Story Stream
recent articles

While last week’s Formula 1 race in Las Vegas didn’t draw the crowds that organizers hoped, a slow weekend in Vegas is still defined by something well north of 90% occupancy. And that only tells part of the story.

As last weekend revealed somewhat cruelly, securing a room in Las Vegas amid the race festivities only got you so much. The real action was in what you did once you were there.

Take the increasingly popular and rather exclusive restaurant chain Carbone. Last weekend it wasn’t enough to just get a reservation at its Vegas outpost. Or even to sit at the bar. If you merely wanted a seat at the bar, you had to be ready to shell out a minimum of $300 for a spot. Except that $300 was a steal during Formula 1 weekend.

At mid-strip hotel and casino Bellagio, a three football field length viewing area was constructed just for the race. It sounds like a fun place to have watched the cars blurring by, but those fortunate enough to be in this viewing area handed over $11,000 per person/per night for the pleasure.

As for viewing locales on the level of the race, locales that included cooking by chefs with names like Keller and Ramsay, prices well exceeded $11,000. All to see a blur a bit more closely.

Readers will understandably ask why to all of this. Why would anyone pay so much to see in person what they could see much better on TV, and for free? The question is particularly pertinent considering the rapid advancement of cameras and camera angles in modern times. Formula 1 viewing is much better, much quieter, and arguably much more informative from the comforts of one’s home. Except that such an observation misses the point.

They weren’t selling sights last week in Las Vegas, rather they were selling exclusivity. Think the Super Bowl. Watching from home similarly exceeds watching from the stands, but watching from home is just that. People clearly put a value on being there.

All of the above has relevance to education at all levels, but most notably college education. For the longest time, happy talking pundits have written and spoken confidently of a day that’s coming soon whereby the education cartel will be broken. Thanks to the internet and what the latter signifies in terms of beaming information to all points around the world, the day is coming when a Harvard education, like the Super Bowl or Formula 1 races, can be had from home. Some would say it’s already here.

Yet college tuition continues to rise. Well, of course it does. And the reason why is no riddle. Not now, and not centuries ago, was anyone ever buying learning or career skills when they went to college. Learning is a choice, after which colleges are most abundant where economic growth is most abundant, and where economic growth is greatest the nature of work is logically changing the fastest. Which means colleges are, on their very best day, teaching or training us for skills that are no longer relevant to actual work.

Except that people keep going to college, and they keep paying more for the privilege. What’s true about college is true about nursery school, elementary school, junior high, and high school too. And the reason prices keep going up is because people will pay through the nose for exclusivity. It was never about the learning any more than it’s about seeing the Super Bowl or an open-wheel race.

Exclusivity is expensive, which means “market forces” and technology are not about to push tuition costs down. To believe otherwise is to mistake what people are buying.

John Tamny is editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors (www.appliedfinance.com). His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

Show comments Hide Comments