From:  (J Klein)
Subject: Re: the MIT anti-trust case
Followup-To: soc.college,sci.econ
Organization: Public Macs, Academic Computing, Yale University
Date: Thu, 1 Oct 1992 01:17:10 GMT

> Tuition hasn't been changed since the Overlap Group was disbanded, so
> I don't know what you're talking about.  We'll see when colleges set
> their tuitions in March or April whether the price rise is 10% or 4%.

A.  Tuition has been set for this year, after many of the schools backed
out.
B.  The price rise never was 10%, but rather ranged from 6-8%; this year
Yale's was 6.8%, I believe.


> When they make an argument, I'll attack it.  What they're doing is making
> a self-serving claim, and I'm attacking it as such.  (And Yale is just
> as liable to a treble-damages lawsuit as MIT is.)

What you name a self-serving claim, others would label an argument.  You
still have to respond to it.

> >
> >	This comment is totally off-point.  I don't really understand it.  I'll
> >elaborate on what I meant in case it was unclear.  First, we are arguing
> >whether or not the decision was fair to students.  There is no explicit
> >statement in the decision that financial aid must be given to "rich"
> >students.  However, in reality, competition will force schools to compete
> >for rich students, which leads to the conclusion below.  A good decision
> >must take into account how it is effected in the real world, including
> >redistribution effects.
> 
> A good decision by a court must take into account the law.  The universities
> were breaking the law.  Therefore, it was a good decision.  It's not at all
> off-point to acknowledge that what the universities were doing was illegal.
> 
> Now, if you want to argue that the decision was bad for students, you have
> a much tougher claim to make.  Colleges will have to compete for rich
> students.  But they'll also have to compete for middle-class and poor
> students.  And you're once again making the mistake that all poor students
> were winners under the old system--that's not at all true.  Only some
> poor students were winners, and others were excluded completely.
> 
> You still haven't addressed the fact that when college tuitions go down,
> all students benefit.

Closer to point, but not all there.  We were arguing whether the decision
was good for students.  My argument does not depend upon how well students
were doing before the decision, only on the fact that poorer students'
situations would get worse.  It is a simple redistributional argument that
you have yet to respond to.

 
> >> Price-fixing was bad for all students, rich and poor.  See Rich Morrison's
> >> Comment on the subject.
> >
> >	From a standpoint of economic efficiency, price-fixing is bad for all
> >students.  However, as I continue to argue, there are other factors that
> >determine a policy's 'goodness' or 'badness.'  In this case, another factor
> >is redistribution.
> 
> That's what progressive income taxes are for, not antitrust policy.  

No, no, no.  Access to education is the point, and the decision at hand has
redistributional effects which MUST be accounted for.


> The only redistribution that will take place is from rich colleges to
> all students, and maybe also from rich colleges to poor colleges.

An assertion without support that does not respond to the original
critique.  I'll respond when you give an argument.
 
> >	Here's a key point where we disagree.  Resources are relatively fixed
> >after the basic expenses needed to employ professors, maintain libraries,
> >etc.  Especially now, in a recession, where even the richest universities
> >are forced to cut programs, the amount of money that can be spent on
> >financial aid decreases because the fixed costs of the University are so
> >high, and the variable costs so minimal.
> 
> But because the variable costs are so minimal, there is next to no marginal
> cost in educating an additional student.  Which is why financial aid to
> poor students doesn't hurt a university at all.  They're still making a
> profit on an additional student, whether that additional student pays
> $20,000, $10,000, or $5,000.  
> 
> I mean, c'mon, if GM raises the price of all of its cars to $40,000, but
> offers $25,000 rebates, would you suddenly worry that they can't afford
> to give rebates if they drop their price of their cars back to $13,000?
> Financial aid isn't a real cost.  Even ignoring the fact that most
> financial aid comes from the government to begin with.
> 

Hardly. No matter how you do the book-keeping, if the University has
planned to accept x number of students at y price, its budget office
expects one source of income to be xy.
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