Against Tulip Subsidies

I.

Imag­ine a lit­tle king­dom with a quaint cus­tom: when a man likes a woman, he offers her a tulip; if she ac­cepts, they are mar­ried shortly there­after. A cou­ple who mar­ries sans tulip is con­sid­ered to be liv­ing in sin; no other form of pro­posal is ap­pro­pri­ate or ac­cepted.

One day, a Dutch trader comes to the lit­tle king­dom. He ex­plains that his home­land also has a quaint cus­tom in­volv­ing tulips: they spec­u­late on them, bid­ding the price up to strato­spheric lev­els. Why, in the Nether­lands, a tulip can go for ten times more than the av­er­age worker earns in a year! The trader is pleased to find a new source of bulbs, and offers the peo­ple of the king­dom a few guilders per tulip, which they hap­pily ac­cept.

Soon other Dutch traders show up and start a bid­ding war. The price of tulips goes up, and up, and up; first dozens of guilders, then hun­dreds. Tulip-grow­ers make a for­tune, but ev­ery­one else is less pleased. Suitors wish­ing to give a to­ken of their love find them­selves hav­ing to in­vest their en­tire life sav­ings – with no guaran­tee that the woman will even say yes! Soon, some of the poor­est peo­ple are locked out of mar­riage and fam­ily-rais­ing en­tirely.

Some of the mem­bers of Par­li­a­ment are out­raged. Mar­riage is, they say, a hu­man right, and to see it forcibly de­nied the poor by for­eign spec­u­la­tors is noth­ing less than an abom­i­na­tion. They de­mand that the King provide ev­ery man enough money to guaran­tee he can buy a tulip. Some ob­jec­tions are raised: won’t it de­plete the Trea­sury? Are we obli­gated to buy ev­ery­one a beau­tiful flawless bulb, or just the sick­liest, grungiest plant that will tech­ni­cally satisfy the re­quire­ments of the rit­ual? If some man con­tin­u­ously pro­poses to women who re­ject him, are we obli­gated to pay for a new bulb each time, sub­si­diz­ing his stu­pidity?

The pro-sub­sidy fac­tion de­clares that the peo­ple ask­ing these ques­tion are well-off, and can prob­a­bly af­ford tulips of their own, and so from their place of priv­ilege they are try­ing to raise pointless ob­jec­tions to other peo­ple be­ing able to ob­tain the con­nu­bial hap­piness they them­selves en­joy. After the doubters are tarred and feathered and thrown in the river, Par­li­a­ment votes that the pub­lic purse pay for as many tulips as the poor need, what­ever the price.

A few years later, an­other Dutch trader comes to the lit­tle king­dom. Every­one asks if he is there to buy tulips, and he says no, the Nether­lands’ tulip bub­ble has long since col­lapsed, and the price is down to a guilder or two. The peo­ple of the king­dom are very sur­prised to hear that, since the price of their own tulips has never stopped go­ing up, and is now in the range of tens of thou­sands of guilders. Nev­er­the­less, they are glad that, how­ever high tulip prices may be for them, they know the gov­ern­ment is always there to help. Sure, the roads are fal­ling apart and the army is go­ing hun­gry for lack of ra­tions, but at least ev­ery­one who wants to marry is able to do so.

Mean­while, across the river is an­other lit­tle king­dom that had the same tulip-re­lated mar­riage cus­tom. They also had a crisis when the Dutch mer­chants started mak­ing the prices go up. But they didn’t have enough money to af­ford uni­ver­sal tulip sub­sidies. It was pretty touch-and-go for a while, and a lot of poor peo­ple were very un­happy.

But nowa­days they use daf­fodils to mark en­gage­ments, and their econ­omy has never been bet­ter.

II.

In Amer­ica, as­piring doc­tors do four years of un­der­grad in what­ever area they want (I did Philos­o­phy), then four more years of med­i­cal school, for a to­tal of eight years post-high school ed­u­ca­tion. In Ire­land, as­piring doc­tors go straight from high school to med­i­cal school and finish af­ter five years.

I’ve done medicine in both Amer­ica and Ire­land. The doc­tors in both coun­tries are about equally good. When Ir­ish doc­tors take the Amer­i­can stan­dard­ized tests, they usu­ally do pretty well. Ire­land is one of the ap­prox­i­mately 100% of First World coun­tries that gets bet­ter health out­comes than the United States. There’s no ev­i­dence what­so­ever that Amer­i­can doc­tors gain any­thing from those three ex­tra years of un­der­grad. And why would they? Why is hav­ing a philos­o­phy de­gree un­der my belt sup­posed to make me any bet­ter at medicine?

(I guess I might have ac­quired a tal­ent for col­orec­tal surgery through long prac­tice pul­ling things out of my ass, but it hardly seems worth it.)

I’ll make an­other con­fes­sion. Ire­land’s med­i­cal school is five years as op­posed to Amer­ica’s four be­cause the Ir­ish spend their first year teach­ing the ba­sic sci­ences – biol­ogy, or­ganic chem­istry, physics, calcu­lus. When I ap­plied to med­i­cal school in Ire­land, they offered me an ac­cel­er­ated four year pro­gram on the grounds that I had surely got­ten all of those in my Amer­i­can un­der­grad­u­ate work. I hadn’t. I read some books about them over the sum­mer and did just fine.

Amer­i­cans take eight years to be­come doc­tors. Ir­ish­men can do it in four, and achieve the same re­sult. Each year of higher ed­u­ca­tion at a good school – let’s say an Ivy, doc­tors don’t study at Po­dunk Com­mu­nity Col­lege – costs about $50,000. So Amer­i­can med­i­cal stu­dents are pay­ing an ex­tra $200,000 for…what?

Re­mem­ber, a mod­est amount of the cur­rent health care crisis is caused by doc­tors’ crip­pling level of debt. So­cially re­spon­si­ble doc­tors of­ten con­sider less lu­cra­tive ca­reers helping the needy, right up un­til the bill comes due from their ed­u­ca­tion and they re­al­ize they have to make a lot of money right now. We took one look at that prob­lem and said “You know, let’s make doc­tors pay an ex­tra $200,000 for no rea­son.”

And to para­phrase Dirk­son, $200,000 here, $200,000 there, and pretty soon it adds up to real money. 20,000 doc­tors grad­u­ate in the United States each year; that means the to­tal yearly cost of re­quiring doc­tors to have un­der­grad­u­ate de­grees is $4 billion. That’s most of the amount of money you’d need to house ev­ery home­less per­son in the coun­try ($10,000 to house one home­less x 600,000 home­less).

I want to be able to say peo­ple have no­ticed the Ir­ish/​Amer­i­can dis­crep­ancy and are think­ing hard about it. I can say that. Just not in the way I would like. Many of the el­der doc­tors I talked to in Ire­land wanted to switch to the Amer­i­can sys­tem. Not be­cause they thought it would give them bet­ter doc­tors. Just be­cause they said it was more fun work­ing with med­i­cal stu­dents like my­self who were older and a lit­tle wiser. The Ir­ish med­i­cal stu­dents were just out of high school and hard to re­late to – us for­eign­ers were four years older than that and had one or an­other un­der­grad­u­ate sub­ject un­der our belts. One of my at­tend­ings said that it was nice hav­ing me around be­cause I’d stud­ied Philos­o­phy in col­lege and that gave our team a touch of class. A touch of class!

This is why, de­spite my reser­va­tions about liber­tar­i­anism, it’s not-liber­tar­i­anism that re­ally scares me. When­ever some peo­ple with­out skin in the game are al­lowed to make de­ci­sions for other peo­ple, you end up with a bunch of el­derly doc­tors get­ting to­gether, think “Yeah, things do seem a lit­tle classier around here if we make peo­ple who are not us pay $200,000, make it so,” and then there goes the money that should have housed all the home­less peo­ple in the coun­try.

But more im­por­tant, it also de­stroyed my last shred of hope that the cur­rent ma­nia for re­quiring col­lege de­grees for ev­ery­thing had a good rea­son be­hind it.

III.

The only rea­son I’m pick­ing on medicine is that it’s so clear. You have your ex­per­i­men­tal group in the United States, your con­trol group in Ire­land, you can see the lack of differ­ence. You can take an Amer­i­can doc­tor and an Ir­ish doc­tor, watch them pre­scribe the same med­i­ca­tion in the same situ­a­tion, and have a visceral feel for “Wait, we just spent $200,000 for no rea­son.”

But it’s not just medicine. Let me tell you about my fam­ily.

There’s my cousin. He wants to be a fire­fighter. He’s wanted to be a fire­fighter ever since he was young, and he’s done vol­un­teer work for his lo­cal fire de­part­ment, who have promised him a job. But in or­der to get it, he has to go do four years of col­lege. You can’t be a fire­fighter with­out a col­lege de­gree. That would be ridicu­lous. Back in the old days, when peo­ple were al­lowed to be­come fire­fighters af­ter get­ting only thir­teen measly years of book learn­ing, I have it on good au­thor­ity that sev­eral ma­jor states burnt to the ground.

My mother is a Span­ish teacher. After twenty years teach­ing, with ex­cel­lent re­views by her stu­dents, she pur­sued a Masters’ in Ed­u­ca­tion be­cause her school was go­ing to pay her more money if she had it. She told me that her pro­fes­sors were in­com­pe­tent, had never ac­tu­ally taught real stu­dents, and spent the en­tire course push­ing what­ever was the lat­est ed­u­ca­tional fad; how­ever, af­ter pay­ing them thou­sands of dol­lars, she got the de­gree and her school du­tifully in­creased her salary. She is lucky. In sev­eral states, teach­ers are re­quired by law to pur­sue a Masters’ de­gree to be al­lowed to con­tinue teach­ing. Oddly enough, these states have no bet­ter stu­dent out­comes than states with­out this re­quire­ment, but this does not seem to af­fect their zeal for this re­quire­ment. Even though many rigor­ous well-con­trol­led stud­ies have found that pres­ence of ab­sence of a Masters’ de­gree ex­plains ap­prox­i­mately zero per­cent of var­i­ance in teacher qual­ity, many states con­tinue to re­quire it if you want to keep your li­cense, and al­most ev­ery state will pay you more for hav­ing it.

Be­fore tak­ing my cur­rent job, I taught English in Ja­pan. I had no Ja­panese lan­guage ex­pe­rience and no teach­ing ex­pe­rience, but the com­pany I in­ter­viewed with asked if I had an un­der­grad­u­ate de­gree in some sub­ject or other, and that was good enough for them. Mean­while, I knew peo­ple who were fluent in Ja­panese and who had high-level TOEFL cer­tifi­ca­tion. They did not have a col­lege de­gree so they were not con­sid­ered.

My ex-girlfriend ma­jored in Gen­der Stud­ies, but it turned out all of the high-pay­ing gen­der fac­to­ries had re­lo­cated to China. They solved this prob­lem by go­ing to App Academy, a three month long, $15,000 course that taught pro­gram­ming. App Academy grad­u­ates com­pete for the same jobs as peo­ple who have taken com­puter sci­ence in col­lege, a four year long, $200,000 un­der­tak­ing.

I see no rea­son to think my fam­ily and friends are unique. The over­all pic­ture seems to be one of peo­ple pay­ing hun­dreds of thou­sands of dol­lars to get a de­gree in Art His­tory to pur­sue a job in Sales, or a de­gree in Span­ish Liter­a­ture to get a job as a mid­dle man­ager. Or not pay­ing hun­dreds of thou­sands of dol­lars, if they hap­pen to be poor, and so be­ing per­ma­nently locked out of jobs as a fire­fighter or sales­man.

IV.

So pres­i­den­tial can­di­date Bernie San­ders has pro­posed uni­ver­sal free col­lege tu­ition.

On the one hand, I sym­pa­thize with his goals. If you can’t get any job bet­ter than ‘fast food worker’ with­out a col­lege de­gree, and poor peo­ple can’t af­ford col­lege de­grees, that’s a pretty grim situ­a­tion, and ob­vi­ously un­fair to the poor.

On the other hand, if can’t you get mar­ried with­out a tulip, and poor peo­ple can’t af­ford tulips, that’s also a pretty grim situ­a­tion, and ob­vi­ously un­fair to the poor.

But the solu­tion isn’t uni­ver­sal tulip sub­sidies.

Higher ed­u­ca­tion is in a bub­ble much like the old tulip bub­ble. In the past forty years, the price of col­lege has dec­tu­pled (quadru­pled when ad­just­ing for in­fla­tion). It used to be easy to pay for col­lege with a sum­mer job; now it is im­pos­si­ble. At the same time, the un­em­ploy­ment rate of peo­ple with­out col­lege de­grees is twice that of peo­ple who have them. Things are clearly very bad and Se­na­tor San­ders is right to be con­cerned.

But, well, when we re­quire doc­tors to get a col­lege de­gree be­fore they can go to med­i­cal school, we’re throw­ing out a mere $5 billion, barely enough to house all the home­less peo­ple in the coun­try. But Se­na­tor San­ders ad­mits that his plan would cost $70 billion per year. That’s about the size of the en­tire econ­omy of Hawaii. It’s enough to give $2000 ev­ery year to ev­ery Amer­i­can in poverty.

At what point do we say “Ac­tu­ally, no, let’s not do that, and just let peo­ple hold ba­sic jobs even if they don’t cough up a a hun­dred thou­sand dol­lars from some­where to get a de­gree in Medieval His­tory”?

I’m afraid that San­ders’ plan is a lot like the tulip sub­sidy idea that started off this post. It would sub­si­dize the con­tinu­a­tion of a use­less tra­di­tion that has turned into a spec­u­la­tion bub­ble, pre­vent the bub­ble from ever pop­ping, and dis­in­cen­tivize peo­ple from figur­ing out a way to route around the prob­lem, eg re­plac­ing the tulips with daf­fodils.

(yes, it is nice to have col­lege for non-eco­nomic rea­sons too, but let’s be hon­est – if there were no such in­sti­tu­tion as col­lege, would you, to­tally for non-eco­nomic rea­sons, sug­gest the gov­ern­ment pay poor peo­ple $100,000 to get a de­gree in Medieval His­tory? Also, any­thing not re­lated to job-get­ting can be done three times as quickly by just read­ing a book.)

If I were San­ders, I’d pro­pose a differ­ent strat­egy. Make “col­lege de­gree” a pro­tected char­ac­ter­is­tic, like race and re­li­gion and sex­u­al­ity. If you’re not al­lowed to ask a job can­di­date whether they’re gay, you’re not al­lowed to ask them whether they’re a col­lege grad­u­ate or not. You can give them all sorts of ex­am­i­na­tions, you can ask them their high school grades and SAT scores, you can ask their work his­tory, but if you ask them if they have a de­gree then that’s ille­gal class-based dis­crim­i­na­tion and you’re go­ing to jail. I re­al­ize this is a blatant vi­o­la­tion of my usual semi-liber­tar­ian prin­ci­ples, but at this point I don’t care.