President Donald Trump is aiming to expand nationwide apprenticeships, and eliminating or improving education and workforce development programs that are lagging, according to an executive order signed this week.
The order creates a task force aimed at identifying opportunities to promote apprenticeships and consisting of federal education and labor officials, and of educators, business representatives, and labor union representatives.
Highlighted in the order’s complementary news release are a skills gap and the debt the average college graduate has undertaken to get a degree—$30,000 in 2016.
Additionally, the government in fiscal year 2017 funded 43 training programs across 13 agencies, according to the release. “However, many of these programs do not work and must be reformed,” wrote a Trump spokesman.
And those are all important points to consider as graduates increasingly fall short of the job earnings needed to repay their student loans.
But the order doesn’t solve the problem. It uses the same funding mechanisms as before, certain that the government can solve it quicker than the marketplace.
In these situations, French economist, Frederic Bastiat always comes to mind.
According to Bastiat’s Broken Window Fallacy, a shop owner’s broken window is thought to stimulate the economy because the owner has to pay someone to repair the window. The shop owner is no richer or poorer because he would have spent the money elsewhere.
But that which is unseen is the cobbler who fails to make a sale to the shop keeper. And, in fact, the shop keeper is poorer because he has no new shoes and no disposable income.
This analogy is often used to contradict the idea that disaster stimulates the economy. But I believe there’s an application to federal programs.
Industry leaders see a skills gap, and a growing number of young adults are graduating with insurmountable student loan debt.
I think the government—which has been heavily involved in creating a student loan bubble—isn’t going to solve the problem.
I think, but of course, I can’t know how the problem will be best solved. That, too, is unseen.
It’s unknowable how taxpayers’ wealth would naturally flow throughout the economy, and by extension, the job market in the absence of government intervention.
But it could be just the solution to the growing student loan bubble and skills gap.