Joseph Stiglitz “Inequality Is Holding Back the Recovery,” New York Times’ Opinionator.
(For the record, I regularly confuse economist Joseph Stiglitz with photographer Alfred Stieglitz.)
The solution to inequality, Stiglitz opines, is:
[A] comprehensive response that should include, at least, significant investments in education, a more progressive tax system and a tax on financial speculation.
Unusually for a liberal economist, labor unions are not part of the solution, even though Germany and Sweden survived the financial crisis with them, he writes. I say it’s unusual because “significant investments in education” don’t do much good when the government predicts that most new jobs won’t require much education even without the depression.
And yes, we are talking about higher education, for the post includes this photo…
…of California public college students protesting cuts to their programs. They should be demanding jobs and higher wages instead of a graft-fueled rat-race, and as much as I empathize with students’ anger, I think their parochialism misdirects it from issues that will actually help them in the current and long run.
Instead, Stiglitz disagrees and really does think we need to double-down on higher education:
Meanwhile, as incomes have stagnated or fallen, tuition has soared. In the United States now, the principal way to get education — the only sure way to move up — is to borrow. In 2010, student debt, now $1 trillion, exceeded credit-card debt for the first time.
The “only sure way to move up”? More Eloi lawyers versus Morlock material movers with law degrees, even though we need people to move our material and it’s a waste of their time and our savings and tax dollars to lend them money for degrees they aren’t using.
As for tuition inflation, it’s a mixed bag due to superficial data collection on the BLS’ part, as I pointed out last month.
Concededly, the trillion-dollar figure is substantial growth in the last decade plus relative to earnings/GDP/whatever, but much of it is IBR-able or serviceable. Repeating what I said earlier, I’m not afraid of a large number of student loan debtors taking to the streets demanding justice. Rather, I’m afraid that some good reforms will occur but leaves those who need it most out in the cold.
Student debt can almost never be wiped out, even in bankruptcy. A parent who co-signs a loan can’t necessarily have the debt discharged even if his child dies.
Aside from IBR, student debt can be eliminated in bankruptcy, but it isn’t often tried (’cause it doesn’t work very often). For federal debtors, hardship discharges are also possible for the disabled, which the Obama administration made easier last year, to its credit. I’m pretty sure co-signers of federal debts can get a release if the principal debtor dies. Not so for private student loan co-signers, but they’re fewer in number. Again, not as big a problem, but it also means acute cases might not get the relief they justly deserve.
The debt can’t be discharged even if the school — operated for profit and owned by exploitative financiers — provided an inadequate education, enticed the student with misleading promises, and failed to get her a decent job.
I’m not sure how bad the educations for-profits sell are. I certainly believe they admit many students whom they should know aren’t ready for college-level coursework, but they enthusiastically take their (debt) money anyway. Yet the same goes for the rest of higher education. Private nonprofits engage in all kinds of self-dealing, such as six-figure and higher forgivable loans to deans. Public schools enroll all kinds of people just for their money. It really is season six of The Wire: grade inflation and dumbed-down standards ensure everyone passes, including foreigners who don’t know English but pay non-resident tuition. Stats are juked just the same (and rapes disappear at college campuses too).
As for the “misleading promises” and “failing to get them decent jobs,” shouldn’t Stiglitz think ABA law schools are guilty of the same thing?