The 30,000-student Santa Monica (Community) College has a budget challenge, which means the school can't hire enough teachers to teach the high-demand courses students need to graduate.
There is a simple market solution—raise the tuition fee on high-demand courses and hire more teachers! Problem solved? No. That's exactly what Santa Monica tried—and has temporarily backed down from doing, after students were pepper-sprayed in a protest.
The "moral limits to markets" theory should be covered in every econ course. We need to know more about why the market system is considered appropriate in certain circumstances and not in others. If your neighbor is sick and you help by mowing his lawn, it would be considered rude for him to mail you a check for $20. However, it would be considered polite and considerate for him to take you out for a beer—spending $20 on you. Weird stuff, but emotionally significant.
So why are the students protesting the price system in college courses? It's complicated, but I think it has something to do with the implicit assumed moral equality of people who belong to the same family, club, or college. As members of the same group, it is assumed that people will share, using rationing or a lottery system to allocate scarce goods. This is particularly true during crises—and the current budget problems can be called a crisis. Deviations from group social mores will lead to the impression that students are not being treated with proper respect.
There is also an income-distribution part to this story. Some students cannot pay the higher prices, hence they will have to wait longer to graduate to get into the "lower priced" course offerings. To some extent, colleges have monopoly power over students. If you've already spent 3 years here you are not likely to transfer, even if prices are jacked up. Hence there is the appearance of exploitation of students currently in the system.
Via Mark White comes this link to an Atlantic article by Michael Sandel on "What Isn't for Sale?" A better version of this story is in his Tanner Lecture, "What Money Can't Buy: The Moral Limits of Markets".
Turns out Sandel (in a few weeks) is going to publish a book version of this article.
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