As a small businessperson, I can tell you that the overwhelming amount of bullshit required to bid on government contracts (especially Federal government contracts), combined with a low probability of successful bids, means that it's imperative that you inflate the bids to cover costs, or avoid bidding on them.

Want to cut the price? Cut out the red tape.

I'm not disagreeing with you that many people have that issue. Business leaders tend not to have that issue. They separate spending into two buckets - capital spending and operational spending. Typically, capital expenditures will have an expected payback.

Congressmen and women tend not to be business people, and have different measures than business people. While a corporate CEO often has the long term health of the company as a goal, Congressmen are rewarded with re-election, often without regard for fiscal sanity. That's why I tend to give "extra" credit to politicians who are fiscally sane, even if they pass on projects that can benefit me personally; because they are actually using their brains to make decisions, rather than using popular opinion to try to ensure their own job security.

Hard to decipher your meaningless question, but I'll try. How is "one" (historic debt) not related to "the other silly neocon"? Presumably you think that borrowing and spending wastefully is a silly neocon. OK, if you think so.

There's a huge difference between borrowing to spend on projects that have a payback, and borrowing a shitload of money and having a huge party of wasteful spending. If you don't understand that, you probably have reading comprehension issues or other major issues.

Businesses make these decisions all the time. It's really not a hard concept. But neither is a silly neocon, as far as I am concerned.

I never thought housing fit the bill.

I think you want to look for investments that have a long term payoff in terms of greater technological advantage or jobs. Government subsidization of housing (through government guarantees) helps create the feeling of more wealth, but it's a temporary thing. Bankers get a little more money, people get a little better housing situation. There is even a small bump in jobs to build houses. But that's all short term. It would have been more efficient to just hand out the money (i.e. give the taxpayers back their money) than to try to filter it this way.

I think projects investing in helping the creation of small businesses would be a much better long-term route to wealth in this country. Even helping large businesses compete more effectively globally would fit the bill (although helping large businesses seems to be "out" these days, thanks to the occupy folks).

Huge debt was not the problem.

If I run a company, and I perceive money to be cheap right now (i.e. low interest rates for me), the logical thing for me to do might be to borrow lots of money and invest it into projects that will have a long term payoff, and allow me to grow or solidify my company. Same thing for individuals: If you can get a cheap interest rate, borrow and invest in something (perhaps a cost-effective education) that will have a good payoff.

The factors that create "cheap money" are having a great credit rating and the market interest rates being low.

The US had a great credit rating during 2000-2010. And interest rates could be considered low. So a logical decision would be to borrow lots of money at cheap rates, and invest in projects with good payoffs. I don't believe that the historic debt was necessarily a bad decision.

The bad decision was to borrow a shitload of money and have a huge party of wasteful spending.

That was my thought as well, the moment I had se'en it. I me'an, I'm not ke'en on all the clever ways to spel'l things.
Where have I be'en?

I thought the standard these days, to determine whether something is racist, is whether anyone is offended by the term.

We can't name our college team the Redskins, to honor the tribe for which the school is named, since there are some who might be offended by our attempt to honor our past.

Whites cannot use the N-word, while blacks can, because blacks aren't offended when other blacks use it.

A term like "he gypped me." can't be used these days, because a gypsy may be offended (even though the person who uses the term never knew the origin and never intended it to be offensive or a reference to gypsies).

I was even corrected in a business meeting by an employee of a large consumer products company (soap, paper, tampons you can rely on, and stackable potato chips), for saying "Bang for the Buck" because of the obvious implications about prostitution, and how offensive it may be to women. (Personally, I was thinking dynamite....)

I guess mentioning the full name of major league baseball's hit leader might actually offend some women, because of the reference to an erection.

Great question! The cynic in me answers that the vaccine works if there's a noticeable increase in the profits of the company that is lobbying the CDC.

Of course, if the "cynic in me" has HPV, then he probably gave it to me.

Well geez... that's why you're not getting laid.
You read the articles!

The problem with your type of people is that you don't just let me win arguments.
Especially when I am right. :)

Carry on! I have to do some real work now.

My choices of funding college for the kids could have been to put the money into a stock fund and bet that stocks would rise faster than college education prices. Or, as I did, buy an inflation-protected investment that is no longer offered. At the time, the state offered a college savings plan that would buy the education at 90's prices. It wasn't a clear-cut decision, but i was able to foresee the train-wreck that was coming, relative to higher education prices. I based my logic solely on the fact that it was getting easier to get government-backed student loans. I happened to be right, and it may have been coincidental, but many people did NOT go the same route as me. And the investment offering has since been canceled, as it was extremely expensive for the State.

You seem to say that competition is causing businesses to raise prices and reduce quality. I (and probably most economics text books) would disagree. Just looking at the three examples I cited: Books, Retail, and Cell phones. In each case, I'd say the prices have fallen and the service level has risen. Twenty years ago, you couldn't order any book in print from your bedroom at 3 AM, for a fraction of the list price. Nor could you buy groceries, clothing, and office supplies at deeply discounted prices from one store, with polite customer service. And of course prices on cell phones continue to drop as service goes up. So I'm not sure how you can say "And how are businesses coping? Higher prices and lower quality services." Sorry, the facts don't support you on that. my facts, anyway. :)

"Or are you suggesting that the nearly $200 price tag on the book is in some way relative to the production costs of the book?" - I DO think production costs factor into the price tag. Not just the price of the paper, but the layout and editing for a relatively small print run. Many of those "production costs" don't magically disappear with Kindle versions, but some do. But the real savings would come if we quit re-inventing the wheel. It's funny that you mention "Fundamentals of Physics", because an Amazon search shows over 12 thousand hits with that search (various names, not all related. But many many hits directly related). Exactly how many versions of "Fundamentals of Physics" do we need? As an analog, consider how many online encyclopedias we need. Wikipedia seems to do a pretty decent job. Maybe, just maybe, there are 12,000 online encyclopedias, but there is only one leader, and it just keeps getting better. Higher education needs to learn from the working models that are out there.

You say that putting courses online doesn't fight costs, it maximizes profits. You are acting as if profits don't have cost in the equation. Cost is a factor in calculating profit, so this argument is nonsensical, to me, anyway. You say that schools can't lower costs ("They'll go out of business.") Yet maximizing profits somehow is disconnected from costs? I lost you there.

The bottom line is that if we agree that the cost of higher education is too high, then different, less-costly methods must be implemented. And those schools who can't figure that out deserve to go out of business. If we subsidized buggy-whip manufacturers (or rail transportation or airlines), we encourage waste and production of items that are not worth the price. If you want to reduce the price, the best thing to do is end the subsidization.

I can see your case for a slow implementation, but I don't happen to agree with it. There are a lot of industries where a major breakthrough occurs, and companies are forced to adapt or die. And amazingly, things work out. Now, I don't have a spouse who is a college administrator, or I might be less brutal. But the quickest way to fix the issue is to rip the band-aid.

But with our legislative process, that would never happen, unfortunately. Having an extreme, obstinate leader (as Obama was on Healthcare) can get things done. And I'm glad that Ron Paul is taking that stand. Even if he never gets elected as President (which is the most likely scenario), I really appreciate that he puts up the most aggressive position, as he gets the conversation going, and maybe we'll actually get to a partial solution.

I disagree with a lot of your facts. Citation needed on a lot of those. Specifically:

1) I'm from an era where it wasn't possible to build up this huge debt that students have. So I have seen step 2. It wasn't a perfect life in Step 3, but it certainly didn't have students collecting in the streets, in protest of their unmanageable student debt (which we have now!!). Was it better then, than now? Well, that's certainly up to debate, but you're kidding yourself if you don't think there's a previous model to look at and learn from.

During the Clinton administration's "make college more affordable" effort, I wrote a post that actually predicted that college costs would escalate to an unmanageable level and that there would be student riots over their unmanageable debt. I also purchased a college savings plan for my own children that was "inflation protected" , which ended up being a brilliant move. I paid mid 90's prices for my kids' education, and I'm done. So I was wrong about student riots (so far, although Occupy X is getting close), but I was financially correct, which is what really matters to my family.

2) I visited a lot of colleges in the past 4 years with my kids. And EVERY college, without exception, had at least one multi-million dollar project underway. Now, this was a self-selected sample, but I'd say 16 out of 16 were that way. The projects were for academic buildings, student centers, student rec centers, and athletic facilities. EVERY single one. So if you have facts to support that delaying such projects are necessary spending, I'd like to see them. I would contend that all 16 schools' projects were excessive projects, in the sense that they were not "necessary", that the school was getting by just fine with the current student center (for example), and that, for the most part, they were to "make the school more attractive and competitive". And they ARE required for competitive purposes if everybody's doing it. But they are absolutely not required if no one is doing it. And they certainly are not required in tough times. Delay it a year or two. Geeez.

Businesses everywhere have to do more with less now. Get with the program, schools!

3) I agree that copyrights are expensive. I disagree that online doesn't save money vs. print. Simply look at the prices of online vs. print in Amazon. Quick semi-random check of Amazon showed 19 out of 20 books cheaper on Kindle (when available), with savings ranging from 6% to 60%.

In addition, there are a number of innovations in education, which include FREE online resources. Wikibooks, Project Gutenberg, Free Tech Books,
Open Book Project, Textbook\Media, Textbook Revolt, and Textbook Revolution are ALL fighting the high price of text books. If your choice as a university is to go out of business or encourage your teachers to use and contribute to free textbooks, you bet colleges and universities will start using and contributing to these resources. Force the choice!

And certain major universities are putting all their lectures on line. Why not? And why not use these to fight the high cost? You'd think that Universities would be LEADING the effort to going online, but they are dragging their feet trying to hold onto an obsolete model! I wish Amazon University or Google University would open, and force their hands! It's time for a shake-up, because this ridiculous pricing model for higher education is not sustainable!

4) I didn't say "push your employees harder" by asking them to teach an extra course. Those were your words. As shown above (with online resources), and as shown in EVERY OTHER INDUSTRY, people have to do more with less, and technology can help solve that problem. People need to think out of the box.

5) I would like to see your evidence that "Most non-ivy league schools don't have endowment funds". Quick check of some of the universities that we visited: Ohio State has more than 4000 endowment funds. University of Cincinnati has a $1.004 Billion endowment fund. BILLION! See also this article.

I'll concede that my statement of "ever-increasing endowments" was an exaggeration. They have bad days and bad years. But there is a bundle of money that is not benefiting students that is just sitting out there.

6) The Pell Grant mills are making a lot of money simply by filling their student body with homeless and indigent students who have little or no chance of graduating into a higher life for themselves. This is a huge waste of taxpayer money.

7) The comment below has little basis in fact, and a lot of contradicting evidence:

Simply look at any other industry were there was a major cost shake-up. Take the book industry. Amazon came along and changed a lot. Look at how Walmart shakes up the retail landscape. Look at how Apple shook up the phone industry. In EVERY one of those cases, which were EXTREME examples of industry shake-ups, I contend that your statement that "virtually every other" competitor didn't "go bankrupt in a few months". That's simply nonsense-speak. You are flat out wrong on that point.

If education took a look at other markets and other businesses, and even education in the past (like 70's or 80's), they'd learn a ton, and they could adapt. This isn't rocket science, and even if it were, who better to adapt than the rocket science teachers? Unfortunately, much of academia has been in a bubble, insulated from real world conditions, and free government money simply exacerbates the problem.

Sorry for turning your arguments into Swiss cheese! :)

If you are really trying to apply economics to this, I believe this would be a SHIFT in the supply/demand curve, not just movement along the same supply/demand curve. Net result would be lower prices.

Each university has fixed costs and variable costs. If enrollment is down, each student's payment would have to cover more of the fixed costs, unless fixed costs are reduced. If fixed costs weren't reduced, then tuition would go up, causing less students to be able to afford that university.

There will be universities that can quickly adjust their fixed costs downward, and those that can't. Those that can't will go out of business, because they'd have to raise fees, causing a death spiral (less students able to afford it, so higher fees required, and so on). The closing of those universities will cause an increase in enrollment in those schools that were able to adjust their fixed costs downward, so they reach equilibrium. Equilibrium would therefore (likely) be reached at a lower cost, and so the cost of education would go down. And that's the goal.

So play the scenario out. Say Federal subsidized loans are eliminated. What would happen?

Sounds like you are contending that college enrollment would plummet because only the rich can go. So play it out a little further. Say you are the President of some university, and you see forecasts that indicate that enrollment will plummet. What would you do?

Some creative universities will make education more affordable. How? Maybe by delaying that multi-million dollar building project. Maybe by requiring teachers to use online books only, not paper books. Maybe by squeezing a little more out of the budget. Maybe by asking the professors to each teach one more class. Maybe by granting more scholarships. Maybe by tapping the ever-increasing endowment funds. Maybe by attracting local students who can live at home (our local university requires freshman and sophomores to live on campus, even if their home is 7 miles away! That's insane!)

Some other universities (Pell grant mills) will simply go out of business. Instead of recruiting the homeless to sign up for classes that they never attend, and collecting federal money for that "service", they will simply end their crooked practices.

Still others who fail to adapt will feel it on their bottom line. They may go out of business. At the very least, they will learn very quickly that they need to adapt. Happens all the time in the real world. They will be forced to create affordable education for students. Period.

This isn't a hard concept, and it happens annually in the real world. Companies need to re-evaluate the business that they are in. Are they in the "Education at any cost" business? Or are they in the "Affordable Education" business. Frankly, you'd think that any business school could help its administration adapt, as this is commonly taught in entry level business courses.

When I was much younger, I underwent extensive training in destroying falling near-earth objects. I would love to use that training to secure a high paying job protecting our civilian and military population.

The training that I received is discussed here, with screen shots.