Economics 101 for university students
O.C. Register 3/19/07
If the question is posed this way, "Do you want a low-cost education?" you will get one answer. But ask, "Do you want to pay more in taxes to provide someone else a low-cost education?" and you're likely to get a different answer.
The question is so often phrased the first way that many people have come to the erroneous conclusion they are entitled to low-cost government services, including even a college education. We saw this last week when people complained about increases in tuitions at the University of California and California State University systems. The assumption apparently was that a college education is a benefit people are entitled to receive at very low cost.
When tuition was increased 7 percent for UC and fees 10 percent for CSU, there were protests that students shouldn't have to pay that much. Why shouldn't they? For that matter, what was sacrosanct about the previous rates? No level of tuition even comes close to covering the actual cost of the education.
Public college education in California already is hugely subsidized by taxes paid in large part by nonstudents. In the CSU system, for example, the official policy is that students are responsible for no more than one-third of the actual cost. These are not necessarily financially needy students. The policy applies to everyone. College officials could just as logically have decided students must pay 90 percent or 10 percent of the full cost.
The determination is entirely arbitrary. It has no relationship to supply or demand, and is alien to what occurs in private enterprise. Compare the private Chapman University's $29,900 annual undergraduate tuition and the private Concordia University's $10,565 to the public CSU's $3,451 and the public UC's $6,636. Does anyone believe a CSU education is worth only 11 percent of one at Chapman?
Once people buy into the idea that some people should be taxed to provide benefits for others, the rationality of a free market evaporates. Once it's assumed the public owes people a low-cost education, there's no reasoned argument for determining how low-cost that should be. The debate always is reduced to vested interests seeking gain, and politicians pandering to vested interests by spending other people's money.
This is the inherent flaw in all government subsidies. Some people benefit at the expense of others, but perhaps worst of all, the beneficiaries come to see it as an entitlement.
Ask most consumers why apples cost 50 cents, and a Lexus costs $70,000, and they will explain those prices are what people are willing to pay for what they receive. Ask the protesters why tuition should not be raised, and you get non-sequiturs like, "The state is putting more into its prison system ... than its students."