There are loud and numerous calls for forgiving the student debt. We've duped the poor (former) students into buying a worthless higher education on time, and dumped them into an economy where it is really hard to pay that debt back.
(Pardon me? I did not sell that snake oil. On either end.)
Well, there would be valid reasons for helping them get out from under that burden.
But.
"We" can't exactly forgive that debt. We don't own it. That is, we don't own the burden of guaranteeing it. At least, not at this time.
Who owns the guarantees on that debt?
Well, it's difficult to untangle. The government that demands business be transparent has serious difficulties making its own operations transparent.
We hear China owns no small part of it. We can be fairly sure that most of the several thousand billionaires and millions of other high-net-worth-individuals all over the world also own no small part of it.
If we could get them all to forgive the student debt in all countries, I'm not sure that would be a bad thing.
But what is being called for is something else entirely -- for the US government to buy that burden back from those who bought the bonds.
So here's how it works. Get people to borrow money from you. Some time later, sell the burden of final guarantee for the burden to the government. That means, if the people who borrowed the money can't or don't repay it, the government has to pay you. Sometime later, get the government to "forgive the debt" by paying it off to you. And you get both the interest and the principle.
Here's what is not being told: "Forgiving the debt" ultimately means paying it off -- making those who are already rich all that much richer.
Those rich people were the ones who set the rules up to demand higher education, you see. "Our worker pool needs more training!" they said. (Who gave them permission to call us "their worker pool", anyway?)
So, as I said, if we could get them, not the government, to forgive the debt for student loans, that might not be such a bad thing.
Except, there are reasons that's not such a good idea, either. Debt is never a simple thing. Those individuals of high-personal-worth actually serve to focus our economic activities on specific business. If they suddenly lose their wealth and somebody is not ready to step in with more money, businesses fail. Jobs disappear. Etc. Economic depression.
That was the excuse for bailing out the banks about ten years back, and it is real. Uhm, well, it isn't exactly entirely the stuff of the imagination of ambitious money-grubbers. It's real enough to cause ordinary people serious harm.
Why? is a very good question.
If you don't understand why, it's time for you to learn what money means.
None of the popular explanations you can find in books or on the web have it right. What does
Money is a proxy for value.
even mean?
Okay, how about something that is often claimed,
Money is value.
Really? Bits of paper and metal, ink in a ledger, charge domains in some storage medium. But it took, for instance, Ms. Rowling a long time of working hard to convert the value in her first stories into enough money to continue writing without working a day job.
At any rate,
Money is not raw value.
So, once again, how about
Money is a proxy for value.
Money is not a very good proxy for value. The things that are of most value to you, you wouldn't want to trade for money. (Well, you shouldn't.) And usually, if someone wants to trade you money for them, it's less for the thing it is than for the control they hope to gain over you in the trade. So,
Money is power.
Yet it isn't power to do the most important things. If I mention the power to breathe, you may counter with the idea that money can buy doctors to fix your inability to breathe, but I already have the ability to breathe. Without money.
And a man who has ruined his ability to breath is often unable, even with billions of dollars, to hire enough medical expertise to fix his lungs before he dies. So, again, something money is not:
Money is not unlimited power.
Debt actually is more powerful than money, if you simply want to control people. Is it surprising that people buy and sell debt?
How about this one?
Money is freedom.
Rich people (and many wannebee rich people) write books detailing how they had to live according to very strict daily routines to get their wealth. You have to sacrifice for that freedom.
And, once they have it, they have to keep up the routine, because with the money came responsibility to manage a company or some such thing.
Ask them if they are really free, and they say, they are free to hire a limousine to take them somewhere. But they are not free to walk there on their own. Free to buy expensive clothes, but not to wear comfortable clothes -- unless they have enough cachet to turn their comfortable clothes into a fashion statement.
And money doesn't buy the cachet -- not on a long-term basis. Show your money and you get attention, but the minute you put your money away, the attention dries up. Real cachet takes more work.
Money is only temporary cachet.
In Hello Dolly, Horace says something like
Money is like manure. It should be spread about making little green things grow.
(US currency being printed with green ink added a certain overloaded semantic -- pun -- to that quote.)
My response when I first heard that was a bit pithy --
Money is like pus. It tends to gather where the wounds in society are.
Okay, I'll skip forward a bit. Money is a fairly good proxy for apparent value, much of the time. Thus, sales campaigns are battles to drive your own products' apparent value up in the market.
Money is an imperfect proxy, or exchange medium, for value.
What happens when we forgive a debt -- assuming that the debt is truly forgiven and not just transferred to a new owner?
The money has already been plowed into the economy. And the former debt-owners lose the power that owning the debt gave them. But it does give the former debtor a bit more room to make more value to bring back into the economy.
The question is not why we shouldn't give the former students a little more breathing room.
The real question is what do we keep doing wrong with money, so that it keeps ending up getting in the way when people want to do good things?
