This week marks the 40th anniversary of the Staggers Rail Act of 1980, which deregulated American freight…
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Happy 40th to the Staggers Rail Act, Which Deregulated and Saved the U.S. Rail Industry

This week marks the 40th anniversary of the Staggers Rail Act of 1980, which deregulated American freight rail and saved it from looming oblivion.

At the time of passage, the U.S. economy muddled along amid ongoing malaise, and our rail industry teetered due to decades of overly bureaucratic sclerosis.  Many other domestic U.S. industries had disappeared, and our railroads faced the same fate.  But by passing the Staggers Rail Act, Congress restored a deregulatory approach that in the 1980s allowed other U.S. industries to thrive.  No longer would government determine what services railroads could offer, their rates or their routes, instead restoring greater authority to the railroads themselves based upon cost-efficiency.

Today, U.S. rail flourishes even amid the coronavirus pandemic…[more]

October 13, 2020 • 11:09 PM

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Jester's CourtroomLegal tales stranger than stranger than fiction: Ridiculous and sometimes funny lawsuits plaguing our courts.
Cutting a Check Vs. Cutting Costs: How Government Mismanages the Economy Print
By Troy Senik
Thursday, July 11 2013
The overwhelming increase in tuition shows precisely why the focus on subsidizing interest rates is so misguided.

The federal government has constructed a virtually perfect system by which to create a dependent class. First, have the state interfere in private markets, driving up prices and leaving consumers feeling the financial burden. Then, provide government assistance to cushion the economic blow. When the aid, by stimulating demand, only drives prices up further, provide more assistance. Lather, rinse, repeat. The cycle is self-perpetuating … and endless.

A good example can be seen in the debate currently underway on Capitol Hill over interest rates for federal loans intended to help students finance a college education. As of July 1, the government-subsidized interest rates on these loans doubled from 3.4 percent to 6.8 percent.

Needless to say, this represents a significant challenge to America’s college students, who are in an unenviable position to begin with. At a time of economic dislocation, particularly for the young, the impetus to earn a college credential as an extra qualification on the job market is high. So too is the financial burden that comes with it.

As Ivan Kenneally recently noted in The Washington Times, “Cumulative student-loan debt now tops $1 trillion with the rates of default rapidly rising. While the average individual debt load for a 2011 graduate was approximately $23,300, current collegians are more ambitious than their predecessors, piling on about $10,476 per year. If crushing financial liability was itself an academic credential, we would be celebrating the smartest generation of scholars America has ever seen.”

Kenneally’s last sentence hints at one of the underlying problems: There’s no clear correspondence between higher costs and better outcomes. From 1985 to 2012, the consumer price index rose by 115 percent, while the inflation rate for college education was nearly 500 percent.

In a world in which a technology bloom is constantly delivering higher-quality products at lower prices, education is ossified, and expensive. That center can’t hold forever – which is the reason that the higher education establishment is feeling pressure from the growing popularity of online courses and a handful of bargain-basement programs like the $7,000 master’s degree in computer science recently announced by Georgia Tech.

The overwhelming increase in tuition shows precisely why the focus on subsidizing interest rates is so misguided. Sure, an increase of nearly 3 ½ percentage points on interest is unpleasant. But it’s a drop in the bucket compared to having the underlying principal (tuition rates) increase at more than 2 ½ times the rate of inflation. Yet instead of trying to make college cheaper, we’re making it more expensive while subsidizing it more heavily.

There’s something of a feedback loop at work here. Part of the reason for the price increase is that it’s an inherent product of the subsidies themselves. Give more people more resources with which to purchase a college education and you inevitably drive up demand. Drive up the demand and price follows shortly thereafter (particularly in a market like higher education, where there are high barriers to entry and it’s difficult for new providers to emerge).

The problem runs deeper, however, than just the subsidies themselves. Public universities in particular are prone to run up stratospheric costs on things that have little or nothing to do with educating students. From 2001 to 2011, the number of administrators and bureaucrats hired by America’s colleges and universities increased at more than double the rate of teacher hirings according to the U.S. Department of Education.

In response, a few outliers like Purdue University President (and former Indiana Governor) Mitch Daniels have begun cutting costs in order to halt the relentless rise in tuition. Daniels is the exception, however. In most cases, universities are still piling on the superfluous costs – and students are bearing the burden.

Education is only one of many areas where government attempts to create affordability through redistribution instead of effective cost management. The same is true of health care, where government cuts checks to consumers while placing regulatory burdens on providers that drive up expenses. The same is true of housing, where development restrictions and rent controls reduce supply, leading to price hikes that are ultimately felt by most citizens twice – first as a consumer and then as a taxpayer.

All indications are that the 21st century will be an era in which technology moves us towards greater convenience, increased personalization and lower costs at a dizzying rate. The private-sector revolution, however, will not automatically translate to government for one simple reason: unlike the wizards of the free market, government faces no competition. Over time, however, the contrast will be impossible to ignore.
 
At a time when conservatives are on a desperate hunt for the Next Big Thing to aid their electoral ambitions, they may want to consider the prospect of designing a 21st century governing strategy that takes aim at precisely this problem. There’s a lot to be said for a government that cuts costs rather than cutting checks.

Question of the Week   
Which one of the following was the first 20th century presidential candidate to call for a Presidential Debate?
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Quote of the Day   
 
"In nominating Barrett to the Supreme Court, [President Trump] kept his promise by choosing an undaunted originalist -- someone who interprets the Constitution based on the understanding held by its ratifiers.Trump's most profound effect on the Constitution will come when she and the other Trump Justices apply that originalism to the questions of liberty and equality."Read entire article here.…[more]
 
 
—John C. Yoo, Heller Professor Law at U.C. Berkeley School of Law
— John C. Yoo, Heller Professor Law at U.C. Berkeley School of Law
 
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