What's the problem?

There has to be a psychological term for this. There's the fallacy of imagination, which I thought might be suitable, but that means something quite different. What I want to talk about is this: there is a tendency among certain people to pause time and the laws of physics when talking about what will happen if you change just one thing in a system. I guess it's really a failure to notice complex systems with several causal inputs and several effect outputs, sometimes effects having feedback loops back into the system as inputs.

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?