports that none of the many drivers he has asked about Uber has ever complained. Moreover, if the law treated them like employees, they would fall under minimum-wage laws and overtime regulations that would ultimately push up the fares that customers would have to pay, thereby offsetting much of the benefit that ride sharing offers. “Modern technology is making it possible to satisfy our needs in new and exciting ways,” Goodman writes. “The prospects are truly breathtaking—unless government stands in the way.”

Ride Sharing Is More than Just Taxi Problems, by Art Carden (Birmingham News, 7/23/15)

It’s Time to Rethink Our Labor Laws, by John C. Goodman (Townhall.com, 7/25/15)

A Better Choice: Healthcare Solutions for America, by John C. Goodman

Priceless: Curing the Healthcare Crisis, by John C. Goodman

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Medicaid turned 50 years old last month, but you probably didn’t hear every low-income enrollee jump for joy. In fact, many intended beneficiaries forgo enrolling in the program and instead rely on hospital emergency rooms when their health problems worsen. That’s tragic, but not hard to see why. A famous study found that when Oregon expanded its Medicaid program in 2008 using a lottery to select new enrollees, mental health outcomes improved but physical health and mortality did not. Now researchers have released a new study that estimates how much the enrollees valued one dollar of Medicaid spending in the Beaver State. The result? Judging by their behavior, recipients valued their benefits at only 20 to 40 cents on the dollar. In other words, for every $100 that Medicaid spent on their benefits, enrollees valued the service received at only $20 to $40 dollars.

This finding is a serious indictment of the program, according to Independent Institute Senior Fellow John R. Graham. A large part of the problem, Graham argues in a new op-ed, is that the $425 billion spent nationwide on Medicaid each year goes directly to doctors, hospitals, and clinics, rather than to the enrollees themselves.

“Medicaid spending is driven by providers, especially hospitals, which have relentless lobbying operations,” Graham writes. Moreover, 60 percent of Medicaid spending in Oregon went to providers for care already given, rather than for new care. “Medicaid spending could be significantly reduced, with no harm to recipients’ health,” Graham concludes, “if the spending were converted to vouchers or something similar, instead of being paid to providers directly.”

Only 20 to 40 Cents of Each Medicaid Dollar Benefits Recipients, by John R. Graham (InsideSources, 7/29/15)

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The headlines from financially troubled Greece read like a wild roller coaster ride, as voters reject a European Union bailout that imposes spending cuts, only to see their prime minister agree to one. Regardless of the size of the bailout, however, Greece will ultimately leave the Eurozone—and others will follow, bringing the entire scheme crashing down. Member countries simply lack the incentive to keep their spending under control, and the European Central Bank is a captive buyer of their debt.

Free trade of goods and labor has been great for Europe, but the adoption of a single government-managed currency has not. “Fortunately, the main benefit of the Euro—a single dominate currency that can be used across a wide geographic expanse and large number of people—can be had without a formal monetary union,” Powell writes. “The solution is to allow competition in currencies.”

Powell calls for promoting competition in currencies by abolishing legal tender requirements and enabling businesses and consumers to adopt whatever notes or commodities they wish to use as a medium of exchange. The result, he argues, would be “a self-enforcing cycle that promotes reliance on sound currencies.”

Europe Needs Free Trade, but Not the Euro, by Benjamin W. Powell (The Daily Caller, 7/31/15)

Making Poor Nations Rich: Entrepreneurship and the Process of Economic Development, edited by Benjamin W. Powell

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From The Beacon:

From MyGovCost News & Blog:

You can find the Independent Institute’s Spanish-language website here and blog here.

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