Originally Posted by Braineack
the price isnt going up because of demand, that's the problem.
ill explain later.
Okay I have a second to write about college tuition rates.
Keep this in mind: Currently for gov't run schools, the average cost is $46,000 and around $100k for private schools. The projection for 2030 is costs of $157,000 and $327,000, respectively.
In the last 40 years, total yearly spending on higher education increased from $7 billion to $170 billion a year.
In 2000, state and federal aid was around $100billion. 60% of which were gov't gaurenteed loans.
The currently solution for the problem is to futher upset the balance of the free market supply/demand and alter individual's choice by giving and loaning more.
You argue that the prices are going up because the demand -- so let's deal with that.
Say an album on itunes costs $10 to download normally. But let's say a third-party subsidy though that was too much to pay, and wanted to giv emore people better access to music, and subsidized $5 of the purchase, making an album $5 to the consumer. Demand will increase, music producers will be estatic and urge more musicians to make more albums, and sales will increase.
But then, itunes, remembering people used to pay $10 for a download, begin to raise the prices back up a little, becuase they know the consumer was still willing to pay that extra $5 for the same album. So they make downloads $11 with a $5 subsidy, then $12, then $13, then $14, then $15. So now the cost to the consumer is still the $10 they were used to, but there's an extra $5 profit from the subsidy.
But, what happens is, the consumer, got used to the lower prices, so they campaign to the third-party. They tell them that their standards of living have fallen. And of course the music producers campaign with them, because sales have started to decline a little. So everyone, consumer and producer want the thrid-party to subsidize a little more.
and the cycle beings.
So, now replace downloads, with tuition. producers with colleges. thrid-party music subsidy with gov't.
It's no different.
What happens is gov't programs mask the true costs of college for students. Grants, loans and direct subsidies lower the apparent price of education and this
leads to the higher demand. The colleges ALWAYS then feel justified in increasing the cost of tuition to meet the demand and the cycle is born. Raise tuition; give out more aid; raise tuition again. wash, rinse, repeat.
Okay, I gotta do real work, I still haven't touched on how it effects choice and the issue it creates there.