Capitalism at work

The primary purpose of a for-profit company is to make money. Like  here:

 But for-profit colleges have failed to support those students, the report states, by prizing recruitment over retention. The colleges studied spent 23 percent of their revenue on marketing and recruiting, and 17 percent on instruction.

The publicly traded companies that operate for-profit colleges yielded an average profit margin of 20 percent in 2009 and paid an average of $7.3 million to their chief executives.

The companies are successful largely because they charge high tuition. Associate degree programs at for-profit colleges cost at least four times as much as comparable programs at public community colleges, $34,988 versus $8,313, the report said. Internal company documents showed tuition hikes were enacted ‘‘to satisfy company profit goals,’’ rather than to cover increased costs of educating students.

There are two basic ways that a company can do well: have a really good product; have really good marketing. As far as the company is concerned either is ok, but only one is better for the rest of us. That means if the product is important, then there needs to be regulation. That’s why there is an FDA, OSHA, and many other federal agencies–the collective we has decided that we want there to be basic requirements for food, medicine, workplace safety and other things (we do not want a company to be able to sell diseased meat for example). We have to decide whether a college needs to have basic requirements in the same way. I think the collective we will decide it’s in our best interests to have these requirements. And it’s also in the best interests of the colleges: if the abuses get too bad at a few colleges, then all of them will suffer. Done well, government regulations help private industry by giving consumers some basic trust that the products they buy have minimum standards.

1 Comment (+add yours?)

  1. gold account
    Aug 04, 2012 @ 15:52:37

    Of course, it’s illegal for kids Bobby’s age to receive financial aid. But for-profit colleges haven’t always been scrupulous when it comes to raiding the federal treasury. Between student aid and G.I. Bill programs, most schools receive 90 percent of their revenue from the American taxpayer. And the recruiters — often little more than salesmen paid largely by how many people they enroll — are driven mercilessly to keep those cash registers ringing.

    Reply

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