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Thursday, August 13, 2009

The next bailout?

From the Baltimore Sun:
Would forgiving student loan be good for the economy?

Some groups think so. A campaign is underway to get student loans forgiven so grads can afford to spend their money on other things. Proponents say this would immediately stimulate the economy.

So, those who went through school without any debt - myself included - get screwed? How about a refund on my tuition and fees - I think I have the receipts still.

I think the story is a "fake" in the sense that the story does not identify by name a single person or group in pursuit of such a policy. The story does go to lengths to interview a skeptic of the "proposal," but the straw man of the agitators is never fleshed out.

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Comments:
Not only that. The quote suggests that theft is stimulating to the economy. I mean, sure, if students didn't have to pay back their loans, they would spend more. But what would happen to the institutions who gave those loans and the people who work for them? I suppose the government could pay them off, but then the cost would simply be spread to the tax-payers who would then consume less as a result. Perhaps the hope is that the college student has a larger MPC than the tax-payer, and thus the net-result will be positive for consumption. In that case, more goods will be consumed than will be produced, and this imbalance will have to correct at some future date.

I also have never filled out a student loan application.
 
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