A Republican mulling a 2016 presidential run would be smart to rip off this idea from Mark Cuban for addressing “the real bubble” in the current economy — the student loan bubble (via Inc.com):
“‘It’s easy for the colleges to ask for more, because then the potential students just take out bigger loans,’ Cuban said at Inc.’s GrowCo conference, adding that rising tuition costs have resulted in more than $1 trillion in student loan debt.
“‘That’s the same money that, when you graduated, you used to move out of the house or you went out and spent money that improved the economy and helped companies grow. It created more revenue and spending power. Instead, it’s going to build a better fitness center at your school.’
“So what’s Cuban’s plan to stem this problem?
“‘If Mark Cuban is running the economy, I’d go and say, “Sallie Mae, the maximum amount that you’re allowed to guarantee for any student in a year is $10,000, period, end of story,”‘ he said.”
I would say a Republican or a Democrat should rip off the idea, except that this kind of idea runs counter to everything the contemporary Democratic Party stands for. Namely, recognizing that when government intervenes in a market, it generally pushes prices up, which in turn raises calls for more intervention, which throws the market still further out of whack. Rinse and repeat, from health care to housing to higher education.
If something cannot go on forever, it will stop. And there is no way the sky-rocketing cost of tuition can go on forever at its current pace. That’s all the more true and obvious given that, as Cuban said, much of the money doesn’t even go toward improving education or access to education. It goes for ever nicer dormitories and fitness centers, and ever more layers of administrators to run the institutions.
The first rule of bubbles, as Thomas Friedman might say, is to stop inflating. You might quibble with how to do that, and how quickly, but you can’t rationally argue against it. Will there be people who come out worse at first from an idea like Cuban’s? Sure. Worse than continuing to rack up student-loan debt they can’t pay off — or waiting for the bubble to burst on its own and let the damage spread as it may? That seems unlikely.