Liberals attacking economists should check their student loan hypocrisy

According to University of Michigan sociology Professor Elizabeth Popp Berman, progressives like Sen. Bernie Sanders (I-Vt.) Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) are “grounded in the values of rights, universalism, equity and limiting corporate power.” 

In her book, “Thinking Like an Economist: How Efficiency Replaced Equality in U.S. Public Policy,” however, Berman argues that economists and the economic way of thinking have been the bane of the progressive movement. 

One thing is certain: Progressives do not think like economists.

Economists, while not a homogeneous lot, generally are grounded in the laws of supply and demand and the recognition of opportunity costs and cost-benefit analysis. They believe that scarcity exists, that incentives matter and that economic efficiency provides broad benefits to society. All of these are rejected by progressives when public policies conflict with their “values.” Berman claims that progressives have different ways of thinking.

President Biden’s forgiveness of college debt, broadly supported by progressives, illustrates the difference. Shockingly, it violates two of their “grounded values”: universalism and equity. It worsens income inequality and targets a special-interest group that needs no subsidy. It also creates what economists call a moral hazard problem. A moral hazard can occur when a policy encourages riskier behavior for financial gain. Expect more borrowing for college and delays in repayment in anticipation of future government giveaways.

Biden’s program also demonstrates the progressives’ disregard for opportunity cost. Simply stated, could the $1 trillion the program will cost have been put to better use?  

“Every dollar spent on student loan relief is a dollar that could have gone to support those who don’t get the opportunity to go to college,” tweeted Larry Summers, the distinguished Democratic economist and former Treasury secretary.

AOC implied the opponents of the giveaway are selfish. Take that Larry Summers. She urged Americans to “reject the scarcity mindset that doing something good for someone else comes at the cost of something for ourselves.”  By the same logic, perhaps we should subsidize indebted yacht owners. Kiss rational discourse and opportunity costs goodbye.

True progressives, following universalism, support “free” college for everyone. Yet they are like chess players who cannot anticipate their opponents’ countermoves. Their game will not end well. 

Sanders supports legislation to “eliminate tuition and fees at public four-year institutions for those from families earning up to $125,000 per year and make community college free for everyone.” Exactly how many additional people would apply for “free” college? How much would this cost and how would it be funded? (“Free” college isn’t really free.) Would price controls and rationing eventually be imposed? How many families would reduce work to fall below the $125,000 cutoff? Checkmate! 

China in the 1980s not only had free college but actually sponsored students to attend, as I observed as a Fulbright Professor in China in 1986. Progressives do indeed have a different way of thinking, and the laws of supply and demand do not enter into it. Politics and power do. 

The Green New Deal provides yet another startling example of the rejection of economics by the progressives. According to many reasonable cost-benefit analyses, the Green New Deal will generate more costs than benefits. The program will be as economically wasteful as America’s Afghan War, no doubt. 

AOC will be shocked to learn that the world will not end in 10 years, despite more greenhouse gases being generated in large part by China and India’s increasing use of coal. But the United States will be poorer and its lower-income people will hurt the most by rising heating and cooling costs. So much for equity.

Moreover, the progressive value of universalism apparently does not apply to the health and environment of the Africans who are mining all the precious metals needed for our electric-vehicle batteries. If progressives have a sacred goal, no matter how much it might cost, an inconsistency with their “grounded values” is of little matter.

The world has benefited greatly from a 20th-century revolution when people thought like economists. Even the Chinese were able to pull hundreds of millions of their citizens out of poverty by doing just that. Nations that follow the thinking of progressives, rejecting basic economic logic, ensure travel down a darker path.

Burton Abrams is a professor emeritus of economics at the University of Delaware and a research fellow at the Independent Institute in Oakland, Calif. He is the author of “The Terrible 10: A Century of Economic Folly.”