College is becoming increasingly unaffordable for many students just entering their higher education years, with the average tuition jumping to $7,020 per year for a 4 year college, says the College Board annual report.

But is it because colleges are raising prices to meet the demand for more education, or is there a more sinister reason for the skyrocketing price of continued education past high school?

In a relatively free market, prices reflect the meeting of supply and demand. Sadly, what was once a market of competition among universities for student attention is now a market of inflationary attack by the one player in the game that the mainstream media ignores: the governments.

One area of the education that is ignored by almost every article you’ll read is the amount of actual dollars focused on higher education. When you have independent families and students coming up with their own money to put towards colleges, competitive factors such as cost, degree-strength and overall quality of education allows the buyer of the service (the student) to play the sellers of the service against each other (the colleges). But now we have a third party involved in throwing off realistic supply and demand figures: state and federal funds that increase the amount of money available to purchase an education.

In all situations where a third party involves itself in the payment for services rendered, prices go up. We have this problem in the health care sector, where Federal laws mandating health insurance coverage have caused prices in health care to skyrocket in 30 years. We also have this problem with Federal and state grants, loans and work-study programs throwing more and more money at education: that additional money in the market causes education institutions to raise their costs based on the new supply of dollars in the market.

It’s a losing battle, too: as college costs accelerate due to more and more government money entering the market, more and more government agencies cry for additional grants and loans due to high costs. As the new dollars comes into the market, prices rise to accept them. This trend will repeat itself, over and over, in future years.

In 2008-2009, $180 billion was spent in student aid alone. Of this huge amount, 65% of it was covered by federal government programs. 2007-2008 had 58% of the student aid dollars covered by federal government programs. Is it any wonder that the price of tuition went up almost 7% year over year?

When government subsidizes something, we get more demand for it. Medicare and social security subsidies make health care more expensive; federal tax benefits and direct grants for solar power create more demand for solar panels which means the retailers raise their prices to match demand. Federal loans and grants for education make the price for education go up.

The proper solution isn’t to worry about the educators (the universities and colleges) over-charging, but to withdraw federal and state aid for students. It might sound harsh, but the proper role of education is to provide the service for those who actively want it enough and save for that education, not to give everyone a right to go to school. If we can withdraw these grants and government-backed loans, schools would lower their prices significantly and return the entire higher education market to a competitive playing field.

Poor and middle class students would immediately see huge tuition price drops, and private colleges would be challenged to offer their own financial aid.

$180 billion a year for aid in education in a country of 300 million residents total means that each adult and child in the country is paying $600 per year to send someone else to college. Does anyone see a flaw in this thinking?

It’s a sure-fire news topic of 2010: overcriminalizing. The Federal government is doing it (even though the Constitution restricts the Federal government to only criminalizing things like piracy and counterfeiting), the individual states are doing it, and the local governments are running wild with the decision to try to criminalize any action that may be considered sinful or even just harmful to oneself.

A crime generally happens when a person makes a threatening action towards the property or body of another. Yet there’s a nice side effect to criminalizing non-violent actions: the cities and other bodies of government can make a nice income going after people who are hurting themselves.

Now the City of Arlington Heights, Illinois wants to go after those jumbo beer can sales locally. It’s not the public who is crying out for salvation from people who make the decision to purchase alcohol to be consumed on their own time and property, it’s the police force who are looking for new ways to pad the income of the Arlington Heights Police Department. They’re looking to “curb the crime” of public drunkenness — and remove millions of dollars of income from local liquor stores who sell the adult beverage.

A dozen liquor retailers in the city have rallied together against the measure, which will be considered this coming Monday. The City of Evanston, Illinois already has such a ban, but it really isn’t effective. As Evanston’s police commander Tom Guenther says, “People can still buy liquor.” Whether they go out of their way to a neighboring town, or purchase a smaller but more potent bottle of liquor, if someone wants to be drunk in public, it’s going to happen.

It doesn’t make a lot of sense: in harsh economic times, cities should be looking for real criminals: those running burglary operations, murderers and rapists. Going after petty alcoholics for an extra $150 in fines doesn’t seem like a good way to protect and serve.

And still, we’ll see it expand: overcriminalization. Rather than letting people learn from harming their own bodies (and going after real criminals who hurt the bodies of others), we’re just going to keep raising the fines for every action that MIGHT hurt someone — even if that someone is yourself.

Photo used under Creative Commons license originally found on the Flickr page of Bluenoise.

Cook County, Illinois, where Chicago is located, has a sales tax rate of 1.75%, which brings Chicago’s sales tax to 10.25%, one of the highest in the nation.

The Cook County Board resolved to reduce the county portion of the sales tax to 1.25%. Most major media organizations call it a “half-penny” decrease to make it sound minor, but in the overall financial outlook, it’s huge.

Todd Stroger, the Cook County Board President, vetoed the rollback on Saturday. Stroger says “”We cannot hold our budget process hostage to revenue reports that we won’t have in hand until after January of next year.”

Cook County and Chicago’s ridiculously high tax rate hurts poor people the most: they may not have the access to drive to Lake County (where sales tax is over 2% lower) for their large purchases, and small purchases made weekly can add up to a huge burden for households with minimal income.

Cook County, like most government bodies, has a big problem: it spends too much money on bureaucracy and unneeded services, passing on those costs through a variety of fees and taxes including the sales tax.

There’s something fishy about the expansion of government during supposed economic booms: if people are making more money, why do they need more government? Doesn’t it make sense that times of economic progress should mean less reliance on the State?

It’s a problem we’re seeing all over the country with states, counties and cities fearing bankruptcy due to their splurging in recent decades. Yet the real problem isn’t that consumers are spending less or earning less, causing governments to take in less in taxes or fees (they are), and it isn’t even that the governments are overspending (they are). The biggest problem with local and state governments is that they don’t have the power to do what the Federal government does to raise money: print more of it.

Since 1913, the U.S. government put the power of the dollar in the hands of the secretive and elusive Federal Reserve, a non-government private bank that is in charge of setting interest rates. When you hear that the Federal Reserve lowered interest rates, it means one thing: they printed new money.

When new money is printed, it hurts everyone who has money in the bank or in their wallet. New money causes old money to be worth less as prices go up due to monetary inflation. This is the policy of the Federal Reserve: print new money, destroy the value of old money, and call it a day.

State and local governments can’t print money, so they have to raise taxes and fees, or cut services. I’d prefer to see Cook County cut services significantly, passing on the savings to the taxpayers who will seek out those same services in the free market. But the grossly belligerent and powerful county never wants to reduce its power or financial-greed appetite. They won’t cut services, not in booms, not in busts.

There’s a solution that has existed since the dawn of this Union of States, right in the Constitution: demand a return to real money backed by gold or silver, rather than “fiat” money backed by promises and force.

In Article I, Section. 10 of the U.S. Constitution, it says: “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

How is it that our states (and cities, and counties) have ignored this? When the states use real money, such as gold or silver, there is no ability of the Federal government to destroy its value. They can stick to a wise budget, within their power and privilege, and not have to worry that their budgets will need to keep rising to offset the purchasing power lost when the Federal Reserve prints new money, daily.

Yet they won’t do it, even though it is the law of the land. Many governments rely on Federal Reserve-created economic “booms” which allow the local governments to increase their incomes and increase their budget, thereby increasing their power. When the inevitable busts happen, and they always do (thank you, Federal Reserve), the local governments can cry to the taxpayer and threaten to reduce services if taxes aren’t raised. It’s win-win for the local governments, who don’t really care about the taxpayer, they care about keeping their power solid, expanding it as much as possible during times of crisis.

If you waste your time voting, at the very least ask your local politicians why they don’t stand by the Constitution and require the states to address payments in gold or silver. It makes little sense to do otherwise, and it will keep the states in excellent financial health regardless of what the Federal government does to the power of their paper dollars.