Predation is observed in higher education. UCLA is both Lott's and my alma mater. It spends $40,000 per student but charges $6,522 tuition for in-state students. Such below-cost pricing gives public universities a significant competitive advantage over private universities. State universities have acquired many formerly private universities after driving, or threatening to drive, them out of business. Lott gives examples of George Mason University School of Law, University of Buffalo, University of Houston and University of Pittsburgh. In the case of University of Buffalo, the State University of New York reportedly threatened to open a public university across the street unless the University of Buffalo joined the state system.
The U.S. Department of Justice would go after a private business using similar predatory practices of intimidating its rivals and selling goods and services below cost. The U.S. Department of Commerce sanctions foreign companies accused of selling goods in the U.S. below cost with anti-dumping duties. If selling goods below cost is seen as unfair in the international arena, why is it not when it's done by government entities?
Lott's "Crime and Punishment" chapter has a lot of interesting tidbits. It starts off stating a fundamental principle of economics: the higher the cost of something, the less people will do of it. To demonstrate the generality of this principle, Lott says that when the number of referees were increased from two to three in the Atlantic Coast Basketball Conference, fouls fell by 34 percent; fouling became more costly. The American League has more hit batsmen than the National League, but the difference only appeared after 1973 when the American League removed its pitchers from the batting lineup in favor of designated hitters. Not being afraid of being hit themselves, American League pitchers threw more bean balls; bean balls became cheaper. The same principle applies to the U.S. crime rate that fell after the death penalty was reinstated, more prisons were built and concealed-weapon carry laws were enacted. The higher the cost of a crime, the less people will do of it.
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