Posts tagged with: Real estate bubble

In an interview on Christian distance education, Dylan Pahman, the assistant editor for Acton’s Journal of Markets & Morality, talks about the education bubble, rising costs of higher education, and whether Christian worldview integration in a distance education program is worth a premium:

Luke Morgan: As a blogger for the Acton Institute, you have written about the education bubble, the textbook bubble, and other items regarding what education costs, and how those things should work in a free market. Could you describe to me what you mean when you say: “the education bubble?”

Dylan Pahman: The idea of a bubble came up in relation to the housing bubble which took place in 2007 in the recent recession. Part [of what] happened is, the government started subsidizing home loans, because they decided “everybody aught to be able to own a home.” So there were good intentions, but what they were doing, was cutting away the calculation of risk… The bank is no longer turning people away, that they normally would have… you have easy access flooded into this market for something people really desire… a nice place to live. In doing so, [the market] ended up ballooning. Demand keeps going up, and as demand goes up the price goes up. So people are getting into more and more debt, for the same exact product until it gets to a certain point where it’s too much, too many people couldn’t handle it, and so a lot of people ended up foreclosing on their homes… it was pretty severe, and it went past the housing market, it effected our whole economy, it effected worldwide economies.

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Blog author: dpahman
Thursday, November 29, 2012

According to AEI author Mark Perry, there is another education-related “bubble” to worry about: the textbook bubble. He writes that this textbook bubble “continues to inflate at rates that make the U.S. housing bubble seem relatively inconsequential by comparison.” He continues, “The cost of college textbooks has been rising at almost twice the rate of general CPI inflation for at least the last thirty years.” Given that many students use loan money to purchase books as well as pay for classes, we might think of this as one of the many sources pumping air into the student debt bubble. But what choice do students (or professors, for that matter) have than to surrender to the textbook “cartel,” as Perry characterizes it? This bubble popping, while a bad thing for the textbook bubble-boys committed to the old, cartel-style model, could be a small relief and contribute to slowing the growth rate of the student debt bubble. (more…)