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Actually, as long as they don't revolt, it's great for the economy. (It's unethical to dupe a whole generation into indentured servitude ... but great for the e

Actually, as long as they don't revolt, it's great for the economy. (It's unethical to dupe a whole generation into indentured servitude ... but great for the economy). These people will have to work. No sabbaticals to find themselves, or time off to spend with a newborn. They'll have to put up with every pointy haired boss and dysfunctional workplace they encounter (at least until they can find another job). Every day of their lives will boost the GDP. (But it sure sucks for them that their culture didn't steer them down a smarter road when they were 18 and didn't know better).

imron 10y ago
It's not that great for the economy. Economies go great when people are spending money. If a large part of your discretionary income goes to paying off student loans instead of spending on other things, and you put off buying a house or having children due to financial insecurity caused by student loans, then the economy suffers.
- kakarot 10y ago
  I think he has confused the US economy with its controlling parties.
- velodrome 10y ago
  Agreed. The US is primarily consumption driven economy. This could lead to behavioral conditioning that could affect future growth (e.g. depression era, silent generation). https://blog.dol.gov/2016/11/03/spending-habits-generation https://blog.dol.gov/2016/11/03/spending-habits-generation https://medium.com/generations-of-spending/meager-spending-and-the-silent-generation-9d71a696630#.98vv4byl4 https://medium.com/generations-of-spending/meager-spending-a... Those of the silent generation are what can be most accurately described as frugal spendors. Again, this tendency is rooted in their surroundings as they grew and developed within the society around them that was facing hard and desperate times.
- tedsanders 10y ago
  Your comment is full of assertions, but not evidence or explanation. My own assertions: (1) GDP measures production. If debtors are incentived to produce more, GDP rises. (2) The spending of debtors doesn't fall. It is just directed toward different sectors (education and financial products instead of housing, etc.). (3) Every dollar lost by a debtor is a dollar earned by a creditor. These dollars don't disappear from the system. And even if creditors tend to churn money less than debtors, inflation targeting by the Fed should fully counter any changes in the aggregate velocity of money. Now, it's possible you're right and I'm wrong. But I think it takes a much more sophisticated (and justified) argument than what you are asserting.
  - 19238998191 10y ago
    I agree that a sophisticated argument would take longer. Regarding (3): The money does not disappear, but what is done with it? Already excess money in the hands of the 1% is just going into real estate, the stock market and stupid VC companies. All this is not particularly good for the real economy.
    - tedsanders 10y ago
      FYI, this is a fallacy. Money cannot "go into" an asset, in aggregate. Every buyer is always matched with a seller. For example, I have heard people say that in the crash of 2008 there was more selling of stock than buying of stock. But that would have been impossible. Each time a dollar was collected from selling a stock, there was a dollar spent buying that stock. They exactly equal. Money cannot go into assets, in aggregate. This is of course different from personal experience, where exchanges are essentially one-sided, not two-sided. An individual can exchange money for property. But a closed economy cannot.
      - RobertoG 10y ago
        True. But that only describe the private actors in an economy. In the same way that money come from the state it can disappear there. The state can decide that "running deficits" is bad and start to destroy money running a surplus, frequently, when what you need is the opposite, like currently in the Euro-zone.
chaverma 10y ago
But isn't a large amount of debt that isn't transitioning whether by getting paid back or written off by the creditor bad for the economy? I'm no economist but my intuition is that these unmoving debts represent money that should exist but doesn't. Since student debt is unusual in that it can't be discharged by bankruptcy it will stay in limbo longer than other kinds. It's reasonable to think that in time much of it will get paid back but there are other kinds of investments that would perform better, and hence the economy would have been better off had these loans not been made and the money were spent on something else. Also to your comment about sabbaticals and other less productive activities, is that really the common case? I believe that underemployment via career choices and local demand for skills would be more common.
perfunctory 10y ago
Not sure why you are being downvoted. Perhaps because people tend to equate "good for the economy" with "good for well-being", which is not necessarily the case.
ekianjo 10y ago
boosting gdp this way does not create much value. Its when private wealth flourishes that you have better network effects in an economy.
leereeves 10y ago
Until they vote to change the laws and cancel all that debt.
deleted 10y ago
[deleted]
rm_-rf_slash 10y ago
People with no money can't buy things. Who will employ them if there are no customers?
marcosdumay 10y ago
An entire generation that can't assume any slight risk for getting a better job or starting a company? No needed sabbatical for updating their knowledge (those aren't all just for fun, you know), no capacity to care for children. Looks like a huge boost to an economy. Besides, let's not forget that economies are made of people.

imron 10y ago

It's not that great for the economy. Economies go great when people are spending money. If a large part of your discretionary income goes to paying off student loans instead of spending on other things, and you put off buying a house or having children due to financial insecurity caused by student loans, then the economy suffers.

kakarot 10y ago
I think he has confused the US economy with its controlling parties.
velodrome 10y ago
Agreed. The US is primarily consumption driven economy. This could lead to behavioral conditioning that could affect future growth (e.g. depression era, silent generation). https://blog.dol.gov/2016/11/03/spending-habits-generation https://blog.dol.gov/2016/11/03/spending-habits-generation https://medium.com/generations-of-spending/meager-spending-and-the-silent-generation-9d71a696630#.98vv4byl4 https://medium.com/generations-of-spending/meager-spending-a... Those of the silent generation are what can be most accurately described as frugal spendors. Again, this tendency is rooted in their surroundings as they grew and developed within the society around them that was facing hard and desperate times.
tedsanders 10y ago
Your comment is full of assertions, but not evidence or explanation. My own assertions: (1) GDP measures production. If debtors are incentived to produce more, GDP rises. (2) The spending of debtors doesn't fall. It is just directed toward different sectors (education and financial products instead of housing, etc.). (3) Every dollar lost by a debtor is a dollar earned by a creditor. These dollars don't disappear from the system. And even if creditors tend to churn money less than debtors, inflation targeting by the Fed should fully counter any changes in the aggregate velocity of money. Now, it's possible you're right and I'm wrong. But I think it takes a much more sophisticated (and justified) argument than what you are asserting.
- 19238998191 10y ago
  I agree that a sophisticated argument would take longer. Regarding (3): The money does not disappear, but what is done with it? Already excess money in the hands of the 1% is just going into real estate, the stock market and stupid VC companies. All this is not particularly good for the real economy.
  - tedsanders 10y ago
    FYI, this is a fallacy. Money cannot "go into" an asset, in aggregate. Every buyer is always matched with a seller. For example, I have heard people say that in the crash of 2008 there was more selling of stock than buying of stock. But that would have been impossible. Each time a dollar was collected from selling a stock, there was a dollar spent buying that stock. They exactly equal. Money cannot go into assets, in aggregate. This is of course different from personal experience, where exchanges are essentially one-sided, not two-sided. An individual can exchange money for property. But a closed economy cannot.
    - RobertoG 10y ago
      True. But that only describe the private actors in an economy. In the same way that money come from the state it can disappear there. The state can decide that "running deficits" is bad and start to destroy money running a surplus, frequently, when what you need is the opposite, like currently in the Euro-zone.

chaverma 10y ago

But isn't a large amount of debt that isn't transitioning whether by getting paid back or written off by the creditor bad for the economy? I'm no economist but my intuition is that these unmoving debts represent money that should exist but doesn't. Since student debt is unusual in that it can't be discharged by bankruptcy it will stay in limbo longer than other kinds. It's reasonable to think that in time much of it will get paid back but there are other kinds of investments that would perform better, and hence the economy would have been better off had these loans not been made and the money were spent on something else. Also to your comment about sabbaticals and other less productive activities, is that really the common case? I believe that underemployment via career choices and local demand for skills would be more common.

perfunctory 10y ago

Not sure why you are being downvoted. Perhaps because people tend to equate "good for the economy" with "good for well-being", which is not necessarily the case.

ekianjo 10y ago

boosting gdp this way does not create much value. Its when private wealth flourishes that you have better network effects in an economy.

leereeves 10y ago

Until they vote to change the laws and cancel all that debt.

deleted 10y ago

[deleted]

rm_-rf_slash 10y ago

People with no money can't buy things. Who will employ them if there are no customers?

marcosdumay 10y ago

An entire generation that can't assume any slight risk for getting a better job or starting a company? No needed sabbatical for updating their knowledge (those aren't all just for fun, you know), no capacity to care for children. Looks like a huge boost to an economy. Besides, let's not forget that economies are made of people.