Monday, July 2, 2012

Ever Onward and Upward!

from “Lights, Camera, Crazy!” by Michael M. Rosen

According to Richard Vedder, an Ohio University economist and the foremost national expert on college tuition, the fees at his alma mater, Northwestern University, consumed 15 percent of the annual median family income in 1958. By 2003, tuition at Northwestern chewed up a gaudy 53 percent of median family income. Other schools exhibit similar explosions.

By 2003, tuition at Northwestern chewed up a gaudy 53 percent of median family income. Other schools exhibit similar explosions.

Much of this obscene acceleration in prices can be laid at the feet of the federal government, which, in a vicious cycle, subsidizes loans, makes direct grants, and offers loan forgiveness, all of which in turn spur higher education institutions to hike tuition further, which in turn necessitates further government aid.

Kent comments:

If you have been around American higher education, you are painfully aware of this.  It has contributing causes other than government money.

I have one son who works at a university that has tried to “have it all” in the last several years.  What it has is a faltering budget, and skyrocketing tuition.  I have another son who teaches at a college that is very focused – on offering good classes, imagine that!  They do not try to do it all.  As a result, it is very affordable.

Many, perhaps most, colleges and universities today do not make serious attempts to focus their mission, or to economize in reaching their goals.  But why should they, when they can more easily complain about their level of government funding, wait for the inevitable direct and indirect (through government loans and grants to students) and constantly raise tuition.

The lack of focus and lack of serious attempts to do more with less can continue to happen because governments continue to pour money into higher education.  Who can be opposed to “more money for education”?

But only the economically blind can fail to see how this does, and must, always work.  Some purportedly desirable activity gets a shot of cash from government.  What is the inevitable result?  The price of that activity will go up, since more money is now “chasing” (by being dedicated to) that activity.

Then, when the price goes up, there are renewed cries about the price increases for that activity.  Politicians are motivated to dedicate even more money to that activity.  As a result, the price of that activity increases even more, as do the cries of “it’s too expensive!”  And thus the cycle continues.

It is true of higher education, as it is always true of everything to which governments dedicate funds.  We could do a similar analysis of “health care.”  We could do a similar analysis of almost everything, since government subsidize almost everything today.

The question is:  how do we escape these vicious cycles?

It would take a remarkable amount of social-political will-power.  Quite frankly, I don’t think we have it.  I hope I am wrong, but it is difficult to come up with any plausible scenario in which I am.

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