Source: MATASII.com, by Gordon Long
Many today strongly believe it is morally wrong to indenture students to the degree of liabilities presently required to achieve the education required to become a productive contributor within our modern society.
The question we need to demand answers to is why has college costs for students exploded upward, while salaries and job positions for graduates has not? What is driving the relentless and inexplicable surge in the debt burden for students and their parents?
The well researched “Ivy League Inc” by my friends at OpenTheBooks only begins to scratch the surface of what is minimally a sham and may be better described as an orchestrated banking scam, not to dissimilar in design to the last financing bubble (i.e. the Residential Real Estate bubble in the last decade). Let me take the discussion in a critical direction which they politically may have felt it to be too sensitive to broach?
TWO BASIC NOTIONS OF UNDERSTANDING
First, to quickly grasp the underpinnings of how this sham has been symphonized it would help to frame our thinking around what might appear as two unrelated notions of how the capitalist system works (or more appropriately in the case of growing student debt – doesn’t work!).
INFLATION – Money Supply and Coconuts
If three hungry people were stranded on an island, each having two damp dollar bills and one having the only coconut which he/she found – what is the price of that coconut?
This of course assumes the finder of the coconut is a former Wall Street banker. The likelihood is that the maximum price that can be extracted for that coconut (no doubt partially eaten by our banker) is $4.
If a government plane then suddenly appears and drops much needed assistance in the form of $5 of financial aid for each inhabitant (which they distribute equally) – How much is the coconut now likely to be worth?
I suspect the banker would extract closer to $14.
As Nobel Economist Milton Freedman postulated ” Inflation is always and everywhere a monetary phenomenon”. Credit or Money supply as this scenario illustrates, significantly determines price.
CORPORATE PRICING – “Pricing-to-Market”
When a corporation has a product it prices that product based on the market.
In the first instance, if there are many competitors then the product must be priced relative to competitive pricing.
In the second instance, if there are relatively few well know competitors and the product is not yet well accepted in the market it usually will be priced against how much money it will save or how much it will increases revenues by. The corporation then prices their product against what the customer might be willing to surrender via their expected profit increases to secure the product.
Finally, when a corporation has no competition, a monopoly exists or “unwitting” demand exists, then the corporation will “Price-to-Market”. That is to say it will charge whatever the market is willing to pay, can afford or can secure financing for.
As in a gold rush, miners in the field paid anything for the picks and shovels they needed to strike a claim. Similarly, today parents and students will pay anything for the “degree” they need to get ‘a leg up’ towards needed employment.
IVY LEAGUE ENDOWMENTS
Let’s start by considering the requirement by colleges for increased tuition levels. Do they actually need significantly more money? Where is the money going?
Read More Here: THE STUDENT SERVITUDE SHAM – MATASII