President Biden today announced he would forgive up to $20,000 in student loans for people making less than $125,000 per year, with several other qualifications determining the amount each applicant is eligible for.
Biden’s political opponents have raised very reasonable objections to this politically motivated favoritism just over two months before the mid-term elections. What about people who paid off their loans? Why only student loans and not others arguably taken to underwrite more productive efforts than women’s studies or French poetry?
Why does someone who borrowed money to start a profitable business that employs people have to pay back its loans when someone who works a tax-subsidized job does not?
While calling out such blatant vote-purchasing for its violation of equal justice under the law and other statist dogma is perfectly valid, let’s not forget the economic law demonstrated by this bailout: the government cannot “invest.”
Politicians love to use that word for its wealth transfer schemes. “Invest in infrastructure,” “invest in working families” (which families don’t work?), and, in this case, “invest in education.”
Merriam-Webster dictionary provides two relevant definitions for the word “invest.” Government-guaranteed student loans doesn’t meet either of them:
1: to commit (money) in order to earn a financial return
2: to make use of for future benefits or advantages
Had the government’s “investments” in student loans met the definition of the word, there would be no need for a bailout. The money spent on tuition would be paid back out of the additional earnings students realized over and above what they would have earned without going to college.
That they not only aren’t in the black based on additional earnings to what they would have earned with a high school diploma, but can’t pay the loans back at all, should end once and for all the ability for politicians to claim they are “investing” in anything.
This excludes all the student loan borrowers who can pay back their loans but now will shift some of that burden onto others. Doctors, lawyers, university professors, and other affluent debtors will force plumbers, taxicab drivers, and construction workers – not to mention other doctors, lawyers, etc. who worked their way through school without student loans or who already paid them back – to pay their debts.
The grand experiment with government “investing” in higher education has produced two returns: people who can’t earn enough to pay back the loans and people who can but choose to force somebody else to do so.
All the same arguments against student loan bailouts can be made against public education in general. Why are homeowners forced to pay for public schools whether they use them or not, while wealthy renters pay nothing? Why is the service called “education” Sovietized in the first place? Is there something special about education that makes the government owning its means of production successful?
Of course not. Just look at the results. The more the government has “invested” in education, the less literate and numerate graduating students have become. Like every government-provided service, the cost keeps going up and the quality keeps going down.
Education, healthcare, infrastructure, transportation, the military – they are all the focus of massive government “investment.” And those investments all continue to produce the same returns: skyrocketing prices and plummeting quality.
Everything the government does is Afghanistan.
Investors in the private sector aren’t better people. They merely work under different incentives. When private sector actors invest, they stand to lose their own money. This powerful incentive doesn’t produce perfect results, but it produces infinitely better results than government spending. And when private sector investments go bad, no one else is forced to pay for their mistakes.
That is, unless one is on the Christmas list of the ultimate government investor, the Federal Reserve System. Its “investments” in stimulating the economy are the most damaging of all, producing steadily rising prices, artificial booms, disastrous busts, and more and bigger bailouts over time.
We have no choice but to pay for Biden’s latest vote buy. But let’s not let him or any other politician continue to call their loot distribution “investment.” Doing so should be tried in The Hague as a crime against veracity.
Tom Mullen is the author of It’s the Fed, Stupid and Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?
