Free Colleges: More Students, Less Quality

„Bernie Sanders is wrong.“ It’s a phrase that we have heard so often over the last few months, often enough at least to even get a book with the title. That is no surprise considering how the candidate for the Democratic Party, who at the moment polls in second place behind Hillary Clinton, keeps uttering false facts, keeps promising freebies and keeps promoting the holy „democratic socialism“.

In an op-ed on October 22 for the Washington Post, Mr Sanders again got confused. This time he took a stance for free colleges and used some countries – including Germany, as examples of how great this system would work:

„In Finland, Denmark, Ireland, Iceland, Norway, Sweden and Mexico, public colleges and universities remain tuition-free. They’re free throughout Germany, too, and not just for Germans or Europeans but for international citizens as well. That’s why every year, more than 4,600 students leave the United States and enroll in German universities. For a token fee of about $200 per year, an American can earn a degree in math or engineering from one of the premier universities in Europe. Governments in these countries understand what an important investment they are making, not just in the individuals who are able to acquire knowledge and skills but for the societies these students will serve as teachers, architects, scientists, entrepreneurs and more.“

As a German who currently goes to universities in this country I couldn’t resist to write something about this.

First of all, it is true, here in Germany you can study (basically) for free. I for example only have to pay a fee of about 120 Euros each semester for a bus ticket. And it is true as well that this is not limited to German citizens only. Everyone can visit a college, no matter if he or she – or the parents for that matter, have ever paid into the system.

However, this has consequences: Erich Barke from academics.de took a closer look at the budget of a university in Germany, compared to one in the US. For that, he selected the Leibniz University in Hannover and the University of Texas at Austin – both of them are good universities, but not elite, compared to other colleges in the respective country. Even so, the differences in quality are enormous:

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Remember, this are two solid universities, so Barke also compared the Leibnitz University with two of the better institutions in the world (which are both located in countries with tuitions):

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Compared to the MIT and Stanford it’s even worse.

As you can see, the Leibnitz University has less funds per student and less staff and at the same time is financed nearly entirely by the government.

There’s no doubt that this miserable situation hurts the German universities. Actually, it’s pretty much demonstrable. Let me tell you two short anecdotes:

Just a few years ago, at the time I was still deciding which course I should choose, I visited an information event at a university in Munich. It was a presentation on civil engineering and the professor who introduced us to this course showed us the structure of it, the content etc. At one point he said that because tuitions have been cut (in Bavaria this happened only in 2013, so quite late), his faculty already has problems to finance research programs.

Since my first semester I have experienced this as well: To put it simply, there is not enough … enough of everything. There are not enough rooms for everyone, there are not enough employees, which leads to long waiting periods for students if there are problems or other requests, and there are not enough professors to teach (or they are totally stressed out). It’s an acute situation in which everyone is overextended and irritated.

It’s easy to see this drop in quality in global university rankings as well. Let’s take a look at the top five colleges from the US and Germany respectively in the most important lists and where they rank:

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Sources: QS 15-16: www.topuniversities.com/university-rankings/; Times Higher Education 15-16: https://www.timeshighereducation.com/world-university-rankings/2016/world-ranking#!/page/0/length/25; ARWU 15: www.shanghairanking.com/de/ARWU2015.html; CWUR 15: cwur.org/2015/; US News: www.usnews.com/education/best-global-universities

In the CWUR 2015 ranking, which lists the top 1,000 colleges on this planet, a total of 55 German universities are mentioned – compared to 229 for the United States.

At last, you can recognize a clear trend similar to the one in the United States: Because of the lower costs and easier access to these institutions there are more and more students and because of that, a Bachelor’s degree possibly won’t be enough soon. In 2009, the number of students passed the amount of apprentices, and it’s getting more extreme as the years pass by, as you can see in this chart (blue are the number of apprentices, red the students, the numbers are in millions):

infografik_1887_zahl_der_studierenden_und_auszubildenden_n

This are just some of the consequences of a free college system as Bernie Sanders proposes it, a system in which, as Mr Sanders says, „governments […] understand what an important investment they are making, not just in the individuals who are able to acquire knowledge and skills but for the societies these students will serve as teachers, architects, scientists, entrepreneurs and more.“

At the end of the day the result will be the following: More students, less job opportunities (or higher job requirements), less money for the universities and less quality. You can certainly #FeelTheBern in Germany already.

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Price raise and stabilized or dramitized

Well here we go again listening to all the amazing scientists explain to us why we can now increase rates with the strengthening dollar, and again for the third or maybe fourth time this year they are predicting a rate hike. Mainly we see bull markets smashing up the prices, and an appreciation of the US dollar. This is showing economists that the economy is in an upward swing. In a sense there is “economic growth” occurring in the United States, and the Chinese markets have stabilized. At least that is what they say. Unemployment rates are low, Chinese liquidation is halted, and everything seems to be great with the american assault on thrift.

First of all the unemployment rates are dropping and the economy is “expanding”. However, there has not been any actual job growth since the recession. Rather, the dropping of the unemployment is just a re-alignment of workers in response to the inflationary measures to combat the recession. After the Chinese dollar dump there was an influx of inflationary prices for the Chinese markets, not any stable growth. With the excess reserves the United States fed initially bought back debt from overseas and by doing so it appreciated the value of the dollar, as compared to the euro. This is why the prices have been rising in certain indexes that accept currency baskets for shares. This is not any actual growth, this is market reaction to inflationary signs of adjustment due to the massive devaluation of the Chinese bull, now bearish, market.

So, then, what does that tell us? We are seeing a shift of growth into full time work from part time work and this should not be happening. Especially with wage hikes, and with obamacare regulations. Since full time job growth is rising, it means labor is transitioning. However, labor is transitioning to full time work, while the regulations are calling for more part time work. This means that we are witnessing a transition of the labor market, which occurs during an inflationary boom. When the market feels inflationary pressure it expands, not in a “market oriented” fashion based on the outcome of the market but an artificial price increase. That price increase is unsustainable because the markets have been continually propped up by global policy, and the when the prices fully re-aligns to what the market actually calls for it will collapse from the pressure of the over bloated full time industry.

This is the sign of a coming recession, no matter what other scientists say. Remember, recessions happen when no one expects it. So diversify your currency, brace for the worse because probably after the holidays, and after the Chinese lift their security restraints, the market will fight back with vengeance and we will be moving into the “next recession”, completely oblivious to the fact we never fully recovered from the last.