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Do not derail the thread with discussions about other topics like global warming. |
On March 15 2012 23:35 Asol wrote:Show nested quote +On March 15 2012 23:26 Hider wrote:On March 15 2012 23:22 TanTzoR wrote: Then why are you saying me that the US system is more free than most of the Europeans system? Btw do you have example of worthless studies? Because many are "private" (operating in a heavily regulated market though). What I want is obv. a completely free university market (and by that i mean the opposite of what you mean by "free". I mean no regulation, no government interference). Actually the US system is a lot more limited o.0 If free means that instead of getting into uni because of your academic grades and instead getting in because you pay.. wat? That doesn't even make sense :S Could you explain yourself a bit more please?
Free market = business are free to do whatever they want.
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On March 15 2012 23:37 Hider wrote:Show nested quote +On March 15 2012 23:30 Asymmetric wrote:On March 15 2012 23:28 Hider wrote:On March 15 2012 23:27 Asymmetric wrote:On March 15 2012 23:15 Hider wrote: Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). What are you mumbling about. No nation operates as a purely hypothetical free maket because it would be an umititagated disaster to have no government regulation on buisness. All western economies operate as mixed economies, theres competition and individual choices but it operates in a sanctioned government legal framework. Hell, the Soviet Union lasted 70 years, thats longer than any libertarian's wet dream free market has ever lasted. Wrong. Go read polticially incorrect guide to capitalism by Robert Murphy. You honestly haven't throught this through. He's wrong. See, that simple. I wrote in the same way as you did. You claimed that it led to disaster. But there was no argumentation. Honestly there are tons of people like you, who thinks they understand how the free market works, but they don't really. They only know what they been told by parents/teachers/politicans who doesn't get it either. It would take me a lot of time to explain it to you ( I have done that in other threads but its very time consuming), so instead I advice you to read that book. Now tell me why he is wrong.
This is not a valid argument, you can't possibly claim that you know what we have been told by our parents/teachers/politicians. Arguing that it takes too long to explain how we're wrong is also not a statement that you can make in a discussion.
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On March 15 2012 23:15 Hider wrote:Show nested quote +On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote:On March 15 2012 21:28 Hider wrote: Wow too many people in here apparently seem to think that more people taking an education = Good no matter what, and hence advocate free education.
That is just abusred argumentation. And this is so sad that many people haven't been taught how to think logical:
An education is only a good idea if its cost-effecticient in relation to the present value of the expected future income.
This is such a basic concept, yet people just keep thinking that taking education = makes everybody richer off. It doesn't. And especially in countries like Denmark, people will take educations that doesn't really give you any knowledge that employeers demand.
But this is why education isn't suppoed to be free and taxes are suppoed to be low. If you have estimated that taking an education has a positive net presenet value, then you can either take a loan, or sell a "share" of your sell (so some investor get a percentage of your expected income - typically if you got good grades in high school he would be willing to take a low percentage of your expected income).
This is how an economy is suppoed to work. It doesn't increase social unjustice in any way. It still gives people the same possibilies, however nobody is gonna tork worthless educations that they are today. In the end everybody is gonna be better off. Sure if your the laziest guy ever in high school, nobody will probably give you a loan or take a share in you. However why is that a problem? Why should someone pay for this guy's education? How can you justifiy taking money from one guy and give it to this guy? There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy.
To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world.
There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die.
To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good.
https://en.wikipedia.org/wiki/Public_good
To put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population.
It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality.
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On March 15 2012 23:39 Asol wrote:Show nested quote +On March 15 2012 23:37 Hider wrote:On March 15 2012 23:30 Asymmetric wrote:On March 15 2012 23:28 Hider wrote:On March 15 2012 23:27 Asymmetric wrote:On March 15 2012 23:15 Hider wrote: Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). What are you mumbling about. No nation operates as a purely hypothetical free maket because it would be an umititagated disaster to have no government regulation on buisness. All western economies operate as mixed economies, theres competition and individual choices but it operates in a sanctioned government legal framework. Hell, the Soviet Union lasted 70 years, thats longer than any libertarian's wet dream free market has ever lasted. Wrong. Go read polticially incorrect guide to capitalism by Robert Murphy. You honestly haven't throught this through. He's wrong. See, that simple. I wrote in the same way as you did. You claimed that it led to disaster. But there was no argumentation. Honestly there are tons of people like you, who thinks they understand how the free market works, but they don't really. They only know what they been told by parents/teachers/politicans who doesn't get it either. It would take me a lot of time to explain it to you ( I have done that in other threads but its very time consuming), so instead I advice you to read that book. Now tell me why he is wrong. This is not a valid argument, you can't possibly claim that you know what we have been told by our parents/teachers/politicians. Arguing that it takes too long to explain how we're wrong is also not a statement that you can make in a discussion.
Well its not up to me to argue why it doesn't lead to disaster. You claimed that it did, yet there was no further argumentation. Why does it lead to disaster? Free market = Voluntary exchanges. People can live the way they desire. What is so bad about freedom? Why does government need to tell you what you need to do, when in fact they are terrible at making decisions for other people.
US in the 19th century was probably one of the most free centuries of a society in human history, and didn't prosperity grow? Even though there were poor people, how was US compared to comparable nations?
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On March 15 2012 23:38 Hider wrote:Show nested quote +On March 15 2012 23:35 Asol wrote:On March 15 2012 23:26 Hider wrote:On March 15 2012 23:22 TanTzoR wrote: Then why are you saying me that the US system is more free than most of the Europeans system? Btw do you have example of worthless studies? Because many are "private" (operating in a heavily regulated market though). What I want is obv. a completely free university market (and by that i mean the opposite of what you mean by "free". I mean no regulation, no government interference). Actually the US system is a lot more limited o.0 If free means that instead of getting into uni because of your academic grades and instead getting in because you pay.. wat? That doesn't even make sense :S Could you explain yourself a bit more please? Free market = business are free to do whatever they want.
No they're not. They're not allowed to steal, counterfeit, de-fraud, enslave, etc. The market is merely freedom of contract to trade, sell, or barter property titles, with property being defined generally as deriving first from self-proprietorship (self-ownership), to Non-proviso Lockean Homesteading. There is a clear line of justice, rights, and moral inquiry that is required for Laissez-Faire.
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On March 15 2012 23:37 Hider wrote:Show nested quote +On March 15 2012 23:30 Asymmetric wrote:On March 15 2012 23:28 Hider wrote:On March 15 2012 23:27 Asymmetric wrote:On March 15 2012 23:15 Hider wrote: Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). What are you mumbling about. No nation operates as a purely hypothetical free maket because it would be an umititagated disaster to have no government regulation on buisness. All western economies operate as mixed economies, theres competition and individual choices but it operates in a sanctioned government legal framework. Hell, the Soviet Union lasted 70 years, thats longer than any libertarian's wet dream free market has ever lasted. Wrong. Go read polticially incorrect guide to capitalism by Robert Murphy. You honestly haven't throught this through. He's wrong. See, that simple. I wrote in the same way as you did. You claimed that it led to disaster. But there was no argumentation. Honestly there are tons of people like you, who thinks they understand how the free market works, but they don't really. They only know what they been told by parents/teachers/politicans who doesn't get it either. It would take me a lot of time to explain it to you ( I have done that in other threads but its very time consuming), so instead I advice you to read that book. Now tell me why he is wrong.
So your not going to bother.
I don't need to explain why a pure free market doesn't work for the same reason I don't need to explain why the easter bunny doesn't exist. Emprically it doesn't exist other than as a idealist concept that certain academics and US politicians have a fetish for.
Somalia and Antarctica have no government intervention in buisness. Neither has roaring economies.
I could just as easily speculate about an omniscience computer with limitless processing power with complete command over an economy which could operate at 100% work rate and 100% energy efficency in all tasks consistently and outperforming a free markets human operators at every single process due to total information awareness. Guess what though, it doesn't exist.
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On March 15 2012 23:54 Asymmetric wrote:Show nested quote +On March 15 2012 23:37 Hider wrote:On March 15 2012 23:30 Asymmetric wrote:On March 15 2012 23:28 Hider wrote:On March 15 2012 23:27 Asymmetric wrote:On March 15 2012 23:15 Hider wrote: Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). What are you mumbling about. No nation operates as a purely hypothetical free maket because it would be an umititagated disaster to have no government regulation on buisness. All western economies operate as mixed economies, theres competition and individual choices but it operates in a sanctioned government legal framework. Hell, the Soviet Union lasted 70 years, thats longer than any libertarian's wet dream free market has ever lasted. Wrong. Go read polticially incorrect guide to capitalism by Robert Murphy. You honestly haven't throught this through. He's wrong. See, that simple. I wrote in the same way as you did. You claimed that it led to disaster. But there was no argumentation. Honestly there are tons of people like you, who thinks they understand how the free market works, but they don't really. They only know what they been told by parents/teachers/politicans who doesn't get it either. It would take me a lot of time to explain it to you ( I have done that in other threads but its very time consuming), so instead I advice you to read that book. Now tell me why he is wrong. So your not going to bother. I don't need to explain why a pure free market doesn't work for the same reason I don't need to explain why the easter bunny doesn't exist. Emprically it doesn't exist other than as a idealist concept that certain academics and US politicians have a fetish for. Somalia and Antarctica have no government intervention in buisness. Neither has roaring economies. I could just as easily speculate about an omniscience computer with limitless processing power with complete command over an economy which could operate at 100% work rate and 100% energy efficency in all tasks consistently and outperforming a free markets human operators at every single process due to total information awareness. Guess what though, it doesn't exist. Agreed. A common problem with free market fundamentalists and Austrians.
They live in a fantasyland, not in the real world.
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On March 15 2012 23:45 paralleluniverse wrote: To put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population.
It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality.
Thank god somebody gets it :D
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On March 15 2012 23:45 paralleluniverse wrote:Show nested quote +On March 15 2012 23:15 Hider wrote:On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote:On March 15 2012 21:28 Hider wrote: Wow too many people in here apparently seem to think that more people taking an education = Good no matter what, and hence advocate free education.
That is just abusred argumentation. And this is so sad that many people haven't been taught how to think logical:
An education is only a good idea if its cost-effecticient in relation to the present value of the expected future income.
This is such a basic concept, yet people just keep thinking that taking education = makes everybody richer off. It doesn't. And especially in countries like Denmark, people will take educations that doesn't really give you any knowledge that employeers demand.
But this is why education isn't suppoed to be free and taxes are suppoed to be low. If you have estimated that taking an education has a positive net presenet value, then you can either take a loan, or sell a "share" of your sell (so some investor get a percentage of your expected income - typically if you got good grades in high school he would be willing to take a low percentage of your expected income).
This is how an economy is suppoed to work. It doesn't increase social unjustice in any way. It still gives people the same possibilies, however nobody is gonna tork worthless educations that they are today. In the end everybody is gonna be better off. Sure if your the laziest guy ever in high school, nobody will probably give you a loan or take a share in you. However why is that a problem? Why should someone pay for this guy's education? How can you justifiy taking money from one guy and give it to this guy? There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy. To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world. There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die. To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good. https://en.wikipedia.org/wiki/Public_goodTo put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population. It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality.
Your assumption that in a Laissez-Faire economy Universities would be expensive is simply absurd. You make the oh-so-common mistake of assuming the price in the Corporatist-Statist economy we have today is reflective of a market economy. It's like telling Richard Cobden he's an absolute moron, and that laissez-faire free-trade will not work, and thus, the Anti-Corn Laws would only make food available for the rich because right now food prices are astronomically high...is completely absurd.
Prices are high for secondary-Education precisely because of Government policies. It wasn't even that long ago you could afford a good University working part-time usually waiting tables, or other relatively low-skill jobs. Of course, there wasn't the insane amount of intervention there is today. Those guaranteed Government loans are a major factor for the explosion of the price of tuition, board, and other associated University costs. It would be the same in any other industry the Government instituted guaranteed loans. Imagine there were Government guaranteed loans to pretty much anyone to buy a car. All the car companies would be ecstatic. Prices would continually rise because the Government is there giving these loans out as they do not care about profit or loss, but are politically motivated, and the money they receive they receive no matter what either from taxation or from counterfeiting (Fed Reserve).
You would probably make the same argument against me if I said that the Government should stop interfering in the car sector because I only want the rich to have one, or something absurd. The two main factors for rising prices across the board (or individualized sectors) is watch where Fed money gets funneled to first (through the Government allocation) and watch the rate of increase of new money creation. You will find that prices rise precisely in the associated industry much faster than anywhere else. Richard Cantillon noted this 300+ years ago. He made a lot of money because of his knowledge.
Shame so many are so unaware of the problem.
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On March 15 2012 23:45 paralleluniverse wrote:Show nested quote +On March 15 2012 23:15 Hider wrote:On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote:On March 15 2012 21:28 Hider wrote: Wow too many people in here apparently seem to think that more people taking an education = Good no matter what, and hence advocate free education.
That is just abusred argumentation. And this is so sad that many people haven't been taught how to think logical:
An education is only a good idea if its cost-effecticient in relation to the present value of the expected future income.
This is such a basic concept, yet people just keep thinking that taking education = makes everybody richer off. It doesn't. And especially in countries like Denmark, people will take educations that doesn't really give you any knowledge that employeers demand.
But this is why education isn't suppoed to be free and taxes are suppoed to be low. If you have estimated that taking an education has a positive net presenet value, then you can either take a loan, or sell a "share" of your sell (so some investor get a percentage of your expected income - typically if you got good grades in high school he would be willing to take a low percentage of your expected income).
This is how an economy is suppoed to work. It doesn't increase social unjustice in any way. It still gives people the same possibilies, however nobody is gonna tork worthless educations that they are today. In the end everybody is gonna be better off. Sure if your the laziest guy ever in high school, nobody will probably give you a loan or take a share in you. However why is that a problem? Why should someone pay for this guy's education? How can you justifiy taking money from one guy and give it to this guy? There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy. To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world. There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die. To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good. https://en.wikipedia.org/wiki/Public_goodTo put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population. It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality.
1) People make cost-benefit calculations every single day, every single time they make a decision. NPV analysis is bascially a cost-benefit calculation involving a series of expected cash flows. In the end value is destroyed if NPV = less than 0. If NPV is above 0 value is created. Of course people actually dont think in terms of discount rate or try to calculate these numbers. However they can still make a much better judgement than the government.
If people are taking a high expensive education even though they don't think it has a positive NPV, but that it will still be worth in terms of cost-benefit (e.g. it gives prestige), then economic value is destroyed. The soceity as a whole is worse of in economic goods. But so what? In a free society the guy who paid for prestige is the only paying. In a public society the guy is getting the prestige for free and tax payers are paying for this prestige.
2) Today the NPV calcuations are manipulated as univisties are free.
3) Universities are supposed to operate like any other business. There are no need for other purposes. Sure I get that purposes are different today, but as I have tried to argue, this is dumb IMO.
4) Did you even read my post - I actually clearly argued why high income isn't a neccesitiy to be able to take an education (future expected income is)
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To put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population
I agree that if people are taking an educaiton they are not supposed to take then its a "waste" of human capital from an economical perspective. But if we ignore the fact that its his familiy or him self who wastes those money on that kind of education for the reasoning of prestige (and not taxpayers). Do you really think that public univeristies are more efficient economically than private?
Today people can take a lot of worthless educations, because they don't care about the costs. How come you haven't even mentioned this in your waste of human ressources?
Its btw a myth that public educaiton is a positive externailiy. This is just assuming that more people taking an educaiton = better no matter what. But its only better if the NPV is positive (as I have previsouly argued).
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On March 16 2012 00:02 Wegandi wrote:Show nested quote +On March 15 2012 23:45 paralleluniverse wrote:On March 15 2012 23:15 Hider wrote:On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote:On March 15 2012 21:28 Hider wrote: Wow too many people in here apparently seem to think that more people taking an education = Good no matter what, and hence advocate free education.
That is just abusred argumentation. And this is so sad that many people haven't been taught how to think logical:
An education is only a good idea if its cost-effecticient in relation to the present value of the expected future income.
This is such a basic concept, yet people just keep thinking that taking education = makes everybody richer off. It doesn't. And especially in countries like Denmark, people will take educations that doesn't really give you any knowledge that employeers demand.
But this is why education isn't suppoed to be free and taxes are suppoed to be low. If you have estimated that taking an education has a positive net presenet value, then you can either take a loan, or sell a "share" of your sell (so some investor get a percentage of your expected income - typically if you got good grades in high school he would be willing to take a low percentage of your expected income).
This is how an economy is suppoed to work. It doesn't increase social unjustice in any way. It still gives people the same possibilies, however nobody is gonna tork worthless educations that they are today. In the end everybody is gonna be better off. Sure if your the laziest guy ever in high school, nobody will probably give you a loan or take a share in you. However why is that a problem? Why should someone pay for this guy's education? How can you justifiy taking money from one guy and give it to this guy? There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy. To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world. There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die. To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good. https://en.wikipedia.org/wiki/Public_goodTo put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population. It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality. Your assumption that in a Laissez-Faire economy Universities would be expensive is simply absurd. You make the oh-so-common mistake of assuming the price in the Corporatist-Statist economy we have today is reflective of a market economy. It's like telling Richard Cobden he's an absolute moron, and that laissez-faire free-trade will not work, and thus, the Anti-Corn Laws would only make food available for the rich because right now food prices are astronomically high...is completely absurd. Prices are high for secondary-Education precisely because of Government policies. It wasn't even that long ago you could afford a good University working part-time usually waiting tables, or other relatively low-skill jobs. Of course, there wasn't the insane amount of intervention there is today. Those guaranteed Government loans are a major factor for the explosion of the price of tuition, board, and other associated University costs. It would be the same in any other industry the Government instituted guaranteed loans. Imagine there were Government guaranteed loans to pretty much anyone to buy a car. All the car companies would be ecstatic. Prices would continually rise because the Government is there giving these loans out as they do not care about profit or loss, but are politically motivated, and the money they receive they receive no matter what either from taxation or from counterfeiting (Fed Reserve). You would probably make the same argument against me if I said that the Government should stop interfering in the car sector because I only want the rich to have one, or something absurd. The two main factors for rising prices across the board (or individualized sectors) is watch where Fed money gets funneled to first (through the Government allocation) and watch the rate of increase of new money creation. You will find that prices rise precisely in the associated industry much faster than anywhere else. Richard Cantillon noted this 300+ years ago. He made a lot of money because of his knowledge. Shame so many are so unaware of the problem. You make it sound like universities are some sort of ponzi scheme sucking money from government subsidies to fund the extravagant lifestyles of their benefactors. In actuality, universities use their money for research, to build faculties for teaching and research, and to pay academics (which aren't as richly compensated than some of their private industry counterparts). Universities provide a lot more public good than most private companies.
Also to subsidize the cost of of university education isn't voodoo economics. It's basic microeconomics that government should subsidize positive externalities.
Finally, the cost of universities is perfectly fine. It's free in Europe, and it's essentially feels free in Australia. I have no complaints about the cost of university.
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Imo education should be free.
In italy you pay beetwen 0 and 1200 usd a year, depending on your family income. Private universities are rare here, as public ones have a very high standards and there is a public university where only students with top grades can get into, witht the same rates. Cost are payed majorly with taxes, which in italy are very high, 40 % about. Due to the high demand, certain faculties like medicine, some enginering programs and law have a limited amout of places available.
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On March 16 2012 00:02 Hider wrote:Show nested quote +On March 15 2012 23:45 paralleluniverse wrote:On March 15 2012 23:15 Hider wrote:On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote:On March 15 2012 21:28 Hider wrote: Wow too many people in here apparently seem to think that more people taking an education = Good no matter what, and hence advocate free education.
That is just abusred argumentation. And this is so sad that many people haven't been taught how to think logical:
An education is only a good idea if its cost-effecticient in relation to the present value of the expected future income.
This is such a basic concept, yet people just keep thinking that taking education = makes everybody richer off. It doesn't. And especially in countries like Denmark, people will take educations that doesn't really give you any knowledge that employeers demand.
But this is why education isn't suppoed to be free and taxes are suppoed to be low. If you have estimated that taking an education has a positive net presenet value, then you can either take a loan, or sell a "share" of your sell (so some investor get a percentage of your expected income - typically if you got good grades in high school he would be willing to take a low percentage of your expected income).
This is how an economy is suppoed to work. It doesn't increase social unjustice in any way. It still gives people the same possibilies, however nobody is gonna tork worthless educations that they are today. In the end everybody is gonna be better off. Sure if your the laziest guy ever in high school, nobody will probably give you a loan or take a share in you. However why is that a problem? Why should someone pay for this guy's education? How can you justifiy taking money from one guy and give it to this guy? There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy. To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world. There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die. To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good. https://en.wikipedia.org/wiki/Public_goodTo put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population. It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality. 1) People make cost-benefit calculations every single day, every single time they make a decision. NPV analysis is bascially a cost-benefit calculation involving a series of expected cash flows. In the end value is destroyed if NPV = less than 0. If NPV is above 0 value is created. Of course people actually dont think in terms of discount rate or try to calculate these numbers. However they can still make a much better judgement than the government. If people are taking a high expensive education even though they don't think it has a positive NPV, but that it will still be worth in terms of cost-benefit (e.g. it gives prestige), then economic value is destroyed. The soceity as a whole is worse of in economic goods. But so what? In a free society the guy who paid for prestige is the only paying. In a public society the guy is getting the prestige for free and tax payers are paying for this prestige. 2) Today the NPV calcuations are manipulated as univisties are free. 3) Universities are supposed to operate like any other business. There are no need for other purposes. Sure I get that purposes are different today, but as I have tried to argue, this is dumb IMO. 4) Did you even read my post - I actually clearly argued why high income isn't a neccesitiy to be able to take an education (future expected income is) What's the NPV of your university education? Walk me through it.
Tell me what model you used to project your income if you went to uni, and how you project it if you didn't.
Now explain to me the interest rate model you used to estimate the rate at which you discount the cash flows projected in the first step. Was it it Vasicek model? If so, explain how you would learn such a model before going to uni in the first place?
Then finally put all this together and calculate the NPV.
Bonus marks: Incorporate utility theory into the above analysis to account for the fact that, say, a certain person may prefer to earn $50,000 a year as a scientist, than $50,000 a year as a factory worker.
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On March 15 2012 23:37 FinalForm wrote: If you don't subsidize education, then the rich will pay for good education and the poor will skimp on it. Thus the rich get richer and the poor get poorer. That leads to greater social unrest such as protests.
How did those rich pepole become rich, and poor, in the first place? By luck? In the turn of the last century, more than 50% of the US's population lived under the poverty line, so it's obviously not "old money" that made most of today's rich pepole (upper decile) rich. There's a huge correlation between IQ and Economic Status these days, the pepole who were smart made good decisions and learned, and thus they earned money, stupid pepole made stupid mistakes and got poor.
So far, while taking Socioeconomic status into consideration, the correlation index of Intelligence (as gauged by IQ points) stands at 0.6, this is a lot, so it seems that being smart leads to having more money in the first place.
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On March 16 2012 00:27 RageBot wrote:Show nested quote +On March 15 2012 23:37 FinalForm wrote: If you don't subsidize education, then the rich will pay for good education and the poor will skimp on it. Thus the rich get richer and the poor get poorer. That leads to greater social unrest such as protests.
How did those rich pepole become rich, and poor, in the first place? By luck? In the turn of the last century, more than 50% of the US's population lived under the poverty line, so it's obviously not "old money" that made most of today's rich pepole (upper decile) rich. There's a huge correlation between IQ and Economic Status these days, the pepole who were smart made good decisions and learned, and thus they earned money, stupid pepole made stupid mistakes and got poor. So far, while taking Socioeconomic status into consideration, the correlation index of Intelligence (as gauged by IQ points) stands at 0.6, this is a lot, so it seems that being smart leads to having more money in the first place. People are rich because they were born into rich parents.
Economic mobility is very low in the US, meaning that the 50% below the poverty line (citation needed on your claim) is likely still below there, and those above it are likely the rich ones.
https://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_United_States
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On March 16 2012 00:15 paralleluniverse wrote:Show nested quote +On March 16 2012 00:02 Hider wrote:On March 15 2012 23:45 paralleluniverse wrote:On March 15 2012 23:15 Hider wrote:On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote:On March 15 2012 21:28 Hider wrote: Wow too many people in here apparently seem to think that more people taking an education = Good no matter what, and hence advocate free education.
That is just abusred argumentation. And this is so sad that many people haven't been taught how to think logical:
An education is only a good idea if its cost-effecticient in relation to the present value of the expected future income.
This is such a basic concept, yet people just keep thinking that taking education = makes everybody richer off. It doesn't. And especially in countries like Denmark, people will take educations that doesn't really give you any knowledge that employeers demand.
But this is why education isn't suppoed to be free and taxes are suppoed to be low. If you have estimated that taking an education has a positive net presenet value, then you can either take a loan, or sell a "share" of your sell (so some investor get a percentage of your expected income - typically if you got good grades in high school he would be willing to take a low percentage of your expected income).
This is how an economy is suppoed to work. It doesn't increase social unjustice in any way. It still gives people the same possibilies, however nobody is gonna tork worthless educations that they are today. In the end everybody is gonna be better off. Sure if your the laziest guy ever in high school, nobody will probably give you a loan or take a share in you. However why is that a problem? Why should someone pay for this guy's education? How can you justifiy taking money from one guy and give it to this guy? There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy. To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world. There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die. To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good. https://en.wikipedia.org/wiki/Public_goodTo put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population. It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality. 1) People make cost-benefit calculations every single day, every single time they make a decision. NPV analysis is bascially a cost-benefit calculation involving a series of expected cash flows. In the end value is destroyed if NPV = less than 0. If NPV is above 0 value is created. Of course people actually dont think in terms of discount rate or try to calculate these numbers. However they can still make a much better judgement than the government. If people are taking a high expensive education even though they don't think it has a positive NPV, but that it will still be worth in terms of cost-benefit (e.g. it gives prestige), then economic value is destroyed. The soceity as a whole is worse of in economic goods. But so what? In a free society the guy who paid for prestige is the only paying. In a public society the guy is getting the prestige for free and tax payers are paying for this prestige. 2) Today the NPV calcuations are manipulated as univisties are free. 3) Universities are supposed to operate like any other business. There are no need for other purposes. Sure I get that purposes are different today, but as I have tried to argue, this is dumb IMO. 4) Did you even read my post - I actually clearly argued why high income isn't a neccesitiy to be able to take an education (future expected income is) What's the NPV of your university education? Walk me through it. Tell me what model you used to project your income if you went to uni, and how you project it if you didn't. Now explain to me the interest rate model you used to estimate the rate at which you discount the cash flows projected in the first step. Then finally put all this together and calculate the NPV.
Well assume I am 20 years old and that I plan to work till I am 70. I am considering whether to take a 5 year education. I estimate that with only a high school education I would be able to earn 50.000$ year (yeh danish wages are pretty high), and if I take that education my wage will be 80.000$ year (average number, obv. i could do it more implicated by assuming that I would have a higher income around the age of 50 than 26). If I take this education it will be relatively easy for me to get a job, and lets say for simpliciity that there are no price increases, so I use a relatively low discount rate of 5% year.
I know I always can get any kind of job paying 50.000$/year with a 100% certainity, and since there are no uncertainity involving taking a loan the discount rate if i do not take an education is equal to the time value of money, which we assume is 3%.
The education costs me 200.000$, which I will have to borrow. The banks look at my grades from high school, perhaps they ask me some questions about what I want to do in life, and what kind of person I am (perhaps they don't, who knows what the free market will do). Then they decide to charge me 2% in interest on those 200.000$ (since they assume that there will be no inflation forever).
I assume that starting by year 6 I will be able to pay back 10.000$/year on my debt. By year 6 total debt will be 221.000. This will take me around 30 years to pay back the debt (incl. interests). Hence for 30 years my expected income will be 70.000$ instead of 80.000$.
Annuity (not taking an education) = 1/0,03-1/(0,03*1,03^55) = 26.77. Annuity (taking an educaiton) = 1/0,05 - 1/(0,05*1,05^50) = 18.25.
PV of not taking an education = 50.000 * 26.77 = 1,338,721 Present value of taking an education = 1,277,915
Hence if above numbers are correct, taking an education has negative NPV. So the wages are supposed to be higher than 80.000$ (or not taking an education is supposed to be lower than 50.000$).
I don't expect that everyone ( in a free society ) will sit down and analyze these numbers, but they will at least consider them. Today they are not considered, and this destroys value.
EDIT: Just realized I forgot to take into account that after year 35 if i took an education my wage would be 80.000 (instead of 70.000). Probably makes taking an educaiton costefficient. Edit 2: Bank interest rate is too low to be realistic (as it is below time value of money, should prob. be 4%).
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On March 16 2012 00:27 RageBot wrote:Show nested quote +On March 15 2012 23:37 FinalForm wrote: If you don't subsidize education, then the rich will pay for good education and the poor will skimp on it. Thus the rich get richer and the poor get poorer. That leads to greater social unrest such as protests.
How did those rich pepole become rich, and poor, in the first place? By luck? In the turn of the last century, more than 50% of the US's population lived under the poverty line, so it's obviously not "old money" that made most of today's rich pepole (upper decile) rich. There's a huge correlation between IQ and Economic Status these days, the pepole who were smart made good decisions and learned, and thus they earned money, stupid pepole made stupid mistakes and got poor. So far, while taking Socioeconomic status into consideration, the correlation index of Intelligence (as gauged by IQ points) stands at 0.6, this is a lot, so it seems that being smart leads to having more money in the first place.
Being smart was enough before, now you need to show a piece of paper named diploma (you can always show me the case of recent "self made men" but overall that's it. So if they can't even access to uni they are screwed.
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On March 16 2012 00:27 RageBot wrote:Show nested quote +On March 15 2012 23:37 FinalForm wrote: If you don't subsidize education, then the rich will pay for good education and the poor will skimp on it. Thus the rich get richer and the poor get poorer. That leads to greater social unrest such as protests.
How did those rich pepole become rich, and poor, in the first place? By luck? In the turn of the last century, more than 50% of the US's population lived under the poverty line, so it's obviously not "old money" that made most of today's rich pepole (upper decile) rich. There's a huge correlation between IQ and Economic Status these days, the pepole who were smart made good decisions and learned, and thus they earned money, stupid pepole made stupid mistakes and got poor. So far, while taking Socioeconomic status into consideration, the correlation index of Intelligence (as gauged by IQ points) stands at 0.6, this is a lot, so it seems that being smart leads to having more money in the first place.
We live in a society that generally rewards smart people with cash. It's your decision if you want to strengthen those mechanisms or weaken them.
All humans are born with different intelligence on a normal distribution, and of course these intelligences can be further ripened with a great education or atrophied with a poor one.
Any policy that allows freedom for intelligent and smart people to skyrocket and solidify their gains will also further deepen the misery of the less intelligent.
A larger divide between the two creates social unrest.
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On March 16 2012 00:35 Hider wrote:Show nested quote +On March 16 2012 00:15 paralleluniverse wrote:On March 16 2012 00:02 Hider wrote:On March 15 2012 23:45 paralleluniverse wrote:On March 15 2012 23:15 Hider wrote:On March 15 2012 22:44 TanTzoR wrote:On March 15 2012 22:38 Hider wrote:On March 15 2012 22:24 TanTzoR wrote:On March 15 2012 22:12 Hider wrote:On March 15 2012 21:43 TanTzoR wrote: [quote]
There are soooo many positive externalities you don't even consider. Like? An no the argument that educaiton --> more jobs isn't valid if you understand how the free market works. It's not only about jobs and economics. Like I said I'm not going to list them all but, for instance, with a well educated population a democracy is more likely to be successful. Less inclined to go to extremes like racism and such. Neo-nazi nowadays are rarely rocket scientists. There are lot more factors that is relevant when discussing culture, but most likely people turn to sick movements when the economy is doing bad. And obv. if people are paid to take wortheless educations then the economy will do worse. But lets say there is a movement, some people are racist. So what? Does it hurt you in any way as long as they dont violate your human rights? Or is your theory that if people don't take an education, then they will vote for the wrong politican, and hence people need to be paid for useless educations so they vote for the right guy? I feel that is an insane theory, and that can only create "voter corruption": 1 politician say "I give you a free education if you vote for me". Other politican say: "You have to pay for your own education". Obiviosuly a lot of people will vote for the first politican, and this is unfortunately why we are having such terrible economics today in almost all countries. You are judging what is worthless. A world with only engineers and workers would be sad. And for the politician thing, well if he says "free education" then since the people are educated they know it will cause the taxes to raise. If they are ok with this trade they vote for him. But if people are uneducated politicians will be able to abuse demagogic arguments and people will get even more fucked than usual. Your last statement is so wrong...look at the US and the price of their studies, look at their economic situation. As I have no evidence that free education ensures growth neither can you say "this is unfortunately why we are having such terrible economics". Worthless = You are not creating any service/product that someone is willing to pay for. US system isn't really free either, though its relatively more free than most european systems. But when people only takes an education if they think it has a positive NPV, then this will lead to higher economic growth. The only argument you can put against this, is if you think that government throgh planned economics is better at deciding what has value for each individual than the individuals them selves (planned economics/socialism). Obivously planned economics doesn't work. Free markets does (I hope this doesn't need further explanation). THe reason people think free education is good has nothing to with better economy, but with the fact that they think its a human right to take a education. But as I have pointed out: In a free society, those who are expected to have a positive NPV by taking an educaiton will be able to take an educaiton as long as they are able to convince an investor or creditor that they should take an education. Some people however can't take a (long) educaiton because it has a negative NPV. However what is wrong with that? Some people are not meant to read books all day. Maybe some people are actually meant to start working after 9th grade or after high school? People are different, and I disagree that is a human right that everybody should have a right to take an educaiton. Nobody calculates the NPV of their university education. It's simply unknowable with any sort of reasonable accuracy. To even suggest that the NPV of university education should be a consideration on the part of the student is delusional, in the sense that it is completely out of touch with how people live in the real world. There have been many studies showing that the earning potential of university graduates is much larger than that of high school graduates, so people go to university. Some people want to be lawyers, some want to be scientists, some want to be economists, so people go to university because it's a prerequisite to getting one of these jobs. This is the thought process they use, not NPV calculations which require unknowable projections of income from now until the day you die. To suggest that universities should be run on essentially a free market system is failing to understand the purpose of a university. Universities do not exist merely to maximize profits by charging high prices to students so that only students from a high income can afford it (as opposed to students with high potential but low income). Universities exist also to propagate knowledge and research, this is a public good. https://en.wikipedia.org/wiki/Public_goodTo put university education out of reach of bright students who are poor, but let in rich students, even if they are stupid, which is what will happen if unregulated, is a waste of human capital and human intelligence, and will degrade the intelligence and productivity of the general population. It's basic microeconomics that negative externalities should be taxed. It is also basic microeconomics that positive externalities should be subsidized. Education is a positive externality. 1) People make cost-benefit calculations every single day, every single time they make a decision. NPV analysis is bascially a cost-benefit calculation involving a series of expected cash flows. In the end value is destroyed if NPV = less than 0. If NPV is above 0 value is created. Of course people actually dont think in terms of discount rate or try to calculate these numbers. However they can still make a much better judgement than the government. If people are taking a high expensive education even though they don't think it has a positive NPV, but that it will still be worth in terms of cost-benefit (e.g. it gives prestige), then economic value is destroyed. The soceity as a whole is worse of in economic goods. But so what? In a free society the guy who paid for prestige is the only paying. In a public society the guy is getting the prestige for free and tax payers are paying for this prestige. 2) Today the NPV calcuations are manipulated as univisties are free. 3) Universities are supposed to operate like any other business. There are no need for other purposes. Sure I get that purposes are different today, but as I have tried to argue, this is dumb IMO. 4) Did you even read my post - I actually clearly argued why high income isn't a neccesitiy to be able to take an education (future expected income is) What's the NPV of your university education? Walk me through it. Tell me what model you used to project your income if you went to uni, and how you project it if you didn't. Now explain to me the interest rate model you used to estimate the rate at which you discount the cash flows projected in the first step. Then finally put all this together and calculate the NPV. Well assume I am 20 years old and that I plan to work till I am 70. How do you know you'll work until you're 70? Maybe you'll be disabled in an accident. Maybe you'll get hit by a bus.
I am considering whether to take a 5 year education. I estimate that with only a high school education I would be able to earn 50.000$ year (yeh danish wages are pretty high), Based on what? How do you know your income will always be $50,000 a year?
Surely you'll earn less at the start and more as you get older. What about increases in income due to inflation?
and if I take that education my wage will be 80.000$ year (average number, obv. i could do it more implicated by assuming that I would have a higher income around the age of 50 than 26). Based on what? How do you know your income will always be $80,000 a year?
Surely you'll earn less at the start and more as you get older. What about increases in income due to inflation?
If I take this education it will be relatively easy for me to get a job, and lets say for simpliciity that there are no price increases, so I use a relatively low discount rate of 5% year. Why would there be no price increases? Your assumption is wrong in the real world.
A discount rate of 5%? Why always 5%? Interest rates are more like 1% now.
Where did you take into account the autoregressive behavior of interest rates?
I know I always can get any kind of job paying 50.000$/year with a 100% certainity, and since there are no uncertainity involving taking a loan the discount rate if i do not take an education is equal to the time value of money, which we assume is 3%. No, you can't know that with certainty. What if there's a double-dip recession caused by Greece leaving the Euro and unemployment increases to 30% because of government inaction?
The education costs me 200.000$, which I will have to borrow. The banks look at my grades from high school, perhaps they ask me some questions about what I want to do in life, and what kind of person I am (perhaps they don't, who knows what the free market will do). Then they decide to charge me 2% in interest on those 200.000$ (since they assume that there will be no inflation forever). How do you know that's how much your education costs? What if tuition fees increase?
Your assumption of 0 inflation is absurd and completely wrong.
I assume that starting by year 6 I will be able to pay back 10.000$/year on my debt. By year 6 total debt will be 221.000. This will take me around 30 years to pay back the debt (incl. interests). Hence for 30 years my expected income will be 70.000$ instead of 80.000$. Again, how did you pull these numbers out of your ass?
Annuity (not taking an education) = 1/0,03-1/(0,03*1,03^55) = 26.77. Annuity (taking an educaiton) = 1/0,05 - 1/(0,05*1,05^50) = 18.25.
PV of not taking an education = 50.000 * 26.77 = 1,338,721 Present value of taking an education = 1,277,915
Hence if above numbers are correct, taking an education has negative NPV. So the wages are supposed to be higher than 80.000$ (or not taking an education is supposed to be lower than 50.000$).
I don't expect that everyone ( in a free society ) will sit down and analyze these numbers, but they will at least consider them. Today they are not considered, and this destroys value. No. NO ONE will take these numbers seriously.
These numbers are concocted and based on delusional and false assumptions.
It would be laughable to take this with even a grain of salt. You would be making a colossal act of stupidity to take calculations based off invented numbers seriously, because the true values are not even remotely knowable.
The GIGO principle applies.
https://en.wikipedia.org/wiki/GIGO
And where did you account for the utility of a person getting more enjoyment and happiness working as, say, a scientist, which requires university education, for $50,000 a year, than working as a factory worker for $50,000 a year?
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