Think Freely Media presents Common Sense with Paul Jacob

In which industries do prices and costs rise fastest? Those in which government is most involved.

The process is no mystery. Regulate supply by limiting entry into the business — to “increase quality,” of course — will raise prices, as producers behave oligopolistically. Government does this with health care providers, and have done so increasingly for the last century. If, at the same time, you subsidize the consumption, that amounts to increasing demand, which also puts upward pressure on prices. This has been accelerated in America since the beginning of Medicare, and with each additional healthcare program.

Typical government intervention double whammy.

Higher education is also not exempt from the play of supply and demand. One policy advocate’s explanation of this, which you can read excerpted, online, at National Review’s site, is worth considering. He explains what happens as vendors rake in profits under a regulated-and-subsidized system: they

sponsor crowd-pleasing sports events on weekends, building public goodwill. Other profits are used to hire professional lobbyists to plead for both more subsidies and more freedom to set prices. You also convince the government to allow you and other incumbent . . . sellers to form a private organization with the authority to decide whether new sellers can become “approved . . . vendors” for the purposes of receiving public subsidies. Unsurprisingly, few new sellers are approved.

Predictably, the analysis is followed by halfway measures that don’t lead to a free market in education at all. That’s just too radical.

Education policy wonks, like educators themselves, seem never to learn . . . economics.

This is Common Sense. I’m Paul Jacob.

By: Redactor


  1. MoreFreedom says:

    Given government doesn’t work (what it does do is use force against citizens) can’t we get government out of business (e.g. education, health care, etc) and let the free enterprise system give us (invariably much better) options, and options where you pay for what you want, rather than the fiction that others (taxpayers) are paying for it?

    The voluntary sector of the economy is moral. The coercive sector (government) is immoral because it uses force. Thus, government should be limited to protecting our freedoms. Not providing food/clothing/health care/housing/etc what we should provide for ourselves.

  2. Drik says:

    Regulations are almost always sought by the group that is regulated. In exchange for money or votes or both to the politician, they then can limit the entry into the market of potential competitors.
    What makes no sense is why this is not on the visible horizon of the OWS crowd. The critical path in this loop is the politician. The critical singularity, without whose blessing and complicity all of the corporate “greed” could not flourish.

  3. Drik says:

    Note to More:
    We have little chance of making inroads in this against the corrupted folks in Congress. The Senate is beholding to almost noone and the House is protected by Madison’s “confusion of the multitude”. Our most likely hope for drawing a line is at the state level. Engage your local 912/Tea Party/10th amendment/etc folks and start burning up the email and flooding the internet with regular updates on your local reps. Coordinate efforts to express displeasure or satisfaction with them.

  4. Kenneth H. Fleischer says:

    Recently on PBS television was a news segment on this very subject, and, in keeping with the blinders that they (and commercial TV mavens, too!) habitually wear, to the point of not realizing that they are wearing them, they never gave the slightest consideration of education being a business, and they treated it as intrinsically a governmental function.

    It’s this wearing of blinders that we need to fight.

  5. Pat says:

    I would disagree with the notion that economic policy wonks don’t learn economics. Seems they understand more than most of us. They know how to create a demand for their services. Perversely, the more expensive their service becomes the more ‘vital’ it becomes and the greater the need for government ‘aid’ to the masses (for the basics, like a college degree!). The only way to get government off our backs is for we the people to stop looking to government to ‘do something’ when times are tough.

  6. Great piece, Mr Jacob.

    Thank you.

    B A :. B) – L A – CA — and The Very Far Away

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