Thursday, December 04, 2008

The Market will Fix This

This article on CNN, based on a government report is so exceedingly short-sited and under-thought that it pains me to have to point out the obvious.

First, the breathless first sentences of the article:

The cost of attending college has risen nearly three times the rate of the cost of living, and could eventually put higher education out of reach for most Americans, according to a National Center for Public Policy and Higher Education report released Wednesday
There are lots of reasons for rising college costs. The biggest are:
  1. Over the last 20 years, demand is way up. Tons more people as a percentage of the population are attending college. [Source] Demand goes up with little change in supply, price goes up. Ecomomics 101
  2. This is due to lots of factors, one of the largest of which is taxpayer funding of college degrees. Student loans are the largest part of this.
  3. This growth will continue as politicians believe going to college is a "right for all Americans" and continue to subsidize
Three things will make this "issue" that they are so worried about in the article become a moot point.
  1. As demand subsides, so will price increases. Economics 101
  2. Online learning will become accepted, acceptable, respected and better. This will dramatically reduce issues with the cost to deploy learning and will be subject to the same supply/demand pressures in the market.
  3. More on this later, but America is going to start actually "making" things again. We can't/won't survive outsourcing the production of goods forever. Many of these jobs, which will be a fast growing sector, will not require a bachelor's degree in Philosophy
Of course, the agenda for those who produce and report this research is to get more government involvement and funding for college. As Milton Friedman pointed out time and again, this will only exacerbate the problem and hurt the people it is trying to help in the long run.

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