Government May Be Cause, Not Solution, to Gen Y Economic Woes

July 12, 2006 • Commentary
This article appeared on Foxnews​.com, July 12, 2006.

CBS News recently ran a profile of Jason DeBonis and Katrina Lust, two medical students facing a “mountain” of student loan debt when they finally graduate and start their careers.

At first blush, the couple seems sympathetic. We see their tiny apartment. We see them eating modestly, and we see the foreboding amount of money the couple will have to eventually pay back — more than half a million dollars.

But take a closer look. In the report, the two are drinking Starbucks coffee, a pricy habit for a couple so worried about expenses. In another scene, we see a bottle of water on the table where they’re eating a modest meal. But it isn’t tap water. Or even bottled water. It’s Vitamin Water, one of the more expensive brands of water on the market. Between them, the two have attended Columbia, NYU, and MIT, three of the most expensive schools in the world.

And the couple has planned a destination wedding in Jamaica.

My colleague at the Cato Institute Neal McCluskey crunched the numbers, and found that even using the most conservative of income projections, Mr. DeBonis and Ms. Lust can expect to make some $8.2 million over the course of their lives, a tidy $7.7 million profit on the investment they made in their education. If only everyone had it so rough.

Feel free to scoff, then, when the couple mugs for the cameras and delivers lines like, “We’d like to save, but we just don’t have any money.”

I don’t mean to pick on DeBonis and Lust. But their story and their complaints are troubling and all too common. Today’s youngest workers have been spoiled by prosperity. They have wholly unrealistic expectations about the professional world, expectations driven by a sense of entitlement and brought on by America’s historic prosperity (a good thing) and a political culture that too often turns to government to remedy all of its problems (a dangerous thing).

Unfortunately, the media continues to give the “woe is me” crowd attention. And the result may be policies that are only going to make things worse.

The same CBS News report, for example, also interviewed Anya Kamenetz, author of the book “Generation Debt.” Kamenetz has become what you might call the Robert Parker of white, upper middle‐​class whine.

The 25‐​year‐​old began her journalism career with an unpaid internship at the Village Voice, a weekly newspaper in New York City. There, she began writing columns about the burdensome debt looming over the 20‐​something crowd, and — in a striking fit of self‐​pity and grand delusion — how it’s more difficult to be a young adult today than it’s been in generations.

As Slate’s Daniel Gross has noted, Kamenetz’s self‐​pity shtick falls far short of authentic. The Yale‐​educated daughter of two successful novelists is married to a Google engineer and has already had some success in her own right.

When Kamenetz complains that she was forced to send expensive flatware, silver candlesticks, and crystal vases (wedding gifts, you see) into storage because they wouldn’t fit in the “insanely narrow” kitchen she rented in a trendy neighborhood in one of the most expensive cities in the world, well, it’s hard for many people to sympathize with her “plight.” And understandably so.

Since her book came out, Kamenetz has gone on to publish in the New York Times, The Nation, the Washington Post and a host of other esteemed publications. Her most recent was an op‐​ed in the New York Times excoriating the rite of passage of the unpaid internship, and the exploitation of young college kids’ idealism and hard work for — horrors! — corporate gain.

“Unpaid internships are not jobs,” Kamenetz wrote, “only simulations.”

Of course, Kamenetz herself parlayed an unpaid internship into a regular column at a respected newspaper, lucrative book deals and plenty of op‐​ed space on the most vaunted real estate in journalism — all of which she uses to bemoan just how tough it is for a kid like her to catch a break.

There are some serious economic issues here. The problem is that Kamenetz and her supporters don’t quite grasp the extent of them. Student loan debt is a problem, as is the spiraling cost of higher education. But these problems have been caused by the entitlement culture. Giving more government money to students will only make them worse.

Higher education tuition began to soar at about the same time our politicians decided that the government should make it possible for virtually everyone to go to college — that is, when the federal government essentially created a college‐​education entitlement.

The widespread availability of federally backed loans and grants created a glut of college applicants. Higher ed became a seller’s market. Most colleges today have far more applicants than slots in incoming freshman classes. That means they can charge whatever they please, and there’s no incentive to keep costs low (or, for that matter, to experiment, innovate or offer a better education).

It’s of no coincidence that the cost of tuition at a private college has risen at a rate just about equal to the federal ceiling on student loans.

The solution is not — as Kamenetz has advocated — more government grants. Grants provide even less accountability than loans. We’re more likely to carefully spend money that we have to pay back than money that’s given to us. More grants won’t force students to shop more carefully for a good education and, therefore, won’t reign in the cost of an education.

The solution is to put more consumer pressure on higher education by getting government out of the business of paying for it. Competition made America’s colleges and universities the best in the world, not government subsidies. Increasing the government’s role in higher education will devolve our institutions of higher learning into something akin to the public schools.

But advocates like Kamenetz have bought into the entitlement culture. They believe that not only do they have the right to an Ivy League education, they have the right to an inexpensive one — and to a chic apartment in a cool neighborhood in an expensive city to boot.

Lust told CBS News, “It makes me upset that I have to maybe not do what I want to do because I won’t be able to pay my bills at the end of the month.”

Of course, the number of people who actually get to make a living “doing what they want to do” is exceedingly small. The number who get to do it straight out of school is even smaller.

This is the way entitlements work. They create dependence and complacence and then, inevitably, demands for bigger, better and broader entitlements. The only difference with student loans is that we get to see the process at work in people who already have plenty.

Instead of trying to elicit sympathy for young people who are doing just fine, perhaps media outlets could run a segment or two examining the possibility that maybe — just maybe — government is part of the problem, here, instead of the terminal answer.

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