Month: May 2013

Let Me Explain the Economics of College Tuition

The Atlantic has discovered that many colleges are soaking the poor by charging high tuition while handing out discounts to students from wealthy families:

Sometimes, colleges (and states) really are just competing to outbid each other on star students. But there are also economic incentives at play, particularly for small, endowment-poor institutions. “After all,” Burd writes, “it’s more profitable for schools to provide four scholarships of $5,000 each to induce affluent students who will be able to pay the balance than it is to provide a single $20,000 grant to one low-income student.” The study notes that, according to the Department of Education’s most recent study, 19 percent of undergrads at four-year colleges received merit aid despite scoring under 700 on the SAT. Their only merit, in some cases, might well have been mom and dad’s bank account.

There’s nothing inherently wrong with handing out tuition breaks to the middle class, or even the rich. The problem is that it seems to be happening at the expense of the poor. At 89 percent of the 479 private colleges Burd examined, students from families earning less than $30,000 a year were charged an average “net price” of more than $10,000 annually — “net price” being the full annual cost of attendance minus all institutional and government aid. Less technically, it’s what students can actually expect to pay. At 60 percent of private colleges, that net price was more than $15,000.

Of course the author of the article is unable to understand why colleges are partaking in such chicanery:

Otherwise, it’s hard to think of a justification for their behavior. Could it be that their prices are worth it, that the educations they provide justify the eye-popping cost? It’s hard to say definitively. But I’m hoping to put that possibility to the test in the coming week by matching Burd’s data against graduation and student loan default rates. In the meantime, the preponderance of evidence seems to suggest that many private colleges are either undercutting the intent of the Pell program, if not abusing it outright.

I’m nothing if not helpful so let me explain what is going on here. The phenomenon noted by the author is really another version of the state’s war against the poor. That is to say colleges, like states, want to raise a herd of dairy cattle that will produce a lot of milk. Doing so requires culling cattle that produce less milk and breeding cattle that produce more milk.

As the article notes many of the students being favored didn’t score notably well on Scholastic Assessment Tests (SAT) or demonstrate any real form of academic exceptionalism. The primary criteria for handing out discounts appears to be parental income. Why would a college prefer to attract students from wealthy families over students who demonstrate academic exceptionalism? Because students from wealthy families provide more milk.

When a college accepts students from wealthy families they stand to get far more than just tuition. Have you ever wondered how college buildings get their names? In many cases college buildings are named after large donors. For example, Parkhurst Hall at the Georgia College is named so because:

Next to Foundation is Parkhurst (2003), an imposing structure that replaces the 1949 Parkhurst Hall that chiefly had been occupied by faculty. The first Parkhurst was built with money from the Sylvester Mumford Fund, established by Mumford’s daughter, Goertner Parkhurst (1850-1949). Sylvester Mumford was a New York merchant who settled near Waynesville, Ga., and built a stately, antebellum home. The beautiful Goertner Mumford cast a romantic figure in the 1870s as she rode her favorite white stallion through the sand hills and pines of the Brantley County estate. Mrs. Goertner Mumford Parkhurst later used her considerable fortune to support the cause of women’s education.

Wealthy families tend to donate money to the college their student(s) went to even after their student(s) graduated. In addition to donations, colleges also gain name recognition by having students from prominent families in their communities (often wealthy families) attend. Name recognition can greatly increase enrollment because many people want to go to a famous college (I’m told it also looks good on a résumé). Not only that but children are often encouraged by their parents to attend whatever college one or or both of them attended. That means a college may enjoy multiple generations worth of students from a wealthy family, thus expanding the amount of time they enjoy the previously mentioned benefits.

What do colleges stand to get when they accept a student from a poor family? Tuition. Somebody is probably saying, “Hey Chris, you dumbass, a student from a poor family will make more money after they graduate college!” As it turns out economic mobility in the United States isn’t very mobile. If you are born into a poor family you are more likely than ever to remain poor. That means a college is less likely to see large donations from students of poor families after they graduate. On top of that, students from poor families are more likely to be, at least somewhat, fiscally conservative. That means even if the student becomes wealthy he or she isn’t as likely to waste that wealth by tossing it to a college they already paid. Because of those two things the college has to milk cattle from poor families as much as possible right away.

In summary colleges favor students from wealthy families because they expect to gain more. The mistake being made by many people is believing colleges are something other than businesses. Colleges aren’t magical egalitarian institutions that are able to rise above self-interest. If that were the case senior college administrators wouldn’t make six-figure salaries, they would forgo a great deal of their salary so that money could be used to educate more students. But they do make six-figure salaries and they know that they need a strong herd of cattle to milk in order to continue making six-figure salaries.

Targeting Political Opponents Through Taxation

The wonderful thing about government regulations is that they’re so versatile. Most people think of the Internal Revenue Service (IRS) as merely a government agency that collects taxes. However to an extremely devious, and somewhat creative, fellow the IRS can become a club to wield against your political opponent, which is what the so-called progressives did:

WASHINGTON (AP) — The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday.

Organizations were singled out because they included the words “tea party” or “patriot” in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.

In some cases, groups were asked for their list of donors, which violates IRS policy in most cases, she said.

I don’t have a horse in this race beyond explaining how the IRS can be used as a political tool beyond tax collecting. My beliefs generally oppose the beliefs shared by organizations with the word “patriot” or phrase “tea party” in their title. However it is worth noting, regardless of your political orientation, how the state can prevent certain messages from spreading without resorting to direct censorship. By using tax laws the IRS was able to harass specific political organizations. Such harassment sends a very clear message: if you don’t subscribe to the dominate state-held political beliefs you can either keep your mouth shut or your life will be made miserable.

What’s even more interesting is that the IRS claims the harassment was initiated by a low-level employee:

Lerner said the practice was initiated by low-level workers in Cincinnati and was not motivated by political bias. After her talk, she told The AP that no high level IRS officials knew about the practice. She did not say when they found out.

In all likelihood the low-level employee received orders from higher up and is now being used as a scapegoat. If that isn’t the case then the IRS just admitted that they have no real oversight and that even low-level employees can wield the agency’s power against specific targets. The implications of this are frightening. Imagine a low-level IRS employee sending the agency to harass an ex-girlfriend or ex-boyfriend because the breakup wasn’t amicable. Suddenly vicious revenge is as simple as getting a job at the IRS.

Tax codes are just as useful for dealing with political opponents as outright censorship or passing laws for the specific purpose of targeting those opponents. Al Capone was taken down by wielding tax code because the state didn’t have enough evidence to charge him with anything else.

The power to tax is the power to suppress.

We’re Number One

Although this news is likely to excite my “tough on crime” friends I find it rather disgusting, especially for a nation that calls itself the freest on Earth:

“Mass incarceration on a scale almost unexampled in human history is a fundamental fact of our country today,” writes the New Yorker’s Adam Gopnik. “Over all, there are now more people under ‘correctional supervision’ in America – more than 6 million – than were in the Gulag Archipelago under Stalin at its height.”

Is this hyperbole? Here are the facts. The U.S. has 760 prisoners per 100,000 citizens. That’s not just many more than in most other developed countries but seven to 10 times as many. Japan has 63 per 100,000, Germany has 90, France has 96, South Korea has 97, and ­Britain – with a rate among the ­highest – has 153….

That’s right, the United States, the supposed bastion of freedom on this planet, has more people in its prison system than the Soviet Union did under Stalin. Anybody who has paid attention to the prison-industrial complex in the United States is unlikely to be surprised by this news. We’re talking about an industry where children have been sold to prisons so those prisons could enjoy the benefits of young slave labor. It is rather sickening that people still claim the United States is some kind of bastion of freedom considering we have more people in cages than any other nation, including some of the most tyrannical regimes.

Where’s Your Messiah Now

To the people who believe Rand Paul will deliver this country from the so-called progressives I have only one question, where is your messiah now:

At a lunch Friday with about a dozen evangelical pastors in a Cedar Rapids hotel, the younger Paul assured the group that he disagrees with libertarians who support legalizing drugs. When one pastor inquired about ideological ties between Paul and his father, the senator asked that he be judged as his own man.

[…]

In an interview a day before his Iowa trip, Paul, 50, also tried to make clear just what kind of politician he is. “To some, ‘libertarian’ scares people,” he said. “Some of them come up to me and they say, ‘I kind of like you, but I don’t like legalizing heroin.’ And I say, ‘Well, that’s not my position.’ ”

Paul said he believes in freedom and wants a “virtuous society” where people practice “self-restraint.” Yet he believes in laws and limits as well. Instead of advocating for legalized drugs, for example, he pushes for reduced penalties for many drug offenses.

If Rand Paul is your plan B for delivering this country from tyranny then it’s time to start working on your plan C. The man is a politician who prioritizes power over principle. He doesn’t want to deliver this country from tyranny he merely wants to be in charge of the tyranny.

Letting the State Define Marriage

Since I was in the middle of helping people bypass the state’s censorship of 3D printer models I didn’t have time to comment on the Minnesota House passing the bill that will likely legalize gay marriage here. Since I’m gifted with a wide variety of friends I have seen both positive and negative reactions to this news.

To my religious friends who are unhappy with this news please know that this outcome was made possible because of the previous actions of your religions. When the state first declared it had the right to define marriage most of the better known religions of the time supported the state’s expansion of power. They supported this expansion because the state was defining marriage according to their terms. What those religions should have done was tell the state that defining marriage is the job of religious institutions and refused to sign any marriage certificates issued by the state. Since those religious organizations stood by and did nothing the state obtained the power to define marriage. These religious organizations apparently failed to realize that once the state obtains a power it can change the rules at any time it desires. In all likelihood same-sex marriages will be legal in all 50 states in due time.

To my friends who are happy with this news please know that the same lesson applies to you. What you won was a temporary victory, one that can be taken away by the state at any time in the future. Much like the religious organizations of the past you seem to support to state’s declaration that it can define marriage because its definition agrees with your beliefs. However the religious organizations could gain more influence in the future and have same-sex marriages made illegal again.

The lesson everybody should take away from this post is that all attempts by the state to grab more power should be opposed, even if one of its power grabs favors your beliefs. While the power grab may favor your belief today it may oppose it tomorrow.

The State May Kill Intellectual Property

After thinking about the State Department’s attempt to censor 3D printable firearms I came to the realization that the destroyer of intellectual property may very well be the entity that created it. The state has never shied away from censorship but its desire to control information is obviously increasing. What will happen if the state continues to censor more and more material that it defines as objectionable? In all likelihood more information will be published anonymously.

How many people will attach their name to something if they know it will land them in prison or cause them to be murdered by the state? I think that list is pretty short. Most people would prefer to release such material anonymously. When material doesn’t have a name attached to it there is nobody to claim a copyright on it and therefore nobody to initiate an intellectual property lawsuit. In effect the state, through its efforts to censor information, may kill intellectual property. It would be fitting that the creator became the destroyer.

You Can’t Stop the Signal

It finally happened, the state finally made it’s move to suppress 3D printable firearms:

On Thursday, Defense Distributed founder Cody Wilson received a letter from the State Department Office of Defense Trade Controls Compliance demanding that he take down the online blueprints for the 3D-printable “Liberator” handgun that his group released Monday, along with nine other 3D-printable firearms components hosted on the group’s website Defcad.org, while it reviews the files for compliance with export control laws for weapons known as the International Traffic in Arms Regulations, or ITAR. By uploading the weapons files to the Internet and allowing them to be downloaded abroad, the letter implies Wilson’s high-tech gun group may have violated those export controls.

“Until the Department provides Defense Distributed with final [commodity jurisdiction] determinations, Defense Distributed should treat the above technical data as ITAR-controlled,” reads the letter, referring to a list of ten CAD files hosted on Defcad that include the 3D-printable gun, silencers, sights and other pieces. “This means that all data should be removed from public acces immediately. Defense Distributed should review the remainder of the data made public on its website to determine whether any other data may be similarly controlled and proceed according to ITAR requirements.”

I think we all knew this was coming. To tell the truth I hoped it would come. This was the overt act of censorship that was needed kick the Streisand effect into action and, in so doing, ensure that the 3D printer models created and hosted by Defense Distributed will never die. As it stands the number of seeds for the Defense Distributed files has jumped to several hundred. I’ve even found a Tor hidden service that is hosting the files (you need to use the Tor Browser Bundle to access that link). As I’ve heard several people say, you can’t stop the signal.

As I stated in my post explaining methods to render the Cyber Intelligence Sharing and Protection Act (CISPA) irrelevant, the need for anonymity and strong encryption is greater today than ever. The state is trying to spy on our communications and censor material posted online. While some may wish to beg the state to allow information to flow freely we know they aren’t going to comply. Because of their desire to control information we must bypass their ability to detect and censor information they find objectionable.

When the state makes attempts like this to censor information it allows us to test our ability to preserve said information. As it stands more people have downloaded the 3D printer models provided by Defense Distributed than would have if the state hadn’t made an effort to censor the models. In fact I’ve had several friends who were uninterested in 3D printed guns ask if I knew where to get the files. Now that the files have been declared verboten everybody wants a copy. The state really shot themselves in the foot with this one.

How the Iron Law of Prohibition Relates to Firearms

While I understand that the most zealous gun control advocates are unlikely to listen to me because they believe I’m a psychopathic murderer who wants to kill children I know that there are a lot of logical individuals who currently advocate for gun control because they believe it will lead to a safer society. This post is for the latter group. I recently came across an interesting post on the Ludwig von Mises Institute website discussing the effects of cannabis prohibition:

Super potent pot is not a market failure. It is simply the result of government prohibition. In fact, it is one of the best examples of the iron law of prohibition. When government enacts and enforces a prohibition it eliminates the free market which is then replaced by a black market. This typically changes everything about “the market.” It changes how the product is produced, how it is distributed and sold to consumers. It changes how the product is packaged and in particular, the product itself. The iron law of prohibition looks specifically at how prohibition makes drugs like alcohol and marijuana more potent. The key to the phenomenon is that law enforcement makes it more risky to make, sell, or consume the product. This encourages suppliers to concentrate the product to make it smaller and thus more potent. In this manner you get “more bang for the buck.”

During alcohol prohibition (1920-1933), alcohol consumption went from a beer, wine, and whiskey market to one of rotgut whiskey with little wine or beer available. The rotgut whiskey could be more than twice as potent of the normal whiskey that was produced both before and after prohibition. The product is then diluted at the point of consumption. During the 1920s all sorts of cocktails were invented to dilute the whiskey and to cover up for bad smells and tastes.

The iron law of prohibition states that “the more intense the law enforcement, the more potent the prohibited substance becomes.” When a substance is prohibited the sellers and buyers of that substance have a vested interest in delivering the most bang for buck because the more of that substance they possess the harder it is to conceal. Small amounts of cannabis can be concealed in film canisters, flashlights (just take out the batteries), cell phones (once again, remove the battery), and any other object that has a hallowed out space. Large amounts of cannabis cannot be concealed so easily and therefore detection by law enforcement becomes much easier.

While the iron law of prohibition relates to drug prohibitions I think it’s also applicable to other forms of prohibition. Let’s look at the type of firearms preferred by violent criminals:

New state stats show that firearms were responsible for more than 58% of the murders statewide last year — but the biggest problem was handguns.

Of the 769 homicides reported in 2011, 393 were the result of handguns. There were 16 deaths by shotgun, five by rifle, and 33 by an unknown “firearm-type,” the state Division of Criminal Justice Services reports.

The Department of Justice’s Guns Used in Crimes [PDF] report backs that claim:

Although most crime is not committed with guns, most gun crime is committed with handguns. pages 1 & 2

This makes sense when you consider the iron law of prohibition. Much like cannabis buyers and sellers, violent criminals, especially ones who are prohibited from possessing firearms, have a vested interest in firearms that can be concealed from law enforcement. Laws prohibiting individuals from lawfully carrying firearms didn’t discourage people from carrying firearms, it merely made the need to possess concealable firearms greater. The same can be said for prohibiting certain individuals from carrying firearms, they now seek firearms that can be easily concealed.

This brings up an interesting consequence of enacting even stricter gun control laws. What would happen if advocates of gun control were able to achieve their goals of a partial or complete prohibition against firearms? Firearm manufacturing and transfers wouldn’t stop, they would simply move underground (or further underground in the case currently prohibited firearm transfers). In addition to moving underground the demand for firearms that deliver more bang for their buck would increase. Firearms would likely become more potent by decreasing in size, becoming more difficult to detect, and, potentially, increasing in power. Resources would be invested in working around the prohibition by making firearms that are more difficult for law enforcement officers to detect.

As it currently stands the demand for difficult to detect firearms is relatively low. Those of us who carry a concealed firearm want one that is difficult for the average person to detect but we usually care little if our firearm is easy for law enforcement agents to detect. Resources are put into making concealable firearms but not undetectable firearms. Criminals tend to favor currently produced firearms because they are cheaper than developing alternatives (everything is subject cost-benefit analysis). Few criminals are going to invest the resources in producing more potent firearms when currently available firearms are good enough. That would likely change under a stronger or complete prohibition. Suddenly the investment in resources to develop very difficult to detect firearms would make sense.

Prohibitions have consequences. When alcohol was prohibited in the United States manufacturers began distilling extremely potent liquors to deliver more bang for buck. The current cannabis prohibition has resulted in a similar outcome, cannabis today is far more potent then it was before the prohibition. A firearm prohibition would likely result in the same outcome, firearms would become more difficult to detect and potentially more powerful. This is something that advocates of gun control should consider when asking themselves if a prohibition would actually lead to a safer society.

The Bringers of Violence

As I pondered the outcome of Kokesh’s armed march on Washington DC I assumed that if violence was to break out it would happen because the state initiated it. As it turns out Washington DC’s police chief may prove me right:

D.C. Police Chief Cathy L. Lanier was firm in her response. “If you’re coming here to protest government policy, great,” she told NewsChannel 8 yesterday. “If you’re coming here to break the law, we’ll take action.” She added, “There’s a pretty good chance we’ll meet them on the D.C. side of the bridge.” Lanier better hold true to her admonition because nothing good will come of this.

In other words they won’t allow anybody with guns into Washington DC and if anybody with a gun tries to enter Washington DC the police will send people with guns to stop them. That sounds rather hypocritical now that I think about it.