Ed. #51: Cancelled Debts and Cancel Culture
A STATESMAN is an easy man, He tells his lies by rote;
A journalist makes up his lies, And takes you by the throat;
So stay at home and drink your beer, And let the neighbors vote,
From William Butler Yeats’ “The Old Stone Cross”
Student debt cancelled
I’m all in for staying home and drinking beer, but perhaps Yeats’ cynicism saying that voting is a waste of time because all politicians will disappoint might be a bit overblown for a democratic society in 2022[1]. Then again, it’s hard not to be cynical about President Biden’s plan to cancel up to $20,000 in student debt for individuals earning less than $125k annually. Setting aside the plan’s questionable legal justification, as well as its moral hazard problems, it just seems to be extremely poorly targeted government relief that will not improve the lives of the neediest Americans[2].
Tone Deaf
In fact, Harvard Law Professor Emeritus Laurence Tribe poignantly emphasized this awful targeting with a giddy, but totally tone-deaf, tweet about how the plan would benefit “thousands of my former students”. Thousands of former Larry Tribe students[3]most certainly will not qualify for the debt relief due to its annual income limitation. [4] Yet, over $500 Billion in debt relief from the government (meaning all taxpayers) is expected go to people with college or graduate school degrees[5], while people who never got past high school, already paid back their debt, or didn’t have to take out debt to pay for college[6]get a big, “No soup for you” from Biden’s give-away.
Jason Furman, a top economist in the Obama administration told The Atlantic, “There isn’t free money out there. There are consequences. Once you frame it as 320 million people paying for a benefit for 30 million people, it makes you think a lot harder”. Similarly, Manhattan Institute Senior fellow, Brian Reidl, claims, “This is a pure redistribution from the working class to wealthier college graduates.” It would seem Biden could take a lesson from the memorable song in Monty Python’s Dennis Moore/Robin Hood spoof. “He steals from the poor and gives to the rich.… Stupid b@#%[7].” Says Python’s Moore in the skit, “Blimey. This redistribution of wealth is trickier than I thought.”[8]
Housing and the racial gap snubbed
Frankly, as a housing and mortgage industry observer, I’m frustrated and disappointed in the Biden administration’s elevation of student debt cancellation over housing related policy objectives[9]. Housing advocates, especially those that have been complaining about the racial housing gap[10]should be outraged at $500 Billion given to a vast number of highly educated and upwardly mobile people[11]most of whom can already afford housing (or who will be able to afford it) and should be knowledgeable about use of credit too. That same amount spent on housing for minorities might actually make progress against the racial gap. I don’t see what makes American borrowers’ student debts more worthy of cancellation or limitation[12] than mortgage debt or housing subsidies. Moreover, if you are going to make the argument that housing subsidies only increase the cost of housing, then don’t expect college tuition rates to get any better from this plan either.
This student loan plan is as misguided as it is bold. Yet, notwithstanding all of the Black women in housing leadership positions who are committed to reducing the racial gap in housing and wealth, the President has offered no bold plan for housing affordability or equity and has no impactful policies to offer for housing in general. As I discussed in my last Musings, all of the government’s focus in housing equity continues to be on ineffective (un)fair lending enforcement disconnected from actual discrimination. As they have for 50 years, these enforcement efforts seem intent on headlines about “punishing” the lenders for discriminating against minorities without any assessment of whether enforcement moves the needle on improving the gaps. It might get me “cancelled” for saying all of this (again) out loud, but we need bold new and targeted ideas to improve housing and wealth of minorities, not punishment of individual lenders for not trying hard enough to fix systemic problems they didn’t cause and don’t have the ability to fix alone.
Cancel Culture
Speaking of getting cancelled, cancel culture has its own Wikipedia page, but whatever it is, as a free speech advocate, I’m not a fan. Sure, there are things I don’t think people should be allowed to say or do, especially involving protecting children and other vulnerable people, but there are better ways for dealing with ideas that create discomfort or challenge orthodoxy. Things like engaging in more speech, simply ignoring the speech, or offering the grace of tolerance are some obvious alternatives to me. The idea that someone is shunned entirely for an aberrational[13]expressed thought despite otherwise being a good person is not the kind of society I want to live in.
Cancelled, but who cares?
Along those lines, I really have no idea what to make of the following story about a computer-generated avatar falling victim to cancel culture. See FN Meka Dropped by Capitol Records After Instagram Backlash (vulture.com). Not only is it nuts to have an AI generated music artist, but who gives a rat’s patootie what he/she/they/it says? I just don’t get it. Maybe FN Meka isn’t capable of being upset about his “cancellation”, but Yeats’ poem “A Coat” suggests to me that confident speakers shouldn’t suffer the fools of the world who would do the cancelling.
I made my song a coat
Covered with embroideries
Out of old mythologies
From heel to throat;
But the fools caught it,
Wore it in the world’s eyes
As though they’d wrought it.
Song, let them take it
For there’s more enterprise
In walking naked.
Walking naked
So, I’ll keep (figuratively, not literally) walking naked and speaking my mind. I hope that you will do the same, and we can agree or disagree peaceably and respectfully. Meanwhile, if you would like to hear my thoughts in person (I promise to be wearing clothes), please be sure to attend either the MBA’s Regulatory Compliance Conference in Washington, DC (September 18-20) or RESPRO’s Fall Seminar in Savannah GA, (September 26-27).
[1]The commentary about journalists is interesting too, but I’m still going to vote.
[2]The inflationary effects of the plan will hurt all Americans, while only potentially benefitting an estimated 10-15% of the population with student loans outstanding as of June 30, 2022.
[3]Thankfully, I had former Tribe student and Harvard Law professor, now named partner at one of the “World’s Best” litigation firms, Kathleen Sullivan, for Constitutional Law. Clearly, Ms. Sullivan and all of the other successful former Harvard Law students at her firm and other firms throughout the world don’t need any student loan debt relief.
[4]Maybe a couple dozen or so 20-something year old former Tribe students who chose to be public defenders, public interest lawyers, or neighborhood activists (like 1991 HLS grad Barack Obama) might qualify. Even they, however, are making a choice to make less than they could in another job and the need is questionable since there are already numerous programs to subsidize their choices. They will move up the income ladder quickly if they want. Barack Obama won’t qualify for any debt relief either.
[5]Over time, a post-secondary degree is an appreciating, income-producing asset for the graduate that can never be taken back by the lender. That is why student loan debts are not dischargeable in bankruptcy.
[6]Maybe they worked during college (like my wife) or their parents worked and spent their savings to allow their children to graduate with income producing knowledge and no debt. Thanks Dad. I am paying that forward.
[7] Some might take issue with use of the term “bitch” as inappropriate in a “high-brow” blog such as these Musings.
[8]Here’s some unsolicited advice for President Biden who is planning to come to Milwaukee for Labor Fest in a few days: don’t mention that student loan bailout thingy to a bunch of blue-collar union folks.
[9] What housing objectives, you ask? Fair question. See https://mortgagemusings.com/f/ed-47-ineffective-policies-the-70s-and-housing
[10] I count myself among that group. See e.g., https://mortgagemusings.com/f/edition-10-jerry-levy-and-perspectives-on-freedom-justice.
[11] I have not seen a racial breakdown of the anticipated beneficiaries, but here’s one person of color’s displeased take.
[12]Biden’s proposal also lowers the maximum percentage of income that is required to be paid from 10% to 5%, which may help some mortgage borrowers at the margins, but is, again, very poorly aligned with reducing the racial homeownership and wealth gaps.
[13] Says who?!!