Riots at UC Berkeley – Tuitions Continue to Rise – Nobody Gets the Root Cause

posted by Nima

March 8, 2010 · Posted in General Economics

Please consider this clip of Riots erupting in Berkeley over tuition increases.

Why is education becoming more and more expensive every year?

Tuition costs have been rising constantly over the past decades. Any comparison of today’s numbers with past numbers usually baffles people.

But why is education cost so expensive? You guessed it. As always it’s government involvement. Every field that the state gets its sleazy fingers around will always and everywhere suffer from this simple, repeatable and predicable phenomenon.

If you use money stolen from people at gunpoint, and use it to subsidize cheap student loans, you are not doing anything to increase the supply, you are merely increasing the demand. You will have more people purchasing higher education than would have under voluntary circumstances.

If on top of that you inflate the money supply over decades and use that same money for the same purposes, that only aggravates the price effects on the market, and a business cycle ensues. Just as I explained the business cycle in consumer goods versus a business cycle in capital goods, you can have the exact same business cycle in the production of education, arguably a capital good.

You can complain and riot all you want, you can act surprised about the inevitable results of completely misguided policies, you can ask for yet more state involvement if you like, but please don’t expect different outcomes then … because it’ll make you look kind of silly.

This is not brain surgery or rocket science. This is all pretty basic and simple stuff. All we can do as long as people don’t understand it is to point out again and again what is at the root of our problems.

Other than that, sit back, relax, and watch this gigantic and predictable crap pile of madness erupt from a safe distance …