It’s ironic that I agree with John Tamny’s conclusion in this piece at RealClearMarkets but think he’s arriving at it in the wrong way. He’s right that even if federally subsidized educational loans were abolished, prices for higher education will not decline.
If you constrain the supply and increase willingness to pay, prices will rise. Even if you decrease willingness to pay by, for example, abolishing federal subsidies, the prices still won’t go down because the supply is constrained and there is a nasty little thing called the downwards inelasticity of wages. Keynes wrong about it. Mr. Tamny should look into that.
