Thursday, January 18, 2007
The Hidden Costs of Socialism
I’m still a college student, and I found myself this semester retaking a Precalculus class that I had begun a couple of years ago but had to pull out of, largely for military reasons. I was pleased, upon reading the syllabus, to see that the same book that I had used for the previous class was still assigned; it would save me having to purchase another $100 textbook. I wasn’t sure whether the same edition was still being used (the syllabus didn’t specify), but I figured I would give it a shot; even if the edition I had was out of date, I figured it would be usable. After all, how much could mathematics have changed in a couple of years?
Everything was going fine until I got about halfway done with my homework and realized that several problems were assigned that did not exist in my text. Frustrated, I went to Morris to check out the current edition from the Reserve room. The answer to the question of how much mathematics had changed in a couple of years was not much; there was very little difference between the readings portion of the two texts. In fact, the only difference I noticed was the removal of a tidbit I had thought interesting about the origin of the word “Algebra.”
The Exercises portion, however, was another story. It was completely different from what was in my old text. Problems had been added, existing problems had been moved; sometimes the only noticeable change was that the problem sections had been rearranged and renumbered. Why? Was the new format somehow superior to the old, aside from the additional problems? No; it was about the same, just reworded and renumbered. Why then? For one purpose: to stiff poor college students like myself.
It’s a cute trick: Leave the text substantially alone, but rearrange the exercises in order to instantly outdate the old textbook and force students to buy the expensive new edition instead of purchasing the old one used. It’s particularly transparent in mathematics, where (at least on the undergraduate level) things change so slowly that publishing a new edition every two years is patently silly. But it’s a trick that is used throughout the massively profitable textbook publishing system. Publish a new edition, discontinue the old edition, and rearrange things sufficiently so that the old edition is incompatible with the new. This bit of skullduggery, along with the exorbitant price of textbooks, combine to jilt college students out of millions of dollars every year.
How is this possible? How is it that in a free-market economy where it seems that nearly every other commodity or service seems to get better and/or cheaper over time, can textbook publishing be stuck in this Dark Ages cycle of ripoffs and exploitation?
The answer, oddly enough, would seem to be socialism. In particular, socialist colleges and universities. “Huh?” you might ask. “What socialist universities?” There’s one right before your eyes. I attend one. SIUC is a state-owned, and therefore socialist, school. Its tuition rates are subsidized, particularly for state residents, so that its tuition rates are substantially below market rates for a comparable education.
So how are state schools responsible for textbook prices? Simple: socialist schools have no incentive to keep costs low for their students. Their tuition rates are already artificially low, so they can expect high enrollment even if they heap other, hidden costs on the students (although SIUC, amazingly, seems to be doing a horrible job at enrollment, even so). What’s more, the low price of state schools removes poorer students from the free market for higher education, so that (except for the intellectual cream) private schools rarely even attempt to entice them. This results in reduced price competition between private schools. Someone who is paying $20,000 a semester (or whatever it is now) to attend MIT is unlikely to balk at a $500 textbook bill.
If state schools did not exist, low-cost private schools would spring up in their place, and (given the magic of the free market) would likely be providing a superior education at equivalent or lesser cost within a few years. What’s more, a free market in education would tend to solve the textbook problem. If schools could compete freely for the poorer students, textbook cost would likely become a factor.
And the solution to the textbook problem is astonishingly simple: Textbook cost should be counted as part of tuition. Students don’t pay room-rental fees for their classrooms; they don’t pay electricity fees for the energy they use while in class. All of that and more are part of the cost of tuition. If textbooks as well were considered as part of this cost by a majority or substantial minority of schools, textbook prices would plummet. Why? Because schools, trying to minimize their textbook cost, would press professors to choose cheaper texts, and those that are not updated more often than necessary. A market for cheaper textbooks would spring up, and publishers would move to fill that market. In fairly short order, this ridiculous stranglehold publishing companies have over students would be abolished. As of now, there is no market for cheaper textbooks. Sure, you want a cheaper textbook, but you are not the one who chooses the textbook you have to buy; your professor is. And your professor is not the one who has to pay for it, so he will rationalize the cost to himself, and you are, once again, screwed.
So remember: The next time you think government would do a better job than the market at providing some service or good, don’t forget the hidden costs.
Everything was going fine until I got about halfway done with my homework and realized that several problems were assigned that did not exist in my text. Frustrated, I went to Morris to check out the current edition from the Reserve room. The answer to the question of how much mathematics had changed in a couple of years was not much; there was very little difference between the readings portion of the two texts. In fact, the only difference I noticed was the removal of a tidbit I had thought interesting about the origin of the word “Algebra.”
The Exercises portion, however, was another story. It was completely different from what was in my old text. Problems had been added, existing problems had been moved; sometimes the only noticeable change was that the problem sections had been rearranged and renumbered. Why? Was the new format somehow superior to the old, aside from the additional problems? No; it was about the same, just reworded and renumbered. Why then? For one purpose: to stiff poor college students like myself.
It’s a cute trick: Leave the text substantially alone, but rearrange the exercises in order to instantly outdate the old textbook and force students to buy the expensive new edition instead of purchasing the old one used. It’s particularly transparent in mathematics, where (at least on the undergraduate level) things change so slowly that publishing a new edition every two years is patently silly. But it’s a trick that is used throughout the massively profitable textbook publishing system. Publish a new edition, discontinue the old edition, and rearrange things sufficiently so that the old edition is incompatible with the new. This bit of skullduggery, along with the exorbitant price of textbooks, combine to jilt college students out of millions of dollars every year.
How is this possible? How is it that in a free-market economy where it seems that nearly every other commodity or service seems to get better and/or cheaper over time, can textbook publishing be stuck in this Dark Ages cycle of ripoffs and exploitation?
The answer, oddly enough, would seem to be socialism. In particular, socialist colleges and universities. “Huh?” you might ask. “What socialist universities?” There’s one right before your eyes. I attend one. SIUC is a state-owned, and therefore socialist, school. Its tuition rates are subsidized, particularly for state residents, so that its tuition rates are substantially below market rates for a comparable education.
So how are state schools responsible for textbook prices? Simple: socialist schools have no incentive to keep costs low for their students. Their tuition rates are already artificially low, so they can expect high enrollment even if they heap other, hidden costs on the students (although SIUC, amazingly, seems to be doing a horrible job at enrollment, even so). What’s more, the low price of state schools removes poorer students from the free market for higher education, so that (except for the intellectual cream) private schools rarely even attempt to entice them. This results in reduced price competition between private schools. Someone who is paying $20,000 a semester (or whatever it is now) to attend MIT is unlikely to balk at a $500 textbook bill.
If state schools did not exist, low-cost private schools would spring up in their place, and (given the magic of the free market) would likely be providing a superior education at equivalent or lesser cost within a few years. What’s more, a free market in education would tend to solve the textbook problem. If schools could compete freely for the poorer students, textbook cost would likely become a factor.
And the solution to the textbook problem is astonishingly simple: Textbook cost should be counted as part of tuition. Students don’t pay room-rental fees for their classrooms; they don’t pay electricity fees for the energy they use while in class. All of that and more are part of the cost of tuition. If textbooks as well were considered as part of this cost by a majority or substantial minority of schools, textbook prices would plummet. Why? Because schools, trying to minimize their textbook cost, would press professors to choose cheaper texts, and those that are not updated more often than necessary. A market for cheaper textbooks would spring up, and publishers would move to fill that market. In fairly short order, this ridiculous stranglehold publishing companies have over students would be abolished. As of now, there is no market for cheaper textbooks. Sure, you want a cheaper textbook, but you are not the one who chooses the textbook you have to buy; your professor is. And your professor is not the one who has to pay for it, so he will rationalize the cost to himself, and you are, once again, screwed.
So remember: The next time you think government would do a better job than the market at providing some service or good, don’t forget the hidden costs.
Labels: Calion, Economics, siu
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Unfortunately for your argument, prices on textbooks are the same at non-state schools as well.
If you want to blame someone for the price of textbooks, blame the size of the market. How many textbooks do you see for sale out at Barnes and Noble? There's a very small market for textbooks on pre-calculus, anatomy or political science theory. Small marekt means higher prices. Grow the market for textbooks and prices will drop.
If you want to blame someone for the price of textbooks, blame the size of the market. How many textbooks do you see for sale out at Barnes and Noble? There's a very small market for textbooks on pre-calculus, anatomy or political science theory. Small marekt means higher prices. Grow the market for textbooks and prices will drop.
Hilarious post! They would be lining up to provide cheap private schools to the youth of today and tomorrow. Ha Ha. You must be channeling Stephen Colbert or something. Or you might just be a business major that trusts his own textbooks a little too much. Keep 'em coming. I need another laugh.
sthorne:
Look at the post again. The point is that the very existence of state schools reduces price competition among universities. This reduces the incentive for private universities to reduce cost to the student. Of course things are just as bad at private schools; the existence of state universities allows them to get away with forcing students to absorb exhorbitant textbook prices.
And the market-size problem is the standard line trotted out whenever this issue comes up. Unfortunately, it's complete hogwash. Self-published books are not nearly as expensive as many textbooks, and their market is sometimes in the dozens. What's more, the market-size excuse does not explain the problem that inspired the article: continuous, unnecessary new editions. No, the problem is the violation of what I consider to be the fundamental normative law of economics: Those who make the choices should pay the costs. In the textbook market this is not the case. The professors make the choices, but the students pay the costs. The state-schools argument is subject to debate, I admit. This bit--that textbooks are ridiculously overpriced--is not.
Look at the post again. The point is that the very existence of state schools reduces price competition among universities. This reduces the incentive for private universities to reduce cost to the student. Of course things are just as bad at private schools; the existence of state universities allows them to get away with forcing students to absorb exhorbitant textbook prices.
And the market-size problem is the standard line trotted out whenever this issue comes up. Unfortunately, it's complete hogwash. Self-published books are not nearly as expensive as many textbooks, and their market is sometimes in the dozens. What's more, the market-size excuse does not explain the problem that inspired the article: continuous, unnecessary new editions. No, the problem is the violation of what I consider to be the fundamental normative law of economics: Those who make the choices should pay the costs. In the textbook market this is not the case. The professors make the choices, but the students pay the costs. The state-schools argument is subject to debate, I admit. This bit--that textbooks are ridiculously overpriced--is not.
Chris: Yes, yes, entrepeneurs would in fact be lining up to provide (relatively) cheap private schools to the youth of today and tomorrow. It's truly tragic that the vast majority of people today are so woefully undereducated that they don't understand as much about economics as anyone who has taken even half of Econ 113 at SIUC does. And no, I'm not a business major; I'm an Economics major. It's not too much, I think, to believe that what I'm learning is not complete hogwash. Besides, I don't need to trust. Economics at the microeconomics level is not much more than a chain of logic built up from uncontroversial, common-sense principles. No trust is necessary; anyone with a decently-working brain can follow the arguments and see that the conclusions must be right. (Macroeconomics, the study of the operation of money, banking, the stock market, and the economy as a whole, on the other hand, is mostly based on empirical studies that are often highly questionable.)
Business, economics, It is all the same to my 1/4 of a brain. I highly doubt that anyone would provide a cheaper mediocre education for the kids. Who would pay for a college, especially one in southern Illinois, when enrollment continues to decrease at SIU each year? They could make more money opening another shopping mall or a subway restaurant. My gut tells me that even if they did, the textbooks would still be priced to rip off the students. They are sometimes written by the professors who obviously profit when a new book is purchased. My stupid brain don't unnerstan.
I forgot to add that education is obsolete. There is no need for corporations to educate people beyond being able to point at a menu at Mc Donalds. Well, they also need someone that can use the fryer. The need for a smart America is over in the eyes of the people controlling most of the wealth. The dumber the populace the easier it is to control them. What the heck do I know though, I can't even graduate from SIU?
Scott:
I know it's been a while, but this just occurred to me (stupid, I know): Don't you know, from extensive personal experience, that the "limited market" argument for overpriced textbooks is wrong? Don't plenty of full-color, glossy-page, hardback sourcebooks that have probably about a similar market size sell for quite a bit less than textbooks? Okay, textbooks are often at least twice as thick as these sourcebooks, but you know better than I do that doubling the number of pages doesn't even come close to doubling the cost. So...call it $50-$60 for a textbook-size small-market sourcebook with glossy pages and more-expensive art than a text; at most half what an equivalent textbook costs. And we gamers gripe about $30 or $40 for sourcebooks (but that is the small-market problem). And the killer argument: Many textbooks are published in cheap paperback versions for foreign markets only. These texts are clearly marked "Not for sale in North America." I'm not sure why I didn't think of this earlier; I buy these all the time, using Campusi to find them. Here's an example, a text I bought last year. Business Statistics in Practice: List price (which means bookstore price): $145-$165. International edition (with all the same text, plus the CD): $40. $40. One-quarter the price. No, nobody's getting ripped off here, nosiree.
I know it's been a while, but this just occurred to me (stupid, I know): Don't you know, from extensive personal experience, that the "limited market" argument for overpriced textbooks is wrong? Don't plenty of full-color, glossy-page, hardback sourcebooks that have probably about a similar market size sell for quite a bit less than textbooks? Okay, textbooks are often at least twice as thick as these sourcebooks, but you know better than I do that doubling the number of pages doesn't even come close to doubling the cost. So...call it $50-$60 for a textbook-size small-market sourcebook with glossy pages and more-expensive art than a text; at most half what an equivalent textbook costs. And we gamers gripe about $30 or $40 for sourcebooks (but that is the small-market problem). And the killer argument: Many textbooks are published in cheap paperback versions for foreign markets only. These texts are clearly marked "Not for sale in North America." I'm not sure why I didn't think of this earlier; I buy these all the time, using Campusi to find them. Here's an example, a text I bought last year. Business Statistics in Practice: List price (which means bookstore price): $145-$165. International edition (with all the same text, plus the CD): $40. $40. One-quarter the price. No, nobody's getting ripped off here, nosiree.
Maybe so, but the market for giftbooks is still bigger than the market for textbooks. I can show you gift book sections in Barnes and Noble, Waldenbooks and even Wal-mart, which none of them would have if there' wasn't a market for overpriced gift books. I still haven't seen a textbook section in any of them. Heck, I can even find gaming books at the local B&N but not a textbook.
Regarding your second point, I assume it means you're abandoning your or at least re-evaluating your original assertion that socialism is the cause of the high cost of books, since most higher education outside the US is state sponsored or supported. Since you're finding lower priced textbooks available there, this indicating that the socialistic aspects of eduction are not the sole or even major cause driving the price higher.
Finding items priced lower on the international market than in the US is not that uncommon. Drugs spring to mind immediately. Drug companies routinely charge much more for prescription drugs in the US than in other countries, justifying the higher price through the need to cover the cost of R&D or to subsidize the drugs sold at lower prices in other countries either because the country's economy can't support a high price or the country's legal system mandates a ceiling on drug prices.
Regarding your second point, I assume it means you're abandoning your or at least re-evaluating your original assertion that socialism is the cause of the high cost of books, since most higher education outside the US is state sponsored or supported. Since you're finding lower priced textbooks available there, this indicating that the socialistic aspects of eduction are not the sole or even major cause driving the price higher.
Finding items priced lower on the international market than in the US is not that uncommon. Drugs spring to mind immediately. Drug companies routinely charge much more for prescription drugs in the US than in other countries, justifying the higher price through the need to cover the cost of R&D or to subsidize the drugs sold at lower prices in other countries either because the country's economy can't support a high price or the country's legal system mandates a ceiling on drug prices.
Drugs are ridiculously overpriced in the U.S. because of over-regulation by (mainly) the FDA. That's another matter.
And no, I'm not giving up my socialism argument until I know why international editions are cheaper. It's not the existence of state schools per se that make textbooks too expensive; it's the particular method that they use (because they have no incentive to do otherwise) to choose textbooks. Perhaps conditions are different outside North America. I really don't know, and don't know an easy way of finding out.
And no, I'm not giving up my socialism argument until I know why international editions are cheaper. It's not the existence of state schools per se that make textbooks too expensive; it's the particular method that they use (because they have no incentive to do otherwise) to choose textbooks. Perhaps conditions are different outside North America. I really don't know, and don't know an easy way of finding out.
I teach in the Math Dept. The Math Dept webpage does list the edition and ISBN number of required textbooks. The instructor should have included at least the addition number. You might let him of her know this. If you have a complaint about a math instructor or about the Math Dept you can contact Prof. George Parker, our Assistant Chair.
The argument textbook companies give for issuing new editions very 2 or 3 years is that the used book market cuts into their sales. They issue the new editions mainly to undermine the used textbook market.
This is a big pain for faculty because even though the changes are minor we have to redo our assignments and syllabi. It is a really big pain for textbook authors! If an author won't playball and "update" he or her book, the publisher will stop marketing it. As the publish owns the copyright the author cannot switch to another publisher. It is not just students who are upset by what is happening.
Here is my question. Why do so many students sell their textbooks? If they came to college to learn and to use and retain what they learned wouldn't they want to keep their books for future reference? In Calculus I expect students to use the precalculus material and to be able to lookup what they don't remember. In differential equations I expect students to use calculus. Yet often they have sold their calculus books and this hurts them in subsequent courses. I'd be interested to hear what students have to say about this. Am I being hopelessly naive?
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The argument textbook companies give for issuing new editions very 2 or 3 years is that the used book market cuts into their sales. They issue the new editions mainly to undermine the used textbook market.
This is a big pain for faculty because even though the changes are minor we have to redo our assignments and syllabi. It is a really big pain for textbook authors! If an author won't playball and "update" he or her book, the publisher will stop marketing it. As the publish owns the copyright the author cannot switch to another publisher. It is not just students who are upset by what is happening.
Here is my question. Why do so many students sell their textbooks? If they came to college to learn and to use and retain what they learned wouldn't they want to keep their books for future reference? In Calculus I expect students to use the precalculus material and to be able to lookup what they don't remember. In differential equations I expect students to use calculus. Yet often they have sold their calculus books and this hurts them in subsequent courses. I'd be interested to hear what students have to say about this. Am I being hopelessly naive?
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: March 3, 2008 at 3:07 PM
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