By Michael Brendan Dougherty
Wednesday, November 18, 2020
Democrats want to prove they are the party of the marginal
and oppressed. But
they also want stuff for their kids.
Every Democrat constituency is currently trying to
reinsert its policy goals into the discussion, as President-elect Joe Biden
begins to announce the members of various task forces and select people to
nominate for cabinet positions. It doesn’t matter if Joe Biden campaigned
explicitly against these policies and beat other Democrats who advocated them —
with a tiny majority in the House, and perhaps no Democratic control of the
Senate, the party has an incentive to unite, and an incentive to at least hear
everyone out.
Of particular interest are the affluent voters, who
mostly live in the inner-ring suburbs and whose ongoing defection to the
Democrats in 2018 and 2020 helped determine their success. These voters want
their taxes lowered, via a repeal of Trump’s cap on tax deductions covering
state and local taxes. They also want to see student debt canceled. Chuck
Schumer, revealing little faith in the ability of Democrats to win special
Senate elections in Georgia, announced rather preposterously that Joe Biden
could, by executive order, cancel up to $50,000 of debt per student debtor.
This roughly hints at the plan put forward by Senator Elizabeth Warren to
cancel student debt.
Alexandria Ocasio-Cortez joined in.
“Things were bad for me, so they
should stay bad for everyone else” is not a good argument against debt
cancellation - student, medical, or otherwise. #CancelStudentDebt
Another member of the Squad, Representative Ayanna
Pressley, tweeted that “student debt cancelation will ensure an equitable
economic recovery from COVID-19, jumpstart our economy & close the racial
wealth gap.”
This is a bad justification for a bad policy.
The cancellation of the bulk of student debt would
immediately put into question the status of future student loans. And, in fact,
many beneficiaries would respond to this stimulus by taking out more student
loans. It would not be the last debt cancellation; it would merely be the
first.
This debt jubilee would postpone the deserved reckoning
of the higher-education system with its runaway inflation and predatory
practices. Tuition inflation is caused largely by the government’s guarantees
and preferment for student debt above other debts in the market. This
preferment is how mid-tier schools started “charging” $70,000 a year. And this
gusher of money has abetted some really awful trends in higher education.
First, the explosion of “administration” jobs, which
leaves many schools with more managers of social life than professors. Second,
the transformation of many mid-tier schools into luxury resorts for the young,
since “amenities” are the only way they can compete with each other. Third, the
proliferation of vulture schools, and “night-programs” that use the student
debt-system as a wealth-transfer program. These schools recruit students from their
five-figure jobs in service industries with promises to help their careers.
They load these students up with loans to pay for six-figure-earning professors
and administrators, and then dump nearly all of these students back into the
low-wage industries they came from. Fourth, the preferment of student debt
enables schools to work with existing incumbents in some industries to help
colleges “colonize” new non-professional fields. Degrees in turf management,
baking science and technology, or brewing and distilling are evidence of
colleges encroaching on industries that did just fine with apprenticeships and
want ads.
A student-debt cancellation is also a bald handout to the
affluent. The Brookings Institution has looked into who holds student debt and
who would stand to benefit from a cancellation along the lines Schumer
mentions. Even when you begin lowering the available debt relief to those
earning over $125,000 a year — as Senator Warren’s plan does — about 65 percent
of the relief would go to households with incomes in the top forty percent
nationally; only 14 percent would go to households in the bottom 40 percent.
It is also an insult to people who made other career and
life decisions. Two-thirds of Americans don’t go to college. A number of them
might, instead of taking out student loans for a degree of marginal value,
instead take out a loan on a truck for work. Or they might have signed a lease
for a storefront or workshop to launch their enterprise. They are also likely
hurting in an economy wrecked by a pandemic and political gridlock. Why should
the government give yet another preferment to investment in upgrading the human
capital of the affluent, over the capital investments of other entrepreneurs
and workers?
It shouldn’t.
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