For a simple example, consider a house of cards. Now remove the bottom layer, but pause gravity so the house doesn't instantly come falling down. What happens? Well, it sits there, you can keep building it up in midair, or if you push just the top part only the top part will fall off, but the house will remain intact...
For another example: College costs a lot of money, and the federal government is deeply involved with the loan business that "makes college affordable." One thing the government does is enforce arbitrary interest rates that are "low" and all but guarantees any student who wants a loan can get one. Now remove all the government's tentacles from the system overnight. And pause the laws of physics. What will happen? Why yes, the liberal nightmare! With only private companies being able to give out student loans at their own discretion, they will do so at huge interest rates, and no one will be able to afford college. Especially not poor performing students.
But this is ignoring the laws of physics. In the card house example, the act of removing the bottom layer makes the house fall apart. This has to happen. When considering "what happens or what can I do next", you have to start from the pile of cards, not some imaginary floating house with a bottom layer removed. Similarly, when considering "what happens or what can I do next" for the college situation, the act of removing the federal government from the system entails a number of other effects you have to let happen first before considering the future afterwards.
A libertarian argument is that without the government providing loans or backing for loans, less people will be able to afford college as it currently is. But this is not necessarily a permanent state of affairs. Because once the government is out of the picture, there is more room for competition as well as, more importantly, a fair market value for the cost of college to emerge. A lot of colleges charge close to $100k for a 4-year undergrad, add in living expenses and it can get higher. The government effectively allows anyone the college accepts to pay, meaning if they can just get 1000 people (let's assume 1000 is the max size of the school) to pay they can get $100k*1000 = $100m. Per four years, so $25m per year.
Is $25m per year "fair"? That is, if the government wasn't involved as much, would many schools be making such money? They weren't decades ago when government involvement was far less, so that's some evidence the answer is "no". And where does that money go? Assuming a Really Good School where the average student-to-teacher ratio is around 10:1, the school of 1000 students will employ 100 teachers. Pay the teachers Really Good Salaries+Benefits that amount to, say, an average of $100k each, $10m is spent on the professors' salaries alone. $15m left in the budget. Where is that going?
The obvious costs are taxes, supplies, sports and clubs, building space, accreditation costs, repairs, executives, IT, licensing, marketing, research, janitors and other minor employees, and administration. Can that really suck up $15m? In fact, for most places, it sucks up more, because most places have a higher student-teacher ratio and a lower teacher salary, leaving more money for other things.
But if the 1000 students starts trickling down because not everyone can afford to fill that quota anymore, the school has less a budget for both teachers and other costs. That $25m per year will go down. Without getting more students, they need to raise tuition on their remaining students (which risks driving even more of them away), lower the pay of teachers, or lower their costs in other areas. They could lower tuition in an attempt to get the quota numbers back up, which would make up for their dwindling funds. Certainly there would be some schools that only care about having 100 students each paying $1m in tuition, but some others could have 4,000 students each paying $25k in tuition (down 75%). Every solution leads to $25m budget to work with, though with more students there is probably more faculty as well that can mean less money for administration et al.
The point of this tangent into a hypothetical is that we start talking about the variables that influence the financial success of a college. We see that when the cost of tuition isn't guaranteed by the government, less students can afford current rates, which means less students attend universities, at first, and we saw that the universities that want to remain at the same level of success either have to raise tuition on a fewer number of students than originally or lower tuition to get more students than originally. They can also just accept a slightly lower level of success and keep about the same number of students, but the tuition needs to be such that the same number of students can afford it.
I just picked that example because it was first to come to mind. Another one that's been in national news lately is the issue of gun regulation. People not only fail at considering what inputs there are to gun crime, but they fail at considering what century we live in. This is the 21st century, attempts to ban certain weapons and certain weapon accessories in the US will fail because we have a wide and active border with Mexico but more importantly 3D printing is upon us. With projects like Defense Distributed, as printers and designs keep advancing more and more people can print their own banned weaponry or weapon accessories with ease. (They can already print 20 or 30 round AR magazines which are the subject of the latest proposed bans.) People also fail to realize that mass shootings are very rare, and the fatalities are minuscule compared to other causes of death ("untimely" or not). They think that by removing a single input to the system of gun crime--the type of rifle and the size of a magazine--they can eliminate the effects. But they aren't looking at all the effects, they aren't looking at new effects that will be introduced by such an input change, they aren't looking at the many other inputs to the system of gun crime such as societal well-being, the structure of government and law enforcement, lack of emergency response training, lack of commonly available protection (the bullet proof backpacks are a good idea), and others, they aren't looking at any effects or side-effects that altering those could create. There's no analysis of feedback.
What is this problem in people? Is this just a lack of critical thinking? Just a lack of system analysis? Does this problem have a special name? Whatever it is, it's annoying, and I bet it's universal like all cognitive biases and I'm pretty sure I've fallen into the trap in the past, but I don't think it's constant for me as it appears to be for others... And while I know I miss lines of analysis, I don't tend to have a blinder to all of them, or even all but one.
Posted on 2013-01-16 by Jach
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