Re: Gelernter: Only the crazies get doctorates...

Rohit Khare (
Thu, 15 Jan 1998 18:48:28 -0800

> >If David wanted to raise a really difficult long-term issue for academia,
> >it's the long-term bummer of pricing yourself out of your market (e.g.,
> >middle-class education).
> How much of an issue is this? After seeing the budget (ca. late 80's)
> for my undergraduate (and only) alma mater, I concluded that tuition
> must be set more as matter of taste than anything to do with finance.
> Admittedly, this was a small private school, with a pretty good collection
> of buildings named Beckman, so it may not be representative. Also, despite
> my qualms at the time about the value of the education relative to tuition,
> the old boy network has certainly justified it since.
> If institutions operate on a basis of scarcity rents, they may not
> be very concerned about failure to set market-clearing prices.

Dave is right-on in his reply to Jim. There is little threat of pricing
yourself out of the market, since the premium market is not charging based on
costs OR on ability to pay, but merely on signaling equilibrium: the
peacock-like plumage display that it costs so damn much it must be exclusive.
Regardless of the fact that actual amounts paid can be much mroe reasonable.

In the middle of the market, it's robbing peter to pay paul. I don't believe
(naivete alert! naivete alert!) 97% of the population should need higher
education to get 'normal' jobs: but the burden of tuition in the middle is the
transfer cost of the failure of public education K-12 as 'deferred
maintainance' to be patched up in college.

Remember, there's a much larger population of associates (2-yr college)
students than either of these two classes.

Broadly speaking, it's a privatization of a public mandate. Of course, in many
states, it was never a public mandate to begin with. India, for example, has a
miserable record of shying away from coimmitement to univeral public
education; the Chinese put a gun behind it, at least for the first few years,
at least to the point of literacy.

But what kind of economy do we have where admin assts need 4-year degrees to
prove they can type, spell, and handle purchase orders?

This argument may go too far. But I basically believe that market prices are
rarely irrational. When they go haywire, it's a sign of something *else* gone
haywire. $30k for CIT, MIT, or Harvard isn't a bad bet, in the long term,
since the premium education pays off again and again as a 3% badge. The upper
47% are paying more than they care to at state universities, etc, but that's
only a consequence of taxes unpaid by their grandparents, etc. The lower 50%
are facing unnecc skill deflation because the opting-out of public secondary
education by the upper 47% means they're forced into at least associate's
programs to prove entry-level skills.

What this has to with graduate education, I can't say...