Obama Calls for Lower University Tuition Rates

‘This morning I heard President Obama call for universities to lower their tuition rates so that “everybody in America can go to college.”

 I am virtually certain that the President is not stupid enough to think that if tuition rates fell to zero,there would magically be enough room in the colleges for everybody in America. So I’ve got to believe that he’s purposely saying stupid things in order to appeal to stupid voters — the sort of voters, in other words, who probably don’t belong in college.

To believe what the President wants you to believe, you’d have to be not just stupid but badly misinformed. At the University where I teach, we do not lack for applicants. The reason we don’t have more students is not that they can’t afford us; it’s that we don’t have room for them.

The President’s proposal would make sense if universities were ordinary monopolists, artificially restricting enrollments in order to keep prices high. But universities, insofar as they are monopolists, are by no means ordinary — they are price-discriminating monopolists — and extraordinarily effective ones at that.

Every year, I tell my Principles students with confidence that “You and the student on your right are probably not paying the same tuition rate”. Universities have detailed information on students’ academic records (which tells them where else those students are likely to be admitted) and detailed information on student’s (and their family’s) financial statuses. They exploit this information to tailor individual aid packages.

That’s important here, because, unlike an ordinary monopolist, a good price discriminator doesn’t leave seats in the classroom unfilled just to keep prices high. Instead, the price discriminator fills empty seats at bargain prices while still keeping prices high for those who are willing to pay full fare.' - Playing the Dunce, Steve Landsburg, 09/04/2012

http://www.thebigquestions.com/2012/09/04/playing-the-dunce/

　

　

Beyond Landburg’s monopoly aspect, what about land grant universities as “the second coming of the post office”? How so?

Administrative positions at universities, as reported many times by Mark Perry, economist University of Michigan,  are now at or exceed the number of professors and instructors at many, many universities. The administrative positions which are increasing at an increasing rate are well paying and come with a litany of benefits driving total compensation to high levels.(1)

Beginning in 1979 to present the escalating cost of higher education is accompanied by escalating administration positions and associated cost. These administrative position are to extent or another the result of a political constituency building process of certain politicos. These expanding public sector administrative positions then rationally require such persons holding such positions to support political candidates that support the growth and maintenance of the growing administration.

Therefore the escalating costs of higher education are politically driven as a political constituency building exercise. A few questions that beg to be asked are: would Mr. Obama be open to slashing this politically built constituency which is very likely part of his voter base? Capacity concerns aside, if institutions overnight jettisoned fifty percent of their administration and consequently lowered cost would Mr. Obama then complain of lost jobs or more succinctly complain of lost jobs which represent his now lost voter base?

In the final analysis, Landsburg is likely correct: “…to believe that he’s purposely saying stupid things in order to appeal to stupid voters”.



Notes:


(1) http://mjperry.blogspot.com/2009/12/college-everythings-going-up-except.html

The Dreadful Legacy of North Korean Dictator Kim Jong Il in One Satellite Picture and One Chart - Carpe Diem

"This one picture above of the Korean peninsula does a pretty good job of capturing the legacy of Kim Jong Il by comparing electricity usage at night between North and South Korea".  - Dr. Mark Perry


Link appears below.










http://mjperry.blogspot.com/2011/12/legacy-of-n-korean-dictator-kim-jong-il.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FmmMP+%28CARPE+DIEM%29

Private Capital Formation and The Great Recession

Within a private enterprise system, private capital formation is a major driver of long term well paying private sector jobs. During the Great Depression private capital formation was anemic. Currently, during the Great Recession, private capital formation is anemic.

Private capital formation during the 1930’s was lifeless due to rising taxes, the specter of even more taxes [which did in fact occur], government deficit spending causing a crowding out effect of private investment,  the vilification of the investor class, and over regulation.

History repeats itself? Same song just a different beat?

'With the jobless rate stubbornly stuck above 9 percent for the last 28 months, the United States is experiencing a “jobless recovery” that is much worse than those following the 1990-91 and 2001 recessions. What’s the main reason that job creation has stalled and prevented a full economic recovery? The ongoing economic weakness and lack of job creation can be traced directly to a lack of private business investment, and the critical “investment-employment-economic growth” connection has been getting some attention lately.

For example, Robert Higgs wrote recently that “The economy remains moribund not because consumption spending has failed to recover and not because government spending has failed to increase, but because the true driver of economic growth—private investment—remains deeply depressed.” In a recent New York Times editorial, Greg Mankiw emphasized that “The subpar recovery has coincided with a historically weak investment recovery.” ' - Dr. Mark Perry, The ‘Jobless Recovery’ Is Really an ‘Investment-less Recovery’, Journal of the American Enterprise Institute, 10/03/2011

Link to the entire article appears below:

http://blog.american.com/2011/10/the-jobless-recovery-is-really-an-investment-less-recovery/

Earth Hour celebrates ignorance, poverty and backwardness?

Below is a link to Dr. Mark Perry's most excellent post regarding Earth Hour.

http://mjperry.blogspot.com/2011/03/leave-your-lights-on-earth-hour.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FmmMP+%28CARPE+DIEM%29

Wisconsin and William Graham Sumner's "Forgotten Man": Revisting the Formula.

William Graham Sumner's Essay The Forgotten Man

William Graham Sumner was a famous nineteenth century economist and sociologist. (1) Sumner wrote the essay The Forgotten Man in 1883. The essay was widely read and widely quoted in the late 1800's. That is to say, the essay was quite famous. Even today the essay is widely read by economists and even managed to be the main title of Amity Shlaes recent book The Forgotten Man, A New History of the Great Depression. (2)

What Was the Essence of Sumner's Essay?

Probably one of the better and simpler explanations is:

As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X… What I want to do is to look up C… I call him the Forgotten Man… He is the man who never is thought of. He is the victim of the reformer, social speculator, and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him. - Henry Hazlitt (3)


Here is an alternate explanation update for the 21st century:
As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed – with the praise of Y – to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. As for A and B, who get a law to make themselves do for X what they are willing to do for him, we have nothing to say except that they might better have done it without any law, but C is forced to comply with the new law. All this is done while Y looks on with glee and proclaims that A and B are so good for helping poor X.
A is the politician
B is the humanitarian, special interest, do-gooder, reformer, social speculator, etc.
C is The Forgotten Man (i.e. you, me, us)
X is the downtrodden, the oppressed, the little guy, the misunderstood, etc.
Y is the Mainstream Media (4)

Better yet, read Sumner's essay for yourself [link below]:


http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=1654&layout=html#chapter_108194


What About Sumner's Formula in a "both sides of the table" environment?


What is the "both sides of the table" phenomena?

(1) if bureaucrat Q is negotiating with collective bargaining public sector union U, exactly what motivation does bureaucrat Q have regarding negotiations? The problem goes back to Milton Friedman's fourth category of spending: other people (bureaucrat Q), spending other people's money (tax payers money), on other people (recipient class which in this case is a public sector union). Therefore the bureaucrat has no motivation because he/she is spending other people's money not his/her own money,

(2) public sector unions have found that they can collect dues through members and funnel dues into political action funds. They then fund the campaigns of politicos that promise them [public sector unions] more compensation. They not only fund certain politicos but actively encourage their union members to campaign for the politico. Once they get their particular candidate elected they have now secured a politico who over sees bureaucrat Q. (5)

Going back to Sumner's formula and identifying the participants we find: The Forgotten Man is you (C). The politico is (A). However, due to the "both sides of the table" phenomena which occurs in collective bargaining by public sector unions, (B) and (X) become the same. That is, the supposed disadvantaged group is also the social reformer. (6)

The formula has morphed! Sumner identified (B) and (X) as two separate entities. However, in public sector unionized collective bargaining environment, through the "both side of the table" phenomena, (B) and (X) become one in the same. This does not negate Sumner's proposition, rather it takes Sumner's proposition to another level.

Disassociation
Since (B) and (X) have become one in the same i.e. (BX), the political-economy is for (BX) to disassociate the sub components (B) and (X) or else (C) might catch on to their duel role as disadvantaged/social reformer [the original formula which was stacked against (C) in the first place, has now become a stacked deck of cards in which (C) always and forever becomes the consequential, quintessential, and constant loser].
Hence BX's strategy is to show (C) that it is merely a suffering group (X) and consequentially a disadvantaged group seeking relief.


Moving from the Formula to the Formula's Yield

As one can see from above, The Forgotten Man is being duped not once but twice. Not only is The Forgotten Man drawn into assisting the supposed disadvantaged group through politicos associating with social reformers, but the disadvantage group itself is the social reformer!

Summary

The Forgotten Man, the James and Jane Goodfellows of the world, are fed the argument that the disadvantaged group is in fact disadvantaged. That the wicked world has left this special group in need. Meanwhile, the supposed disadvantaged group functions as the social reformer. The social reformer in association with politicos vote to enhance the disadvantage group which in fact is the social reformer.

The recent actions and political-economy arguments surrounding the unrest in Wisconsin becomes the perfect example of the now morphed Forgotten Man formula. The unionized public sector employees march around the Wisconsin capital building with signs identifying themselves as the "disadvantaged", a special group that needs help. Arguments then come forth identifying the protest group as the "disadvantaged" while simultaneously and purposely leaving out of the debate/argument, that in point of fact, the same exact group is "the social reformer".
Moreover, examining Sumner's formula the exact same "disadvantaged" group is actually functioning in its duel role of social reformer. The social reformer/supposed disadvantaged group are one in the same. Purposely and methodically the social reformer/supposed disadvantaged group, through politicos, leave out their identity of simultaneously enhancing their supposed disadvantaged position.

Its the non-disadvantaged acting the part of the disadvantaged and perpetually enhancing their very own position through their duel role as the social reformer. Its the formula, stupid!


Update: "Public Unions: The Rise of Arithmetic and How Taxpayers and the Little Guy Are Left Behind" - Mark Perry:
http://mjperry.blogspot.com/2011/03/rise-of-arithmetic-is-politically.html

Notes:
(1)http://www.encyclopedia.com/topic/William_Graham_Sumner.aspx

(2)http://www.amityshlaes.com/books.php

(3) Economics in One Lesson by Henry Hazlitt

(4)http://wstfrederick.blogspot.com/2009/09/sumners-explanation-of-forgotten-man.html

(5)(6)http://thelastembassy.blogspot.com/2011/02/wisconsin-is-coming-to-state-capital.html