Friday, December 05, 2008

Last Time on the Lonely libertarian ...

To pick up from Wednesday and the stories I had linked too ...

The piece of higher education costs is interesting in that there's little speculation about why these costs have increased so dramatically. Part of that increase is, I'm sure, related to the growth of entrenched bureaucracies. This is true of education at all levels, where more and more administrators who don't actually teach children are paid fairly substantial salaries. These higher-ups tend to become the hardest people in the budget to cut, oftentimes because they're intricately involved in the budget process.

But that's certainly not the whole story. Another factor in increased costs certainly has to be technology- I don't know what it costs to maintain a campus-wide wireless network, but that's certainly one cost that simply didn't exist twenty years ago. Here's where the tie-in the medical costs comes in and that's the question of what new technology is worth. Technology offers tremendous benefits, but even the simplest technology represents costs that just didn't exist before. It seems to me as though this would be the sort of issues economists would be all over, but I've seen very little on the topic.

Perhaps the real issue is that the push for near-universal higher education has pushed millions into a market that hadn't previously been accounted for. So long as there is no universal higher education and you have individuals paying their own way, what you have is a market system, a convoluted one perhaps, but a market system nonetheless. And given we're talking about a market, it's not all that surprising that prices have increased dramatically along with the increase in demand.

To move on to Britain, we find that their public health care system is left with the difficult decision of weighing how much people's lives are actually worth. It sounds morbid, but this is how money works. For an individual family, it probably makes sense to go bankrupt to prolong a loved ones life, but you can't justify such unlimited expenses in a system where everyone shares costs.

My own personal light bulb went off when reading these stories for the various manners in which markets are neglected and ignored. Market factors are at work and economic decisions have to be made, even when the idea of a market isn't so apparent. But what's even more interesting is this unconscious desire (or sometimes not so unconscious desire) to wish away basic economics altogether. After all, it's not fair that a private college might cost so much for a poor person, or that a life-prolonging treatment would be so expensive. What we don't see is an acceptance that health and education are services that cost money and that values need to be assigned whether you it's pleasant or not. In terms of college, discussion about the costs versus the benefits of various educational opportunities are rarely discussed, even amongst families and individuals. In terms of medical care, there generally are no limits when it comes to individuals and families, but the nice thing about a market system is that it's a choice individuals and families actually get to make.


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