Blessedassurance wrote:Samara wrote: Yep, that's how demand works. If I'm willing to see one movie per month at $10/ticket and two at $7/ticket, and the government gives me a $3 coupon, I'll see two movies instead of one and more movie theaters will open. My consumption changed, but my demand curve didn't. If studios misrepresent how good their movies are, I'll want to see two movies at $10 and three movies at $7, thus changing my demand curve.
Producers enter the market to take advantage of the increase in price due to the increase in demand.
The problem with government subsidization is that it creates demand where none would have existed. The increase in demand relative to supply causes a rise in tuition and the proliferation of producers at the new higher equilibrium which further creates an increase in supply of JD-holders relative to demand of labor which drives down price to a lower equilibrium (and unemployment).
The availability of alternate means of financing which you speak of is also a consequence of governmental interference to the extent that the loans are non-dischargeable.
All this analysis of a bubble-burst requires the participation of rational , informed agents and viable substitutes, rendering the point moot. The educational bubble is not going to burst anytime soon. Cooley will continue to meet its quota, JDU notwithstanding (snowflake syndrome, knowing an employed Cooley grad etc). The government can quit subsidizing education but that will open up a whole new pandora's box. The onus is on the ABA to restrict the supply of JD-holders in a manner similar to the AMA but that also involves trade-offs.
I think we can all agree on this.