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I found out about this lit­tle move­ment through its Face­book group, “Can­cel Stu­dent Loan Debt to Stim­u­late the Econ­omy.” Basi­cally, a guy named Robert Apple­baum hatched an attractive-to-some but crazy plan to have the gov­ern­ment bail out those car­ry­ing col­lege debt by pay­ing off their loans. This would, allegedly, cause all those for­merly oppressed by stu­dent loan debt to feel renewed con­sumer con­fi­dence and start spend­ing again and, well, you know the rest.

I could say alot about why this plan is bad on eco­nomic grounds. But, I’m not pri­mar­ily an econ­o­mist, I’m pri­mar­ily an ethi­cist (in train­ing), and so I want to say two things about what is morally wrong with this scheme.

First of all, the pro­posed bailout is deeply dis­crim­i­na­tory. It’s full of lan­guage like this:

“Instead of fun­nel­ing bil­lions, if not tril­lions of addi­tional dol­lars to banks, finan­cial insti­tu­tions, insur­ance com­pa­nies and other insti­tu­tions of greed that are respon­si­ble for the cur­rent eco­nomic cri­sis, why not allow edu­cated, hard­work­ing, middle-class Amer­i­cans to get some­thing in return? After all, they’re our tax dol­lars too!”

Now, keep in mind that the rea­son Apple­baum thinks that col­lege grads in debt are good bailout can­di­dates is because they would spend their new dis­pos­able income and stim­u­late the econ­omy with it, while rich peo­ple who get bailed out might not (sav­ing or invest­ing it instead). But this does not by itself sug­gest that “edu­cated, hard­work­ing, middle-class Amer­i­cans” are the ones who should get the stim­u­lus money. On the con­trary, since non-college-grads learn less on aver­age than col­lege grads but are often sim­i­larly hard­work­ing, they are equally as good as can­di­dates to receive stim­u­lus money that needs to be promptly spent. In fact, the very rea­son alot of these peo­ple didn’t go to col­lege is because it costs alot of money and they couldn’t afford it. What bet­ter way to equal­ize these unfair life cir­cum­stances than to bail out the hard­work­ing non–college-grads? I sus­pect that the rea­son that ver­sion of the pro­posal doesn’t have a Face­book group and a web­site is because those who are not col­lege edu­cated have less of a pres­ence in social media. That doesn’t make them any less morally eli­gi­ble to be bailed out, how­ever. To what­ever extent you think that col­lege grads who are in debt are enti­tled make a moral claim for bailout money, non-college-grads are equally enti­tled to make such a claim, if not more. For Apple­baum to pre­fer bail­ing out the col­lege grads in the absence of a morally rel­e­vant dif­fer­ence between the two groups reveals that the pro­posal is about ful­fill­ing spe­cial inter­est group demands at the expense of oth­ers, and not really about fix­ing the econ­omy at all.

But, we can assume for the sake of argu­ment that there is some morally or prag­mat­i­cally com­pelling rea­son to pre­fer bail­ing out col­lege grads as opposed to non-college-grads. My sec­ond major prob­lem with the pro­posal is that Apple­baum has no appre­ci­a­tion what­so­ever for the moral value of fair­ness, even among col­lege grad­u­ates. In the proposal’s FAQ, he writes

10. What do you sug­gest should hap­pen to the stu­dents who have paid off their loans prior to this proposal?

I fully rec­og­nize that this isn’t fair to them. I’m sorry that many of them will see the imple­men­ta­tion of this pro­posal as pun­ish­ment for their hav­ing done the right thing. I could only hope that they look beyond their own self-interests to see the ben­e­fits of this pro­posal to all Amer­i­cans if it achieves the goal it’s designed to accom­plish — eco­nomic growth.

In this quote, Apple­baum both blames the vic­tim and con­tra­dicts him­self. He blames the vic­tim by imply­ing that the respon­si­ble peo­ple are mis­in­ter­pret­ing the pro­posal as a pun­ish­ment. Well, I don’t know of any bet­ter way of under­stand­ing GIVING PILES AND PILES OF MONEY TO THOSE WHO CAN’T AFFORD THEIR DEBT while encour­ag­ing the respon­si­ble bor­row­ers to self-soothe with thoughts of altru­ism. Fur­ther­more, one of Applebaum’s crit­i­cisms of bailouts to the finan­cial insti­tu­tions is that it rewards bad behav­ior. Well guess what, Robert — your pro­posal does, too. Do you think that reward­ing bad behav­ior is accept­able in order to pro­mote the greater eco­nomic good, or not? If yes, then there is no com­pelling rea­son offered for bail­ing out specif­i­cally col­lege grads instead of the banks. If not, then we should bail out nei­ther the col­lege grads nor the banks. Can’t have it both ways.

A later Huff­in­g­ton Post inter­view fol­lowed up on this crit­i­cism. Applebaum’s reply just makes him look even worse:

“A big oppo­si­tion to your idea is that stu­dents who have paid their loans in the past will resent peo­ple who get bailed out. Whats your thoughts on this?
I rec­og­nize that it’s unfair. Noth­ing in a democ­racy is ever truly fair. I don’t have chil­dren, yet my taxes pay for pub­lic schools. I don’t col­lect Social Secu­rity or Medicare/Medicaid, yet I pay FICA taxes. The mea­sure by which this pro­posal should be judged is not whether it’s fair but whether it would work to turn the econ­omy around. When the econ­omy starts to grow again, every­one ben­e­fits. Des­per­ate times call for des­per­ate mea­sures and the old Wash­ing­ton ways of doing busi­ness are no longer applic­a­ble to the 21st Cen­tury econ­omy. New ideas need to be con­sid­ered to help the mid­dle class unshackle them­selves from crush­ing debts that keep them from real­iz­ing the Amer­i­can dream. One should not have to be pun­ished for the rest of his or her life sim­ply for want­ing to obtain a higher edu­ca­tion. Soci­ety as a whole ben­e­fits from a well-educated cit­i­zenry. It’s time we start rec­og­niz­ing the real value of an edu­ca­tion to every­body and fund it accordingly.”

Apple­baum just admits that he doesn’t care about fair­ness. He con­tin­ues to show bias towards the edu­cated mid­dle class (who are really prob­a­bly mostly upper class). Then he talks out of both sides of his mouth again: he sug­gests that it’s unfair for him to have to pay for pub­lic schools when he doesn’t have any kids, then goes on to assert that edu­ca­tion is a value to every­body. Incon­sis­tent much?

While I agree that an edu­cated cit­i­zenry is, in some sense a pub­lic good, I sure as hell don’t think that that your hav­ing been able to party for 4 years at an élite pri­vate school to the tune of $100k+ in order to become a pro­fes­sional under­wa­ter bas­ket weaver is SUCH a pub­lic good that the gov­ern­ment should pry the money to foot the bill out of my pocket so that you can go on buy­ing Manolo Blah­niks. No flip­pin way. Your debt, your prob­lem, Mr. Apple­baum. I don’t like pay­ing mine either but that’s just the way that debt works. If you are all into col­lege financ­ing reform, why not work towards that goal mov­ing for­ward from now? It would have the same stim­u­lat­ing effects (if you believe in that sort of thing) as there would be more pocket money in the hands of col­lege stu­dents and their par­ents, and much less of a moral mess. But, oh wait, that wouldn’t get you and all of your hard­work­ing, edu­cated, middle-class friends off the hook for your debt. Mhmmm…

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