THE GOOD OLD DAYS. WERE THEY REALLY THAT GOOD?

Things ain’t what they used to be and probably never was. ~ Will Rogers    

Nostalgia and anxiety are in full bloom. Trumpian rhetorical authenticism about “making this country great again” falsely implies that the US is now no longer great. More Americans are hoping to turn the clock back and return to the “good old days” when life (perhaps through rose-tinted VR goggles) seemed less anxious and disordered and more culturally assured. Ah, the glories of the past. I examine here how golden the good old days really were compared to the present days.

Extensive public nostalgia for the past is hardly new, it’s always lurking during unsettling times; and frankly what times aren’t in some way unsettling? Desires of status-quo-ism or wishes to have the past recreated once again can characterize folks who believe they’re now forgotten and ignored. The underpinning of such people’s yearnings can be their inability to construct a viable present and future for themselves and families. History is replete with such yearnings.

From a previous age when the good much-older days were also being proclaimed and preferred, an insightful Voltaire wrote in 1764, “There are things in which the moderns are superior to the ancients; and others, though very few, in which we are their inferiors. The whole of the dispute reduces itself to this fact.”

Populist and nationalist proselytizers like Donald Trump, Marine le Pen and other xenophobic complainers have had to be quite selective in describing the allegedly far better golden ages or more simply be dismissive of historic facts altogether. Ultimately, The Donald’s entreaties hardly have anything to do with how well the nation is actually doing now or was doing in the past. Instead, his calls rely on powerful emotions like anxiety, fear and insecurity for their clout not facts.

Some members from the millennial generation have succumbed to big anxieties about their prospects. In a story headlined “Debt. Terror. Politics. To Seattle Millennials the Future Looks Scary,“ Kirk Johnson interviewed six Millennials who seem exceedingly anxious about their futures despite being enrolled in the Ada Developers Academy. This Seattle school trains women to code. Tuition is free those who passed an arduous admissions process with all costs underwritten by local tech giants. From this micro-sample of six seemingly fortunate people Johnson proceeds to characterize Millennials as having acute anxieties about incurring debt, choosing a career and other facets of modern adult life. And these six women are in a program whose graduates find jobs with starting-salaries can reach $90,000. No wonder Xanax prescriptions have grown over 27% since the Great Recession officially ended.

Although I can relate from afar to these six women’s current situation, I do remember many moons ago – in the tumultuous 1960s and 1970s – when I was choosing a career and finding a place for myself in a fast-changing, calamitous society. So I sympathize with their plight as members of an emerging generation. I remember being in it decades ago. But it’s difficult for me to understand how these six people can be so plagued by doubt and anxiety, given their talents and likely prospects.

Johnson’s article anticipates my difficulty when it states “people now in their 20s and 30s say that the 1960s were different, that there seemed to be a clearer goal then — to end racial segregation, poverty or the war. The economy seemed better and the nation’s future more assured.” Here these Millennials are engaged in the same fantasy that the “this country can be great again” proselytizer and his cohorts also suffer from, that the past was “golden” and far better than what we’re suffering through now. The mists of history somehow make the past clearly better than now.

To be trite, how would these unidentified Millennials know how assured the Boomers’ future was 40+ years ago? I’d have to say living amid the social, economic, political and cultural transformations surrounding the Vietnam War debacle (e.g., Kent State), the civil rights struggles (e.g., Selma and beyond), the John and Robert Kennedy assassinations, Watergate’s consequent presidential resignation (Richard “I’m not a crook” Nixon) and economic stagflation (with 12% annual inflation, 7.7% unemployment and 13% interest rates) makes Millennials’ illusions about the 1960s’ and 1970s’ “assured future” ring hollow. It was by no means assured. As every generation solemnly and candidly states, “You had to be there.”

The Millennials’ future is iffy, just like all emerging generations. But, paraphrasing Van Morrison, don’t let the future keep you out of the present time. This apt notion seems especially worth remembering for apprehensive Millennials. Hopefully their fresh talents, thoughts and technologies will counter youthful anxieties that darkly cloud the expected sunshine ahead of them as Millennials secure opportunities they can take advantage of.

So, were the olden days golden and greater than now? Let’s see.

The Olympics.  Speaking of golden, the 2016 Summer Olympics recently concluded in Rio de Janeiro. The instant experts have decided the Rio Games were reasonably well run, quite entertaining and cool. After all, it’s actually winter in Rio – makings these games the second “summer” Olympics that actually happened in the host city’s winter. The 2000 Sydney games were the first summer-games held in local winter. Despite the quadrennial pre-event predictions of impending disaster, nothing terrible happened at the Rio Games; unless you were an inebriated Ryan Lochte. Nevertheless, Rio and Brazil probably lost at least a silver medal’s worth of money (that they can ill afford) by hosting the Olympics, just like virtually all hosts always do. Go figure.

But let’s get back to the US athletes’ performance in 2016 compared to the Olympics’ “good old days.” I examined the US performance in 4 past Olympics along with the 2016 games. The table below presents the results of my analysis.

The total number of medals awarded in the Summer Olympics more than doubled – to an astounding 975 medals in 2016 – during the 46 years of Olympics shown in this table. In the Rio Games 11,303 athletes competed from 207 nations and territories in 28 different sports. These sports included archery, BMX bicycling, rhythmic gymnastics, taekwondo and wrestling. The US ranked first (receiving the most total medals) in 2016 and 2000. In 1972, 1964 and 1960 our overall medal performance was ranked second behind the Soviet Union, even though our relative medal performance (percent of total medals) in Tokyo was higher, as shown in the table.

Table 1: US Summer Olympic Performance: 1960 to 2016

US Medal Performance	2016 Rio Games	2000 Sydney Games	1972 Munich Games	1964 Tokyo Games	1960 Rome Games
Total Medals Awarded	975	927	600	504	461
US Total Medal Rank	1st	1st	2nd	2nd	2nd
US Medals - % of Total	12.4%	10.0%	15.7%	17.9%	15.4%
US Gold - % of Gold Total	15.0%	12.3%	16.9%	22.1%	22.4%
US Silver - % of Silver Total	12.1%	8.0%	15.9%	15.6%	14.1%
US Bronze - % of Bronze Total	10.5%	9.8%	14.3%	16.1%	10.0%

Source: International Olympic Committee

In 2016 the US received more gold medals than ever in a non-boycott Olympics. The US won more of each medal type than any nation has in 40 years. And most impressive, the US Olympic women dominated our successful male Olympians, accounting for 60% of US gold medals this year. Although the good old Olympic days were quite worthy at times, they weren’t as impressive as this year. For the Olympics, it’s current days, 1; olden days, 0.

Public Health.  Next I surveyed 3 aspects of public health during the past 5 decades; life expectancy, infant mortality and birth rate. How has US average life expectancy at birth changed since the good old days? With all the reported mayhem currently flooding the news, are we now living longer or shorter than we were?

Table 2 shows that the average American is living about a decade longer than she or he would have 55 years ago. That’s a very large increase due to several factors, including improved health care and enhanced public infrastructure (better water-treatment, cleaner air and improved medical/health knowledge). Would you rather live in 1970, when your expected adult lifetime was 71 years, or now when you may enjoy almost 80 years of life? If you could, this doesn’t seem a hard choice to make.

Table 2: US Life Expectancy, Infant Mortality and Birth Rates, 1960-2015

Year	Average Life Expec-tancy at birth for Men and Women (Years)	Infant Mortality - Deaths per 1000 live births	Birth Rate - Births per 1000 population
1960	69.77	26.0	3.65
1970	70.81	20.0	2.48
1980	73.66	12.6	1.84
1990	75.22	9.2	2.08
2000	76.64	6.9	2.06
2010	78.54	6.1	1.93
2015	79.68 (est.)	5.9	1.89

Source: Data360.org, CIA World Factbook, CDC and Infoplease.com.

Infant mortality and birth rates are also shown in Table 2. Infant mortality rates have been cut by more than 300% during the 5 decades since 1960. One infant in 50 died in his/her first year in 1970. Such a high mortality rate now seems deplorable, until you realize that the US infant mortality rate about a century ago – in 1910 – was a staggering 96.5. Now less than one infant in 166 dies during their first year.

Despite this impressive health success, currently the US has only the 57th lowest national infant mortality rate. It is higher than many other advanced nations, perhaps because the US has more pre-term births than other nations.

Finally, the American birth rate has steadily fallen since the 1990s. In 2015 the number of births per 1000 population is 1.89, below the replacement rate of 2.1 births that is required to maintain the population level. Following this decline in birth rate, US household size has also waned. In 1960, average household size was 3.33 persons, by 2015 it is 2.54 persons.

Presently, we are living longer, being born far more safely, though we’re not pro-creating as often as in the past. From a public health perspective, don’t turn the clock back, the current days are indisputably better.

Macroeconomic Conditions.  I now examine 5 inter-related economic characteristics to assess how our overall economic climate has changed. These characteristics are shown in Table 3; growth of our real Gross Domestic Product (GDP), real median household income (in 2014$), unemployment and change in consumer prices.

Table 3: Macroeconomic Conditions, 1960-2015

Year	GDP Growth (Annual)	Median Household Income*	Unemploy-ment Rate	Increase in Consumer Prices (CPI)
1960	2.6%	$38,317	5.5%	1.4%
1970	0.2%	$47,538 (2.4%)	4.9%	5.6%
1980	-0.2%	$48,587 (0.2%)	7.1%	12.3%
1990	1.9%	$51,669 (0.6%)	5.6%	6.1%
2000	4.1%	$57,724 (1.2%)	4.0%	3.4%
2010	2.5%	$53,507 (-0.7%)	9.6%	1.5%
2015	2.6%	$56,500 (0.2%)	5.1%	0.7%

*Average annual change in parentheses. 
Source: Bureau of Economic Analysis, Bureau of Labor Statistics

Wishing to live in conditions similar to 1970, 1980 or 1990 would not be advised. There was no real GDP growth in 1970; unemployment was low, mortgage interest rates were high, above 7%, and consumer inflation was 8 times as high as in 2015. Stagflation was alive and much too well in 1980; real GDP declined – a recession was occurring – consumer price inflation was over 12% and median real household income had grown only 0.2% annually since 1970. 1990 saw economic growth improve; but real household income had averaged 0.6% per year growth since 1980; inflation was 8 times as high as in 2015. From a macro perspective 2010 was much better than previous decades with respect to inflation, except that unemployment remained elevated from the 2005-07 recession. There have been 8 recessions since 1959. And more unsettling,real median household income decreased 0.2% since 2000 through 2015. Was America as “great” in these past years? No. From a macroeconomic vantage point, current days are much better, despite finally improved but lackadaisical household income growth.

Socio-Economic Conditions.  Table 4 presents several socio-economic factors that contribute to people’s sense of how well or poorly our nation is doing. These factors include home prices, mortgage interest rates, labor force participation since 1960, people’s confidence in the executive branch of our government and the public’s overall satisfaction with how things are going in the nation.

Home ownership in America has long been inextricably linked to attaining the American Dream. The US housing stock is the largest asset class in the world, worth about $26 trillion. At the end of 2015, home mortgages totaled $13.8 trillion (75% of our GDP). The Economist recently estimated the total public subsidy provided for home-owner debt is $150 billion per year, which is 5 times as large as the major subsidies provided to private energy corporations. Residential housing has represented the majority of US families’ wealth for decades, in part because just 55% of Americans said they directly own any company stocks in a 2015 Gallup survey. Accordingly, it’s no surprise that the cost of mortgages is important to millions of people. Table 4 shows how the prices of homes and mortgage interest rates and the labor force participation rate for men and women have changed over time.

The labor force participation rate (LFPR) measures the number of employed and unemployed people as a percentage of the population aged 16 years and over. A rising LFPR indicates a strengthening labor market. The LFPR level can change for several reasons: first, the demographic composition of our population (more older workers retiring, fewer young people entering the work force); and second, what part of the business cycle (peak or nadir) the economy is in.  

The final factors in Table 4 are confidence in the executive branch of our government and overall satisfaction, based on telephone survey responses.

Table 4: Socio-Economic Conditions, 1960-2015

Year	Case - Shiller Real Housing Price Index (1945-46=100)	Mortgage Interest Rate	Labor Force Participation Rate		Homicide Rate (per 105 people)	Confidence in Executive Branch**	Overall Satisfaction
			Men	Women
1960	126.99	--	83.3%	37.7%	5.1	--	--
1970	125.61	7.55%	79.7%	43.3%	7.9	­­18.8%	--
1980	127.67	13.74%	77.4%	51.3%	10.2	17.8%	19%
1990	136.64	10.13%	76.4%	57.5%	9.4	16.5%	55%
2000	150.70	8.05%	74.8%	59.9%	5.5	17.2%	69%
2010	154.66	4.69%	71.2%	58.6%	4.8	14.6%	23%
2015	174.73	3.85%	69.1%	56.7%	4.5*	12.0%+	32%

*This is the 2014 national homicide rate, the latest available.

**Average percent of respondents that stated “a great deal” when asked the question, “How confident are you in the executive branch of the federal government?” from surveys performed in each decade.

+ This is the 2014 survey response, the latest available.

Source: multpl.com, Freddie Mac, Bureau of Labor Statistics, FBI, GSS, Gallup.

The Case-Shiller Real Housing Price Index shows changes in real residential home prices, as of December of each year shown. This index has been calculated since 1900. From Table 4 we can see that real home prices have steadily increased since 1970. The maximum value in this index occurred in December 2005, when it was a startling 220.6, before the “housing bubble” popped, ushering in the 18 month “great recession” in 2007. As shown, housing prices have recovered some by 2015. Mortgage rates also varied considerably since 1970. The good old days for housing were better (for buyers) than now because prices were significantly lower than now, although mortgage interest rates were not. In 1980 interest rates were a stunning 13.74% and in 1990 mortgage rates still surpassed 10%. During the past several years mortgage rates have remained at historic lows, as shown in 2015, but rising prices of homes has created affordability issues in a growing number of cities, especially in the San Francisco Bay Area, Seattle, New York City and Washington, DC. Are the good old housing days better? No; not in terms of the cost of mortgages. But yes, in terms of the cost of housing.

The men’s and women’s labor force participation rates have headed in opposite directions during the past 5 decades. Demographic trends have had an over-arching influence on the LFPR. Ten-thousand Boomers are now aging-out and retiring from the labor force every day. Also, more and more young adults have been attending college instead of directly entering the labor force after high school. For about a decade more women have received Associate and Baccalaureate degrees than men. As shown in Table 2, the US birth rate has steadily dropped, which ultimately will result in a smaller total work force unless politically-sensitive external factors like immigration counter this trend. Aside from the demographic influences, the drop in both women and men’s LFPR from 2010 to 2015 likely reflects the lingering and unaddressed challenges of getting discouraged workers to re-enter the labor force after the 2005-07 recession. 

For the reasons just cited, the men’s LFPR has steadily declined, from 83.3% in 1960 to 69.1% in 2015. This drop has a host of unfortunate consequences including personal angst and upset as well as lost personal and public economic benefit. In contrast, women’s LFPR solidly increased through 2010 from 37.7% in 1960 to 58.6% in 2010, reflecting the significant growth in women’s contributions to our nation’s economic activity, influence and progress during the second half of the 20th century and beginning of the 21st century.

From the LFPR perspective, the good old days were brighter than more recent times for men. This is not true for women or for college graduates; recent days are better.

The US national homicide rate (the number of persons who die from murder or non-negligent manslaughter per 100,000 people) is tracked by the FBI. Homicide rates were considerably higher in the United States during the 1970s, 80s, and 90s (over twice as high as in 2014). During the past 25 years, national homicide rates have fallen nearly continuously. One would have to travel back to 1957, when the homicide rate was 4.0, to find a lower rate than the most recent homicide rate.

The good old days most definitely were not better than now, as far as people being murdered and killed. Donald Trump’s rants about entire cities being “war zones” over-run by crime and mayhem are fact-free fantasy that have engendered fear where violent crime has diminished. Nevertheless, national statistics like this one should not cloak notable local crime problems such as killings in South Chicago and other locales.

The public’s confidence in the executive branch is measured via the General Social Survey (GSS), a well-regarded phone survey administered at the University of Chicago. There have been 28 surveys performed between 1973 and 2014 that respondents stated how much confidence they had when asked the question, “How confident are you in the executive branch of the federal government?” The average percentage of respondents who said they had a great deal of confidence is shown in Table 4. As you can see the average across the 5 decades that the question has been asked, although the percentage has declined, it does not change much until the 2010s, when it starts to dip to a mere 14.6% in the surveys done in that decade. In 2014, only 12% of the respondents had great confidence in the executive branch. For some perspective, as low as this 12% is, it is more than twice as large as the public’s confidence in Congress (5.6%). The good old days were better.

Overall Satisfaction is measured from a monthly phone survey by the Gallup organization that was begun in 1979. The percentage of nationally-representative adults who answered I’m “satisfied” to the question, “In general, are you satisfied or dissatisfied with the way things are going in the US at this time?” Overall satisfaction with the way things are going rises and falls quite a bit over time, as illustrated in in the table. In 1980, during one of the 8 post-1959 US recessions, satisfaction was very low, only 19% of survey respondents said they were satisfied. This level of “un-satisfaction” is close to the 12% realized in July 1979. 1990 showed a much higher satisfaction rate, 55%. In 2000, when the macroeconomic situation was much stronger (see Table 2), overall satisfaction was 69%, near the all-time high of 71% that occurred in February 1999. Since 2000 it has slipped to 23% in 2010 and 32% last year. The good old days, here meaning the early 1980s and 1990s, showed less overall satisfaction than the early 2000s.

The envelope, please.  I tallied the scores of the good old days and the present days for the 15 characteristics I’ve discussed above. The present days have an impressive and winning .646 batting average; the good old days have a weaker .336 batting average, about 50% lower than the present days’ performance. The present days reign.

Despite there being a couple of reasons for nostalgia, the goodness of olden days heavily depended on who you were, what your socio-economic situation was and where you came from.

My assessment is admittedly only a partial validation of our current circumstances. Several inter-related, important stains remain; including inequality that inhibits socio-economic mobility, dogged poverty (about 10% of Americans are poor, including 20% of our children) and Congress’ obdurate unwillingness to enact needed expansionary fiscal policy. Our multi-layered political dysfunction has thwarted the achievement of higher, more equitable growth.

Is our nation great? Yes. Can we do better? Certainly.

We can do better if we ease our unwarranted pessimism, our misplaced nostalgia and our fraught anxieties to better appreciate how well we have been doing now and can do in the future. Looking backwards and pining for the good old days will not create wide-spread advancement.

I remain an Optimista. A greater future is achievable. Our public and private institutions remain world-class, perhaps even Olympian. With the right focus, sustaining will and fitting public and private action, as well as proper election results, we can affect much-improved progress and continued greatness.

PUBLIC UNIVERSITIES ARE CAUGHT BETWEEN HOBSON AND A HARD PLACE

The whole purpose of education is to turn mirrors into windows. ~ Sydney J. Hams 

These are roiling times for our vast edu-industrial complex – public and private colleges and universities and their attending students. Even the most renowned public universities are being tested, as a new batch of freshman will soon enter their hallowed halls.

The prestigious University of California (UC) system, founded in 1868 in Berkeley, has over 238,000 undergraduate and graduate students going to its 10 universities throughout the state. More than 71,000 freshmen will begin classes at UC later this month and next month. Echoing the formidable challenges facing public colleges-universities, UC President Janet Napolitano said several months ago that because of substantial budget cuts, nearly every state university in the nation had been forced to make a “Hobson’s choice, and they all have reached the same decision: Open doors to out-of-state students to keep the doors open for in-state students.”

Her use of the phrase “Hobson’s choice” to characterize her difficult job is interesting. Thomas Hobson was a 17th century livery stable owner in Cambridge, England who had over 40 horses for rent. Having so many horses made it appear to customers that they had many choices available to them. But there actually was only one choice, because Hobson required his customers to choose only the horse in the stall nearest the door, so his best mounts would not be overused by perceptive customers. Hobson’s choice has thus come to mean a situation in which you are supposed to have a choice but really do not have any choice because there is only one thing you can really have or do.

Thomas Hobson is alive and well at virtually every public college-university. Over the past several decades California and many other states have substantially reduced the amount of public funding they provide their universities – 40 years ago UC received 32% of its budget from the state, now less than 16% is provided.

As usual, legislators wanted it both ways; cut higher education funding and suffer no negative consequences. But there have been predictable consequences, tuitions have risen (to replace the lost public funding) and the composition of students has changed (to increase revenue). In order to garner more income universities have made their Hobson’s choice and raised tuitions and accepted more out-of-state students, who pay far more tuition than in-state students. In the case of UC/Berkeley, the 2016-17 tuition for in-state students is $13,500/yr, out-of-state tuition is $35,850/yr. Unsurprisingly, ever-rising tuition has created headwinds for students, universities and politicians.

In-state students and their parents have been none too pleased that universities have raised tuition and are accepting more out-of-state students – this fall, 32% of UC/Berkeley admitted freshmen are either from out of state or other nations. After a series of public protests California legislators, Ms. Napolitano and the UC Board of Regents had several discussions. UC agreed to reduce the number of out-of-state students and increase the number of in-state students in return for receiving more state funds.

Everyone agrees that US colleges and universities have long produced storied and positive benefits for our society and their graduates. This is why going to college has been an essential ingredient for attaining the “American Dream.” Over the past century the ranks of baccalaureate (BA) degree holders have increased spectacularly, as shown in the figure below. People who have a BA now represent 34% of young adults, more than a ten-fold increase since 1905, when my grandfather graduated from college. Having a BA is fast becoming the new norm rather than the exception for young adults.  In 2013-14 more than 2.7 million adults graduated from a 2- or 4-yr college.

Source:  National Center for Education Statistics.

This dramatic, continuing upsurge in people receiving BAs is creating challenges for more recent college graduates. Their Associate or Baccalaureate degrees may not be worth as much as they were decades ago when just 10% or 20% of young adults earned a BA.

The law of diminishing returns, first posited in the 18th century, applies to college grads as well as other productive inputs. As more of any given input (like skilled, BA-holding workers) are added to the productive work force, their incremental contribution (“return”) to output will diminish. This is beginning to happen for college graduates. But not just the returns from a college degree are weakening.

With ever-more young people (and their parents) demanding a 2- or 4-college education, the costs of attending college have risen significantly, in part reflecting the relative insensitivity of costs to levels of demand. In economic terms, college attendance seems fairly price inelastic, especially for “selective” colleges. Thus, the expense of going to a public college-university has increased 94%, after adjusting for inflation, during the past 15 years; for private colleges-universities the increase is 46%. And yet even with these substantial cost increases, college attendance has skyrocketed to 20.2 million (M) in 2015 from 15.3M in 2000, an increase of 32%. Faced with more demand for their product, colleges are more able to charge what the market will bear.

Recognizing the benefits of having a more educated work force, federal and state governments have long subsidized college attendance, starting with the 1944 GI Bill (formally called the Servicemen’s Readjustment Act) that provided returning WWII veterans with cash to attend college, high school or vocational school, among other benefits. The cost of sending veterans to college paid for itself many times over through increased post-war economic growth fueled by their increased productivity.

In April when I first heard of Bernie Sanders’ free college tuition plan I wondered that if his idea were ever to become law, would it have an effect similar to that of the 1862 Homestead Act ratified about 60 years after the pioneering Lewis and Clark expedition traversed some of the new US territories. Why? Because like promising free tuition in the 21^st century, this Act provided virtually everyone in the US with 160 acres of free land in the mid-19th century.

The US wanted its citizens to inhabit its then very sparsely-populated new western region, so it offered free land to incentivize its settlement. Similarly, when the government wanted to improve the US labor force in the mid-20th century, as service men and women were returning from the WWII, it began subsidizing college education with the GI Bill.

The Homestead Act distributed 270 million acres of federal land (nearly 10% of all the area of the US) to 1.6 million homesteaders (about 4% of the US population). One consequence was that many people who didn’t know much about farming, moved to the Great Plains (where the climate was not benign at all) and beyond, claimed their 160 free acres and had difficulties being successful. Only 40% of the land-grant applicants who started the process were able to complete it and obtain title to their homesteaded land. Despite this low success rate, the Act served to populate the American west.

The timing of now offering a 100% subsidy for public college tuition is very different than the Homestead Act, because one-third of young adults have already “populated” public universities, paid for that education and has college degrees. In addition, it will be challenging for some new students (like the Homestead Act’s new farmers), who are enticed by free tuition but not completely prepared to successfully graduate. Who will be responsible for their success? This job would probably become another potentially significant indirect cost borne by public colleges-universities. Even without a free-tuition incentive, only 52% of incoming college students actually graduate within 5 years (and just 25% from for-profit colleges). This percentage may further fall when more students show up.

Other than offering political enticement for young people to vote for Democrats, is there a broader rationale for spending billions per year on a federal free tuition plan? I don’t think so.

Receiving a BA degree has intrinsic and realized value for each graduate. Every college student and her/his parents understand the value of graduating from college. It is far from zero. Two ways of measuring it are: $610,000 and 2.2%. Over their entire working life, the typical college graduate will earn $1.19 million. This is $610,000 more than the lifetime earnings of a typical high school graduate and $335,000 more than that of a typical associate degree graduate. The national unemployment rate is 4.9%; for high-school graduates it is 5.4%; for young adults with a BA it is 2.7%, 2.2% less than the overall unemployment rate. College graduates both earn more money and have an easier time finding a higher-paying job.

This college earnings premium has existed for a long time, but has not increased recently. According to the Pew Research Center this leveling of the premium is due in part to the reduction in annual real (inflation-adjusted) earnings for high-school and 2-year college graduates since the 1980s, rather than actual gains in college graduates’ salaries. The Pew report found that the median annual real earnings for young college-educated workers was $45,500 in 2013, compared to $28,000 for high-school graduates — a premium of $17,500. College graduates’ real earnings increased only 1.8% between 1986 and 2013; but high-school graduates’ real earnings decreased 7.7% between 1986 and 2013. A Goldman Sachs’ assessment found that students who graduate from universities that rank in the lower 25% of college rankings (often including lower-cost schools like 2-year community colleges and less selective 4-year colleges) enjoy no salary premium at all, and earn less than high school graduates.

More and more college graduates are entering the US work force as macroeconomic growth has dissipated. In 2015 the US real GDP increased only 2.4%; in 2016Q2 annual growth was a meager 1.2%. Thus, with increasing supply of college graduates and lessening demand for their services, more are “underemployed” in jobs that do not require a college degree or are working part-time when they want a full-time job. In July, the Economic Policy Institute found that 12.6% of college graduates were underemployed, much higher than 9.6% in 2007 during the Great Recession.

With more than one-third of young adults now gaining BAs, having an undergraduate degree is becoming a standard, not the exception. Markets, including the employment market for college graduates realize this. Despite increasing costs, college-based wage premiums will diminish because of the pending “normalcy” of having a BA. But, as pundits have stated, what’s more expensive than going to college? Not going to college.

This disquieting trend has prompted some analysts to say that the nation has reached a point of diminishing returns from increased work force educational attainment (referring to college graduation). Harvard economist Dale Jorgenson and his co-authors state that increasing the quality of the US work force through higher educational attainment may no longer provide the same, prominent benefit as a source of US economic growth that it has since the 1950s.

At this point, the US economy may have all the college-educated workers it needs. Jorgenson instead argues that getting low-skilled (non-college educated) workers who have exited the labor market – and thus are not counted as being unemployed – back into the labor force, together with increased private investment, will revive higher growth more than producing more BAs.

And yet the politics for spurring college attendance are inescapable. Hillary Clinton has largely usurped Bernie Sanders’ proposal to dramatically lower the costs of attending college by providing students who attend public universities and colleges with “free” tuition. Unlike Bernie’s original plan, hers wisely caps the provision of free tuition to families who make less than $85,000/yr now, rising to $125,000 in 2021. Nevertheless, such a huge, new subsidy would disproportionately benefit more well-off families than others because as family income rises, so too does college attendance. Only about 20% of children from the poorest 2% of families in the country attend college. For the richest 2% of families, who are far more likely to attend higher-cost, more selective colleges, around 90% of children attend college.

From an individual student’s perspective, it is worth remembering that free tuition does not mean free college. Tuition is a sizeable piece of total college costs, but represents only a part of all college-associated expenses that include living expenses, books, ancillary fees, and room & board in addition to tuition. For the 8 colleges and universities that my family members attended, tuition accounts on average for 51% of total college expenses, according to the College Board.

About 73% of post-high school students going to college attend public colleges-universities. If implemented (and that’s a very large IF, given the political composition of Congress and the cost of such a subsidy), a free-tuition policy will dramatically increase the demand for publicly-funded tertiary education, despite the aforementioned relative price inelasticity of demand for college education. Nothing beats free. Such a free tuition policy will undoubted unleash a lecture hall’s worth of unintended consequences, in addition to diminishing the college earnings premium.

Clinton's plan will not increase the capacity of public colleges-universities to meet the augmented attendance. For several reasons her plan may place public colleges-universities between the rock of satisfying larger numbers of students and the hard place of not having a way of meeting this increased demand. A possible consequence may be that her plan could perversely lead to increased tuition levels that may have to be covered by the federally-funded program. A direct federal subsidy of college tuition would likely increase the already all-too-weak incentives of universities to reign in tuition, unless forced to limit their increases.

There are a plethora of calculations for how much the Hillary-Bernie free-tuition program may cost. My round-number guesstimate of Hillary’s income-capped plan is at least $60 billion per year. For some perspective, this potentially-worthy tuition subsidy cost is about 3 times as much as farm subsidies and almost 2 times as much as the oil and gas industry’s principal subsidies. Mrs Clinton’s overall plan to make college more affordable will cost $350 billion.  

In this time of historically-low growth and missing-in-inaction, Republican austerity-flavored Congressional economic legislation to promote economic progress, it may be that the supply of college-educated people is rising more than demand for them. Promising billions of federal and state dollars annually to zero-out public universities’ tuition may be politically advantageous, as demonstrated by young ex-Bernie acolytes. But by itself it will not help that many people. Certainly not the majority of young (and older) workers without BAs, whose job prospects and wages have dissolved as employers require college degrees for more and more jobs. Moreover, nations like Germany, Finland and Brazil that offer free college education have lower levels of post-high school educational attainment than the US does now. Norway, another free-tuition nation, has a slightly higher level than we do.

Better ways to reduce college costs would be to increase the number of Pell Grants and the grants’ allowable maximum amount, increase the availability of federally-guaranteed Stafford loans and increase federal and state direct funding of colleges in return for their agreeing to stringent limits on allowable increases for in-state tuition. Make all public and private loans’ payments based on the student’s post-graduation income level and increase the payment period from the standard, too short 10 years to at least 20 years that is common in other countries. Also, simplify and consolidate the loan process, such as Jeb Bush, of all people, has suggested.

Qualified students would receive a single line of educational credit and take what they need each semester. For every $10,000 you borrow, you turn over an additional percentage point of your income each year for 25 years. It’s prorated to the exact amount of what you borrow, so that if you have a debt of $28,000 you would be paying 2.8 percent of your income after graduation. The payoff term runs out in less than 25 years if your total payments hit 1.75 times the amount you originally borrowed. Borrowers would pay through payroll deduction or quarterly payments, as they now pay estimated taxes. This would reduce the number of people who are behind or in default (11.6%), often because they are not aware of the confusing array of income-driven repayment programs that already exist.

The media’s fixation with the “student loan crisis” is unduly focused on a tiny fraction of exceptional situations, not the circumstances facing the vast majority of BA holders. The median monthly student loan payment is $203, or about 4% of earnings – roughly comparable to an average household’s monthly expenditures on entertainment. 

Progressive politicians need to recognize it’s no longer the 1960s or 1970s when only 10% of young adults got BAs. Promoting piecemeal policies like free tuition sound admirable, but have drawbacks. Less inviting but more appropriate programs such as simplified, expanded college loans and more direct public funding of 4-year (and especially 2-year, vocationally-focused) colleges-universities will be much more cost-effective for increasing the educational attainment of our young adults. Thomas Hobson needs to be dismissed from academia’s ivory towers.