Conservatives who embrace protectionism thereby embrace both the fear that businesses, entrepreneurs, and workers in their country are simply not up to the task of competing against foreign rivals, and the belief that among the steps in making their country “great” is for their own government to restrict the freedom consumers in their country.
“Progressives” who embrace protectionism share conservatives’ low opinion of their country’s businesses, entrepreneurs, and workers, but also mistakenly believe that protectionism “sticks it to” corporate oligarchs when, in fact, it creates corporate oligarchs.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2018-09-10.
February 17, 2021
QotD: Protectionists, left and right
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February 15, 2021
The current (and future) rash of newsroom purges
Some thoughts from The Line on why people like former New York Times science reporter Donald McNeil are being given the show trial treatment and why it’s not going to stop quickly:
The New York Times Building in New York City, 1 January, 2008.
Photo by Frieder Blickle via Wikimedia Commons.
The first issue, of course, is a steady weaponization of HR processes and unions. Vehicles intended to fix problems like unfair pay structures, workplace misconduct and lack of due process are being re-deployed as tools of ideological conformity — fuelled by healthy doses of personal dislike and professional resentment.
Make no mistake: there are bad people in journalism, as there are in any profession. Abusers should be rooted out, and there should always be clear processes in place to handle toxic personalities fairly, decisively and effectively. (“Fairly” isn’t a buzzword here — the accused must have rights, too.)
But there has also been a steady lowering of the bar as to what evils warrant an HR intervention. Every newsroom should be a safe place from abuse, harassment and violence — but not from ideas that are offensive. We recognize the entirely legitimate concerns of employees who are from marginalized groups about historic injustices, microaggressions and systemic power imbalances. But being in the world sometimes involves working with people who are simply insensitive assholes. Drawing the line between the merely difficult and the truly dysfunctional isn’t always easy.
Further, many of the complaints now being bandied about are strategic. They are being used to pummel terrified HR staffs and weak, ineffectual managers into compliance with ideological agendas. A staff at war with itself and ever-fearful of the axe is easier to silence and control. Owners have long understood this; it’s a grim irony that our peers have now decided to take up the hood and the blade.
These workplace revolts always boil down to an internal struggle for control. The very concept of where power rests is being challenged by those who think the traditional way of running newsrooms is as obsolete as a classifieds page. Uprisings are about who decides institutional values, and who gets to enforce those values. An entire class of leaders needs to wake up to the fact that they’re three campaigns deep into a battle for their own legitimacy. And they’re losing.
That brings us to the third issue: management. We’ve said this before, but managers need to show some spine. The most consistent theme in all these newsroom eruptions is management either lacking the confidence to assert its authority, or hesitating to do so just long enough to make things worse. Too many leaders have been selected for their affability rather than their toughness. We at The Line suspect this is no accident. Powerful editors, necessary for effective management of staff, are inconvenient for owners intent on slashing said newsrooms. The kind of people who’d be most effective at crushing the odd staff rebellion also annoy the suits. So instead, we get nice people — truly nice people — who know the right folks and subscribe to the right politics, and shy away from embarrassment, conflict, and loss of status. They’re marks.
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February 11, 2021
QotD: Progressive credentials as positional goods
But if PC was not really about protecting anyone, and really all about expressing one’s own moral superiority, PC credentials would be akin to what economists call a “positional good”.
A positional good is a good that people acquire to signalise where they stand in a social hierarchy; it is acquired in order to set oneself apart from others. Positional goods therefore have a peculiar property: the utility their consumers derive from them is inversely related to the number of people who can access them.
Positionality is not a property of the good itself, it is a matter of the consumer’s motivations. I may buy an exquisite variety of wine because I genuinely enjoy the taste, or acquire a degree from a reputable university because I genuinely appreciate what that university has to offer. But my motivation could also be to set myself apart from others, to present myself as more sophisticated or smarter. From merely observing that I consume the product, you could not tell my motivation. But you could tell it by observing how I respond once other people start drinking the same wine, or attending the same university.
If I value those goods for their intrinsic qualities, their increasing popularity will not trouble me at all. After all, the enjoyment derived from wine or learning is not fixed, so your enjoyment does not subtract from my enjoyment. I may even invite others to join me – we can all have more of it.
But if you see me moaning that the winemakers/the university have “sold out”, if you see me whinging about those ignoramuses who do not deserve the product because they (unlike me, of course) do not really appreciate it, you can safely conclude that for me, this good is a positional good. (Or was, before everybody else discovered it.) We can all become more sophisticated wine consumers, and we can all become better educated. But we can never all be above the national average, or in the top group, in terms of wine-connoisseurship, education, income, or anything else. We can all improve in absolute terms, but we cannot all simultaneously improve in relative terms. And that is what positional goods are all about – signalising a high position in a ranking, that is, a relation to others. This leads to a problem. Positional goods are used to signalise something that is by definition scarce, and yet the product which does the signalling is not scarce, or at least not inherently. You can increase the number of goods which signal a position in the Top 20 (of whatever), but the number of places in that Top 20 will only ever be, er, twenty. Increasing the number of signalling products will simply destroy their signalling function. Which is why the early owners of such a signalling product can get really mad at you if you acquire one too.
Kristian Niemietz, “The economics of political correctness”, Institute of Economic Affairs, 2014-04-30.
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February 10, 2021
“Did you know that seventy years ago, our grandparents were having an underpolarization crisis?”
Scott Alexander reviews Why We’re Polarized by Ezra Klein, beginning with the underpolarization crisis of the mid-20th century:
In 1950, the American Political Science Association “released a call to arms … pleading for a more polarized political system”. The report argued that “the parties contain too much diversity of opinion and work together too easily, leaving voters confused about who to vote for and why”. Everyone agreed with each other so much, and compromised so readily, that supporting one party over the other seemed almost pointless.
In 1976, three years after Roe v. Wade, Democrats and Republicans were about equally likely to support abortion restrictions. That same year, a poll found that “only 54% of the electorate believed that the Republican Party was more conservative than the Democratic Party”; 30% thought there was no difference. As late as 2004, about equal numbers (within 5 pp) of Democrats and Republicans agreed with statements like “government is almost always wasteful and inefficient” and “immigrants are a burden on our country”. Between the late 60s and early 90s, Democratic presidents deregulated the airlines and passed welfare reform; Republican presidents pushed immigration amnesties and founded the EPA.
What happened between then and now? Klein has two answers: a historical answer, and a structural answer.
The historical answer is: the Dixiecrats switched from Democrat to Republican.
When the North won the Civil War, it had grand plans to remake the South into a paradise of racial equality and universal love. After Lincoln’s death, his successor Andrew Johnson decided this sounded hard and gave up. Within a few decades, the South was back to being a racist, paramilitary-violence-prone one-party dictatorship. That one party called itself “Democrat”, but had few similiarites to the Democrats in the North. The Southern Democrats (“Dixiecrats”) and northern Democrats disagreed on lots of issues, but the South hated the Republicans so much after their experience with Lincoln that they caucused with the northern Democrats anyway. This turned into a stable coalition, with northern Democrats agreeing to support the South against civil rights for blacks, and the Dixiecrats supporting the northern Democrats whenever they needed something.
But since the Democratic party contained both northern Democrats (relatively liberal) and Dixiecrats (relatively conservative), it didn’t want to take a coherent party-wide stance on liberalism vs. conservatism. And by the median voter theorem, that meant the Republicans also didn’t want to take a coherent stance on liberalism vs. conservatism. So both parties ended out centrist and identical.
In 1964, the Civil Rights Act threatened the Dixiecrats’ key issue. It wasn’t quite as simple as “Democrats were for it, Republicans were against it” – in fact, 80% of Republicans and 60% of Democrats supported it. But that year’s presidential election pitted heavily pro-CRA Democrat Lyndon Johnson against anti-CRA Republican Barry Goldwater, beginning Southerners’ defection to the Republican Party.
Klein says this successfully got all the conservatives on one side of the aisle and all the liberals on the other, allowing polarization to begin. Essentially, he believes polarization is a natural process, which the odd coalitions of the early 20th century temporarily prevented. Once the coalitions were broken, it could begin to do its work. He spends the rest of the book talking about why exactly polarization is so natural, what aspects of modernization have made it worse, and what sort of feedback loops make it keep going
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Victor Davis Hanson on Animal Farm, America’s nightmare 2021 version
Victor Davis Hanson outlines the original George Orwell novel and then contrasts today’s situation with what progressives demanded back in the 1960s and 70s:
Yes, the downtrodden pigs, the exploited horses, and the victimized sheep finally did expel Farmer Jones from America’s Animal Farm.
But in his place, as Orwell predicted, revolutionary pigs began walking on two feet and absorbed all the levers of American cultural influence and power: the media, the bureaucracies, Wall Street, Silicon Valley, publishing, the academy, K-12 education, professional sports, and entertainment. And to them all, the revolutionaries added their past coarseness and 1960s-era by-any-means-necessary absolutism.
We are now finally witnessing the logical fruition of their radical utopia: Censorship, electronic surveillance, internal spying, monopolies, cartels, conspiracy theories, weaponization of the intelligence agencies, pouring billions of dollars into campaigns, changing voting laws by fiat, a woke revolutionary military, book banning, bleeding the First Amendment, canceling careers, blacklisting, separate-but-equal racial segregation and separatism.
Conspiracies? Now they brag of them in Time. Read their hubristic confessionals in “The Secret History of the Shadow Campaign That Saved the 2020 Election.” Once upon a Time, radicals used to talk of a “secret history” in terms of the Pentagon Papers, or a “shadow campaign” in detailing Hollywood blacklisting. They are exactly what they once despised, with one key qualifier: Sixties crudity and venom are central to their metamorphosis.
Our left-wing American revolutionary cycle from the barricades to the boardroom was pretty quick — in the manner that the ideology of the Battleship Potemkin soon led to Stalin’s show trials, or Mao’s “long march” logically resulted in the Cultural Revolution. The credo, again, is that the noble ends of forced “equity” require any means necessary to achieve them.
The Left censors books in our schools, whether To Kill a Mockingbird or Tom Sawyer. It is the Left who organizes efforts to shout down campus speakers or even allows them to be roughed up.
The Left demands not free-speech areas anymore, but no-speech “safe spaces” and “theme houses” — euphemisms for racially segregated, “separate-but-equal” zones. “Microaggressions” are tantamount to thought crimes. The mere way we look, smile, or blink can indict us as counterrevolutionaries. Stalin’s Trotskyization of all incorrect names, statues, and commemoratives is the Left’s ideal, as they seek to relabel Old America in one fell swoop. No one is spared from the new racists, not Honest Abe, not Tom Jefferson, not you, not me.
For “teach-ins,” we now have indoctrination sessions. But the handlers are no longer long-haired 1960’s dreamy, sloppy, and incoherent mentors. They are disciplined, no-nonsense brain-washers.
The Left’s Russia is our new old bogeyman. Putin is the new “We will bury you” Khrushchev.
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QotD: Wells’s Rules of Canadian Politics
1: For any given situation, Canadian politics will tend toward the least exciting possible outcome.
2: If everyone in Ottawa knows something, it’s not true.
3. The candidate in the best mood wins.
4. The guy who auditions for the role of opposition leader will get the job.
Paul Wells, “Wells’s Rules, annotated”, Maclean’s, 2009-05-21.
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February 8, 2021
QotD: The deeply rooted anti-Americanism in Canadian politics
Ben Woodfinden, “True North Patriotism and a Distinctly Canadian Conservatism”, The Dominion, 2020-10-20.
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February 7, 2021
Former Liberal MP dishes on Justin Trudeau in her new book
When I moved out of Whitby, the local Member of Parliament was Liberal Celina Caesar-Chavannes. She was, we thought, a high-profile person who’d probably be quickly moved into a junior cabinet position, as Justin Trudeau sets a very high value on being seen to be supportive of women and minorities. As she quickly discovered, however, with Trudeau it’s very much the “being seen” part that matters to him and almost nothing in the way of actually being supportive:
[After a kerfuffle with opposition MP Maxime Bernier] she said she didn’t hear from most of her Liberal colleagues or the prime minister until a #hereforCelina hashtag campaign started weeks later, in response to a column that accused her of “seeing racism everywhere.” When she later confronted Trudeau about the lack of support, she said he told her, “As a strong Black woman, I didn’t think you needed help.” She said Conservative MP Michelle Rempel Garner was more supportive to her during that period than Trudeau.
The incident is one of many allegations of racism, tokenizing, and microaggressions Caesar-Chavannes wrote about in her new memoir Can You Hear Me Now?, which came out February 2.
[…]
Caesar-Chavannes told VICE World News her experiences of being tokenized, excluded, and undervalued led her to resign from the Liberal caucus and not run again in the 2019 election. Her decision culminated in an explosive conversation with Trudeau in February 2019, during which she alleges he complained to her about being confronted about his privilege. She said he was angry that she wanted to resign on the same day then Minister of Veterans Affairs Jody Wilson-Raybould quit her cabinet role, in the midst of the SNC-Lavalin scandal, the biggest crisis the governing Liberals had faced since Trudeau’s election in 2015.
“I was met with an earful that I needed to appreciate him, that everybody talked to him about his privilege, that he’s so tired of everybody talking to him about this stuff, and that I cannot make this announcement right now,” she said. She alleges he told her “he couldn’t have two powerful women of colour leave at the same time.”
After listening to his “rant” for a while, Caesar-Chavannes said she cussed out the prime minister.
“I had to ask him, ‘Motherfucker, who the fuck do you think you’re talking to?'” she said. “I was so angry.”
She said she didn’t make out what Trudeau said after that, but it “sounded like he was crying.” She ended up delaying her resignation announcement until March 2019.
Caesar-Chavannes said the Liberal party’s treatment of Wilson-Raybould — an Indigenous woman and whistleblower — made her feel like many of her colleagues were “fake as fuck” and cemented her desire to sit as an independent.
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February 6, 2021
QotD: Political virtue signalling in everyday conversation
It wouldn’t generally occur to me to shoehorn politics into an otherwise routine exchange, or into a gathering with strangers, or to presume the emphatic political agreement of random restaurant customers. It seems … rude. By which I mean parochial, selfish and an imposition — insofar as others may feel obliged to quietly endure irritating sermons, insults and condescension in order to avoid causing a scene and derailing the entire evening. The analogy that comes to mind is of inviting the new neighbours round for coffee and then, just before you hand over the cups to these people you’ve only just met, issuing a lengthy, self-satisfied proclamation on the merits of mass immigration, high taxes and lenient sentencing. And then expecting nodding and applause, rather than polite bewilderment.
David Thompson, “The Blurting”, David Thompson, 2019-09-04.
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February 4, 2021
Ace reads the upper middle class out of the conservative movement
At Ace of Spades H.Q., Ace himself explains why he doesn’t consider anyone who evinces loyalty to “the mores of the upper middle class” to be in any way, shape, or form “conservative”:
Never once do these bougie “cons” notice that the class whose class markers they are so eagerly collecting like Cub Scout merit badges are entirely created by progressives.
I’m going to say this more straightforwardly than I’ve ever said it. I’ve hinted around it, I’ve never said it straight up.
But here goes:
People loyal to the mores of the upper middle class are left-liberal. Period.
They should have no place in the leadership and “thought” leadership of any “conservative” movement. They are not conservative.
They are all pro-gay marriage.
They are all pro-abortion.
They are all in favor of shipping out every single working-class job to China, and, for those few remaining jobs which must be performed in America, shipping in workers from the third world to displace Americans.
They are all supporters of a soft version of the SJW progressive stack. They all believe in “White Privilege,” for an obvious reason — as the rich children of the prosperous upper-middle class, they’re actually the ones born to privilege, but they wish to obscure that fact. So they buy into the left’s claims about the “White Privilege” of 63% of the country, instead of focusing on the wealth privilege of 10%.
Jake Tapper will entertain he shares a kind of privilege with two thirds of the country but he will never acknowledge his real privilege, one shared by only 10% of the country.
And the social-climbing “conservative” media class is almost entirely born from the same prosperous class. They too do not want to talk about real privilege.
I always want to ask these guys, so desperate to peonize the working class: How far back in time do you have to go to find an ancestor who had a job which caused callouses to form on his hands?
Was it two generations ago? Three? It’s obvious the “conservative” media class has never had to work a shovel in their lives. The toughest job they’ve ever held was working in their dad’s law office, or valet parking Beemers at the country club.
And yes, they support the leftwing SJW claims about race. Bullshit like “minorities can’t be racist,” or at least not racist in a way that should be held against them.
That’s why they all rushed to defend notorious, swaggering racist Sarah Jeong, and refuse to even acknowledge the eyebrow-singing anti-white racism seen every single day in the media.
To acknowledge there’s such a thing as “anti-white racism,” and that it ought to be condemned, is, they’ve decided, an “alt-right” idea, and the alt-right is a lower class phenomenon, and, as I’ve noted, they really, really really need you to know they are not lower class.
The only way in which they are arguably “conservative” is that … they are in favor of oligarchical fascism directed by the billionaires signing their paychecks.
Which is of course not “conservative” at all. But that’s the one category in which they can make an arguable case for their “conservatism” — in always championing the Ruling Class’ right to rule over the downscale Dirties.
Is that the “conservatism” we want? A gonzo left-liberalism which is also thoroughly anti-republican, anti-egalitarian?
Also at Ace of Spades H.Q., OregonMuse quoted this rather timely Barry Goldwater statement:
I have little interest in streamlining government or in making it more efficient, for I mean to reduce its size. I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution or that have failed their purpose, or that impose on the people an unwarranted financial burden. I will not attempt to discover whether legislation is “needed” before I have first determined whether it is constitutionally permissible. And if I should later be attacked for neglecting my constituents’ “interests”, I shall reply that I was informed that their main interest is liberty and that in that cause I am doing the very best I can.
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February 2, 2021
Well, it is a very, very cunning plan …
In the latest Libertarian Enterprise, Sarah Hoyt explains why the progressives’ cunningest of cunning plans may not be cunning enough:
The left has a plan so cunning that if it were a person, it would be teaching cunningology at Oxford. And the ones who get the reference will also know that their plan is about to go pear shaped in all sorts of interesting ways, and at the end of it there might very well be a turnip or two involved, but not as the only item available in the shelves of the grocery store.
Look, someone pointed out in the comments the left are trying to follow the “plan” for other communist revolutions round the world.
He’s right. They’re trying to follow it to the letter. Partly because it’s worked before, and partly, because to be fair, they’re a cult, and cults don’t know the reason for the ritual, they just follow it.
… but it’s already going wrong. And it’s only going to get worse.
You see, part of the problem is that the cult of communism and the procedures for “the revolution” were set in the early twentieth century. And it’s designed for the early twentieth century. To the extent they worked in places like Venezuela, it is because the underlying structures of the society were still very much “early twentieth century.”
The US? Well, not so much. In fact we never were much like the early twentieth century in Europe, which is why they’ve had a hell of a time getting a foothold here.
The communist revolution is designed to work in a country that is mostly urban, with a vast urban underclass that can’t rise above for reasons both internal and external despite working unreasonable hours. It’s designed for a country with a firm aristocracy of the hereditary sort (even if that aristocracy is often from trade), it is designed for a country with a conscript army where the plum assignments go to the “good families” as a matter of course, it is designed to work — most of all and very importantly — in a country where they ABSOLUTELY control all the means of mass communication and do so without the vast majority of the people being aware of it.
The last time they could have pulled that off in the US was in the mid seventies. And my guess, honestly, is that they tried. I don’t know for sure, since the news of the time were all reported by biased sources, and besides I’m too lazy and too busy […] to spend my day chasing down hints. I bet they did try, though. I bet they gave it a sporting try. And I bet part of the issue back then — as now, btw — is that they were pinning their hopes on a race war, having both not realized how much of a minority people of African descent are in the US (last estimate is what? 14%? Sizeable, sure, but not a large minority and certainly not a majority. Also, and seriously, a lot of that minority is middle class and whatever they voice from the mouth-out as uninterested as the rest of us in having the apple cart overturned. Apples are tasty. Genocide not so much.) Mostly because that sh*t was so successful in Africa, and again the left doesn’t think. It ritualistically applies “what worked” without being able to account for changed conditions.
Anyway, that was the last time they could have MAYBE credibly have followed their little red map to revolution and have it work. And even then Americans were just too darn contrarian. Why everyone and their parents were telling us that Republicans were so dangerous, that they were going to start the nuclear war, that — And we went and voted Reagan in. (Well, not me. I only worked towards it. I didn’t vote. I wasn’t a citizen and I’m not a democrat.)
In fact, America could have engraved on its door lintel “authorities can go f*ck themselves.” The left keeps forgetting that. And sometimes justifiably. Take their Covid-psy-ops. It worked. And it was all run on the “experts” and how important it was.
Uh uh. So, they think their control is back! They’re golden again, baby!
February 1, 2021
In the wake of l’affaire GameStop, frantic regulators call for more power to intervene in the market
“Regulatory capture” is the term for situations where the regulators and the regulated begin to get too close and the regulated industries or organizations begin to indirectly control the actions of the regulator for their own benefit. A topical example would be the sudden, agonized cries of politicians and market regulators for new powers to clamp down on disruptive players like the Redditors or other small investors who triggered the rise in GameStop share prices causing potentially ruinous financial losses for regulated hedge funds.
“GameStop” by JeepersMedia is licensed under CC BY 2.0
Although the story has garnered the attention of regulators and even the White House, the wrong takeaway is to suggest options for retail investors should be restricted more than they already are. Yet this is precisely what William Gavin, Secretary of the Commonwealth of Massachusetts, has called for. Gavin argued that there should be a 30-day trading suspension on GameStop to protect “small and unsophisticated investors.”
Gavin’s suggestion would have serious extended consequences. First, consider the knowledge problem that is involved in constructing such a restrictive regulation. When exactly would a rally become unacceptable? Despite years of decline, Kodak experienced a rally after its announcement that it would move into pharmaceuticals. Would this be permissible? If so, one could simply point to GameStop’s decision to appoint three new directors in an effort to turn the company around. If this is not enough, regulators must clearly state what identified the investments as unacceptable.
It is unclear if there is a perfect benchmark to distinguish rallies. But without such a measure, the suspension proposal would put every rally at risk of wrongful closure — potentially halting the growth of companies and industries, alike. Worse yet, the fear of missing out on a rising stock may push some investors to rush in with less information than they would otherwise acquire. Even if it is in a traditional rally, an uninformed decision could cause more harm than good.
Yet suppose the knowledge problem is solved and there is a perfect measure in place. Should other protections be put in place? One could make the case for a law against allowing “unsophisticated” gamblers from going to Las Vegas and losing money. And although this may seem like a leap, Gavin himself told Reuters, “This isn’t investing, this is gambling,” when he spoke of the GameStop rally.
The rally has attracted the world’s attention, but it does not require it. Rallies are a normal part of financial market activity. The only difference here is that it was Main Street that pulled one over on Wall Street.
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QotD: “Useless things … do not further The Revolution”
Too bad for the Bolshies that it’s in our nature to confuse the messenger with the message. I like to think of myself as an open-minded, tolerant man who takes things as they come, but holy jeeebus, I don’t care what Emma Goldman’s deal is — if she’s for it, I’m against it. I need bleach for my eyes.
We need to use that. It’s no coincidence that Ashley Judd and now Taylor Swift are spouting off about Progtard politics — they used to be cute; now they’re not. See what Social Justice does to you, ladies?
Severian, “The Face You Deserve”, Rotten Chestnuts, 2018-10-11.
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January 30, 2021
QotD: Positional goods and social signalling
You can do that by insisting that the no real progress has been made, that your issue is as real as ever, and just manifests itself in more subtle ways. Many people may imitate your rhetoric, but they do not really mean it, they are faking it, they are poseurs … You can also hugely inflate the definition of an existing offense … Or you can move on to discover new things to label “offensive”, new victim groups, new patterns of dominance and oppression.
If I am right, then Political Correctness is really just a special form of conspicuous consumption, leading to a zero-sum status race. The fact that PC fans are still constantly outraged, despite the fact that PC has never been so pervasive, would then just be a special form of the Easterlin Paradox.
Kristian Niemietz, “The economics of political correctness”, Institute of Economic Affairs, 2014-04-30.
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January 29, 2021
Costs of keeping Biden’s promise to forgive student debt
Antony Davies and James R. Harrigan consider the frequently issued campaign promise by Joe Biden and what it will cost to implement:
Given the results of the recent election, it should come as no surprise that we’re poised for the next big expansion: student debt forgiveness, a promise Joe Biden made frequently as he campaigned for the presidency. Like the big ideas that came before it, this idea will cost us more than we can afford from day one, and far more than its proponents will admit. Biden’s plan as currently envisioned would cost over $300 billion. But that’s just this year. The plan will set in motion unintended consequences that will doubtlessly persist for generations.
First, next year’s crop of new students will — understandably — demand that their loans be forgiven too. And so will those of the year after that, and so on. This program will quickly become a sort of college UBI, where the government just hands out $10,000 to every college student. Some argue that if this results in a better educated populace, then it’s worth the cost. But it won’t result in a better educated populace; it will result in a whole bunch of students majoring in things the market doesn’t value, and another batch simply taking a four-year vacation on the taxpayer’s dime. Heretofore, graduates knew they needed marketable skills in order to repay their college loans. But when student loans are forgiven as a matter of course, graduates bear no cost for wasting our collective resources by studying things the market doesn’t value, or by not studying at all.
Data sources: Federal Reserve Bank of St. Louis, National Center for Education Statistics.
Second, colleges and universities will respond to this new reality by raising tuition commensurately. Tuition and fees were a pretty constant 18 to 19 percent of family income from the 1960s until 1978. In 1965, the federal government started guaranteeing student loans. In 1973, Congress established Sallie Mae and charged it with providing subsidized students loans. And by 1978, tuition and fees had started a steady march to 45 percent of family income today. When the government makes it less painful for students to borrow, whether by guaranteeing, subsidizing, or forgiving loans, it takes away some of the pain of student borrowing, which makes it easier for colleges and universities to raise tuition.
Third, expect many taxpayers to cry foul. Homeowners will quite sensibly wonder why the government is not forgiving their mortgages. After all, student loans add up to about $1.4 trillion, while American mortgages total more than $16 trillion. If relieving students from the burden of their debts is a good idea, it should be an even better idea to relieve homeowners of theirs.
What about students who worked multiple jobs or attended less prestigious schools so they could avoid going into debt? Why aren’t they being rewarded? What about students who diligently paid off their debt and are now debt free? Will they receive nothing? What about, fantastically, people in the trades? Is it reasonable to charge people — via the higher taxes loan forgiveness will bring — who did not go to college to subsidize those who do? Regardless of the answers to these questions, implementing this plan will be fraught with difficulty.
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