Supply, Demand, and Outcomes

Well, if you want skilled factor substitution between industries - and you must have skilled labour moving into the desired industry - then you must change relative factor prices, yes?

Or alternatively engage in massive degrees of skilled immigration, but that is unpopular among left and right.

We see the same thing when we decide to subsidize heating oil. the price of heating oil now has a floor that has been raised and the price has no need to drop. Demand is effectivelhy increased while supply remains the same. The result is that prices do not fall.

With education we see multiple factors creating an artificial floor. Many fields require a college diploma so there is an artificial demand. Many organizations as well as governments are willing to subsidize students (as long as they are not white, male, and over 30) which allows prices to rise with no effect on the student. finally many educational institutions are government operated so excess costs may be passed on to taxpayers once again causing an even higher artificial floor on pricing.

While supply and demand seem over-simplified, it really does explain a lot. However, when a business increases its prices - even educational institutions - the business is greedy. The educators and staff of those institutions who increase their salaries are simply called 'public servants.'

Supply and demand has no response for semantics.