The Great Debt DebatePosted: June 26, 2019 Filed under: Politics, society | Tags: economics, economy, fiscal policy, politics, student debt, student loans Leave a comment
There’s nothing like a heavily disputed presidential primary season to bring exciting new ideas out into the open, and there’s nothing like new ideas to generate debate (or if you’re on the internet, scorn and abuse). One of the big ideas being tossed around among Democratic presidential hopefuls is the idea of alleviating some or all student loan debt. Whose, how much, and how are all part of the mix, and of course the ever-present “why?” raises its head in the discussion, particularly when the question makes its way outside the narrow corridor of progressive thought.
In a lot of ways I feel like I’ve had this discussion before, on any number of topics, pretty much anytime the subject of government intervention in the economy (or any kind of government spending really) comes up. The simple fact is that government spending exists for a lot of reasons, but it always has one of a few intentions:
- Providing basic services. This one seems kind of obvious, but it doesn’t cover nearly as much ground as most people think it does. That’s because there’s a significant amount of ground between what you want and what you need. We’ve become accustomed to a government that provides an awful lot of wants in addition to a scant handful of needs. This is not intended to be a polemic against government providing those things, merely pointing out that there is a difference between the two. This also goes hand in hand with…
- Making a moral statement. You might not think something as dry as taxation and spending would have moral implications, but boy would you be wrong. Consider the phrase “provide for the common weal”. What exactly does that mean? What does it cover? And how do you intend to collect the money to pay for it? Once you figure that out, you’ve taken a moral stance, and your budget and taxation priorities will reflect that stance.
- Stimulating the economy (whether it’s effective or not). I’m going to be generous and pretend that every time politicians have said that their various taxation and budgetary maneuvers were intended to “stimulate the economy” they were being sincere, regardless of the actual outcome of those efforts.
Please stop laughing at me.
So where does that leave us when considering the idea of relieving student debt? Well, a lot of that is going to depend on how you feel about it coming in. As Obi-Wan once said, “you’re going to find that many of the truths we cling to depend greatly on our own point of view.” Do you consider college to be a basic service? If so, then government should have been providing it all along, and of course people shouldn’t have to pay for it, either in the past or in the future. Pay off ALL the loans and make all public colleges free. Perhaps you believe this is a matter of economic justice, in which case something more akin to Elizabeth Warren’s plan is more to your taste, with only a certain amount of debt being paid off, and an income cut-off being involved to ensure it’s more progressive than regressive. Or maybe you’re interested in stimulating the economy, in which case you want something a bit more modest but even-handed.
Or perhaps your stance leans more the other way. I have heard arguments asking why student loan debt should be privileged over other kinds of consumer debt, such as mortgage debt or credit card debt. These are important questions, and worth addressing by those who would forgive or pay-off student loan debt. I have a few answers of my own, although not sufficient answers I am sure for those who are asking those questions.
Regarding comparisons to mortgage debt, mortgages have been privileged over other kinds of consumer debt for as long as the modern income tax has existed. Last I checked I couldn’t deduct my credit card interest or my rent payments from my income taxes, and while I can deduct the interest from my student loans from my income taxes, there’s one big difference on those that I’ll get to in just a moment. So suggesting that relieving student debt would be an anomaly because we would be “privileging” one particular kind of debt is disingenuous at best. While there’s a fair argument to be made that the price of the mortgage deduction has already been “baked in” to the price of housing, the same can be said for the price of tuition, with the cost of public four-year institutions increasing 213% in 10 years. I’d like to flip that house.
As for credit card debt, that’s a tougher lift. Despite the calls to limit interest rates at 15%, I haven’t heard any suggestion of relieving existing debts, nor do I seriously expect there to be any suggestion for that happening either (nor do I think such a suggestion would get any traction). Going back to needs and wants, there is an understanding in America today that you need a college degree; despite the realities that many Americans face of having to get by week to week using any means at their disposal, including high-interest credit cards, there is still a Puritanical moralism that says credit card debt represents wants. Regardless, though it has been made significantly more difficult in recent decades, there is still an option available to credit card debtors that is not available to student loan debtors: bankruptcy. Yes, it’s an ugly word in America. Yes, it will ruin your credit rating. But it sure does beat insurmountable debts. At least it does if it applies to the insurmountable debts you have.
I am not unsympathetic to any of these positions. I am a renter, and I have been a home owner. I have dug myself out of the bottom of a very deep hole of credit card debt more than once, and I know how awful it can be. Worst of all, I have carried substantial college loan debt for a quarter of a century, and every time I make a payment I am reminded of all the stupid choices I made that got me into that debt. I own those choices, I do not deny it. And I have been paying for them for over twenty years. It is not something I would wish on another human being.
The best answer I can give, ultimately, is the same answer I have always given when it comes to government policy or societal action: someone’s gotta take it in the shorts. It may not be “politic”, but it is absolutely egalitarian. It is the recognition that in a cooperative society, there are only two ways to manage things: everybody goes it alone, in which case the winners and losers make themselves, or we do things cooperatively, in which case we collectively make winners and losers. Either way somebody takes it in the shorts. There is no scenario in which everybody comes out ahead, but there are many scenarios in which everybody is worse off. The question we have to answer is which scenario we choose to pursue, and who ends up taking it in the shorts.
Anybody who says the student loan industry is getting it right is someone who is profiting off college students. And it’s not just teenagers. Veterans, working professionals, career switchers, stay at home parents returning to the workforce; these are all people who are trying to navigate a complex and often predatory environment, and they don’t have decades before retirement to pay back overwhelming loans. I’m not advocating any particular approach, I’m saying a conversation needs to be had now before the bubble bursts and it’s too late for a conversation, and all that’s left is to try to clean up the B.S.
Who’s To Blame for the Amazon Pullout?Posted: February 15, 2019 Filed under: Politics, society | Tags: Alexandria Ocasio-Cortez, Amazon, AOC, business, economics, HQ2, Jeff Bezos, NYC Leave a comment
Full disclosure: I live in Northern VA, relatively close to Arlington, so I am not completely unaffected by HQ2. Not directly impacted, but not unaffected either. It is also worth noting upfront that I am 100% opposed to corporate welfare of any kind, including subsidies to entice corporations to establish any sort of facilities in a given region. With that out of the way…
Amazon decided to give a special Valentine’s Day present to the people of New York City, a sort of “fuck you too” to the protesters and politicians who have been demanding significant changes to the deal that had been negotiated between their company and the city to bring 25,000 jobs to Long Island City in Queens. This has apparently thrilled some Amazon opponents such as Alexandria Ocasio-Cortez, who according to the Washington Post tweeted “Today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.” If you say so Ms. Ocasio-Cortez. Personally I don’t see the benefit. But maybe I’m missing something, which is not surprising since (a) I’m not a progressive and (b) a tweet is hardly conducive to explaining nuanced policy views.
Let’s consider another quote from the Post:
“Amazon showed its true colors today and every American should be outraged,” Marc Perrone, president of the United Food and Commercial Workers International Union, said in a statement. “Jeff Bezos had the opportunity to listen to the voices of working families and support the good-paying jobs New Yorkers deserve.
“But now we can see this is all about blind greed and Jeff Bezos’ belief that everyday taxpayers should foot the bill for their new headquarters even as the company actively works to eliminate millions of American retail jobs. No company that refuses to invest in hard-working men and women should be allowed to stuff their pockets with taxpayer-funded subsidies. Make no mistake, this fight has only begun,” Perrone said.
This is at least more detailed, although hardly more nuanced. I’ll have to take it point by point, as there’s a bit here to unpack:
- “Amazon showed its true colors today and every American should be outraged.” I both agree and disagree. Yes, Amazon did show its true colors. It is a business, and one that is not interested in being held hostage or shaken down. Regardless of how you feel about the original deal, that was the deal that brought them in, the one they agreed to, and unless you have some very disturbing role models you don’t generally become “outraged” when someone pulls out of a deal when the other party decides to change the terms.
- “Jeff Bezos had the opportunity to listen to the voices of working families and support the good-paying jobs New Yorkers deserve.” Not sure exactly what this is supposed to mean. I guess I’m one of those libertarian nuts who doesn’t believe people are “entitled” to a job, good paying or not. But even if I did think people were entitled to a job, my understanding of the plan was that Amazon was going to build a campus with at least 25,000 jobs with an average salary of $150,000 a year. I realize that “average” doesn’t mean “every job will pay at this rate”, but I seriously doubt the intention was “one extremely well paying job and 24,999 crappy ones.” (Sidebar: this same article from the Post says that Ms. Ocasio-Cortez among others “protested that the influx of Amazon employees, to be paid an average salary of at least $150,000 a year, would cause housing costs to skyrocket, drive out low-income residents and worsen congestion on the subway and streets.” So I’m confused – is the pay too low or too high?)
- “But now we can see this is all about blind greed” – I’ll resist the temptation to take a cheap shot here and simply offer a rebuttal. I believe this is about two competing forces: corporate finance and local politics. And when push came to shove it turned out that the local political groups in NYC (including the labor unions, activists, and local and apparently national politicians) had not yet learned a critical lesson of negotiation: the next best option. When trying to push for more, consider what your opponent’s next best option is before you put your offer on the table; if walking away is their next best option, they will take it. And they did.
- “Jeff Bezos’ belief that everyday taxpayers should foot the bill for their new headquarters” – I specifically singled out this statement because this is the only sentiment I can unequivocally agree with. As noted at the outset, I am completely opposed to corporate welfare in all its forms, and this deal is no exception. Whether Mr. Bezos personally negotiated the deal or not is irrelevant; Amazon is his company, and he is ultimately responsible for the direction it takes. Certainly such a major decision as HQ2 would not proceed without his significant input, and he could not have been unaware of the massive “incentive” package involved.
- “Even as the company actively works to eliminate millions of American retail jobs.” And this is the kind of foolish statement that works to undermine practically anything of value Mr. Perrone might have had to say. I understand if he feels the need to defend his membership, but this smacks of defending buggy whip makers in the era of the automobile. Last I checked nobody was coerced into using Amazon, although the same cannot be said for unionized labor.
- “No company that refuses to invest in hard-working men and women” – According to an article at Business Insider, Amazon does invest in “hard working men and women”, with a benefits package for full-time employees that makes me envious, and even “[p]art-time employees who work more than 20 hours per week receive benefits, including life and disability insurance, dental and vision insurance with premiums paid in full by Amazon, and funding towards medical insurance.” But perhaps what Mr. Perrone had in mind was investing in their future: “Both full-time and part-time hourly employees are eligible for Amazon’s innovative Career Choice program that pre-pays 95 percent of tuition for courses related to in-demand fields, regardless of whether the skills are relevant to a future career at Amazon. The company has built dedicated Career Choice classrooms at more than 25 fulfillment centers to make it easier for employees to go back to school by offering classes onsite.” To be fair, this article is from 2017, and Amazon’s culture may have changed for the worse. But I’d be willing to take that bet against the likelihood this is simply more political posturing on Mr. Perrone’s part. Unless he had something else in mind for “investing in hard working men and women”.
- “Should be allowed to stuff their pockets with taxpayer-funded subsidies” – It actually feels misleading to separate this from the previous phrase, as this is a dependent clause, so let’s put them back together: “No company that refuses to invest in hard-working men and women should be allowed to stuff their pockets with taxpayer-funded subsidies.” This is actually a bit more uncomfortable for me than the previous incarnation, as the implicit contrapositive is that “Any company that does invest in hard-working men and women should be allowed to stuff their pockets with taxpayer-funded subsidies.” If we are to be generous and assume that is not his intent, I am right there with Mr. Perrone; however I am rather cynical given the company he keeps.
- “Make no mistake, this fight has only begun.” Which fight exactly? The fight to drive Amazon out of NYC? Fight’s over. You won. Congratulations. The fight to keep Amazon in NYC, on your terms? Sorry, not gonna happen. Short of nationalizing the company (something that I will not accuse anyone of seriously contemplating, no matter how many Atlas Shrugged comments are tossed my way) there’s nothing to be done. Amazon made their choice. Do you perhaps intend to shame them into coming back? Good luck with that. What I expect the rest of the country to see is that NYC won the lottery and then a small group of people decided to tear up the ticket because the jackpot wasn’t big enough. That won’t garner much sympathy outside of a vanishingly small circle, most of whom live in Manhattan.
For myself, I won’t dispute that there are flaws with the HQ2 deals. And I will freely admit that there are reasonable arguments to be made that one or both of them go past flawed and into the realm of bad. But none of the arguments that I have heard coming out of NYC strike me as reasonable, and most of them sound at best partisan and at worst childish and churlish. The fact that many of them are contradictory (either with facts on the ground or with each other) does nothing to enhance the position of those who are making them. Worst of all, the time to fight against a deal is before it is made, not after. And demonizing someone who pulls out of a deal that you have changed the terms of is quite literally blaming the victim, and does even more damage to your business reputation than your already shady tactics have done.
My advice to NYC and the people who created this mess? Shut up, suck it up, and learn from this mess. Before you create another one.