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 elite 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…