Monday, March 4, 2013

the forest for the trees

Hamilton Nolan's work for Gawker, from the past several years, is a truly mixed bag. Nolan has always been a talented and perceptive writer, and one with an admirable willingness to get angry. His dispatches on unemployment and the individual lives affected by it are admirable and necessary, given the tendency of numbers and statistics to appear impersonal and vague. And he is absolutely right in his repeated insistence that the philosophy of college-for-everyone, and specifically college-funded-by-loans-for-everyone, is a bad idea.

I also think, though that he can be a bit sloppy in making his case. He is far too enamored of the analogy between student loan debt and the housing bubble. I have made this case many, many times. (Nicole Allan and Derek Thompson have an infographic about it.) I don't think and haven't said that there is no crisis coming, and I would argue that we currently have a slow-moving crisis. But that crisis should be thought of as a humanitarian one, and whatever shape a financial meltdown will take, it will unfold in a very different way than the housing bubble did. I won't rehash all the reasons why, but the basic point is that the size of the problem is exaggerated, that nontransferable and immaterial assets behave differently from transferable material assets like houses, that the relationship between the value of a degree and the debt used to purchase it is different from the relationship between a house and its value, that a degree is not subject to perceived changes in value in the way that a house's value is subject to the perception of value of others on its block, that student loan debt is not dischargable in bankruptcy (or by walking away), and that the holder of a majority of student loan debt is the world's most powerful government, which controls a fiat currency and access to the printing press. Again, I'm not saying that nothing bad is going to happen. I'm sure that something bad is already happening! And I've proposed a lot of ways to fix it. But we need to think and speak clearly about the problem.

But more than those specific disagreements, there's the broader sense in which Nolan is indicative of people who make accurate damning critiques of particulars but never quite gets to causes. He advocates ending uncapped student loans-- an idea I fully support-- as part of a move away from college for all. OK. But what next? You see tons of people calling for a return to trade schools. But the rolls of the unemployed are filled with people from the trades, as trades broadly defined are deeply sensitive to the housing market. People say, "we need to get back to making things in this country!," but American manufacturing is in great shape-- it just doesn't employ people at nearly the same rate as it once did. The notion that we're going to reinvigorate the uneducated labor sector seems just as unrealistic to me as the notion that our current higher education funding system is sustainable.

Also, it's worth saying: the problem with both the mortgage fiasco and the student loan debt issue is not the specific industries. The problem is an unrestrained financial sector. The conditions are stark: we've socialized risk in the financial industry while keeping the profits privatized. If the student loan debt bubble is in fact a bubble and it does in fact burst, the banks know that they will be bailed out, one way or another. And literal bailouts are just the most obvious and direct sense in which the government prevents our finance industry from being accountable for its behavior. Trust me: they will find a different vehicle for risky investments, before, after, or during a student loan crisis. To focus on the individual students, or the individual colleges, or the federal loan system, is to miss the actual culprit, which is a completely rapacious and unaccountable financial sector.

When Nolan writes about the unemployed, he does so very poignantly. And he seems to understand how deep our problems are, with our entire economy becoming a machine for siphoning resources to an ever-shrinking number of people at the top, while productivity gains have become totally decoupled from wages. But like a lot of bright, critical people I know, he seems to think that we can tweak our way back to the old economy. People know that it's silly to think that the 1950s Fordist economy is coming back, but they are being just as naive if they think that the economy of the early 2000s is coming back. The finance industry will never restrain itself, and it holds too much power to be effectively regulated. Meanwhile, the pace of technology prevents us from returning to full employment under anything like the working conditions that we would deem minimally necessary. We need to nationalize the finance industry, establish a universal basic income or negative income tax, institute a single-payer health care system to restrain health spending, and raise taxes on the upper and (yes) middle class. I know, I know-- and a pony. But that's no more of a fantasy than getting back to an economy where there's about as many jobs that can provide for a minimum of material security as people who want them. That world is never coming back. Guys: the social contract you thought you signed is dead. Enough good jobs for enough people is never coming back under present conditions.

In the short term: enforce a rigid cap on student loans; prosecute predatory student loan lenders; stop making for-profit universities eligible for federal funds; forgive some significant portion of extant loan debt held by the government (ideally all); and refund the public universities through the state governments, the way they used to be. Institute college cost reforms as I've advocated for to go along with ending uncapped loans on demand. All of that is necessary.

But it is not sufficient. Not when our system is so horribly bent towards remunerating the few at the expense of the vast majority. Until we bend that curve back, by force, the rest is rearranging deck chairs.

1 comment:

Brett said...

I wonder how the actual revenue math would work out in terms of what you'd need for taxation, if you replaced the patchwork of welfare spending with universal single-payer and a basic stipend for every adult. About 76.3% of the US's 313 million people is above the age of 18, so a $25,000 stipend for every adult would lead to an annual cost of $5.97 trillion.