Tuition rates didn't go through the roof until the government started guaranteeing/sponsoring tuition loans. When that happened, the colleges and banks knew they could charge whatever they wanted and still get paid, so tuition cost became detached from ability-to-pay, and there was no incentive to keep prices affordable anymore.
The victim in this is the student, who gets saddled with decades of debt, or alternately, an eviscerated credit profile with an albatross that can't be discharged even in bankruptcy. That, however, is obviously not something that disturbs the educational system.
Things go screwy fast when you decouple the classic economic checks and balances. While a small number of wealthy people would be both willing and able to afford outrageous rates for tuition, most of them would want a good value, and there's not enough fantastically-rich Americans to support something the size of the education system without drawing from the middle class for pupils.
Education is expensive, because there is a limited capacity (teachers, facilities, etc). But rather than put money into expanding the capacity, they start offering stipends and loans. But this just inflate the prices.
I wonder how much of the choice is because it is easier and quicker to show a results, thus it can be implemented within a single election term, and how much of it is straight graft.
If you can demonstrate that reduced social mobility is an issue, and that this is increased by progressively greater income inequality (the latter of which I probably agree with on cursory inspection), then it seems income inequality is a net loss.
However, from a utilitarian perspective, I don't see a reason to care about social mobility if quality of life increases for everyone, not just the upper classes.
Keep in mind that I am working on two axioms:
1. Income inequality is a mathematical certainty in a functional society with more than n participants, where n is the maximum number of people who can be personally and honestly cooperative with each other, and
2. Income inequality refers to differences in an individual's absolute resources available for consumption, not their quality of life (exceptions granted for luxury consumption goods, not basic utilities that are available across all social classes).
As a very simplistic example that I'd enjoy having holes poked in, Apple has generated wondrous income inequality for many of its engineers and management. However, it has also leveraged economies of scale and competitive forces to manufacture a mass market product that is, statistically, enjoyed by even the poorest households in America and which affords its users with the most powerful innovation since the printing press in their pockets.
EDIT: This comment has had a rapid change in up and down votes. It's fine to disagree with me, but I don't think it's unreasonable to question whether or not a lack of social mobility is actually a bad thing, as a Socratic baseline.
P.S.: The rapid change in up and down votes is probably caused more by your confusion of socioeconomic mobility and equality (you seem to be using the two interchangeably) than anything else.
More to your point - I respond by asking whether or not the socioeconomic standing of a scientist matters for the societal impact of their work.
I don't see an easy conclusion here. The scientists driving innovation in industry are generally paid very well (this is relative, but we can probably agree they are paid higher than a median salary). The scientists driving innovation in academia are not, as a rule, paid as well as their counterparts in industry, but that doesn't stop them from contributing valuable research to their fields.
So how do we conclude that socioeconomic stance matters for a scientist's research impact, if they have grants or corporate sponsorship?
To reiterate my point - if reduced socioeconomic mobility can't be demonstrated to be a net loss for society, why does it matter if income inequality causes it or not, and how does it demonstrate income inequality as a net loss for society?
It's not so much an issue for those people who came from poorer backgrounds and became scientists (though there's still a question of whether they could have been better scientists with better early educational support), but it's a bigger issue for those who never got that chance by an accident of birth.
I don't support equality of outcome as a desirable goal, but I do support equality of opportunity.
> If people who could have been top-notch scientists, engineers, civil servants and entrepreneurs were prevented from doing so because they couldn't move up the ladder (and inversely, rich rent-seekers couldn't move down), society is deprived of their contributions and is worse off.
Why are they being perevented ? If I am the CEO, would not it be against my own interest to prevent my employees from making a contribution ? What ladder is that you speak of ? It certainly cannot be salary. Is there a caste system in company ? If people are being prevented based on their position in social ladder (such as caste system) does it even matter if they have more income ?
> Why are they being perevented ?
Well, education is expensive -- and has an opportunity cost -- so low-income people often cannot afford to improve their skills and earn more income. If I am poor, and I have enough intelligence to become a good scientist, engineer, or artist, but cannot afford to go to university and gather the requisite skills, then this is a loss to society.
Why do you classify it as social mobility ? Would not economic mobility be a better term considering education and skills are economic goods not social.
> Well, education is expensive -- and has an opportunity cost -- so low-income people often cannot afford to improve their skills and earn more income.
I thought it was not economic inequality but something else. But yes this make sense and its expected/desired of a good economy. This is not preventing.
> If I am poor, and I have enough intelligence to become a good scientist, engineer, or artist, but cannot afford to go to university and gather the requisite skills, then this is a loss to society.
Thats why the concept of loan/investments exist. All you have to is convince them that its net positive for them too.
Also this not loss. This is absence of profit.
Obviously life will always be somewhat unfair, but we should always see things that decrease fairness as a negative, unless they make up for it in other ways.
The first section of your comment was about socioeconomic mobility, but starting with the "two axioms" portion, you started talking about inequality instead. The two concepts are different, although related.
> I respond by asking whether or not the socioeconomic standing of a scientist matters for the societal impact of their work.
Not very, but for people at the bottom of the ladder, they need some socioeconomic mobility to become a scientist in the first place.
> if reduced socioeconomic mobility can't be demonstrated to be a net loss for society
That's presupposing that it can't, and thus begging the question.
It depends on the end goal. If the end goal is scientific advancement, for example, mobility into the educated and academic class is important to provide intellectual diversity. If we bifurcate society into the educated and uneducated, it would likely restrict the flow of new ideas and discovery.
Except that such goods are increasingly not priced via the market.
If you're smart enough to get into an elite university, you don't have to worry about the cost. Full stop.
That being said, I do think we have a societal responsibility to set things up so that this applies across the board. Personally, I think income inequality is fine and maybe even good if we can also have:
1) Basic income, so that even if your parents aren't wealthy you still have all the necessities.
2) Well-funded and high quality public education (from pre-K up through college)
Personally, I actually think income inequality can make these things easier to achieve for 2 reasons:
1. Each individual dollar matters a lot less to billionaires, so they're a lot more willing to give away a huge percentage of their wealth. This trend is very evident with tech billionaires. If Warren Buffet had his wealth spread amongst millions of families, would each one be willing to give up 90% of that wealth?
2. The winnowing of the middle makes redistribution more palatable. A large part of current politics is moderately well-off people feeling morally superior to slightly less well-off people. If society becomes more bimodal, it's a lot more possible to pass aggressive redistribution policies.
This presupposes that you are already in a social position that allows your intelligence to be recognised and that puts you in a position to even apply, or know that applying is an option.
I never thought about it. I considered ETH Zurich for a while because Niklaus Wirth is a legend in language development, but without any real idea of how it measured up as a school. In the end I stayed in Norway for university. I don't regret it, per se, but understanding the difference more later was a very strong eye opener for me when it comes to how much of social stratification is not really down to money but more broadly background and expectations.
It takes a very specific background before elite universities will even be on your radar, and a subset of that for you to believe it to be possible, and a subset of that for you to see it as the norm and what is expected of you. And then that needs to intersect with the understanding of your family to either pay or put in the effort to look for other ways of getting in.
Some portion of those will not be rich, sure. There are lots of options. Most top universities are good about grants and bursaries. But proportionally, a far larger proportion of children of wealthy families will go to top universities.
And this is a large part (but not all) of what "privilege" is really about: To grow up in an environment that teaches you to expect certain things that is not even on the radar of others.
This question doesn't make a lot of sense. Of course they wouldn't be, because any middle- or working-class family can actually conceivably spend 90% of their wealth.
Instead of allowing Warren Buffett to accumulate such a large quantity of wealth and relying on his whim to donate that wealth to good causes -- something which most billionaires don't do -- shouldn't we have redistributive mechanisms in place to ensure this money goes to people who can actually use it?
> 2. The winnowing of the middle makes redistribution more palatable.
More palatable? If we accept that the rich are likely to attempt to hold onto their wealth, then why would they not spend much of their significant resources establishing and entrenching policy that does not affect redistribution?
Absolutely not. Financial aid is dependent on parents' income and wealth, regardless of parents' willingness to actually bankroll said school. The cost is significant, rivaling the average annual gross household income, but worse because you pay high interest rates on top. Don't kid yourself, worrying about the cost dissuades lots of people.
And if your parents had a high enough income where you had to pay full tuition, then you already enjoyed an upper middle class upbringing.
It's a slight disadvantage and not the difference between going to Harvard and not going to college at all.
[citation needed]. Full-ride merit scholarships are quite rare. Here's an article from 2011 that says that only 20K full ride scholarships are awarded annually across the entire US, and only 0.3% of all students get a full ride (either from any individual scholarship or a combination of them). http://www.cbsnews.com/news/how-rare-are-full-ride-scholarsh...
It's why I'd rather give to GiveWell than to my local shelter.
The nice thing about our tax system is that you can write off donations. So even if we did adopt stronger tax measures, billionaires could still choose to support more effective causes than the government.
One main issue is that income inequality decreases socioeconomic mobility by inflating the cost of scarce goods that improve earnings capabilities. So 4K TVs are cheaper but college tuition becomes unaffordable, because good universities and grad programs are valuable, scarce goods that the wealthy can outbid everyone else on.
Policies that aggressively expand capacity and defray costs, such as post-WW2 expansions of universities and the GI bill, can ameliorate this by shifting monies down the socioeconomic ladder via taxation, but high levels of inequality also lead to a powerful political interest group that generally seeks to reduce tax rates that affect them.
There's also the more general economic argument that high levels of inequality are economically inefficient since they result in a lower average marginal propensity to consume, but that's not so much "bad" as "could be better and provide greater macro stability."