Wednesday, April 4, 2012

The Self-Destruction of Entitlements

Here is a report from Shaya Tayefe Mohjer via myway chronicling the desperate plight of Santa Monica College students who are outrageously outraged that their higher education is not free:

Raw video posted on the Internet Tuesday evening showed students chanting "Let us in, let us in" and "No cuts, no fees, education should be free."

Community colleges statewide have lost $809 million in state funding over the past three years, causing schools to turn away about 200,000 students and drastically cut the number of classes offered.

Trustee Louise Jaffe said during the meeting that she doesn't believe the students want to listen.

"We spoke for four hours and we weren't understood," she [Louise] said.

Most of the article is about how the meeting had limited seating and some 200 students wanted to attend and got pepper sprayed for their efforts. But what gets me is not so much that these privileged crybabies got pepper sprayed by the drastically outnumbered (not to mention threatened) campus cops; no it's the abject sense of entitlement that has permeated every facet of our lives.

Louise's comment that 'we weren't understood' is telling in the extreme. Of course the trusties weren't understood, in order for that to happen the other side has to take their fingers out of their ears and stop yelling "I can't hear you - I can't hear you - la la la la la."

These children have no interest in why the trustees are cutting back due to lack of funds, they just want to know "where's my free stuff?"

Look many of these kids have no idea how businesses are run (and yes public universities are businesses albeit non-profit). More importantly they (and to a large extent the country) have no idea how entitlements should work.

For their benefit lets review how it should work. First society decide that some entitlement will ultimately be for the public good and therefore should be paid for by the state (i.e. taxpayers). If enough elected officials believe this to be true then the entitlement is pushed through the legislative process and volia we got somebody on the dole good bad or indifferent.

But here's the tricky part. What ultimately happens (and has for the past 70 years) we get what is called 'Entitlement Creep'. This is where an entitlement is put into place to serve a limited number of recipients. What will happen over time though is those who are just outside the requirement to receive the entitlement complain that they should get it too.

So those wily politicians always looking for the next vote takes up the charge and changes the requirements of the program to include these likely voters poor folks. The problem is that the original entitlement program was not budgeted to take on these new recipients. So, one of two things will happen: 1) raise taxes to cover the shortfall or 2) borrow to cover it.

Now if everyone still agrees that the said entitlement was still worth it to society then the first option is the way to go simply raise taxes. But more times than not, people just don't want their taxes raised. Weird huh?

So what's a corrupt hard working politician to do? He has promised these new entitlements but can't pay for it because those unenlightened taxpayers just don't understand how badly he needs the votes. Is he stymied? 

Well no silly, he simply borrows to pay for it thereby increasing the public debt. Thus the more ever-expanding entitlements the more ever-expanding debt. And over the years (just like in my Aunt Mable's attic) stuff starts to pile up and you end up with unfunded entitlements all over the place and the state has to borrow more and more just to keep pace.

So fast forward to today and we find that we have raised a bunch of self-centered, ahem, young adults who have been given everything on a silver platter their entire life. They've never been told no. We've raised a bunch of chronic complainers where no matter what they get it is never enough.

The real tragedy here is that if the students miraculously get what they want they will have effectively destroyed higher education in California. Why? Same reason O-Care will destroy health care. So called 'Free' education will inherently increase demand (econ 101 price goes down demand goes up). With increase demand and no efficient increase in supply will cause shortages and limit services.

The lesson here? Entitlements without limits will ultimately destroy itself and collaterally everything around it.

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