The only service category that has outpaced higher education is hospital services.
https://en.wikipedia.org/wiki/Baumol_effect (See also section on education https://en.wikipedia.org/wiki/Baumol_effect#Education)
Basically as scalable goods and services get cheaper, non-scalable goods and services become relatively more expensive. In terms of hospital services and college tuition, this is a much more intuitive explanation than government regulation, although I'm open to more informed opinions.
In a graph in that wikipedia article, we see that from 1998-2018, average hourly earnings increased by less than 100%, but tuition increased by more than 150%. If wages for university staff (who aren't becoming more productive) are rising to match wages for those who _are_ becoming more productive, why should tuition costs rise significantly faster than the rise in other wages?
https://en.wikipedia.org/wiki/Baumol_effect#/media/File:Pric...
Further, one statement in the education section sounds right to me:
> The economists Gary Rhoades and Joanna Frye went further in a 2015 study and argued that the Baumol effect could not explain rising tuition costs at all, as "relative academic labor costs have gone down as tuition has gone up".
And we know there's a trend towards shifting teaching responsibilities from tenure-track faculty to cheaper adjuncts. And from anecdata, I get the impression that in the humanities especially, salaries _are_ quite low and raises are currently below inflation.
And my understanding is also that the trend at many schools is towards larger classes e.g. when UC Berkeley increased the freshman class size by a third, there was not an across-the-board increase for departments to hire a proportional increase in faculty and staff, nor did existing faculty and staff get a raise ... so the same people are asked to just teach larger classes (does that count as a productivity increase?), and students just get less interaction with their professors.
Now look at the board of trustees of your local University, and play spot the construction firms...
https://www.lesswrong.com/posts/FCMfToFnRXhsfpfQB/book-revie...
Then there's a lot more old people with a lot of complicated cases, which require a lot of person-hours.
And we still don't really have turnkey solutions. Sure, we have nice vaccines, but they are not 99.99%, there still are complications, there still are ridiculous inefficiencies (why do we still don't have combined yearly multivalent boosters for influenza+covid+others)?
Education also suffers from this overcomplication, but it's mostly because of credentialism. It's perfectly possible to watch lectures at home, complete coursework at home, and then go to some place fill out a test, and then do oral and practical exams. Grading can standardized (high-school exam is already done this way here in Hungary, there's a PDF booklet issued to teachers conducting the exam; and profs and TAs already do the same basically verbally).
I always thought the issue was in admin body count. However, just picking the largest universities in Germany and US on wikipedia we see:
Ludwig Maximilian University of Munich Academic staff: 5,565 Administrative staff: 8,208 Students: 51,606
Michigan State University Academic staff: 5,703 Administrative staff: 7,365 Students: 49,809
Those look pretty comparable, so what is going on?
Stanford University, for example: Academic staff: 2,279; Administrative staff: 15,314, Students: 17,246 - that's basically 1:1
A less prestigious private university like University of Southern California: Academic staff: 4,706; Administrative staff: 16,614; Students: 49,318 - that's about 1:2.5
You have to really break down the administrative staff number (if that's what's of concern here) to see what people are doing to make an informed argument (not saying you are making an uninformed argument or anything like that).
-edit-
For a while I was in on the administrative staff thing and I certainly think there is bloat and just flat out incompetence at many universities in this area, but I also think it's a bit of a red herring to avoid other issues like funding reductions, etc.
The way student loans are structured is the cause.
Year over year they get at least 5% pay increases with US tax dollars. Not to mention, they get private pay increases by weaponizing the ACGME to keep residency slots low.
Residency does not need to be paid. Outside of the Medical industry, people pay for their college. For some reason Physicians make tax payers pay for their education and a decent salary.
Residency is more like on-the-job training (a hospital still makes money when a resident sees and treats you). It just takes longer to train a physician because there are human lives at stake.
Yes, teaching fellows and others in academia are often taken advantage of and work for free, but that doesn’t mean physicians are evil for getting paid during residency.
Airbags?
Our electrical infrastructure?
Our plumbing?
Please, there are plenty of of industries that have lives at stake and we don't have a cartel controlling the supply of people. The issue is that we don't have enough Physician(By design), so they need to operate independently. Any other industry has multiple layers of qualified people checking to make sure things are safe.
I kind of dream of a world where you'd have 1 physician and a physician manager and a physician director all looking at your paperwork. Instead you get 1 total.
However, the human body is much more complicated. Would you trust the life of a loved one who, God forbid, has cancer or needs surgery to a person with a fraction of the education and training physicians receive?
By the way, I’m reminded of a joke: a doctor called a plumber for a faucet leak. The plumber fixed it in 5 minutes and charged $175. The doctor said “how can you charge that much for 5 minutes of work? I spend a whole hour with a patient and charge less!” The plumber said “that’s exactly what I used to say when I was a doctor.”
False dichotomy.
Right now the ACGME limits the number of residents. This causes a lower supply, so instead of having 6 surgeons working on you, you have 1-3. Do you only want a few people fresh from residency working on you? Or a bunch of physicians with various experience?
Also, plot twist, we own a medical company. (not physicians, but a different cartel that is paid way less and got a pay cut since 2016) You can treat 7 people per 37 minutes, each paying between $40-$125. Physicians is way worse, you can charge $250 for 5-10 minutes.
(Note that this ignores documentation costs/times, but it should give you an order of magnitude to play with.)
We don't do that blatant 7 people per 37 minutes, its more like 1 person per every 60 minutes, but as the clinic grows we've had 2 people per 60 minutes out of necessity. The hospital/other clinics do this.
I need to do an AMA on owning a medical clinic. My wife, the primary doctor, isnt exactly happy that I bite the hand that feeds. We already lost our chiropractor referrals because I couldn't handle their mysticism and spoke out against it.
Hospitals lose money on residencies. That's why there aren't enough and the ones that do exist need to be subsidized by the federal government.
I _have_ been a patient going to a specialist appointment where the only doctor I saw was a resident, and I don't think I or my insurance were charged any less. So if their work brings in the same amount of revenue for the same services, and if resident often do a lot of hours (I seem to recall several years ago their hours were capped to not be _dangerous_ but are still a lot), and they're paid less during their residency than after it ... why _don't_ hospitals make money off residents? Is there some training going on parallel to seeing/treating patients which is really expensive?
Residency is not college, residents are practicing physicians that are providing considerable value to society and in many cases they are paid appallingly little for the amount that they work.
Physicians are not advancing scientific knowledge.
Also a co-op during a CS degree isnt paid with taxes.
I don't understand your point about scientific knowledge, in my mind keeping people alive is at least equally as important as advancing scientific knowledge.
Yes, but they are providing a similarly valuable service. And, in fact, almost all medical practice contributes to the development of knowledge as well. Lot's of physicians (even residents) write papers.
Hopefully states experimenting with universal higher education legislation makes some improvement possible: https://apnews.com/article/minnesota-legislature-college-tui... ("Minnesota lawmakers reach deal for free college tuition")
Note for this article that private colleges have the highest drop out rate, and Minnesota's plan excludes such institutions:
> Qualifying students would have to attend a two- or four-year school in either the University of Minnesota or Minnesota State systems, or a tribal college. Private college tuition would not be covered.
> From 2008 through 2009, enrollment in private for-profit colleges rose disproportionately compared to private non-profit and public colleges. Private for-profit colleges have extraordinarily high rates of default, near 16% of borrowers default within 3 years.
The rest of your point stands though.
The whole "get a college degree if you want to be middle class" scam is evaporating, which results in your observation.
https://reason.com/2023/03/31/poll-most-americans-dont-think...
https://apnews.com/article/skipping-college-student-loans-tr...
Funding directly by setting a price cap, and paying vendors that amount for services rendered? Seems to work for almost every other developed country in the world.
With the monetary savings of #2, it could even give every medical student a fully free ride.
I love when someone says "seems to work". In the strict sense, that only ever means "does something". Not necessarily "does what someone wants"... and never "does what I want".
When it works for those other countries, does it "do what you want"? Because it doesn't "do what I want" at all.
> With the monetary savings of #2, it could even give every medical student a fully free ride.
Won't someone think of the millionaire heart surgeons in the 1%? They obviously needed free rides back when they started, it's why they're only single digit millionaires!
> Funding directly by setting a price cap,
Starving the people you want to provide your medical treatment isn't the brightest strategy. Increases to price caps are always reactive, after they've been complaining for years. The bureaucracy demands that it take years more to raise the price caps. And by the time that happens, they've been bleeding money the whole time. It's a strong incentive for them to do all sorts of things that you don't want... and if you do it for any length of time at all, it trains them to do these bad things so even if you realize the error of your ways and withdrawn the bad policy, they keep on doing the bad things.
Quite clearly, the problem with health insurance is that we need a gigantic insurance company larger than any other in history, and that it needs to be managed by the paragons of competency, the federal government. Of course, they'll need to staff up... and with all the layoffs in the private insurance industry, we'll hire all those empathetic, kind-hearted subject matter experts.
Should be the best thing ever. I can't possibly see anything that might go wrong.
If "better health outcomes per dollar" is not "what you want" -- how come?
[1] https://www.pgpf.org/blog/2022/07/how-does-the-us-healthcare... [2] https://www.piie.com/blogs/realtime-economic-issues-watch/wh...
IMO, if the US decided to actually help its citizens every country the average progressive considers "great at healthcare" would likely implode under the sudden increase in cost. The cost of medication alone would likely nearly bankrupt several governments. Imagine if the price of insulin, almost completely funded by US citizens paying absurd prices, went up to its US price.
Much like with defense, the US taxpayer is the hero of the rest of the world's healthcare. Without US tax cattle the rest of the world would not be as nice as it is. It's just like when prices go up at your favorite store due to theft. The US is punished by insurance companies because other countries refuse to pay more.
By removing the for-profit system, you would actually be removing rampant rent-seeking on something that should be a human right.
> Imagine if the price of insulin, almost completely funded by US citizens paying absurd prices, went up to its US price.
A very strange example to select, considering it was first discovered by Canadians and the patent was later sold for $1. US citizens are certainly not "subsidizing" insulin elsewhere.
[0] https://www.pbs.org/newshour/economy/do-other-countries-pigg...
[1] https://www.washingtonpost.com/opinions/2022/11/29/us-health...
Of course, anyone can do a google search and find some opinion pieces confirming their world view, that doesn't make it true.
The post article in particular just looks at the total revenue and essentially says "look how big it is compared to other countries, we must be subsidizing them". But this just justifies the extreme profit-seeking already in the sector, it's not an argument that it's necessary for innovation.
Even your own source [1] contradicts the idea that high costs are inevitably caused by this subsidization:
> Why doesn’t competition bring U.S. health-care prices down? The answer: America’s stagnant third-party payment system allows hospitals and doctors to avoid competing on price.
If we're paying more for nurse salaries, hospital administration, insurance company bureaucracy, and ineffective procedures near end-of-life with low probability of success, it's unlikely the cost diff is mainly due to "subsidizing innovation."
Because I don't confuse "individual" with "group".
The fallacy here is to tally up every dollar spent on medical treatment in a given year, then saying "here we spent X on medical treatment, but it could only be 0.7X if the government were in charge".
But you never asked me how much I spent on medical treatment. What if I spent 0?
Well then, your plan has me spending more than I used to, to get me something I didn't want/need. It's not a good deal for me. And if it's a good deal for someone else, it's only because you shackled me up and made me work the fields for their benefit. No thanks.
Even if I was the sort to engage in that non-sense, the problem itself is insurance. And that holds true whether some private company (or many) is in charge of the insurance, or the government is in charge of it. You think BCBS rejects claims, but that the feds don't reject them? Wow, do I have a bridge to sell you.
When someone wants a good or a service, and they pay for it themselves, they are price-conscious. When they don't pay for it themselves (because the insurance company does, or the government), they aren't price conscious. But this encourages the goods-provider to raise their prices... even discourages them from keeping them low. Low prices signal low quality. This encourages the payers to reject claims, then once more the goods-providers to raise prices again to cover for all the rejected claims (bonus if they can go after the goods-buyers for the price too!).
And it all spirals out of control. There is nothing in this mechanism that makes it less ridiculous if the federal government owns the insurance company, and it is the only insurance company permitted by law.
I take that back, there is one thing different. Now you can introduce price caps, woohoo! That will certainly fix the problem. Some committee 2000 miles away and months-distance from the facts can magically determine a fair price for all physicians and surgeons nationwide for some procedure's medical code (not the procedure itself, these are always unique... but the little alphanumeric codes, nice and uniform so they fit in the database).
That definitely won't cause further meltdowns. Will it be blamed on nefarious capitalists hiding in the woodpile? Will it just be chalked up to disappointing reality "there can be no other way"? Probably will depend on just where we're at in the election cycle.
If you want to see prices drop (plummet really), outlaw all insurance. Make people pay cash, out of pocket, for everything. You starve if you can't sell your stuff to people who want it, and if those people only have 1/100th of what you used to ask, then you either learn to live with the 1/100th, or you starve. No one gives out bank loans for heart transplants.
But... they don't. Peer countries with gvt subsidized/socialized care spend less than the US (per procedure and in aggregate).
> Starving the people you want to provide your medical treatment isn't the brightest strategy
Gosh, it's almost like I pre-empted the latter complaint with the note that you've responded to above...
Expanding the number of doctors, and lowering doctor pay and workload, and lowering the cost of becoming a doctor will produce better health outcomes for everyone. Yes, some people will stand to lose from this, just like the current bloat of worthless administrators and billing clerks and other paper-pushers will stand to lose from a cleanup of the system.
I don't care about their well-being.
> I love when someone says "seems to work". In the strict sense, that only ever means "does something". Not necessarily "does what someone wants"... and never "does what I want".
> When it works for those other countries, does it "do what you want"? Because it doesn't "do what I want" at all.
This exact criticism can be levied on the current US system.
So go do it. No one's cockblocking you. Well, except the AMA. Or are you saying that you'll only do this if you get your socialized medicare-for-all quackery?
Wouldn't be shocked if it was held hostage like that, but no thanks.
> This exact criticism can be levied on the current US system.
I never said it worked. Wouldn't catch me saying that ever.
(Mind you, I know "largest" doesn't mean most expensive usually - indeed the most expensive TV was "only" 65" but was still <$2k.)
Capitalism has certainly worked really well for this one specific consumer good.
There obviously is a different arrangement when you have companies like TCL putting in Google TV.
"When dad was your age, TVs cost a heck of a lot of money, had terrible resolution, took several grown men to carry, and were almost as deep as they were tall"
"Last year I carried home a larger TV with 40x the number of pixels by myself, and paid for it with one day's work"
https://www.opensecrets.org/federal-lobbying/top-spenders?cy...
The medical cartels need to be destroyed.
[1] https://www.reddit.com/r/Professors/comments/un7uei/average_... [2] https://tuition.psu.edu/tuitiondynamic/tabledrivenrates.aspx...