The Great Divergence

Let’s Impose Price Controls on Colleges
New books dissected over email.
April 25 2012 2:00 PM

The Great Divergence

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Why not impose price controls on colleges?

College students on campus.
College students on campus.

By Catherine Yeulet/iStockphoto

Dear Matt,

Yes, Tyler Cowen says we won’t get broad-based prosperity until mankind dreams up an innovation as transformative as the potty. Which, to tell you the truth, wasn’t all that transformative. It’s not as if people didn’t have places to piss and crap before indoor plumbing came along. And how many toilets does anybody buy in a lifetime? In my 54 years I’ve bought two. That’s fewer than the number of houses or cars that I’ve bought. (Serially, let me stipulate. Longtime Slate readers may recall that I don’t own a summer place. Though a discussion of income inequality may not the best context in which to revive my bourgeois whine.)

I agree with you that our economy would work better if working people could actually afford to purchase more innovative new products. But I can’t agree that the Great Divergence has led to a paucity of such innovation. I note that you can’t make your point without exempting computers and various digital appliances like the smartphone. But those are pretty significant innovations. In the book, I discuss Apple’s perplexing ability to transform the American consumer market without creating much in the way of American jobs. “You could invite all the U.S.-based iPod production workers [employed in 2006] to dinner,” I write, “and feed them with a single pot of chili!” That isn’t because people aren’t buying iPods like crazy. It’s because Apple figured out that it could increase its profits by offshoring its production work (most of it to China). If Mike Daisey wanted to do a monologue about Apple’s exploitation of American workers, he’d have to make it up, because there are virtually no such workers for him to interview.

The New Republic blog item of mine that you link to is more a rant against the inadequate state of low-flow toilet technology than it is an answer to Cowen’s argument, which is that we don’t deserve broad-based prosperity because we aren’t innovative enough, and won’t get it until we are. My fuller analysis of Cowen’s theory (as laid down in his 2011 book, The Great Stagnation) can be found here. Essentially my argument boiled down to a point I made earlier in our dialog: Prediction is a mug’s game.

The Great Divergence, by Timothy Noah.
The Great Divergence, by Timothy Noah.

We haven’t discussed my suggestion that the government impose price controls on college tuition. When I wrote that, I thought, “Here’s something wild and crazy that will really piss off the cultural elite and stimulate much debate.” Then, after my book went to press, President Obama proposed essentially the same thing in his State of the Union, and everybody ignored it. (“If you can’t stop tuition from going up,” he told college and university administrators, “the funding you get from taxpayers will go down.” Tweedy gatekeepers of the meritocracy scarcely blinked.) Does that mean the idea is uncontroversial? Does it mean nobody expects it to happen? Or does it mean that Republicans have made such an enemy of higher education that no one wants to defend a university’s’ right, as a private institution, to set prices in accord with the market?

Signed,
Baffled

Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.