Only a $500 Billion-Dollar Hole in Student Loan Debt? So You’re Saying It’s Not That Bad…
Of Mice and Straw Men
“DO YOU WANT TO LIVE IN A COUNTRY FULL OF IDIOTS!?!?!?” the socialist asks.
That’s what you call a straw man. A straw man is an informal logical fallacy of having the impression of refuting an argument. The real subject of the argument isn’t addressed or refuted but instead replaced with a false one.
When a perfectly reasonable person asserts the public purse shouldn’t fund education, it doesn’t mean that person wants to be the one-eyed man in the land of the blind.
That perfectly reasonable person simply says the public should not pay for education, and the costs should be borne elsewhere (usually privately). Not, “I don’t want there to be any education at all.”
For instance, as a Yank who lived in England for nearly ten years, it seemed ridiculous to me that the entire healthcare system even could be publicly funded in a country of over 60 million people.
English friends would damn near foam at the mouth when I’d even ask how it could be possible.
“Do you want people to bleed on the steps of hospitals like they do in America?”
Thanks to BBChé News, they actually believe that nonsense. But let’s leave healthcare for another day.
Today, let’s turn our gaze to state education, an oxymoron if ever there was one.
A Moral Demolition of State Education
Let me preface my argument by quoting the great libertarian writer Isabel Paterson from her seminal book, The God of the Machine:
…the old-fashioned education said there was no royal road to learning. It gave the teacher sufficient authority for any necessary discipline. It imparted positive facts and positive principles. It discouraged immature self-expression, sought to strengthen character by self-control against the social impulse; and attached personal responsibility to any degree of emancipation from the rule of obedience for children. It taught the child to think by the use of formal logic on impersonal examples; while contemporary issues were kept out of the schoolroom as far as possible.
I’m pretty sure this isn’t the way we do it now.
Paterson goes on:
Where teaching is conducted by private schools, there will be a considerable variation in different schools, the parents must judge what they want their children taught, by the curriculum offered. Then each must strive for objective truth, and as there is no public authority to control opinion, adults must be supposed to exercise the final judgment on what they learned in school, after they have graduated. Nowhere will there be any inducement to each the “supremacy of the state” as a compulsory philosophy. But every politically controlled educational system will inculcate the doctrine of state supremacy sooner or later, whether as the divine right of kings or the “will of the people” in “democracy.” Once that doctrine has been accepted, it becomes an almost superhuman task to break the stranglehold of the political power over the life of the citizen. It has had his body, property, and mind in its clutches from infancy. An octopus would sooner release its prey.
A tax-supported, compulsory educational system is the complete model of the totalitarian state.
Paterson’s argument is a moral one, and she doesn’t delve into the economic consequences of taxpayer-funded education.
That’s for us to do. Because in her wildest nightmares, Isabel Paterson couldn’t have seen this mess coming.
I hate being a doom merchant, especially on a Friday. I hope to bring happier tidings one of these days, but first things first.
“Everything Government Touches Turns To Crap”
Ringo Starr or Murray Rothbard?
Pat yourself on the back if you guessed Ringo. (Guess he didn’t buy into John Lennon’s.. ahem… philosophy.)
Let’s take a look at the current situation:
Yikes! That’s about $1.7 trillion (yes, with a “tr”) in student debt. And it’s growing. The federal government currently expects that amount to be repaid.
How could it have come to this?
Well, if you’re a parent of a college student, you know. But if you want mathematical confirmation of your experience, here it is:
Yes, college tuition, on average, has increased nearly 1200% since 1980. And I thought Villanova was ridiculously expensive in the 90s!
Little wonder, as the one and only Elizabeth Warren, collected roughly $400,000 from Harvard over two years. Now before you accuse me of circulating rumors, here is the link to the Ministry of Truth Politifact. You don’t have to click, though:
“In short, we found that Warren did make more than $400,000 for her work at Harvard Law School over a two-year span. But it’s wrong to suggest that all she did was teach one class, and the claim leaves out important context about the other work Warren was doing at that time.”
Perhaps she taught 1 and 1/1024th of a class.
A Closer Look at Price Changes
What do the red things have in common? And the blue?
This chart tells you all you need to know about government backing.
Let’s start with the blue stuff. Cellphone services, computer software, and TVs are technologies the government has no idea about and can’t regulate. And when the government can’t regulate stuff, it tends to get cheaper over time.
Technological advances, operational efficiency, economies of scale, and increasing foreign and domestic entrepreneurial competition contribute to this. Even Kommie Klaus Schwab’s World Economic Forum agrees.
Now let’s look at the red stuff on the chart. Healthcare, college, and childcare are the biggest offenders. Why? Increasing state control, regulation, and provisions all contribute to this. It assumes one size fits all when that clearly can’t be the case.
And Here Comes the Height of Governmental Oversights!
With all this said, the government still views student loans as a profit center. Just one problem:
It doesn’t make a profit.
As you can see from the WSJ’s chart, the USG thought they’d make $115.6 billion in profit from 2000-2019 off student loans. The actual amount? $1.8 billion. That’s it.
That’s two orders of magnitude off. “Just a tad,” as Elaine from Airplane II might say.
According to The Journal, Betsy DeVos, the former head of the Department of Education, called in Jeff Courtney, a JPMorgan executive, to help sort out the DOE’s numbers. His conclusion: $500 billion of the $1.7 billion in outstanding student loan debt may not be recoverable.
This is why you don’t want government in education. Or healthcare. Or anything else. It’s simply too big a job when you’ve got more than 300 million people in your country.
A $500 billion loss would be bigger than the Savings and Loan Crisis of the 1980s. Not as bad as 2008, but pretty damn bad.
“If you accounted this way in the private sector, you wouldn’t be in business anymore,” Mrs. DeVos said. “You’d probably be behind bars.”
You almost certainly would.
Under President Biden’s American Families Plan, four more years of education would be added. This includes two free years of community college. Additionally:
It will invest in making college more affordable for low- and middle-income students, including students at Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and institutions such as Hispanic-serving institutions, Asian American and Native American Pacific Islander-serving institutions, and other minority-serving institutions (MSIs). And, it will invest in our teachers as well as our students, improving teacher training and support so that our schools become engines of growth at every level.
It may be vague, but one thing’s clear. Despite its evident failures, the US government has no intention of getting out of education.
So batten down the hatches, and protect your wealth.
But more immediately, have a great Friday and a wonderful weekend!
See you Monday.
All the best,
Editor, Rude Awakening