Thursday, September 09, 2021

Cancel this odious debt

Writing on Newsroom, Laura Walters makes a case for cancelling student debt:

[A]t the moment, loan debt is hurting the economy, holding back everything from small business formation, to new home buying, and even marriage and reproduction.

So rather than offering interest-free borrowing, or expecting people to refinance their loans, the Government could try something more ambitious.

The Levy Institute, a non-partisan think tank in the United States, makes a strong case for student debt cancellation.

It found positive macroeconomic feedback effects from running simulations through two different models for debt cancellation. It saw average households’ net worth and disposable income increase, driving new consumption and investment spending.

In short, the analysis shows debt cancellation would lift GDP, decrease the average unemployment rate, and result in little inflationary pressure, while interest rates increased only modestly.

That's the economic case. Walters also mentions the values-based case about free education, and I'll throw in another: the student loan scheme is odious debt. It violates the government's own lender responsibility principles set by the Credit Contracts and Consumer Finance Act 2003: the government exercises no care or diligence and makes no inquiries as to whether loans can ever be repaid; the sub-minimum wage repayment thresholds make the agreement inherently oppressive; the government exercises its powers as a lender in an oppressive manner, with border arrests and threats; and they induce young people to borrow by oppressive and downright fraudulent means, on a promise of benefits from tertiary education that turn out to be substantially overstated (and an implied threat that without this, you have no hope of a decent job or a future). If they were a normal lender who induced people to borrow in this way, on such terms, we would prosecute them and ban them from lending.

Or we can put it even more simply: the student loan scheme was a massive act of intergenerational theft by Boomers against everyone younger than them, which has burdened successive generations. And rather than perpetuating it any further, we should end it, lift that burden, and cancel the debt.

People who went through the system, were gouged by oppressively high interest rates, and paid off their loans anyway may feel hard done by by this. But their having suffered in the past is no reason to continue to make people suffer in future. The struggle to make a better society inherently means that people in the future are going to have better lives than us if we succeed. We don't begrudge them that. So why begrudge this? If you want to be angry at anyone over your suffering, be angry at Lockwood Smith and Phil Goff, who inflicted this misery on us and are still swanning around as if they didn't do anything wrong, and who haven't even pretended to apologise. Or at the Boomers, on whose behalf they looted the state and gouged us. Or at the entire class of 1980's and 1990's NeoLiberal politicians, who wrecked the country and fucked us over, and whose ideology of greed and selfishness is still governing the state today, despite being completely debunked and officially denied by their political successors. Be angry at the people responsible, not your fellow victims.

And when you're done being angry, use that anger, and make Aotearoa a better place, by cancelling this odious debt.

(Disclosure: Like Walters, I still have my student loan. I do not intend to repay it).