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Student loan smokescreen

President Obama’s latest focus on student loans is a vapid response to the unemployment issue:

We should be doing everything we can to put higher education within reach for every American — because at a time when the unemployment rate for Americans with at least a college degree is about half the national average, it’s never been more important. But here’s the thing: it’s also never been more expensive.

Unemployment or underemployment occurs when the kind of labor being supplied by a pool of prospects is not in demand or the demand is less than what is available. Think about that. Given this, will churning out more college graduates change the unemployment situation? If there is little demand for the skillsets reflected in the pool of college graduates, then the answer is an easy and obvious No.

The fact the unemployment rate among the college-educated is about half the unemployment rate of those with a high school diploma or less is, in my opinion, unimportant. And the focus on such a statistic is a smoke screen.

Now if skillsets are not in demand by existing companies, then certainly those college graduates can create new companies reflecting their sets of skills. That may provide economic stimulus and a greater pool of potential jobs – if they can drive market demand toward the skills they offer. This is not guaranteed, and market forces and its drivers and signals can take what in one year is a profitable company and the next year put them and their employees out of business. They can also take what is one year a struggling company and the next year make them a successful company needing to expand and create jobs to keep up with rising demand.

That is the way of it. But churning out more college graduates is not going to change that reality, only create more debt. However if you understand how the supply of money in the United States actually works, then you know that this is not only planned, but necessary.

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