The issue of student loans is a problem that few economists treat as a threat. Thanks for bringing this issue into your focus.
The problem with education loans is that the dollar is trending ever faster towards zero value. Smart money is going out of dollars. When the government subsidizes loans, it creates gratefulness for government largesse on the public “dime.” This means the government is subsidizing people who owe their careers, possibly their choice of spouse, and children they can afford to the government subsidy of their education. An ever increasing cadre of education beneficiaries is a great long-term way to bring a once-free country into submission.
Printing dollars to finance need is how Weimar turned into Mein Kamp.
The proper economic formula would reconcile need-supported “universal compulsion” goods like state-mandated public education with tax-the-rich and debase the currency at the federal level to pay for it. The monkey wrench in the machine is the pace of innovation.
In a hard money economy, innovation reduces real prices. In an inflation economy, the money supply expansion without increase in productive innovation increases apparent prices. Collapse is inevitable when the administrative class out-comsumes the productive class. Collapse is the simple effect of an unsupported building or a cannibalized economy.
I saw the white dress with red lettering, “Eat the rich.” It was offensive, unpopular, or too soon, depending on your politics.
College loans that the government will eventually find a way to forgive is a next logical step in this charade.
All we need now is a ready scapegoat. Oh, wait, we've got that too. No thanks to October 7th, a majority of the university population seems to be saying everything is the fault of the Jews.
The BRICS are preparing for it, while the US and the West are frittering.
I think the standard justification is that much of the value of education goes to society rather than the individual who gets the education, so education should be subsidized by society.
This justification is really funny to me. Many of the same people will say "the greedy fat cats at the top exploit everyone and get all the benefit" but at the same time "people getting educated and making more money produces value that accrues to all of society" which is almost Adam Smithean.
What we need is not more / different loans. What we need is educational unbundling so students pay for what they truly value. College without the 100s of mental health advisers/athletics programs/fancy dorms, brand without the education / education without the brand, take a class without having to pay for the 200 dollar textbook professor wrote, etc etc
When I was teaching full time I remember students blithely taking out loans each semester. They rarely if ever read the documents: the financial aid office said "sign here" so they did. They had no practical understanding of what "taking a loan" meant. Combined with their having imbibed the cultural message that college was about partying and having fun, the outcome was too often disastrous.
They didn't take into account that the school's six year graduation rate was (at that time) under 20% and that there was a real possibility they could become one of the (too) many who left college with a mountain of debt and no degree to show for it.
This was one of the reasons I stopped teaching full time.
The supporters of education typically say that education should be subsidized even at a loss because it's necessary for living an enriched life. Or something like that. Even if there was absolute proof that education didn't improve future earnings a lot of people would still insist on it.
Government subsidies of education are investments by the government in childbirth. People have fewer children than the government would prefer. So: it taxes those with few children and subsidises those with many. Enough people have children or like children so that it's a vote winner. Those with no children suffer from the tyrrany of the majority.
The issue of student loans is a problem that few economists treat as a threat. Thanks for bringing this issue into your focus.
The problem with education loans is that the dollar is trending ever faster towards zero value. Smart money is going out of dollars. When the government subsidizes loans, it creates gratefulness for government largesse on the public “dime.” This means the government is subsidizing people who owe their careers, possibly their choice of spouse, and children they can afford to the government subsidy of their education. An ever increasing cadre of education beneficiaries is a great long-term way to bring a once-free country into submission.
Printing dollars to finance need is how Weimar turned into Mein Kamp.
The proper economic formula would reconcile need-supported “universal compulsion” goods like state-mandated public education with tax-the-rich and debase the currency at the federal level to pay for it. The monkey wrench in the machine is the pace of innovation.
In a hard money economy, innovation reduces real prices. In an inflation economy, the money supply expansion without increase in productive innovation increases apparent prices. Collapse is inevitable when the administrative class out-comsumes the productive class. Collapse is the simple effect of an unsupported building or a cannibalized economy.
I saw the white dress with red lettering, “Eat the rich.” It was offensive, unpopular, or too soon, depending on your politics.
College loans that the government will eventually find a way to forgive is a next logical step in this charade.
All we need now is a ready scapegoat. Oh, wait, we've got that too. No thanks to October 7th, a majority of the university population seems to be saying everything is the fault of the Jews.
The BRICS are preparing for it, while the US and the West are frittering.
I think the standard justification is that much of the value of education goes to society rather than the individual who gets the education, so education should be subsidized by society.
> education should be subsidized by society
Without individuals
This justification is really funny to me. Many of the same people will say "the greedy fat cats at the top exploit everyone and get all the benefit" but at the same time "people getting educated and making more money produces value that accrues to all of society" which is almost Adam Smithean.
> Imperfect information
In Heaven, everyone will be perfectly free of information. Progressive education is a Pragmatist
approach to this ideal.
What we need is not more / different loans. What we need is educational unbundling so students pay for what they truly value. College without the 100s of mental health advisers/athletics programs/fancy dorms, brand without the education / education without the brand, take a class without having to pay for the 200 dollar textbook professor wrote, etc etc
When I was teaching full time I remember students blithely taking out loans each semester. They rarely if ever read the documents: the financial aid office said "sign here" so they did. They had no practical understanding of what "taking a loan" meant. Combined with their having imbibed the cultural message that college was about partying and having fun, the outcome was too often disastrous.
They didn't take into account that the school's six year graduation rate was (at that time) under 20% and that there was a real possibility they could become one of the (too) many who left college with a mountain of debt and no degree to show for it.
This was one of the reasons I stopped teaching full time.
> college was about partying and having fun
Nihilist philosophy courses are grand occasions for partying and having fun.
As long as the loans are repaid 😉
The supporters of education typically say that education should be subsidized even at a loss because it's necessary for living an enriched life. Or something like that. Even if there was absolute proof that education didn't improve future earnings a lot of people would still insist on it.
Yep. It's mostly the "equity" SJW stuff combined with believing 100% in human capital theory.
Government subsidies of education are investments by the government in childbirth. People have fewer children than the government would prefer. So: it taxes those with few children and subsidises those with many. Enough people have children or like children so that it's a vote winner. Those with no children suffer from the tyrrany of the majority.
It would be better to have a private market in student loans and just triple the child tax credit.
The US child tax credit finishes at age 17 and is not aptitude tested. It doesn't seem like quite the same thing.