On: Will Your College Go Out of Business Before You Gr...

[dantheman]

How is it a market failure?

If anything it's a direct result of the ease at which students can get loans from the federal government.

[HarryHirsch → dantheman]

For starters, the gratuitous building and renovation does nothing to improve the quality of the degree, and certainly increases cost of tuition. The university isn't better off, and the students undoubtedly are worse off. If that isn't a market failure I wouldn't know what is.

[TruthElixirX → HarryHirsch]

Market failure:

Market failure is a concept within economic theory describing when the allocation of goods and services by a free market is not efficient.

Colleges are not operating in a market system. They get money rationed to them by the government in various ways. Therefore it is not a market failure.

[yukoncornelius → TruthElixirX]

Yes, its government failure which is a more inefficient allocation of resources than would occur without the government intervention.

[TruthElixirX → yukoncornelius]

Yes, I agree. That was what I was trying to convey with my comments.

[TruthElixirX → dantheman]

Everything people don't like are market failures.

https://news.ycombinator.com/item?id=5098258 http://news.ycombinator.com/item?id=5112837 http://news.ycombinator.com/item?id=4738488 http://news.ycombinator.com/item?id=963251 etc

People keep calling things like city planning a market failure when it is full of regulation.

Or healthcare when the U.S. government spends the most money on healthcare in the U.S.

etc

People throw the term around without knowing what it means.

EDIT:

Changed "is a market failure" to "are market failures".

[sliverstorm → TruthElixirX]

Oh yeah? Well your comment is a market failure.

edit: I was being humorous.