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"This only gets worse if we do something crazy like forgive massive amounts of debt, whether it’s student or mortgage. The psychological effect on the people wh
by Sporktacular 5y ago
"This only gets worse if we do something crazy like forgive massive amounts of debt, whether it’s student or mortgage. The psychological effect on the people who have lived within their means and met their obligations will be radicalizing."
Not nearly as radicalising as a debt-laden permanent underclass.
And this just assumes debt comes from living beyond one's means, ignoring complexities like historical or systemic unfairness in how it's sometimes created and inherited. Investing in education to escape debt cycle is good for people and economies. It's so often subsidised because it generally pays for itself many times over. But when it doesn't, allowing it to deepen the cycle just keeps people in debt and suppresses economic growth.
The productive carrying the less productive is an ancient problem. They usually feel like suckers until they learn it's for the good of the society that sustains them.
- jl2718 5y agoOkay, but you understand that the bailouts are not for them, right? It’s for their lenders that would never get repaid otherwise. The bailouts let them charge high-risk interest rates with zero actual risk.
- Sporktacular 5y agoNo, the bailouts are directly for the borrowers. Just as bailing out an airline keeps the airline alive, not indirectly the creditors funding it. Of course the effect is on both but I'm avoiding definition torture. But risk externality is a good point. Maybe one that needs addressing with a return to reasonable regulation, reigning in speculation/predatory lending, Glass-Steagall etc.