Did you get that hot Christmas toy?

Last night I heard this sound bite from President Obama:

If you [colleges] can’t stop tuition going up, your funding from taxpayers will go down.

I wonder if he has considered that the funding from taxpayers is the very cause of rising tuition?

Have you noticed that the areas of the economy where costs tend to rise faster than inflation — education (K-12 & college) and health care for example — receive the most taxpayer dollars?

The areas of the economy that have little or no taxpayer funding tend to produce exponentially better and cheaper products.

It’s not just coincidence.  It’s basic economics.  Supply and demand.  We all know what happens to the price of that hot Christmas toy every parent wants to buy their kids — it goes up from the strong demand.

Now, imagine that government comes along and says that no child should be without that hot Christmas toy.   In fact, government is going to give a $50 voucher –provided by taxpayers, of course — to ensure that every family gets one.

What do you think would happen to the price of that hot Christmas toy?  Yes.  It will go up further because of even higher demand.  So, that $50 voucher just gets built into the price.

In the same way, the taxpayer dollars that flow into education and health care just gets built into the price.  Education and health care are our hot Christmas toys.

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2 thoughts on “Did you get that hot Christmas toy?

  1. Pingback: Trade-offs | Our Dinner Table

  2. Pingback: But more people get to go | Our Dinner Table

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