"This morning I heard President Obama call for universities to lower
their tuition rates so that “everybody in America can go to college”.
I am virtually certain that the President is not stupid enough to
think that if tuition rates fell to zero, there would magically be
enough room in the colleges for everybody in America. So I’ve got to
believe that he’s purposely saying stupid things in order to appeal to
stupid voters — the sort of voters, in other words, who probably don’t
belong in college."
He goes on to discuss how universities use tailored financial aid packages to effectively price discriminate. Price discrimination (as opposed to being restricted to charging a single price) means that colleges don't have to undersupply seats to maximize their objective (yes, presumably most of these schools aren't for-profit, but they have some objective to achieve and that objective costs money).
Now - I actually found the claim fairly appealing. So we have two options here, according to Steve. I'm either stupid, and the president has to say stupid things to appeal to me and I don't belong in college...
...or maybe the president was talking about the people who find themselves on the demand curve to the right of the intersetion of supply and demand and thus are excluded even if a university is a price discriminating monopolist.
That seems like a more straightforward interpretation of what the president said - that college costs a lot both in terms of what you pay and your opportunity cost - for credit constrained families, than that he was trying to make some point about schools exercising monopoly power.
There's a lot of neat stuff to talk about in economics, like how universities are price discriminators.
I get the desire to share those points. It doesn't seem like you need to call people stupid or distort plain English to share those neat insights.
Here's another guy that put words in the president's mouth on that line. At least Landsburg communicated some economics in the process.
For the Weekend...
2 hours ago