From: thf2@ellis.uchicago.edu (Citecheck Hell)
Subject: Re: the MIT anti-trust case
Reply-To: thf2@midway.uchicago.edu
Organization: University of Chicago Computing Organizations
Date: Tue, 29 Sep 1992 15:32:57 GMT

In article <1992Sep29.093758.23933@news.yale.edu> (J Klein) writes:
>As I said before, since the overlap group is gone now, there are no
>price-setters, yet still the increases continue at the same rate at most
>private universities.  There's more to it than you say.

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%.

>> Financial aid offices have ulterior motives for claiming this.  They
>> still hope to win on appeal--they're not going to go and say "Gee, I
>> guess we were just being collusive bastards.  Okay, students who we've
>> ripped off over the last twenty years--come and sue us for treble
>> damages now!"
> 
>Not a fair argument.  Yale for one is not looking to win on appeal, and
>anyone can claim anyone has ulterior motives (even you).  Attack their
>arguments, not them.

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.)

>> >However, de facto results
>> >must be taken into account in a good decision.
>> 
>> No, the law must be taken into account.  What the universities were doing
>> was illegal.
>
>	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.

>> 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.  

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

>	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.

>> And why do you assume that a college will choose to recruit solely on
>> SATs?  There has never been a top university that looked at SATs and SATs
>> only--why do you think that because they're told to stop breaking the law
>> they'll suddenly switch to an irrational method of choosing which students
>> they want most?
>
>These comments are also off-point.  I never attacked the SATs (however I am
>sorry that I reduced "SATs, grades, quality of education, activities,
>community service, and athletics, etc." to "SATs, etc.")  There isn't a
>whole lot to respond to here now, so I'll take it you agree that poorer
>students statistically have poorer records by these standards, and would
>therefore exacerbate the problem.

I agree the poorer students have poorer records.  I don't agree that this
exacerbates the problem, because the problem either already exists now,
or if it doesn't, it isn't going to suddenly start to exist because colleges
are complying with the law.

Once again--why do you think colleges will be more irrational in choosing
which students they want?  Why won't they use the same methods they've used
all along?
-- 
           .. . . .  .  .   .    .     .     .    .   .  .  . . . ..
          ted frank | thf2@midway.uchicago.edu | standard disclaimers
         the university of chicago law school, chicago, illinois 60637