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Opinion: Whitmer proposes 'free' college; bread and circuses to follow?

Charles N. Steele

Nowhere in the nation have lockdown decisions been more absurd than in Michigan under Gov. Gretchen Whitmer’s executive orders. 

While her mandated lockdown continues, civil liberties are ignored, protesters have rallied at the state’s Capitol building, the economy crumbles and lawsuits loom. The opposition to the lockdown has sensible support as economic research groups and hospitals both rural and urban say it’s time to reopen. 

Yet the situation grows more absurd. At the end of April, as Michigan’s economy crumbled under lockdown, Whitmer decided to not only extend the state of emergency, but also declared that it would be a smart move to provide “free” college tuition to those working on the front lines of the coronavirus through her “Futures for Frontliners” plan. 

What a slap in the face to Michigan residents! As we all know, nothing is “free.” The taxpayers who were forced to stop working would now also be forced to pay college tuition for people who were not forced to stop working. That’s not free. That’s a very different proposal.  

Inventing new spending programs, like providing free college tuition to frontline workers, will worsen the state's budget problems and slow economic recovery, Steele writes.

Not only is this “free college” a burden to Michigan taxpayers — more than 1.2 million of them recently unemployed — but it will have dramatic impacts across the state. Businesses and Michigan residents will have a difficult time rebounding after the shutdown. This program would increase the tax burden and make recovery more difficult. 

The state government is already facing dramatically reduced revenue because of the shutdown. Inventing new spending programs will only worsen the state’s budget problems.

Jeff Donofrio, director of the Department of Labor and Economic Opportunity, claims this is “an investment” for Michigan. In one way this makes sense; education can be an investment in human capital. An important distinction, however, is that (usually) when one invests, one reaps the returns on the investment. But in this case, Michigan taxpayers pay, while workers themselves are mobile. Michigan still has a net outmigration, as people leave for states with better economies. 

The measure was proposed as a “temporary” program, but taxpayers should still beware. Many examples show that once a program is in place, it is nearly impossible to undo. Cases in point: New York City’s current rent controls were put in place as a “temporary” wartime measure during WWII. Likewise, the tax deductibility of employer-provided health insurance — which started the U.S. on the road to its current unwieldy, non-transparent insurance system — also began as a “temporary” measure during WWII. 

The governor should look for direct solutions to boost Michigan’s economy and address the high costs of higher education, not add further costs. 

She should reduce regulatory and tax burden on small business in Michigan. Michigan is already at a disadvantage relative to, for example, Indiana, in terms of regulatory costs imposed on small business and entrepreneurs. Reduce these burdens to help businesses get back in action to create goods, services and incomes for people.

The governor should look to reduce the costs of higher education, trade schools and other forms of secondary education. Subsidizing these actually raises costs, because schools become adept at administrative bloat. If college is “free” (or paid by third-party, “single payer” or deferred payments), then colleges have incentives to raise costs and reap bigger payments. State officials should instead work to make state schools lean, mean and effective.

Whitmer’s proposal is likely to have negative economic and fiscal consequences for our state and its government, while raising serious issues of unfairness and injustice to Michigan residents. She may find that bread and circuses, like “free college,” will not placate a populous already straining for its freedoms. 

Charles N. Steele is an associate professor of economics at Hillsdale College, where he holds the Herman and Suzanne Dettwiler Chair in Economics.