Sunday, November 22, 2015

Leave the Beer Alone!

In December 2014, the Seoul High Court ruled that forcing large retail stores to close two Sundays every month was illegal because (1) the law limited consumers' right to choose where to shop and that (2) there was no evidence to suggest that the law actually helped small retailers or traditional markets.

For a while, I was hopeful that there might have been some sense in Korean courts. However, the Supreme Court made sure that common sense and critical thinking stayed dead and buried when they overruled the Seoul High Court and sided with local municipalities.

According to the Korea Times, one of the justices said,

"A regulation for the public good is not only important but also necessary. However, it can hardly be seen as depriving consumers of their right to choose as large retailers do not need protection."

Don't ask me how that makes any sense.

Of course, this is not the only instance of the government meddling in the economy that has screwed over consumers.

The Mobile Device Distribution Improvement Act has shackled all telecom companies to offer the same discounts to their customers, thus forcing people to pay more for their smartphones.

The Book Discount Law prevents retail bookstores from selling books at a discount any higher than 15%.

And a year ago, the Korean government was mulling the International Direct Purchase Law; a proposed law, which would have regulated how much, how, and what individual consumers would have been able to purchase from international websites such as Amazon or eBay.

But now someone has really messed up. Now there are rumors that the government plans to regulate discounts of imported beer.

Let's be frank. Shutting down large retail stores two Sundays out of a month is no big deal. People can plan ahead or just shop online. Making smartphones more expensive pissed off some people, but thankfully smartphones are becoming cheaper anyway. As for books, who reads books? And regulating online foreign purchases sound like it would be easy to skirt around.

But mess with beer? Do they not know what country they're governing? There has been debate about the accuracy of the claim that Koreans drink more than anyone else in the world. but it's without doubt that Koreans are heavy drinkers.

So dear Korean government, you done goofed. If you think the protests have been violent so far, wait until every single pissed off salaryman joins the fray. There will be hell to pay!

So if you know what's good for you, for God's sake, leave the beer alone!

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Sunday, November 15, 2015

The Unbearable Easiness of it All

Punditry, especially social media punditry, is easy. It is easy to say:

1. I told you so. They are reaping what they have sowed.
2. They are all evil and should never have been given refuge.
3. Pray for the victims.
4. I am outraged.
5. We should fight against all religions.
6. They were escaping that same shit that followed them here.
7. I stand with France. And look at my new profile picture.
8. You care about it now because white people are dead? Where have you been while non-whites were dying?
9. Radical Islam is the enemy and we should treat it as such.
10. Of course you would think that, you racist!

And the list goes on and on and on and on and on. They are all easy to say, easy to share, and easy to hashtag.

The only ones who are facing any difficulty, and this is real difficulty, are the people who lost family members, friends, and lovers. The whole world can stamp our feet in unison or sing "We will Overcome" in perfect harmony and it will not take one iota of pain away from them.

To those who are suffering -- really suffering, the rest of us are nothing more than infuriating sources of noise pollution.

But what can we do but talk and make noise? The world is for the living, after all. And yeterday's tragedy is always forgotten and/or exploited if that is what needs to be done to win tomorrow's election.

I did not lose any friends or family members in the Paris attacks. So I am not grieving a loss or thirsting for blood. I am quite dispassionate about it all. Thank God.

What I am upset over is that the whole thing is just so fucking easy.

Monday, October 12, 2015

Random Thoughts: The Martian and Forced Filial Piety

Thoughts about The Martian

Yesterday, I went to the movies to watch Ridley Scott's The Martian. I thoroughly enjoyed the movie and I had wanted to write a review of the movie but Kevin Kim, from Big Hominid, already wrote a great review for the movie, which you ought to read for yourself here.

As Kevin already covered more than I would have, seeing how I have never read the book the movie was based on, I only have one additional thing to add.

This movie is a must-see for younger Koreans, especially considering how popular the notion of “Hell Joseon” has become among many of them.

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This article from Korea Expose describes those who subscribe to the notion of Hell Joseon as those who “find no hope for South Korea; they seek only to abandon and escape the system altogether... embodies despair and hopelessness of the most extreme variety, the idea that the South Korean state cannot be redeemed through effort.”

In other words, Hell Joseon is just another incarnation of nihilism, except that it has been served with Korean lipstick. Regardless of the guise it has been portrayed, nihilism is the very antithesis of the movie's core message, which was delivered by Matt Damon's character toward the end of the movie:

You have to solve one problem and then solve the next problem, and then solve the next problem, and if you solve enough problems, you get to go home.”

This is a lesson that many people, not just Koreans, often seem to forget.

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Thoughts about Forced Filial Piety

It has been revealed that from the beginning of this year to September, the National Health Insurance Service has forced 39 people to pay for their parents' national health insurance premiums.

To be more specific, these 39 people had to pay for their biological parents' national health insurance premiums. Yes, these 39 people had been given up by their biological parents and had been adopted by other families.

This discovery was made despite the NHIS's claim that no such case existed.

I understand why someone would want to force someone's offspring to pay for their parents' medical bills if the parents themselves are unable. Firstly, the government, which knows that raising taxes is not popular, would rather that old people's medical bills be paid for by their children. Secondly, such enforced filial piety laws are probably easier to pass in Korea because of the lingering effects of (near pathological) Confucian values. And finally, though I seriously doubt it would lead to the law's intended results, the rationale behind such laws is to create “ideal” family relations.

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However, all of those factors might have some merit if we were discussing people who were raised by their biological parents. These 39 people were not raised by their biological parents and I assume that their legal ties with their biological parents ended as soon as they were adopted by other families.

It is my professional opinion that now is the time to give the NHIS the finger.

That being said, the government has long been wrestling with how to combat Korea's aging society, part of which is exacerbated by low birth rates. If people can have children, legally give them up, and still be ensured that their children will some day have to pay for their medical bills, that could be a novel way to turn Korea's birth rates around!

But I hope that you'll forgive me for not leaping for joy.

Tuesday, October 6, 2015

One Way to Find a Seat on the Subway

Recently, a man – a senior citizen – was arrested after he was accused of assaulting a pregnant woman because she had been sitting on one of those seats at the ends of the subway cars that are usually occupied by older people. This wasn't the first time that a pregnant woman was not shown basic human decency.

In order to make seating a bit more equitable, the Seoul City government decided to do something nice for pregnant women a few months ago. It designated certain seats as reserved for pregnant women and made its intentions unmistakable by making those seats bright pink. So far, however, it has failed to work.

When I first saw those pink seats, I knew that it was not going to be terribly effective. Although people pay to ride the subway, people don't have to pay for seats. The seats are, therefore, a type of commons; and I am sure that everyone is aware of the Tragedy of the Commons.

Everyone is looking for a seat. And the seats are in short supply compared to the number of people looking for seats. When one assumes (probably correctly) that everyone else is going to look for a seat without much regard for who is left standing, there isn't much room for consideration for others.

Bellum omnium contra omnes
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If it is difficult for pregnant women to find seats on the subway, then one can only assume that the only way to find a seat in the subway is to go full speed ahead – elbowing and maiming anyone who dares to stand in your way – damn the torpedoes!

But is that the only way to find a seat? I think there has to be a better way for people to persuade others to give up their seats for the more vulnerable members of society.

One method that often comes up is to shame those people who refuse to give up their seats for pregnant women or the elderly. In fact, public shaming has been proven to be useful in many instances. In a study that was conducted by the European Commission, it was revealed that shaming was one of the more effective methods of ensuring that people paid their taxes on time because, according to the study, “the psychological costs connected with tax evasion or financial costs other than the fine can be influential factor that deter people from cheating. For example, psychological costs might arise because people fear to be detected or publically shamed.”

So, perhaps shaming those people who refuse to give up seats for pregnant women on social media might be effective.

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However, shaming might not be as effective as people think. Of course, the most obvious reason why shaming might not work, especially in Korea, is because of Korea's bizarre defamation laws. However, even if Korea's defamation laws didn't make such a fetish out of preserving people's honor, naming and shaming would still not work too well. That is because according to a study that was published by the University of Chicago, shaming someone excessively could cause the person to continue engaging in the kind of behavior that brought about the shaming in the first place.

To explain, the study focused on whether or not sex offender registries were effective. The study revealed that as sex offenders found in the registries were stigmatized and shunned by society, it reduced their job opportunities and destroyed their social lives. As a result, the registries effectively “lowered the opportunity cost of choosing crime over legal activities.” In other words, this so-called “disintegrative shaming” that resulted from the registries drove them to continue their criminal behavior and made them more likely to recidivate.

So, if people who sat on those reserved seats were named and shamed, and if the naming and shaming were “excessive,” instead of learning not to sit there in the future, they just might continue to sit there because they might think that they have nothing left to lose.

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One method that I think is rather simple and underrated is simply asking people for a seat.

In many instances, people often assume the worst about each other. So, many people might think that if we ask someone for a seat, that could lead to a verbal assault, if not an actual assault. However, that may be a false assumption. According to several studies conducted by psychologists, it has been revealed that humans are, for the most part, cooperative and selfless – almost always willing to help one's fellow Man.

Seeing how that the majority of people are good and decent, I think that simply asking whether one can sit down would be more effective (and would lead to less conflict) than simply to engage in passive aggressive behavior.

So what do you think? Do you think politely asking someone to give up his or her seat is a good idea? Or do you think it's the worst idea since techno music? Leave a comment behind and who knows? It could lead to another blog post with you as a guest blogger.
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Thursday, September 24, 2015

When Vultures Feast on AIDS Patients

When I read about how the price of Daraprim, a drug used to fight a parasitic infection called toxoplasmosis, which is potentially life-threatening for people with weakened immune systems, such as those with AIDS or cancer, went from US$13.50 a tablet to US$750 a tablet after Martin Shkreli, a former hedge fund manager who runs Turing Pharmaceuticals, purchased exclusive rights to the drug, I knew that the pitchforks would be out in full force.

The Unique Problems of the Case

When I first heard this story, I immediately thought was that this was clearly a problem with the way patent laws are set up. Therefore, this had to be a government failure, rather than market failure. When I read more about the subject, I realized that I was only partly right.

Typically, prices serve as a type of flare gun. It informs people where supply and demand lies and where the most and least profits lie. Therefore, a 5000% profit margin is bound to attract competitors.

However, this is not one of those typical cases. Unlike markets for other goods like cars or smartphones, the market for Daraprim is too small for there to be enough room for competitors to create generic drugs. Also, the costs of manufacturing new drugs is prohibitively high. That is because there are fixed costs associated with building a new plant. There could also be lost revenue from having to discard the production of other (more profitable) drugs, getting samples of the drug, and figuring out how to make the generic product.

Therefore, even a 5000% profit might not be sufficient motivation for another drug manufacturer to jump into the business. To paraphrase an old saying, this town ain't big enough for two corporations.

This is NOT enough gold!!!
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Then there is also a problem with the common public perception of medications and what it takes to manufacture them. Not all drugs are equally easy to create. A good example of this is the drug known as Hyate:C. This drug is so difficult to manufacture that one person can end up causing a world-wide shortage of it if they use too much, as it actually almost happened in 2001 when a man's tragic 34-day treatment at Duke Medical University Center cost approximately US$5 million.

Hyate:C is also another example of a drug where the market is so small that it does not become profitable for there to be too many competitors. Back in 2001, Hyate:C's wholesale price came to about US$1000. I did a bit of Googling and I found that Advate, one of the dozen or so brands of Hyate:C, goes for a little under US$5000 today.

If investors buy up tech products that delay the next iPhone release, it may cause inconveniences, but no one dies from it. However, if you mess with drugs like Daraprim or Hyate:C, people will die.

The Not-So-Unique Solutions

(A) Leave the Market Alone

However, not all is gloom and doom. That is simply because in the real world, the sticker price is seldom what is actually paid. For example, let's say that I have invented the next big thing. I think it is the greatest thing in the world and that it will save humanity. Therefore, I decide to charge US$1 million for it.

But the story doesn't end there. Just because I say it will cost a million dollars does not mean that I will get a million dollars. That is because if there is no demand for my next big thing at that price, then it doesn't matter what the sticker price is. In reality, the actual price, as far as earnings go, is zero.

Supply and demand always wins.

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The same is true here. When Shkreli announced that he was going to sell the drugs at US$750 a tablet, the first thing that I thought was that this just was not going to happen. No matter how much people might need the drug, if it costs that much, people would not be able to afford them. Shkreli would then have a pile of useless medicine that he does not need or can sell.

Therefore, the first solution is to let the market be. After all, unlike the Hyate:C drug I mentioned earlier, pharmaceutical companies have gotten better at making AIDS medication to the point where AIDS is no longer an automatic death sentence. Therefore, missing a few doses no longer spells out your death.

As I typed this, I learned that Shkreli announced that he would lower the price of the drug, though no specifics have been given.

(B) The Invisible Hand of Twitter

Adam Smith is widely known for his book “The Wealth of Nations.” However, he wrote another book, which I don't think people given enough attention – “The Theory of Moral Sentiments.”

Long story short, Moral Sentiments is Smith's other theory that people should not act like dicks because acting like a dick has consequences.

The fact of that matter is that people are more considerate of our fellow human beings than we get credit for. That is why it was not surprising when social media exploded with outrage at this drastic price hike. When the most vulnerable members of our society are perceived to be harmed by the actions of a few sociopaths, people will rise to their defense.

Twitter is a double edged sword. It can needlessly ruin the lives of good men and it can also raise mediocrity to the stars. However, it can also lead to awareness of the plight of the unfortunate. Exposing what Shkreli did was one of those good things.

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(C) Shkreli Will Quit

Everything that I read about the man behind the story reeks of a Gordon Gekko-wannabe who, unlike his hero, has not read The Art of War.

Being a corporate vulture, I highly doubt that Shkreli plans to stay in the pharma business for very long. He strikes me as the type of person who will take off as soon as he gets his thirty pieces of silver. And all the better for it. More businesses (perhaps one or two at the most) that want to take advantage of the profits that he exploited (which probably will be profitable even if the pills do not fetch up to US$750) will enter the market, which will in turn increase choices for consumers (it seems choice is something that AIDS patients have lacked thus far); and the choices will inevitably lower prices.

But that's assuming that he makes his money back. The fact of the matter is that he's a commodities speculator and when it comes to any kind of speculation, any activity which harms the public automatically harms the speculator. In other words, if he makes a profit, he would have shown successfully that there is a market that was ready to be exploited, which will benefit everyone involved.

To explain, though this is probably not realistic, we have to play a “what if” game. Let's say that Shkreli's asking price of US$750 is not unreasonable. Let's say that people CAN actually afford the pills at that price. If that were true, then people would immediately think that those AIDS patients are spending a lot more money, and therefore, they are the clear “losers.”

But that depends on how far we look ahead. If we are talking only about immediate results, yes, those patients would be losers. However, in the long run, if other pharmaceutical companies realize that there are profits to be made because people are able to afford the hefty price tag, they will more than happily jump into the market. This will result in more competition, more choices, higher (though perhaps marginal) quality, and lower prices. The businesses will benefit, the consumers will benefit, and the speculator can take home a big fat paycheck.

But if he fails, an incompetent speculator would be driven out of the market and (maybe) prices will return to what it was.

Good riddance to bad rubbish!
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What Not To Do

The worst thing that anyone could do is to pass a law against this sort of behavior. The fact of the matter is that whenever governments get involved, there is usually unintended consequences. For example, if an artificial price cap is introduced, it would force drugs to be cheaper. However, it will seriously disincentivize pharmaceutical firms from producing much needed drugs like Hyate:C.

Oops. I spoke too soon. Oh well. That's politics for you.

Saturday, September 19, 2015

Paul Krugman vs The GOP: The Ultimate Oy Vey

In this op-ed piece in The New York Times, Paul Krugman gave the Republicans a much deserved drubbing for their circus show of a debate.

It's absolutely true that the GOP debate was a farce. I know, I watched it. If it wasn't painfully stupid, it was painfully insipid. Whereas the debate could have been a forum where the contenders espoused their vision about shared prosperity in a changing economy, they instead engaged in primitive chest-thumping and braggadocio.

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The one bit in the debate that I thought worth noticing was Carly Fiorina's quip about Trump's comment about her face. The rest of the three-hour spectacle was so mind-numbing that Michael Bay must have been jealous.

But I also found it quite amusing that Krugman would say this:

...some of the candidates went beyond expounding bad analysis and peddling bad history to making outright false assertions, and probably doing so knowingly, which turns those false assertions into what are technically known as “lies.”

For one thing, Krugman said in this very same column that the modern GOP economic discourse is “completely dominated by an economic doctrine — the sovereign importance of low taxes on the rich — that has failed completely and utterly in practice over the past generation.”

This doctrine that Krugman did not name is, of course, Trickle Down Economics, which he once said was akin to “being nice to the wealthy and being cruel to the poor.”

ALL the economics textbooks that have ever advocated Trickle Down Economics
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Whether or not one thinks that low taxes is a good idea, which of those Republican candidates ever said that the government should give more money to the rich? The answer is “no one.”

In regards to low taxes, Ben Carson said:

What made America into a great nation was the fact that we said "That guy just put in $1 billion, let's create an environment that's even more conducive to his success, so that next year he can put in $2 billion." And that's the kind of thing that helps us to grow. We can't grow by continuing to take a piece of pie and dividing it and redistributing it.

On the other hand, Marco Rubio said:

Well, first of all, capital gains and dividends is investment. That means someone is taking money they have access to and investing it in something. That’s how jobs are created. My father had a job as a bartender at a hotel. And the reason why he had a job as a bartender is because someone who had money invested in that hotel. Invested in building it, invested in expanding it, invested in modernizing it so people would keep coming back. And that’s why people visited that hotel. That’s why my dad had a salary, and that’s why he had tips.

The oversimplification of these two men's positions notwithstanding, none of the positions that we heard were about how the rich should remain rich because they deserved to be rich. In fact, both men's positions were rather uncontroversial positions about how additional wealth and jobs can be created when businesses are not hampered by burdensome regulations and steep taxes.

Obviously, low taxes and deregulation are NOT the only things that ensure job growth. Other things to take into consideration are financial and political stability, currency fluctuations, interest rates, boom-bust cycles, corruption, demographics, education levels, market failure, government failure, etc. etc.

These were topics that the Republican candidates should have discussed. However, instead of treating the voters like adults, none of these topics were brought up, which was all the more reason why the entire “debate” was such a waste of time.

Then again, can you imagine a political forum where politicians were actually honest and were forced to talk about real issues and real solutions? Voter turnout rates would fall into single digits! That is assuming, of course, that voters don't decide to express themselves on the streets.

Revolution IS the hell of it!
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However, that's not the point that Krugman was making either! In fact, Krugman's point, at least as far as economics goes, was that Bill Clinton's tax hikes were followed by a huge economic boom while George W. Bush's tax cuts were followed by a weak recovery that ended in financial collapse.

As an economist, a Nobel laureate at that, Krugman knows very well that economic booms and busts depend on many more factors than the few I already mentioned earlier – tax rates being only just one of them. Despite the fact that he is fully aware of this, Krugman decided to play the idiot and went into “correlation is causation” mode.

The fact is, aside from the tax hikes, the Clinton economy also benefited from the end of the Cold War, NAFTA, and the rise of the tech sector. On the other hand, the Bush economy was hampered by the tech bubble burst, the War on Terror, and the much bigger housing bubble burst.

In other words, unless absolutely mismanaged to the tune of Hugo Chavez, the Clinton and Bush economies would have boomed and busted regardless of which tax policy was pursued. The only difference would have been the degree of the booms and busts.

Krugman knows this. But he took off his economist hat and put on his partisan pundit hat instead, which does a disservice to those who read his columns to learn about economics.

So going back to his quote about false assertions and lies, I suppose the only appropriate thing to say is “Pot, meet Kettle.

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Thursday, September 17, 2015

Don't Vote. It Just Encourages the Bastards. (Part II)

I have never voted for anyone in my life. Well, I have cast votes for class presidents when I was in school. But when it comes to electing public officials, I have never cast a single vote for anyone.

There is a good reason for this. For one thing, I was not the citizen of the country of my birth, Brunei. Even if I had been, I would not have been able to vote as the country is run by an absolute monarchy. Monarchs don't tend to look kindly upon voting. And of course I was excluded from the voting process while I was in the US as I am a Korean citizen. When I came to Korea in 2011, that was when I finally had the right to vote for the first time in my life.

However, I did not vote in the 2011 mayoral election or in the 2012 presidential election or in the 2014 by-elections. Also, I do NOT plan to vote in the foreseeable future. There are two reasons.

Firstly, I find those politicians who actually make it through the system far enough to have a serious shot at getting elected to their desired positions, particularly executive positions, repulsive. Secondly, my single vote does not matter. No election has ever been decided by a single vote. Even close elections are not determined by actual votes but rather by the courts a la Bush v. Gore. So, I find the act of voting to be a waste of time and would much rather spend that time with my family.

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Going back to the process itself, seeing how they have to pander to the lowest common denominator, politicians often have to spout things that are unintelligent, indecent, and nonsensical. Even if they are not positions that they actually hold, by the time they become “viable” candidates, I simply cannot identify with any of them. If I were an economics professor, whether we are talking about Park Geun-hye or Moon Jae-in or Jeb Bush or Bernie Sanders or anyone else in between, I would give them Fs in the class.

However, it is a mistake to assume that politicians are stupid or incompetent. Politicians are NOT stupid or incompetent. They are good at their jobs, which is telling voters what they want to hear. After all, it was H.L. Mencken who said “If a politician found he had cannibals among his constituents, he would promise them missionaries for dinner.”

And the reason this problem exists is that many people seem to believe that if something is popular, then it must be a good idea. This is problematic because, regardless of our personal biases, what is true is that very few people are actually evil. The vast majority of people in the world, to some degree or another, believe in tikkun olam.

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That's the problem!

So why is it bad that people have good intentions? It's particularly bad for democratic societies because when people have good intentions, it becomes easy to create consensus. However, the problem is that many people lack knowledge or understanding to know what is actually a good idea. After all, economics, which so many electoral promises boil down to, can be quite counter-intuitive. Combine good intentions, consensus, and a lack of knowledge and what we end up with are things that are either ineffective or, worse, counterproductive.

For example, ask any average person in the street whether it is a good idea to assure more welfare to the poor and the elderly and most people will say that it is a good thing. However, ask that same person whether he or she would be willing to pay more taxes to support welfare for others and there is a good chance that he or she will not want to do so. And that's how we get ridiculous promises like the ones President Park made about increasing welfare benefits without increasing tax rates.

Or here's another one that politicians love to talk about – affordable higher education. While campaigning, President Park tried to woo younger voters by promising them that she would slash college tuition fees in half. Unsurprisingly, this campaign promise has not been kept. On the other side of the ocean, Bernie Sanders likes to claim that if elected president, he will make every public university tuition-free. Sure.

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Let's put aside the fact that these kinds of promises are made to be broken from the start. Even if it were possible for politicians to keep these kinds of promises, would it be a good idea to make college so affordable to so many people? Most people's gut reaction would be to shout “YES!” And I am sure that some will even post news articles that support how a well-educated population will increase a society's wealth.

The problem, however, is that many of these people do not consider marginal students – those who attend college for one or two years before dropping out and those who take a lot more than the traditional four years to graduate with a degree in Independent Studies – in their equation.

Recently, it was reported that Koreans rank first among OECD nations in terms of doctor visits and hospital stays. This is what happens when prices are artificially set below market price – the creation of excessive demand aka a shortage of goods, which is a direct result of government failure. If the cost of attending college is lowered, or even made free, something similar would happen. So it would seem quite likely that making college more affordable will encourage a lot of marginal students to waste a lot of time and energy and get very little (jobs that pay) to show for it.

Will the effect on marginal students overshadow the overall benefits to society? I do not know. What I do know is that people don't usually talk about marginal students when they talk about affordable higher education.

But which politician, aside from those who plan to retire, would dare to be honest with voters? There's a reason Eisenhower only talked about the military-industrial complex in his farewell address.

Public Choice theory assumes that everyone, even those politicians whom we vote into office to look out for the interests of the public, acts on self-interest. So, in the case of a politician, it's in his self-interest to get voted into office. Even if the politician does have the best of intentions, he/she wouldn't be able to do much if they were not in office. Therefore, to be successful, politicians cannot afford to actually pinpoint real problems and try to fix them. They need to find out what people want to hear and then tell it to them. Repeatedly.

The fact that the majority of voters do not actually understand economics or public policy or national security issues is a given. There are only twenty-four hours in a day and it is impossible for us to be experts at everything. What is disgusting about politicians is that they know better, or at least ought to know better.

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