Overpriced Education Is a Moral Issue

Inside Higher Ed has a respectable write-up of the small shrinkage in law school enrollments coming this fall to at least three campuses. This quote, from California law professor John Yoo (originally posted here back in March), struck me as rather naive:

The decision to reduce the size of a law school class has little to do with morality (though it may have a lot to do with moralizing) and everything to do with economics. Education is a product in the market, like any other. The producers (law schools) sell a service (a legal education) at a price (tuition) to consumers (students). If there is an oversupply of the product, or the demand falls, then the price should drop and eventually the quantity will fall until the market clears. I don't see anything so moral (or immoral) about it.

While his economic analysis is technically correct, education is absolutely not "like any other [product]." I probably should be baffled that a professor at a "top" university is grossly oversimplifying a situation to cleanse his own guilt, but I'm not.

When someone buys almost any other product or service, any liability created by the purchase can be removed by filing a bankruptcy petition. Providing normal credit is an example that would fit into his model. Because consumers can declare bankruptcy and erase the transaction from being a burden, there's nothing "moral" or "immoral" about a credit card company that raises or lowers rates, or creates new cards/marketing pitches to give the illusion of scarcity, etc. The bank retains some risk in the transaction, so economic principles can entirely guide their actions.

Conversely, some jackasses in Congress decided that student loan debt should be treated differently than all other debts. The schools - like Yoo's University of California - sell a product, often with gross exaggerations fueled by fantastical myth-making - with absolutely no risk on the credit side of things, either to the school or the bank.

Because student loan debt is non-dischargable with a standard bankruptcy petition, the risk of a education being a bad investment falls entirely on the students and their parents when they need to use credit (which 90+% do).

At that point, a school's decision to enroll students takes on a moral element. Unlike normal producers, who either have an incentive to sell to those who can pay or can only provide services to credit-worthy people, the schools' abilities to draw in any consumer and saddle them with debt-for-life gives the school a position of power divorced from economic reality. The fact that Yoo even suggests that the market can or will "clear" is perplexing; the market has been willfully prevented from "clearing" for decades by the ABA and the law schools, including his employer.

Plus, educational institutions often invite moral disapprobation by marketing themselves as leaders, subtly vilifying corporate America, justifying their high costs as "good" debt, holding themselves up as prestigious institutions and community-based institutions, etc., which gives them more culpability that Joe the Auto Mechanic, who's at least honest when he says he just wants to make a living.

My gut reaction to Yoo's comment is that he's too enmeshed in the system - and therefore a party to stockpiling some students with unsustainable debt loads - to see a moral issue and moral culpability where it's obvious. After all, if you admit that ruining innocent parties financially is a moral issue, a whole lot of people need to trudge their way to confession tomorrow. Can't have that, now, can we?

Almost every immoral event and practice can be explained in basic economic terms. Slavery's rise and fall, for example. Or teenage prostitution in Thailand. That doesn't make them non-moral issues. A professor of law should know better.