I'd basically respond by just biting all the bullets you set up. Yes I would also support reasonable plans to dismantle Medicare and Social Security and lots of other spending programs because they are incredibly costly, debt financed, regressive, and ineffective ways of helping people.
On Moral Hazard, I mostly agree that "there’s nothing about student loan forgiveness that precludes overhauling the loan-making and pricing systems generating this mess." But there's nothing about it which helps overhauling the systems generating this mess. It really doesn't help clean up the mess at all, it just moves it around and invites more people in. The moral hazard problem with debt cancellation is not that it prevents reform it's that it subsidizes something we want people to do less of and it will make the underlying crisis worse.
Well said. This is reason #1 to stand against cancellation. If the cancellation is not paired with a systemic reform, the underlying perverse incentives that created it will be sustained and enhanced. It is like giving an alcoholic a sip of vodka to stop the trembling.
Great article. Really like the Harry Potter argument. It's surprising to me that the decision to forgive loans is not viewed from an investment thesis perspective. Quite a l ot of research that I have written about has shown that when students have their loans forgiven, they end up making better financial decisions, getting a higher paying job, which in turn increases tax receipts for all of us. We, as a society, can be better off when we cancel the debt (just like a growth company relies on equity and not debt)
This is a good post!
I'd basically respond by just biting all the bullets you set up. Yes I would also support reasonable plans to dismantle Medicare and Social Security and lots of other spending programs because they are incredibly costly, debt financed, regressive, and ineffective ways of helping people.
On Moral Hazard, I mostly agree that "there’s nothing about student loan forgiveness that precludes overhauling the loan-making and pricing systems generating this mess." But there's nothing about it which helps overhauling the systems generating this mess. It really doesn't help clean up the mess at all, it just moves it around and invites more people in. The moral hazard problem with debt cancellation is not that it prevents reform it's that it subsidizes something we want people to do less of and it will make the underlying crisis worse.
Well said. This is reason #1 to stand against cancellation. If the cancellation is not paired with a systemic reform, the underlying perverse incentives that created it will be sustained and enhanced. It is like giving an alcoholic a sip of vodka to stop the trembling.
Great article. Really like the Harry Potter argument. It's surprising to me that the decision to forgive loans is not viewed from an investment thesis perspective. Quite a l ot of research that I have written about has shown that when students have their loans forgiven, they end up making better financial decisions, getting a higher paying job, which in turn increases tax receipts for all of us. We, as a society, can be better off when we cancel the debt (just like a growth company relies on equity and not debt)