Wait for it: There’s another financial bubble ready to pop.
I’m not an economist, so I could be as wrong as, uh, a Keynesian strung out on (and pushing) “economic stimulus.” But the usual signs of an over-priced market sure seem to apply to higher education, today. After all, colleges and universities are sustained and over-fed by massive debt … in this case, government-guaranteed student loans, now passing the trillion-dollar mark.
From your local community college to the Ivy League, the whole industry reeks of insider advantages, constricted supply and inflated demand. So of course prices rise.
Beyond all reason.
The latest sign on the way to the bubble’s bursting comes from Harvard. That august institution’s Faculty Advisory Council for the Library issued a memorandum last week declaring that the cost of subscribing to peer-reviewed journals has become too great to bear. Robert T. Gonzaleaz, writing at io9, puts this news in perspective:
What does it say about the world of academic publishing, the accessibility of knowledge, and the flow of information when the richest academic institution on the planet cannot afford to continue paying for its peer-reviewed journal subscriptions?
When I look at the prices of textbooks and journals and academic books, I wince. Were this industry marked by laissez-faire policies and free markets, the typical leftist “anti-greed/anti-business” attitude might make sense. But this is an industry riddled with government intrusion, as far-reaching as the intrusions into housing and banking that led to 2008’s financial debacle.
How could the over-sold, over-subsidized, over-controlled college-university industry remain immune to a similar catastrophic deflation?
This is Common Sense. I’m Paul Jacob.
5 replies on “Harvard Shrugs”
When I went to college, taking 18 credits per term, my tuition at a PRIVATE COLLEGE (living at home) was somewhere in the range of $400.00 per term.
The other day, as to the costs, two or three professors from NEW YORK CITY COLLEGES ( THAT IS, COLLEGES FOR N.Y.C. RESIDENTS, AND CITY SUPPORTED) ATTEENDED A CONFERENCE IN TEHRAN, IRAN– and needless to say, blasted this country, for various things. (see blog – Jihad Watch 4/22/2012–
AMERICAN PROFESSORS ATTEND OCCUPY WALL STREET CONFERECNE IN TEHRAN).
And while NYC wages ( and taxes are higher) –to me– this seems to border on treason.
And, how could these “underpaid” professors afford such a trip?
sorry is I spelled any words incorrectly
Jay: A wavy red underline indicates a misspelled word. Just go to Dictionary.com and fish around for the correct spelling.
This will prevent most errors, but will not catch the use of words that mean something different from what you meant to say. For example, “sorry is I spelled any words incorrectly” should be “sorry IF I spelled any words incorrectly.
The student loan bubble will soon collapse but I disagree with your premise the educational services sector will be decimated as a result.
You are correct that student loans and direct subsidies have driven to an costs of higher education to a level which would be sustainable in anything close to a free market.
I believe very shortly student loans will be going into default at a rate higher than that which brought down the mortgage market.
This because the current student loan debtors, who contracted for, received and spent the funds, will determine to cease paying “in protest”. They are being falsely lead to believe they did not get as much immediate benefit as they had hoped, that because they were “oversold”, that because their education was “too expensive”, it is “unfair” for them to have to pay the obligations they contracted for and to pay for the services they demanded and received.
These “educated” individuals are being convinced they are justified in their position, a position championed by their progressive leaders.
It makes no difference this thought process is logically bankrupt as the student loan program is financially. This illogic is akin to trying to justify ceasing to make the payments due the BANK for funds borrowed to purchase a car because the actual miles per gallon delivered is less estimated mileage found on the government window sticker, while maintaining, regardless of default, the borrower must be able to retain possession of and use the automobile.
There will be a a significant financial dislocation resulting from significant numbers of student loan defaults. Where I differ with you is that I am very doubtful a student loan meltdown will stop the foolishness in this sector, after all there are new loans to be made and the exclusive lender is now the government. Therefore there is no market control to stop or even slow the process.
I premise the reaction of the progressives will be to fashion programs of “forgiveness”, payment obligations calculated on percentages of income and perhaps dropping the provision which prohibits discharge of student loans obligations in bankruptcy.
There are already calls for universal “free” college education. Because the higher education sector has already received the funds, and there is no question it will have a continuing and perhaps even greater sources of subsidies the party will continue on campus. Hyperinflation in this sector will continue.
This “fixes” will quickly become a “right” and then morph to another (unsustainable) entitlement, provided by progressives in exchange for the support and vote of their “beneficiarires”.
The student loan meltdown will result in significant additional turbulence in the financial sector, and eventually land on the backs of the taxpayers. That, with the additional entitlement, will accelerate this country’s movement toward maonetary and/or fiscal collapse.
Not pretty, close to inescapable and not the product of common sense!
As for Harvard, it will find a way to afford subscriptions to all desired peer reviewed journals. Given its applicant to seat ratio it does not appear that institution has reached the point of diminishing returns so it can, and will, simply raise its tuition and fees.
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