My last two paragraphs
Essentially the bottomline is education, health care, and housing are probably all way overpriced (not to mention food, energy, etc.). There are intagible sets of market factors that individually don't account for much but taken as a whole provide major differences. A bad but demonstrative analogy would be the mob mentality (irration exuberance!) of the stock market. Behavioral economics (which attempt to explain the influence of human behavior in market actions) is a field that is only recently gaining attention but for which there have been substantive studies.
Essentially all economic classes explain things in terms of "rational consumers." Ones who always go for the better deal, who always choose more later over less now, and who generally seek out and choose the best options. The inherent flaws in explaining behavior are glaring. It's great for creating conceptual models but hardly appropriate in explaining "actual consumers." Thus, behavioral economics.
Market psychology demonstrates and attempts to explain things like "loss aversion" (that losses are more psychologically affecting than gains), and explain how, against rational expectations, these behaviors appear. The field naturally extends into evolutionary psychology which makes for an interesting connection between explaining market behaviors and linking economic and scientific models (IF YOU ARE INTO THAT SORT OF THING LOL).
MOVING ON NOW!
Back in the 50s it was still possible for many Americans to persist on a single parent's income and still manage to have a suburban household with a child or two. However much of this is a myth I cannot say, but I know for certain it is very hard nowadays to live with the same relative comforts on a single income. Which leads back to the idea of "lifetime incomes."
Things like mortgages and large loans given for things like education, things that are paid in very long-term durations and in small parcels over that time, are effectively based on the idea of lifetime incomes. Since the market in the long-term is always slated to grow (as it will and always has), since a college degree nowadays equates to assured employment (YA RITE), since we can bit by bit stretch rising costs of prospective lifetime incomes, since parents are generally guarantors and there are always two parents who also have two lifetime-incomes, since many of these loans and other costs are assuaged by grants, scholarships, federal aid, just how much can these prices be stretched without affecting market demand?
Any free-market economist will tell you, the market is self-regulating and rising costs will always be met with lowering demand. This is a little idealistic as far as these things go. In order for that to happen in real life everyone considering a college degree would measure the gains of a college education against the opportunity cost of starting to do work now. I can safely assume no one does that and furthermore the notion that you *NEED* a college degree (and a college experience) is only becoming more pervasive. Thus we have artificial demand created based on cultural norms, long-term economic viability, and a host of other contributing factors that are difficult to measure.
Supposedly these all somehow figure into the free market, or with deregulation the prices would be a more accurate reflection, but human psychology doesn't play out well in these sort of things. If I think I need the education in order to persist in the system, then I will probably pay the price anyways even if I can't afford it. Is it often that people turn down ivy league acceptance because they can't afford it? Probably to a certain degree, but those school reputations alone make it mighty hard I'm sure. Does that mean they can afford it?
As far as I'm concerned taking out a loan is the first sign I can't afford something. It will essentially represent a tax on the rest of my life (if I buy a house I guess). But credit puts us face to face with a psychological choice as much as an economic one. I have a credit card, I can buy something on the presumption that I can pay it off later. But if I can pay for it later, do I really need it now? Credit cards are the lubricant of consumerism.
Credit too, if you want to extend the metaphor. If we are only now coming to realize that our current consumerism isn't sustainable (more on that later), how long before we hit the Real Iceberg. I think I can ask pretty safely, given the state of things in a global sense, can we really afford to be at war? Not in terms of the national debt or anything like that. Can we, humanity as a whole, afford to be in bloody conflict facing the momentous problems that are occurring right now?
Can we ever? Probably, actually. Not now though. As far as I can tell we are awaiting the final moment when humanity collapses in on itself, a shitty morass of hubris and selfishness.
But, of course, you have to remember, despite all of this, I have always been an optimist.
P.S. This probably all equates to some kind of bizarre rambling and poorly constructed thought-sterbation. At least I get to vent for a bit!
Essentially all economic classes explain things in terms of "rational consumers." Ones who always go for the better deal, who always choose more later over less now, and who generally seek out and choose the best options. The inherent flaws in explaining behavior are glaring. It's great for creating conceptual models but hardly appropriate in explaining "actual consumers." Thus, behavioral economics.
Market psychology demonstrates and attempts to explain things like "loss aversion" (that losses are more psychologically affecting than gains), and explain how, against rational expectations, these behaviors appear. The field naturally extends into evolutionary psychology which makes for an interesting connection between explaining market behaviors and linking economic and scientific models (IF YOU ARE INTO THAT SORT OF THING LOL).
MOVING ON NOW!
Back in the 50s it was still possible for many Americans to persist on a single parent's income and still manage to have a suburban household with a child or two. However much of this is a myth I cannot say, but I know for certain it is very hard nowadays to live with the same relative comforts on a single income. Which leads back to the idea of "lifetime incomes."
Things like mortgages and large loans given for things like education, things that are paid in very long-term durations and in small parcels over that time, are effectively based on the idea of lifetime incomes. Since the market in the long-term is always slated to grow (as it will and always has), since a college degree nowadays equates to assured employment (YA RITE), since we can bit by bit stretch rising costs of prospective lifetime incomes, since parents are generally guarantors and there are always two parents who also have two lifetime-incomes, since many of these loans and other costs are assuaged by grants, scholarships, federal aid, just how much can these prices be stretched without affecting market demand?
Any free-market economist will tell you, the market is self-regulating and rising costs will always be met with lowering demand. This is a little idealistic as far as these things go. In order for that to happen in real life everyone considering a college degree would measure the gains of a college education against the opportunity cost of starting to do work now. I can safely assume no one does that and furthermore the notion that you *NEED* a college degree (and a college experience) is only becoming more pervasive. Thus we have artificial demand created based on cultural norms, long-term economic viability, and a host of other contributing factors that are difficult to measure.
Supposedly these all somehow figure into the free market, or with deregulation the prices would be a more accurate reflection, but human psychology doesn't play out well in these sort of things. If I think I need the education in order to persist in the system, then I will probably pay the price anyways even if I can't afford it. Is it often that people turn down ivy league acceptance because they can't afford it? Probably to a certain degree, but those school reputations alone make it mighty hard I'm sure. Does that mean they can afford it?
As far as I'm concerned taking out a loan is the first sign I can't afford something. It will essentially represent a tax on the rest of my life (if I buy a house I guess). But credit puts us face to face with a psychological choice as much as an economic one. I have a credit card, I can buy something on the presumption that I can pay it off later. But if I can pay for it later, do I really need it now? Credit cards are the lubricant of consumerism.
Credit too, if you want to extend the metaphor. If we are only now coming to realize that our current consumerism isn't sustainable (more on that later), how long before we hit the Real Iceberg. I think I can ask pretty safely, given the state of things in a global sense, can we really afford to be at war? Not in terms of the national debt or anything like that. Can we, humanity as a whole, afford to be in bloody conflict facing the momentous problems that are occurring right now?
Can we ever? Probably, actually. Not now though. As far as I can tell we are awaiting the final moment when humanity collapses in on itself, a shitty morass of hubris and selfishness.
But, of course, you have to remember, despite all of this, I have always been an optimist.
P.S. This probably all equates to some kind of bizarre rambling and poorly constructed thought-sterbation. At least I get to vent for a bit!