Economic Proof of Failed Democrat Promises

Everyone likes a free lunch, right?  After all, free is better.....everyone knows this.  Hillary Clinton and Bernie Sanders believe that university education should be free to all who are willing, and have gone as far as made this a promise if they are elected.  It is well documented that those who have graduated from college are compensated higher than those who have not, so this is a good thing, right?  Not so fast......let's bring in sound principles of economics......this one we will call the Law of Supply.

The law of supply is very simple......as the quantity supplied increases, the relative value that a consumer is willing to pay for that item decreases.  The graph to the right demonstrates a very simple example of what is called a "shift" in the supply curve.  As the supply of a given quantity increases, the price a consumer is willing to pay decreases until the price achieves equilibrium point.

The main reason people do not attend college is that they cannot afford the tuition.  Sanders and Clinton propose that if this is made free, there will be economic prosperity for all, and the workers will be better off.  While the claim is noble, it is also foolish to anyone who knows the slightest thing about how an economy works.  The supply of college graduates will increase in their plan, and effectively the wages that these new college graduates can expect will decrease, as the supply of graduates have increased.  The "Free College for All" plan can be counted on for the following to take place:

• Underemployment (a term never mentioned by the Democrats, I might add), with college graduates working at places like Starbucks as there will be fewer jobs available
• Decreased income tax revenue due to decreased wages
• Increases in unemployment of college graduates
• Decreased consumer spending due to decreased wages, resulting in decreased tax revenue (again)

All in all, this plan is foolish, and could devastate the economy.  College is expensive; I know this first-hand.  As I have said many times, the solution is for the University systems to become more competitive, and no longer rely on government subsidization.  This would force universities to become more competitive, and they would either increase the value of their product or reduce their rates to satisfy a market demand.

Now some folks would argue about increasing the minimum wage.....in my next entry, I will point out why this is just as foolish as this free college nonsense.