Driving prices to feel good: housing, education, health care?

Some folks are worried about another bubble because it might just burst like the housing bubble did. Mead describes it as Obama’s War On The Young

“In the housing bubble and in the higher ed bubble we are getting some very expensive crash courses in how federal cash, good intentions poorly thought through and bad incentives for both public and private actors can lead to disaster. We have paid a lot of money already as a result of these mistakes and will likely have to pay a lot more; we should at least learn some lessons so we don’t do the same things in the future.”

what’s the issue?

“it’s clear that the huge presence of the federal government in both health care and education helps to drive price increases. On the one hand, Uncle Sam is a kind of payer of last resort. If it weren’t for student loan programs and financial aid, for example, colleges would have to charge only what students and their parents could actually pay out of their own resources and any private loans they could get.”

He lists five things that went wrong. One is lobbying for the poor, changing the meaning of debt, changing economic factors, perverse incentives, and unanticipated implications of reform efforts. It is a systemic problem based on trying to use the government for things that make one feel good. The consequences come along later and are often tragic.

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