I Hate To Tell You, But...

I hate to be the one to tell you, but the government's subsidy of school loans is why school has doubled in cost during their lifetime.  Can I get an Amen Mr. President?

As in every other commodity out there, the price we pay for any good (or service) is determined by supply and demand.  When people say Alex Rodriguez gets paid too much money I agree with them because he cheated by taking steroids, but in general I say no, they aren't.  They are paid as the market will bear because there are a limited number of players who can consistently his Major League pitching.


All things being equal, the greater the supply of some product with a given demand, the lower the price the supplier will ask and obtain for that product. Conversely, when there is a given supply and there is a rising demand, prices increase.


Don't believe me?

If a music album downloads for $10, there will be a given number of people willing to purchase them at that price.  What happens if a third party decides to subsidize the cost of downloads and pays everyone $5 to help defray the cost of purchasing that music?  More people will now decide they can afford to purchase the latest and greatest by Justin Beiber or Coldplay or whoever. After all, these $10 downloads only cost them $5.  They will now buy the downloads even though they value them less than those willing to pay the full $10 price.  Again, don't believe me?  Check my iTunes with the ridiculous number of free downloads I have for bands I would never pay for but am more than happy to clutter my music library with because they are free.

This subsidy will of course cause sales to increase.  How long will it then take for the music producer to then raise the price to $12, $15, or even $20?  The consumer isn't feeling the pinch, so why not?

This is the basic problem with government subsidy...you alter the normal market pattern and usually not in a positive way.  This is Economics 101 and for some reason Obama doesn't seem to get it.

P.S. It is offensive Mr. President, for you to ask for an "amen" like you are a preacher when all you have done for your entire Presidency is work to further remove our country from God.  Instead of using catchy phrases, maybe a little honest prayer is in order and no, I don't mean the vile from the Rev. Wright either.