Saturday, March 14, 2015

Confusing Cause and Effect

Instapundit Glenn Reynolds, blogging in 2010 on the topic of how the government invariably does the wrong thing in trying to help the poor.
The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people.

But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.
It leads to home ownership bubbles like that which burst in 2007, when people who lacked those traits were destroyed economically by a recession. And the poor kids who are subsidized to go to college normally drop out after 1-2 terms.