Jill Stein just claimed that for every dollar invested in college education in the GI bill the government got 7 dollars back. Is this true?
If it is true, then so what?
What if the market would have returned 7.1 instead?
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
The biggest reason the "Fiscal Multiplier" doesn't work is because it ignores the Opportunity Costs, and the collecting the tax itself (losses in shifting money from the tax payers to the tax consumers). What would everyone have purchased otherwise? What would have been produced had those GIs never been in government approved higher education? What is the Unseen?
Here is similar nonsense about food stamp spending:
Chapters 4, 5, and 22 of Economics In One Lesson cover some of this, it is pretty much the Broken Window Fallacy:
Chapter 11.17.C in Man, Economy, and State covers the absurdity of the multiplier. And this video covers the "spending multiplier" specifically:
My opinion is that the GI Bill is unfortunately a huge plus financially for the US Federal Government and a huge loss financially for the veterans themselves.
Only about half the money in earned GI Bill "Benefits", really burdens, is ever used by the GIs. So in real terms the US Federal Government is never having to pay the full salary of hundreds of thousands of veterans. But this isn't the half of it (Pun intended).
In reality the multiplier of 7 is completely arbitrary, it could be -77 just as easily as it is +700. Unfortunately there is no way to know the value as there is no way to account for these effects that would help the individual veteran and hurt the US Federal Government.
1. Super-Short Term-Kind of mentioned in lost opportunity, The veteran could have received this money in cash when they "earned it". We have no ideal what they would do with it nor do we know how much having money in their hands would compare to having money in some college fund. How about the Federal Government disburse the money not only for college but just to the veteran. Then the veteran would be better off. (This is obviously a worse scenario for the veteran than receiving it as untaxable income as the sooner they get the money the better.)
2. Short Term. Like any program that steals money from the populace and gives it to colleges, the GI Bill, will only have colleges increasing prices given the prospect that a large number of students have cash that can ONLY be used by them.
3. Longer Term, mentioned in lost opportunity. No one knows the value of a college education versus working. This is especially true for entrepreneurs. So all the statistics around this determined by professors almost always side with the college graduate are really just lies.
4. Super Long to Long Term, not mentioned, the GI Bill like any other govenrment forced redistribution of wealth from tax payers, especially the veterans themselves mucks up the whole pricing system and thus hinders Economic Calculation.
And to make matters worse, the Economic Calculation that is disrupted is when the GI signs onto this crappy deal.
We have no ideal what they would do with it
Sounds like that would stimulate the economy a lot more than earmarking all the money for a university!
You are playing parent with these folks. How do you know anything about how they will use their property?
But your logic is also faulty. If a person uses their property in the manners you describe and has nothing left for college later then it may be good for that person to have used their property as I doubt college will be that good for them.
I don't think they are talking about the fiscal multiplier for this I think they are referring to the increase in productivity from the education veterans recieved.
Confusing cause and effect? Who's to say that the 7 dollars are a necessary and direct result of the 1 dollar invested? Someone could use the GI bill and end up paying taxes that have no dependency on their education.
Could point it would be revealling to see how they calucated this. But then again if their calculations are sound what then?
It wouldn't obviate any of the flaws Bogart pointed out. Additionally, it just keeps pouring funds into the educational bubble. This isn't necessarily to say that these vets will walk out better educated, at all, or indeed more "productive".
Freedom of markets is positively correlated with the degree of evolution in any society...