Whether good or bad, our economy depends on consumers.  When young people have to enter the working force with tens of thousands of dollars in loans, it’s a drag on the economy and detrimental to their future security.  How can we attack the problem?

First, let’s analyze the root of the problem: higher education in this country suffers from the same disease that the medical system does—the incorrect idea that colleges and universities have to make a profit.  Whoa! you say.  Aren’t they non-profit organizations?  Some of them say they are, but more and more are admitting their goal is to make money, especially online outfits and those “professional schools” who pay their professors very little and charge their students big dollars to “learn a trade.”

Even prestigious schools are in it for the money.  Harvard, for example, is connected to hospitals in Boston, MIT has its Lincoln Laboratory, Cal Tech its JPL, Berkeley its Lawrence Livermore, and so forth.  Institutes and national labs funnel taxpayers’ money into big universities, many of them private.  And these schools charge the most—obviously, prestige, earned or otherwise, is worth gold.  I’m not saying that a full professor at MIT or Harvard makes a hefty salary compared to a corporate CEO, but they’re both overpaid.  Academia also sports the tenure system—there’s a lot of deadwood among those tenured professors.

The obvious solution is to nationalize the whole system.  No student loans necessary.  Isn’t going to happen, of course.  Even our black president went to Harvard.  It’s long life is guaranteed by the power elites in this country, many members of that infamous 1%.  Parents will make all kinds of sacrifices to get their kids into one of the Ivies, even though a state university or college often has more quality professors and is the much better bargain while offering a wider variety of programs.  Yet state schools aren’t inexpensive either.  There is no true public higher education in this country.  Everybody pays and pays dearly, in spite of all that federal and state money—either out of pocket, through scholarships and fellowships (the latter often requiring taking your turn in the university’s cheap labor force), or through student loans.

Instead of Ivies, higher education is more like poison ivy that’s engulfing a tree.  You can hack it away, turning your hands into vicious blisters, but you can’t really dig out the root of the problem very easily.  Is there anything else to do?  The standard solution has been to offer low-interest student loans through banks, the U.S. government subsidizing the loss of interest revenues to the bank.  Republicans used to like that—now they don’t.  They want the loan’s rate to be what the market can bear—read: no taxpayers’ money should be used.  Sounds good, huh?

Let’s say, for the sake of argument, that the subsidized rate is 3% and, at the end of four years, a student has incurred $100,000 in loan debt.  You figure out the payment table, or ask your banker to do it for you—they live off this.  Or, you can run it through an online mortgage calculator—it’s the same tool.  Believe me, a $100,000 debt is a big one for someone just entering the work force.  Take off the subsidy, action which will at least double the rate, and realize that some houses in the Midwest might cost less than the accrued debt (forget the West Coast or the Northeast) and you’ll see that we have really saddled that young person with heavy debt, probably for the rest of his life (well, unless he becomes a CEO of a major corporation or an investment banker).

The fundamental question: why are banks involved at all?  After the Wall Street fiasco of 2008, I’m sure most of us trust bankers about as far as we trust politicians.   A national student loan service can be set up so it’s impervious to the political storms of political Washington and not in the hands of greedy bankers.  VA housing loans, etc, operate on this principle.

The fundamental answer: the GOP’s vision of government’s function is limited to its serving as a mechanism for the orderly transfer of wealth from the middle and poor classes to the rich elites.  They can dispatch nationalizing our education system with the boogey word “socialism,” but they can’t hide their motives.  For taxes, this transfer affects the middle class more, because the true poor aren’t taxed.  For higher education, the chance for a college degree means upward mobility for a poor family.  I know a mom-and-pop breakfast and lunch stand in Cambridge where the family has made huge sacrifices to send their children to college.

The joke on the GOP, of course, is that they’re shooting themselves in the foot.  They and the 1% they represent are so stupid that they don’t recognize a basic economic law—you can’t make money where there’s no money to be made!  Any young person, rich, middle class, or poor, has his consuming potential seriously diminished if he’s saddled with exorbitant student loans.  Maybe the more affluent aren’t as hog-tied by these debts because mummy and daddy are there to cover their butts, but that’s just a cop-out—the burden then lessens mummy and daddy’s consumer power.

Moreover, the GOP is also exhibiting a myopic view of what our place is in the world.  I’m sorry, GOP troops, but the world doesn’t revolve around the U.S. anymore, politically or economically.  In particular, we have to compete economically on an increasingly competitive playing field.  The money pot you’re tapping into among the poor and middle class is a shrinking pot because our young people aren’t prepared to compete in this brave new economic world, and are less prepared with every passing year.

And don’t come at me with the argument that education doesn’t matter.  Sure, Kelly Ripa can get rich running a talk show without much education.  David Tumblr, rich CEO of Tumblr, which he invented after becoming a high school dropout, is now perhaps following in the footsteps of Mark Zuckerberg, Bill Gates, and Steve Jobs.  But these are exceptions.  Their consumption doesn’t count for a hill of beans in the national or international economy.  The fact that Bill Gates has all that money to give away only tells me he has shirked his patriotic responsibility to educate the next generation.  If I were St. Peter, I would still check arrival tickets before I let any of these people through the pearly gates.  In fact, I would check any member of that 1% very carefully, including the Pope.

Finally, we have the moral responsibility to educate the young.  Yes, I know, morality doesn’t seem to be too profitable these days, but it’s obscene that the new generation will be the first not better off than the previous.  Part of this is due to that expanding world-wide economy.  There’s only so much air in the balloon, so if you pull it out somewhere—Asia or South America, for example—you have to push it in somewhere—the E.U. or U.S.  I recognize that.  Abdus Salam, the Pakistani Nobel prize-winner, once told me that this is economic entropy in action.  You might want to call it the homogenization of world economies—they’ll end up looking the same.

But each country has to invest in its young people to guarantee a solid economy and quality of life for its citizens in the future.  Some are doing it better than others.  Right now, under the guidance of the GOP, the servants to the infamous 1%, we are doing a terrible job of it.  Young people are worth fighting for.  Let’s not let them down.

And so it goes….

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This entry was posted on Thursday, May 30th, 2013 at 4:00 am and is filed under Capitalism Without Control, Government Waste & Inefficiency. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.