The origins of the Buttigieg position about college

The Buttigieg argument goes like this: College increases the incomes of those who complete it. But the people who go to college are typically already better off. By charging them less than the actual cost of their education, we’re using the tax dollars of poorer non-college-goers to pay for the education of their richer counterparts — whose earning potential will only increase with their shiny new bachelor's degree.

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However standard this position seems today, historically speaking, it’s relatively novel. Making it requires two intellectual moves that didn’t take place until the 1960s. First, you have to think of college in human capital terms: as an investment that produces future earnings. Second, you need a cost-benefit approach to evaluating policy: spending the least possible money to achieve the maximum desired benefit — in this case, education.

Liberal economists such as Alice Rivlin began advancing this way of thinking about college in policy circles during the Lyndon Johnson administration. Public higher education is irrationally cheap, they argued. Because individuals benefit from attending — and especially because they’re mostly better off — they should bear the cost.

If that’s the case, the best policy is to let tuition rise, but ensure students can borrow affordably. It will still pay off for them in the long run but at less cost to the government. If you really want to be progressive, replace the loans with grants for the poorest.

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Such arguments produced (unsuccessful) experiments with “human capital contracts,” such as the Yale Tuition Postponement Option, designed by economist James Tobin in 1971. They led to the creation of Sallie Mae the year after, which created a secondary market to facilitate the growth of guaranteed student loans. And they set the stage for the long, slow expansion of student debt.

Many progressives disagree with Buttigieg

Not all progressives, of course, buy the “free-college-is-regressive” claim. One common counterargument is that this undermines the case for all sorts of public services. As economist J.W. Mason asks, “Suppose users of Central Park are higher-income on average; is progressive policy then to fence it off and charge admission?” Similar arguments could be made about fire stations, if you notice that they particularly benefit well-off homeowners.

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And this is not just a U.S. conversation. Economist Justin Sandefur argued in a tweet that “this is LITERALLY the debate happening in development econ right now re free secondary ed in Ghana, Malawi, Sierra Leone, etc.”

Other critics stick with the microeconomic framing (college as investment), but challenge the cost-benefit calculation. They tend to emphasize the positive economic spillovers unaccounted for by individual wages, or the particular impact of tuition on low-income students unwilling to borrow enough to attend.

But the literature on public policy-making highlights a second, more fundamental set of limitations in the Buttigieg view of college.

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The first is political. For nearly 50 years, many Democrats have argued that cost-effective government means not subsidizing those who can pay their own way. This is why they haven’t supported free college, and it is why they don’t support universal health insurance. Instead, they prescribe government assistance to help the needy afford such things.

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Of course it is cheaper to offer government services to only a slice of the population. But history suggests that Americans don’t particularly like providing public assistance. As Wilbur Cohen, architect of Social Security and Medicare, famously said, “Programs for the poor make for poor programs.” The result is that in practice, the high-tuition, high-aid model of higher education funding rarely includes the actual aid.

Political scientists point to other effects of education, as well. Danielle Allen emphasizes its role in creating citizens as well as economic actors. And Jacob Hacker shows the second-order effects of socializing risk, so that, for example, people feel they can take a chance on pursuing education without mortgaging their futures. Working-class New Yorkers, for example, might have a very different understanding of their opportunities if the CUNY educational system today were what it was 50 years ago — excellent, well-funded and free.

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Across the political spectrum, many Americans share the intuition that parks, fire stations, high schools and colleges are important for creating a good society. They will differ on just how prominent a role government should play in ensuring that such institutions thrive.

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