Student debt and the workplace
from David Ruccio
The other day in class I explained to students how debt, including student debt, works.
First, banks make loads of money extending credit to individuals (and, of course, other corporations)—money begets, through interest, more money. Second, sellers of commodities (including institutions of higher education) can charge higher prices, because the buyers (e.g., students and their families but also, of course, car- and home-buyers) can, through debt, purchase more than their current incomes allow. Finally, those who have gone into debt (again, including students) are forced to have the freedom to sell their ability to work in order to receive an income to repay the debt (remember, student debt can never be cancelled)—and, much to the consternation of at least some students, not pursue other dreams that don’t promise some kind of steady income.
A real teaching moment, for them and for me, since it required that I look at my own teaching position in a new light.
Just as it did for Andrew Ross [ht: ke]:
The burden of debt has become the lens through which I see my workplace, and it is rapidly altering my view of my profession. I can no longer fulfill my classroom duties without wondering if the ultimate price, for many of my students, is a form of indenture. This is not an extreme way of putting it. After all, the indentured have to go into debt in order to find work, and their wages are then used to pay off the debts. I have concluded that it is immoral to expect young people to privately debt-finance a basic social good like education, especially if we are telling them that a college degree is their passport to a
The absolute horror to my students is when I calculate how old they will be before they have paid down their debt. FORTY…. and even, for some of them, fortyfive. The point: I do have to ‘spell’ this out before they realize themselves that this will be the case. I’m, by the way, in favor of higher taxes for people with a bachelor’s or master’s degree. There already is too much debt in our world.
Karl Denninger highlighted a particularly pernicious development re Student loans a while ago http://market-ticker.org/akcs-www?post=201540
“Aggressively exchanging virtual digit cash for jewels, land and public assets, world-wide.”
Slightly edited, long-running ad in local papers and on shopping carts. The text is over a backdrop photo of a gold statue draped in jewels and surrounded by peacock feathers. I only add that the owners of key-stroke digital cash demand much higher interest than those who are able to save a portion of their wage-slave currency.
There is more virtual wealth on planet earth than one planetary real value unit.
Let me just repeat my comments listed elsewhere:
Maybe you need to “dumb it down”, justa a stupid question.
Why are we (the people) paying interest to for-profit banks for the use of our own money and to boot, guaranteeing payment?
The Feds have proven they can buy trillions of dollars of loans without increasing the deficit.
Note: QE1,QE2,QE3 a/k/a QE Infinity.
Take a stand !
If you in fact do represent the 99%.
Demand that you vote only for those who will agree to :
“The Federal Reserve Bank shall purchase all student loans and modify those loans with new terms and conditions. The annual rate of interest is to be 1% with a term of 72 years. Payment is to be 5% of income until note is paid or expires .”
You could even make the payment “tax deductable”
The only reason 1% is to cover losses and cost.
The economic benefits are beyond calculation.
Stop attacking the symtoms, cure the desease.
Have every student-challenge this, improve it, and then endorse it .
Exactly. Education is a huge direct profit for civilization via increased creativity, imaginative potential, and, lastly traditional notions of productivity. The indirect positive externalities are even greater, start with reduced family size and a gently declining population that reduces environmental stresses and restores planet earth’s natural contribution to well being. Next consider reduced stress upon urban infrastructure … this list is quite long and worthy of general agreement and then a plan of action.
America is unique. It is governed “by the people”.
The people have a means to issue that this nation governs according to their wishes.
THE SECRET BALLOT – VOTE.
Either vote or serve, there is no other option.
You choose every elected official, why do you have a problem ?
Every two year you have the right to remove those who do not do what they promised and replace them with those who say they will “govern” as you wish.
*****************repeat comment**
The R’s and the D’s have coventions and announce “platforms”
How about OWS stating a “Manifesto”
One of the planks being,
Vote only for those being elected, regardless of what office, that would issue a statement in favor of the following:
The Federal Reserve Bank shall purchase all outstanding student loans, and become the sole supplier of any and all future student loans.
The Federal Reserve Bank FRB) has the power to make such a purchase and this would not increase “deficit spending” since the loans would be an equal asset.
The FRB would then modify all outstanding loans as well as use these new terms and conditions for all new loans;namely, they are to have an interest rate of 1% with a term of 72 years(the 1% is to cover any cost or losses). The first payment would not be due until the first anniversity date of full employment or 5th anniversity date of issue whichever comes first.
The payment shall be 5% of the borrowers income, thus maintaining a fair and equitable demand for repayment.
*****We must take back the power of money from the for- profit banks and get it back for the people. We are the governing and must exercise our vote to prove it. What better start then “Student Loans” ?
“The Wealth of a nation is in the Redistribution of its Wealth” by justaluckyfool.
Another good point, I would a good first step toward restoring health to US democracy is a high turnout and writing in None of the Above if one is uncomfortable with supporting the evil of war against humanity and the planet. Next is supporting instant registration at the poles, and then weekend voting, both days. Once past these improvements we will notice that representative democracy itself is an type, and is old and feeble, information-age democracy will be continuous, leaderless and include he economy.
If this is news to an economist or an academic it is certainly not news to those of us who have no such credentials. It is an absolute mystery to me how you can miss it. I have been reading this forum because I have been trying to learn a bit about how the neoliberal case is justified: much of what you all say is beyond me and that is no surprise. But the role of debt in the real world is not difficult, How it touches on student debt is only one example and I tried to get to grips with it in this post on another board. It goes farther than you suggest for the very premium which is used to sell it will disappear if the economic notion of supply and demand holds true: the whole thing is incoherent
http://thosebigwords.forumcommunity.net/?t=48431479&p=337370136
“I have been trying to learn a bit about how the neoliberal case is justified”.
This is not the best place for that, Fiona, for even if most of have been indoctrinated with neo-Liberal ideas, we are aware of that and trying to re-educate ourselves.
I realise that davetaylor1. Their case seems to me to be ridiculous on its face, but it is so wrapped up in sums and jargon that many intelligent lay people presume that it is valid. Thus it is accepted without much challenge, and folk put it in the “it can’t possibly be as stupid as that; I must be missing something” box. The more I read, the more I think it is precisely as stupid as it looks. This forum seems to me to comprise people who are genuinely trying to get to grips with what is wrong with it. Some appear to have learned it from the inside and so, as is always the case with professions, they are aware of the underlying assumptions: both valid and invalid. And maybe they are also unaware that some parts are unexamined assumptions: they are too ingrained to be seen.
I have no such knowledge: all I can do is start from the other end. From the people. In the end I do not care how successful the operation is: if the patient dies it is worthless. And that is what is happening. But I have been trying to understand why they do not notice that or do not care. That is the hard bit. This forum does discuss such issues and it is helpful to me for that reason: though, as I said, I am often lost in the jargon.
Hello Fiona, Modern non-academic economics is a different world, one where the laws of physics prevail and the goal is to design a new and fitting economy as-well-as an information-age democracy that includes the economy. Academicians are constrained by the funding quagmire that besets education; if one strays too far afield in imaginary science areas, the job is terminated. Therefore, caution with one’s words is paramount if one is operating within the university systems of corporatist nations. Keep at what you search for, you are on the right track.
Thanks Garrett: do you personally think there is anything more than politics hiding behind a scientific looking facade, to this? You see it does not seem to me that it is people like me who are fanciful. I can find no science at all so far, and it is the economists and their jargon who seem to me to lose themselves in imaginary pseudo science. They don’t seem to be grounded in observation or to make testable hypotheses they can falsify. I am persuaded that no social study is a science and that the reason we make no progress is that the whole approach is wrong, I don’t know what the right approach might be but all I see to see is reinvention of ideas which are well known in other fields such as philosophy: adopted with what looks like religious fervour. That would be fine, only they are killing people
Fiona, I find you are very accurate until you mention “no social study is a science.” We who see civilization as a living being, for instance, cannot make testable hypotheses that can be be proven false, yet. Even so, if we look closely at information theory, cosmology, and atomic physics; we begin to discern a framework of logic that leads one to societal speculations based upon logic born of great science. My point? Our individual human selves are complex beyond absolute scientific analysis yet we are able to work together, using science, to study disease and then eventually stumble upon cures. Even though together we are probably not that much more complex than individual biological intricacies, our collective energy threatens the life support ability of Earth. And those who are stricken with infinite personal want will not be bothered by wars, pollutions or social distortions that are killing people. So where does even untestable science fit into this? We look to find the roots of our being and find that if together we can visualize an alternative in the grand experiment of life, then our mutual interest and curiosity will immediately alter the experimental results; such is the power of consciousness. We are only minutes into the dawn of Aquarius. The first sign of light in the east remains questionable. Do you see it? Am I imagining thing?
I find you post a bit confusing, Garrett. A “framework of logic” is not science: it is a branch of philosophy. “Societal speculation” is not science either: it might be political philosophy, I think.
What I seem to see here is the working of “scientism”. The scientific method is enormously successful and its scope is far wider than was imagined when it first emerged. It is rightly applied as widely as may be, and we all understand the benefits it has brought in enhancing our understanding in many fields. Its success has, however, dazzled us. Because it has been shown that this method can be applied to so many things we behave as if it can be applied to all: yet most things are not science and are not amenable to its methods. It is absolutely right that we should look and see if that methodology can be applied to any problem: but it is not right that we should assume the answer must be yes.
As I look at economics and psychology and such disciplines I see this: they make no progress. The scientific method has been applied for a century: yet a student of psychology today is taught much the same as they were taught 30 or even 50 years ago, and this also seems to be true of economics. In hard science hypotheses are put forward: they are tested and if they do not pass those tests they are discarded. We do not seek for phlogisten any more: we do not revisit the idea that the sun goes round the earth. But so far as I can see in social studies there are no notions which are put to bed in the same way.
I do not wish to elevate the practice of hard science as if it was independent of political and human pressures of course it is not. What we study and what is resourced is subject to those influences: and scientists have limits to their ability to think outside existing parameters too: for they are human. But in principle the truth will out because of the requirement for the “crucial experiment” (or crucial observation). It may mark time: but it does not go backwards.
It seems to me that if one has taken an approach for nearly a century and it has not yielded results then it is logical to question the value of that approach. The wish to ape the scientific success is understandable because it is the fetish of our age. A “scientific” conclusion is not challengeable even if the implications are unpalatable, and that is absolutely right. But it seems to me the very foundation of that method that all hypotheses should be measured against reality: and the reality is that it does not work in social fields.
One can say that is because the study of society is at a very early stage, and that if we persist it will yield to that approach eventually: that may be true. I see no reason so far to believe that it is true. Since we have this fetish a discipline which takes the cloak of science speaks with far more authority than one which makes no such claim: So the pressure to do that is plain. But that authority is illegitimate if it merely disguises politics or interest: and that is what I think is happening. It walks like a duck and it talks like a duck: but sadly it does not lay eggs.
In your post you talk of those stricken by “infinite personal want” and that seems to me to be a case in point. It is not clear whether you are talking of a few mad individuals, or of people en masse, or of “society” (which is not quite the same concept as “people en masse). What is clear to me is that for the vast majority of individuals want is NOT infinite. Look around you: folk want a level of material comfort, certainly. But they are content with that level once achieved and they do not seek much more in the real world. What makes Sammy run? Most people will accept more if they can get it without much effort: but it is perfectly plain they will not pursue it beyond the level they have concluded (or been taught) is “enough”. It is also perfectly plain that they will accept a reduction if the level they have reached is more than the level they consider adequate: you could not impose austerity if that were not so: we have the guillotine….
Yet the neoliberal says that it is “human nature” to seek ever more: in the teeth of our own experience we do not challenge this neoliberal fairy story. Such is the power of propaganda. The psychopathy of the few is presented as the reality of the many. It is just not true. I do not need any mystical “age of aquarius” notions to see this: it is plain in what people actually do. From where I am sitting nutters are in charge: Sammy was just such a nutter and seen to be so: yet today we placidly accept that he is Everyman. And that is the level of unexamined assumption which is the foundation of the whole project. At least that is the way I see it.
Fiona, though we may not be able to use the verifiable or provable as false approaches of hard sciences for analysis of social studies, we can study scientific progress in other fields and observe fit or misfit of the subject under scrutiny, here being economics, to which I append justice and democracy. Scientific method is a tool of a scientific inquiry which is also available to sociopath nutters for marketing propaganda refinements until poor Sammy is stimulated to purchase in order to satisfy artificial wants; verifiable proof of propaganda accuracy is transmitted via sales receipts and inventory records. My point is that we humans are what we are and to expect more from us than beautiful but socially malleable blossoms of cosmic of consciousness leads to disappointment and false conclusions.
Frederick Soddy provides us with another way to use science to visualize; it was almost a century ago that Frederick noticed human economics did not conform to physical laws of thermodynamics. Frederick’s analysis led him to theories of value, debt and virtual wealth, he was scorned by the banksters as being no different than a housewife looking for value at the grocery store. Though the critique caused some discomfort, Frederick Soddy was writing for people who would be alive a century later and this knowledge made it easier for him to weather silly arguments against using science to analyze economic activity for a fit with a sustainable social relationship with reality.
Today we enjoy the fruits of science and taste of visions far beyond even the mighty sorcerer who won a Nobel prize for explaining transmutation of elements, Frederick Soddy. Now we can without doubt know that humanity and probably all warm blooded life will be extinct in a very few short years without justice for all who are alive, justice for the future, and justice with nature. The trick is discovering how democracy fits information theory to express a reality that supports life as an expanding cosmic bloom rather than a vessel for an unending futile war of dominance over infinite creation.
Why not challenge what was written in 1926 and 1933 what explains our present crisis and solution to to that crisis?
Please post your profound results.
*****Who was Frederick Soddy ?
http://en.wikipedia.org/wiki/Frederick_Soddy
In four books written from 1921 to 1934, Soddy carried on a “quixotic campaign for a radical restructuring of global monetary relationships”, offering a perspective on economics rooted in physics—the laws of thermodynamics, in particular—and was “roundly dismissed as a crank”. While most of his proposals – “to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort” – are now conventional practice, his critique of fractional-reserve banking still “remains outside the bounds of conventional wisdom”. Soddy wrote that financial debts grew exponentially at compound interest but the real economy was based on exhaustible stocks of fossil fuels. Energy obtained from the fossil fuels could not be used again. This criticism of economic growth is echoed by his intellectual heirs in the now emergent field of ecological economics.[3]
http://archive.org/stream/roleofmoney032861mbp/roleofmoney032861mbp_djvu.txt
THE
ROLE OF MONEY
WHAT IT SHOULD BE,
CONTRASTED WITH WHAT IT HAS BECOME
By
FREDERICK SODDY
M.A. (Oxon) ; LL.D. (Glasgow) ; F.R.S. ; Nobel Laureate
in Chemistry, 1921 ; Author of ” Science and Life ” ; ” Wealth,
Virtual Wealth , and Debt ” ; ” Money versus Man ” ; etc.
LONDON
GEORGE ROUTLEDGE AND SONS, LTD.
BROADWAY HOUSE: 68-74 CARTER LANE, E.C.
PRINTED IN GREAT BRITAIN BY
STEPHEN AUSTIN AND SONS, LIMITED, HERTFORD
PREFACE
This book attempts to clear up the mystery of money in its social aspect. With the monetary system of the whole world in chaos, this mystery has never been so carefully fostered as it is to-day.
And this is all the more curious inasmuch as there is not the slightest reason for this mystery.
This book will show what money now is, what it does, and what it should do. From this will emerge the recognition of what has always been the true role of money. The standpoint from which most books on modern money are written
has been reversed. In this book the subject is not treated from the point of view of the bankers as those are called who create by far the greater
proportion of money but from that of the PUBLIC, who at present have to give up valuable goods and services to the bankers in return for
the money that they have so cleverly created and create. This, surely, is what the public really wants to know about money.
It was recognized in Athens and Sparta ten
centuries before the birth of Christ that one
of the most vital prerogatives of the State was
the sole right to issue money. How curious that
the unique quality of this prerogative is only now
being re-discovered. The” money-power ” which
has been able to overshadow ostensibly responsible
government, is not the power of the merely ultra-
rich, but is nothing more nor less than a new
technique designed to create and destroy money
by adding and withdrawing figures in bank ledgers,
without the slightest concern for the interests of
the community or the real role that money ought
to perform therein.
The more profound students of money and,
more recently, a very few historians have realized
the enormous significance of this money power
or technique, and its key position in shaping the
course of world events through the ages. In this
book the mode of approach and the philosophy
of money is expounded in the light of a group of
new doctrines, to which the name ergosophy is
collectively given, which regard economics,
sociology, and history with the eye of the engineer
rather than with that of the humanist. It is con-
cerned less with the details of particular schemes
of monetary reform that have been advocated
than with the general principles to which, in the
author’s opinion, every monetary system must at
long last conform, if it is to fulfil its proper role
as the distributive mechanism of society. To allow
it to become a source of revenue to private issuers
is to create, first, a secret and illicit arm of the
government and, last, a rival power strong enough
ultimately to overthrow all other forms of
government.
Again you confuse me and I am not sure where the problem lies. I suspect it may be in a difference between what you conceive to be science and what I think it is. As I read your posts you appear to think there can be no thinking if it is not science: and that rather equates to the religious who deny the possibility of ethics absent god. I do not accept either proposition.
Science is what we call consistent application of the scientific method. As you say, the scientific method is a tool. It comes into play once we have identified a problem: but the identification is not, itself, science. The application of the method depends on hypotheses which can be formulated and then tested: but the hypotheses themselves are not an outcome of scientific thinking either. Rather they arise from anecdote, often: and anecdote is the report of observation.
You go on to say that science can be used by all: and that is obviously true. But your example puzzles me. As a read it you seem to claim that marketing is applied science and the test is sales receipts. I had not looked at it that way before, I confess. I can see an argument for that. Yet marketing is not a science: or at least those who engage in it do not say so.They see it as a branch of creativity, and there is no set of prescriptions which will guarantee good sales. One may say,”sex usually works” or “we can appeal to the wish to have soft hands”. These things are not lawful and they do not always hold. Moreover, someone once said that he recognised that half of his advertising was wasted: trouble was he did not know which half. That is still true, I think. There is some evidence that producers who do not advertise do not thrive: but even that is only true where there are other brands which are identical in worth, I suspect. In short this is not science, but rather trial and error.
On another point: you assert that we are stimulated to purchase, to satisfy artificial wants. Perhaps we are: I think it is true for some things some of the time. But to explore that idea we have to say what is artificial, and as I look around me I don’t see a great deal of that. We have our luxuries, certainly, unless we are amongst the poorest. In hard times we give them up and our plutocrats complain that we are not consuming enough to suit either them or ourselves in the current system. But the fact remains that luxury spending for most is quite small most of the time: and reduces with our income, no matter what advertising does. To put this in the realm of science we must be able to say what the artificial wants are: what makes us spend to meet them: and what makes us stop spending to meet them. And this must be lawful., I don’t think it is, if we have to introduce such concepts as “confidence” to account for what we observe.
Many people have sought to make analogies with other fields in talking about economics. It seems to depend on their background which one they choose. You see that in psychology as well, when you get conceptions of people as animals (behaviourists): computers (cognitivists): hydraulic systems freudians) and on and on. There are those who describe economics in terms of newtonian physics; you say in terms of thermodynamics and I believe you: and probably any number of other systems. All that tells me is that it has no content of its own
Good post Fiona.