Tuesday, November 30, 2010

Theme of the Week: Supply and Demand

Two blogs raise interesting issues about the relationship between supply and demand, but not necessarily in the same way.

Lil' Steve (the much taller and redder Steve Greene) posted about the strange but true reality: that if taxes are low, people may actually expect and demand more government services since the price for such stuff is low.  They might actually want fewer government services if taxes are high because the price for such stuff would be high.  Steve builds on a couple of blogs to discuss “government at a discount”.  Come one, come all, and step up here to consume some government--it is cheap, so take more!  Well, there are a couple of problems with this: much of what government produces are "public goods" in which my enjoyment does not reduce the supply available for you: security, economic stability, clean air, etc.  Of course, most of the debates these days are pitched in terms of goods that are "rival"--that the health care reform act means less benefits for senior citizens (the damned buggers who vote), that money for unemployment seems to be pitched as less $$ for other folks. 

Still, this logic does make sense (if the Republicans are willing to increase the debt ceiling): people are getting more for less.  That it passes the costs on to the next generation is no biggie.  Well, it is, but we focus on the short term.

Speaking of which, Jacob Levy has a post about conflicting ambitions: that people complain about teachers not teaching enough days, and yet when McGill considers shortening the semester (or term as they call it here) by a week (three hours of contact time from 39 to 36), the students are actually in favor of this. 
Students' Society Vice-President University Affairs Joshua Abaki has pushed for the changes, arguing that McGill students must work harder than their peers at other universities. According to Abaki, McGill is the only member of the G-13—a group of research-focused universities in Canada—that requires 39 hours.
This seems at odds with the stuff up top because the students here pay far less than the rest of Canada and are now demanding less product--fewer lectures, less seminars, a shorter semester.  But if they think of costs in terms of hard work, rather than cash, then it makes sense.  They are paying a higher price, so they want less of the good.

Of course, this is again short-term thinking--McGill has the best reputation in Canada if you believe Maclean's (and rankings produced by other folks).  Perhaps it is because we make our students work harder, that they have more time in class, gaining more knowledge (assuming that is what we dispense--always a questionable assumption).  So, the students have two comparative advantages--getting more and paying less.  They love the latter, not so much the former. 

What does this demonstrate?  Well, we know that short-term thinking tends to overwhelm longer term cost-benefit calculations.  Here, we find the educated and the less educated making the same foolish mistakes.  But the really important lesson is that I may end up doing less teaching down the road, which, given that I am running out of material for my upper division class this week, would not be entirely a bad thing.  Which goes to demonstrate another basic principle--we are all self-centered. 

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