Wednesday, July 8, 2015

When Is a Cartel Not a Cartel?

It's Presidential Campaign Season again (what? already?), and the crazy is starting to come out of the woodwork. This early in the effort, with so many candidates (especially on the Republican side) everybody's trying to get noticed in a crowded field. Which probably accounts for them saying some pretty nutty things.

Underneath the firestorm created by Donald Trump's remarks about Mexicans this past week (why are we paying attention to Trump, again?), Florida Senator Marco Rubio decided to give a speech outlining his views on higher education. Which is an interesting choice, since higher ed isn't really a major Presidential campaign issue and it doesn't do much to fire up the tribal base of either party.

But it isn't his choice of topic so much as what he said that I found interesting. Two particularly odd tidbits:

• Rubio referred to the existing system of colleges and universities as a "cartel". That earns him the little-coveted Inigo Montoya award:

There are some 3000 to 4000 four-year institutions of higher learning in the United States. The very largest of them hold only the tiniest sliver of the market. All of them compete vigorously against each other on price, product, and amenities. A cartel, on the other hand, is "an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition."

To think that this applies to higher education is simply absurd - universities, public and private, couldn't collude to this level if they wanted to. Plus, the public ones (including those in Senator's own state of Florida) are subject to the rules, regulations, and dictates of their state governments. My own state government decided that, for the next two years, no public university in Ohio can raise its undergraduate tuition at all. How exactly is this "cartel" behavior?

• As crazy as this was, it's pretty garden-variety politician idiocy. They and their speechwriters regularly mangle words all the time, which is great entertainment for the rest of us. What followed next was even more interesting:
"We do not need timid tweaks to the old system. We need a holistic overhaul," Rubio said in a policy speech in Chicago. "We need to change how we provide degrees, how those degrees are accessed, how much that access costs, how those costs are paid, and even how those payments are determined."
Take note: here is a Republican politician demanding an "overhaul" to a key sector of the economy. As President, he wants to use the executive branch of the Federal government (and possibly the Congress as well) to change how degrees are provided, what the costs are, and who pays them.

I'm sorry, didn't he say he was running for the Republican nomination? The party that supposedly stands for smaller government and less regulation? The party that claims to believe in the power of the free market?

Maybe he should go read his own party's platform again.

The current higher education system has its problems, chief among them cost - although cost is not nearly as much of a problem if you stop focussing on the Stanfords and Harvards of the world and look at where most people actually go to college, which is regional comprehensive public institutions and community colleges. But the cost problem exists for a host of reasons, nearly all of them not easily addressable by the President of the United States. If you upset the apple cart of the accreditation system (the one lever Congress might actually have), you will create all kinds of effects, many of which you may not like.

(It should also be noted, as an aside, that cost in higher ed is a problem not only because tuition has gone up, but because wages and salaries for the vast majority of Americans have not. In an economy that better distributes the wealth it has, we wouldn't be talking about an "affordability crisis" in higher ed at all.)

I've made the claim before: all American politicians are meddling Keynesians. Democrats tend to be more honest about it, Republicans try to argue that they want to "get government off the people's backs" and then turn around and use it to monkey with other parts of the economy and hope no one notices the contradiction. Rubio is fitting himself squarely in that camp. I'm sure he and his colleagues will provide us with plenty more amusement in the coming months.

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