A RESPONSE TO TWO COMMENTS

Richard Lewis offers this comment on my animadversions against Columbia: 

“One theory favored by more neo-liberal types is 'Baumol Cost disease' whereby human labor intensive services get relatively more expensive over time as technology makes manufacturing, communications, transport, etc cheaper in relative terms. In other words, you can automate production of toothpaste but not nursing or university teaching, so costs in health and education will tend to rise relative to the technology intensive parts of the economy. The neo liberal aspect of this is a kind of 'automatic compensation' principle whereby fridges and airline tickets get cheaper while health and education get more expensive.”

I decided to do a little Googling to check this out, and my scattered investigations suggest Baumol is correct.  For example, in 1965 one year of Columbia tuition bought 1462 pounds of steak.  In 2019, one year of Columbia tuition will buy 8400 pounds of steak.  [And so forth for many other consumer items.]  But how does Columbia do compared with other labor intensive elite services?

Well, in 1965, Columbia tuition was $1900, and my psychoanalyst on the Upper East Side charged me $25 an hour, so one year of Columbia bought 76 hours of analysis [I will leave it to others to decide which was a better bang for the buck.]  Today, Google tells me that New York analysts are charging $200 an hour, which means that one year of Columbia buys 295 hours of analysis.  Somehow Columbia has managed to raise its prices almost 400% as much as Manhattan psychoanalysts.  I trust no one will accuse analysts of selling themselves cheap, so William Baumol to the contrary notwithstanding, Columbia’s dramatic escalation of its tuition requires some additional explanation.

Professor Goldfarb offers a more detailed objection.  I am afraid I have a long history, going back almost seventy years, of bad mouthing Harvard, and Professor Goldfarb has on sever al occasions taken me to task for my carping.  Here is his comment:

“Prof. Wolff posts on this topic regularly, but his point is completely undercut by his inattention to JKR's point. Sticker price is paid only by the well-off. The elite private institutions have very robust financial aid for most of their students. In fact, I am surprised that Prof Wolff does not applaud this highly redistributive arrangement. The colleges and universities bump up their sticker prices with an eye to how much the well-off can pay, and then give it back to the less well-off.  Here's an example. TwinBob is a senior at Forest Hills High School applying to Harvard in 2019. His father is a high school principal in NYC, in his third year in that position. His mother is a secretary at a non-profit. He has a sister already in college. As a guess, I'll take his father's salary to be $125,000, his mother's $45,000. According to the Harvard financial aid tool, he can expect a tuition scholarship of $51,400, making his tuition payment $7,520, about 12% more than what 1950 tuition would be in current dollars. Now the following year, TwinBob's mother has to retire due to health concerns, but his father gets a hefty seniority raise, so the family income is now $140,000. In that case, TwinBob pays $600 in tuition.  Financial aid at the elite institutions nowadays also eliminates the necessity for students to take out any significant loans.  The sad story, however, is in the public institutions. Here the sharply rising tuition costs are driven much more by legislative strangulation.”

First of all, let me say that this is an extraordinarily gracious and rather touching comment, drawing as it does on details of my family history to be found in my on-line Autobiography.  Now, I am and always have been an admirer of noblesse oblige, whether at Versailles under the ancient régime or in Cambridge in the elite redoubts of mature capitalism.  So I applaud Harvard’s redistributive efforts, even if they are made necessary by its inexplicable ballooning of the tuition it charges its undergraduates.  I confess that sitting here in North Carolina, far from Harvard Square, I experience a perhaps reprehensible suspicion that this is not just some clever scheme to soak the rich, but Professor Goldfarb is on the spot, and so I bow to his superior wisdom.