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No, student loans don't "have problems". They are problems. It's not they were ill-conceived but that they were conceived at all. College education (as well as

No, student loans don't "have problems". They are problems. It's not they were ill-conceived but that they were conceived at all. College education (as well as health care) is an example of an activity that doesn't benefit from being guided primarily by the market.

whimsicalism 2y ago
the problem with healthcare in America is not “the market”
- lesuorac 2y ago
  Do go on.
  - novariation 2y ago
    My guess is they're talking about regional monopolies ? There's generally a misunderstanding from left wing voters — when people say "markets" they understand "crony capitalism and monopolies with regulatory capture" when most other people just mean "fair competition between suppliers". We'll all agree the second option isn't easy to get, but the disagreement often comes from the fact one team thinks it's impossible or even undesirable, and something more radical should be preferred.
  - brightball 2y ago
    Your employer offers health insurance. You go to doctors who bill the insurance company for your services. You paying directly for your services is almost entirely removed from the equation. You even deciding on which insurance company you would like to use is removed from the equation as well because it’s more expensive for you to sign up directly than it is for your company to sign up as well. If you wanted to be a part of a private insurance group with diet and exercise requirements for membership, including annual physicals that could potentially get you a lower rate…but you don’t really get that option. The market doesn’t even get to attempt to provide that option because of how separated the producer and consumer of the service are from the people paying for it. The market is completely removed from the equation. The only person who proposed a plan that would have resolved this problem was Dr Ben Carson fwiw. It was by far the best solution to fixing healthcare in the US that I’ve heard in the last 20 years but instead we got ACA.
  - whimsicalism 2y ago
    There are a number of related problems. 1. Doctor cartels (this one is sort of self-explanatory) and other provider coordination on pricing 2. Over expansion of insurance (insurance is not meant to cover things that are expected, we have expanded insurance to cover routine expected expenses) and the associated costly administrative structure 3. Lack of price transparency 4. Global free ridership on drug prices makes us think we could get new drugs for much cheaper than we could 5. Lack of neutrality in tax law between cadillac health insurance plans and income 6. Overutilization (partially due to fear of malpractice lawsuits, partially due to overexpansion of insurance) 7. Political failure to address any of these. Obama tried to resolve 5 and Trump tried to resolve 3. Both have essentially failed. Almost all of these are caused by bad policy more so than the market-based outcome. This is not a ranked list, if I had to find primary culprits it would be 2, 3, and 6.
- deleted 2y ago
  [deleted]
- rambojohnson 2y ago
  okay. that was insightful.
- readyman 2y ago
  I don't necessarily disagree. I would say the problem is capitalism, which is not to be confused with "the market." They are distinctly different things.
  - whimsicalism 2y ago
    saying the problem is capitalism is basically a non-answer to me. anything that exists today can be called capitalism, nobody has a clear definition of what is constitutive and it is not a useful diagnosis for offering prescriptions on how to make it better
  - novariation 2y ago
    I've got a weird relationship with market socialists because I generally think they're much more sensible and convincing than the average "destroy evil and create utopia" socialists, but ultimately it's hard to understand whether their efforts to rebuild society would yield much better outcomes compared to European style welfare capitalism with more taxation and welfare spending. I suppose they're trying to build a grand theory of social market economies / social democracy, which is nice.
- mathgradthrow 2y ago
  The primary beneficiary of treating productive young people is society itself, and they are also the most efficient to treat. The primary beneficiary of existing socially subsidized care is the elderly. Since this is the optimally bad outcome, it is reasonable to assert that every system of healthcare incentives is misaligned.
analog31 2y ago
In a sense, both student loans and health insurance target the wrong thing: How to preserve established institutions by making sure that they get their money, not how to deliver education (and research) and health care to people. I think in 100 years we'll look back on subsidized private universities, and subsidized private hospitals, as obviously bad ideas. I think the way to solve both is to let the state own both systems. Publicly funded research and education can occur at state universities. The private colleges can do whatever they want with their own money, until they're small enough to drown in a bathtub, or they can go back to primarily serving as seminaries.
georgeplusplus 2y ago
The market was/is responding to the environment that was created by the department of education. It’s quite weird that you blame solely ‘the market’ but totally ignore the role the federal gov has had in this. I read somewhere about 90% of student loan debt is from federally backed loans ? You think getting rid of competition the market provides and making the gov the sole issuer, creditor, and policemen of student loans would create cheaper education? Lol
- joe_the_user 2y ago
  It’s quite weird that you blame solely ‘the market’ but totally ignore the role the federal gov has had in this. There is no place I say anything like "it's the market, not the fed". The Federal Government initiated it's (pseudo) market "reforms" and so certainly bares considerable blame for the outcome. My main point that whole approach was bad rather than the approach having implementation problems.
novariation 2y ago
Even if you dislike markets as a mechanism, education is very tricky because it's very very expensive, and prone to important moral hazards when it's free. Think your passion is economics or psychology and drop out after 1.5 years ? You've just cost the equivalent of 8 years of tax money from the average joe (ex: France median after tax income is 25k, roughly 2k of tax money, each college year is 10-12k). It turns out there aren't enough average joes to give every kid the opportunity to try multiple studies, so we have to share the burden, at least a little bit. The average joe can pay 70%, and the students 30%. Or the average joe pays 90% of the first curriculum, but if you "reset" once (change majors without transfers), then the average joe no longer pays that share and only pays 50%. But you have to accept that education isn't free and there should be some incentive, even if small, to make sure you're picking something you'll commit to and make it work.
- joe_the_user 2y ago
  Even if you dislike markets as a mechanism, education is very tricky because it's very very expensive, and prone to important moral hazards when it's free. Education is not inherently expensive. The student loan mechanisms are what allowed the vast expansion of colleges as capital intensive enterprises. You can find a multitude of discussion about how cheap both public and private education was in, say, the 1960s. And that was with primarily state/institutional regulation. Which is to say the student loans were moral hazard crack to compared to state regulation. For most subjects, one needs an informed teacher, a class room and some books. Somehow this costs vast sums now. Guess why?
  - novariation 2y ago
    I'm using french costs, these are paid 90% by the government ! The underlying issue does not disappear.
    - novariation 2y ago
      More details: You need practicing, so you need experiments/computers/supplies/projects — this is true both in engineering and art school, any time you do anything that's not completely pen and paper. You also need to divert time from your researchers to teaching activities. You need to pay for classrooms, that's real estate, plumbing, electricity, etc. Keeping up with the state of the art in research isn't cheap, and using part of those funds to purely teach and not compete with other countries is an investment that's not neutral.

whimsicalism 2y ago

the problem with healthcare in America is not “the market”

lesuorac 2y ago
Do go on.
- novariation 2y ago
  My guess is they're talking about regional monopolies ? There's generally a misunderstanding from left wing voters — when people say "markets" they understand "crony capitalism and monopolies with regulatory capture" when most other people just mean "fair competition between suppliers". We'll all agree the second option isn't easy to get, but the disagreement often comes from the fact one team thinks it's impossible or even undesirable, and something more radical should be preferred.
- brightball 2y ago
  Your employer offers health insurance. You go to doctors who bill the insurance company for your services. You paying directly for your services is almost entirely removed from the equation. You even deciding on which insurance company you would like to use is removed from the equation as well because it’s more expensive for you to sign up directly than it is for your company to sign up as well. If you wanted to be a part of a private insurance group with diet and exercise requirements for membership, including annual physicals that could potentially get you a lower rate…but you don’t really get that option. The market doesn’t even get to attempt to provide that option because of how separated the producer and consumer of the service are from the people paying for it. The market is completely removed from the equation. The only person who proposed a plan that would have resolved this problem was Dr Ben Carson fwiw. It was by far the best solution to fixing healthcare in the US that I’ve heard in the last 20 years but instead we got ACA.
- whimsicalism 2y ago
  There are a number of related problems. 1. Doctor cartels (this one is sort of self-explanatory) and other provider coordination on pricing 2. Over expansion of insurance (insurance is not meant to cover things that are expected, we have expanded insurance to cover routine expected expenses) and the associated costly administrative structure 3. Lack of price transparency 4. Global free ridership on drug prices makes us think we could get new drugs for much cheaper than we could 5. Lack of neutrality in tax law between cadillac health insurance plans and income 6. Overutilization (partially due to fear of malpractice lawsuits, partially due to overexpansion of insurance) 7. Political failure to address any of these. Obama tried to resolve 5 and Trump tried to resolve 3. Both have essentially failed. Almost all of these are caused by bad policy more so than the market-based outcome. This is not a ranked list, if I had to find primary culprits it would be 2, 3, and 6.
deleted 2y ago
[deleted]
rambojohnson 2y ago
okay. that was insightful.
readyman 2y ago
I don't necessarily disagree. I would say the problem is capitalism, which is not to be confused with "the market." They are distinctly different things.
- whimsicalism 2y ago
  saying the problem is capitalism is basically a non-answer to me. anything that exists today can be called capitalism, nobody has a clear definition of what is constitutive and it is not a useful diagnosis for offering prescriptions on how to make it better
- novariation 2y ago
  I've got a weird relationship with market socialists because I generally think they're much more sensible and convincing than the average "destroy evil and create utopia" socialists, but ultimately it's hard to understand whether their efforts to rebuild society would yield much better outcomes compared to European style welfare capitalism with more taxation and welfare spending. I suppose they're trying to build a grand theory of social market economies / social democracy, which is nice.
mathgradthrow 2y ago
The primary beneficiary of treating productive young people is society itself, and they are also the most efficient to treat. The primary beneficiary of existing socially subsidized care is the elderly. Since this is the optimally bad outcome, it is reasonable to assert that every system of healthcare incentives is misaligned.

analog31 2y ago

In a sense, both student loans and health insurance target the wrong thing: How to preserve established institutions by making sure that they get their money, not how to deliver education (and research) and health care to people. I think in 100 years we'll look back on subsidized private universities, and subsidized private hospitals, as obviously bad ideas. I think the way to solve both is to let the state own both systems. Publicly funded research and education can occur at state universities. The private colleges can do whatever they want with their own money, until they're small enough to drown in a bathtub, or they can go back to primarily serving as seminaries.

georgeplusplus 2y ago

The market was/is responding to the environment that was created by the department of education. It’s quite weird that you blame solely ‘the market’ but totally ignore the role the federal gov has had in this. I read somewhere about 90% of student loan debt is from federally backed loans ? You think getting rid of competition the market provides and making the gov the sole issuer, creditor, and policemen of student loans would create cheaper education? Lol

joe_the_user 2y ago
It’s quite weird that you blame solely ‘the market’ but totally ignore the role the federal gov has had in this. There is no place I say anything like "it's the market, not the fed". The Federal Government initiated it's (pseudo) market "reforms" and so certainly bares considerable blame for the outcome. My main point that whole approach was bad rather than the approach having implementation problems.

novariation 2y ago

Even if you dislike markets as a mechanism, education is very tricky because it's very very expensive, and prone to important moral hazards when it's free. Think your passion is economics or psychology and drop out after 1.5 years ? You've just cost the equivalent of 8 years of tax money from the average joe (ex: France median after tax income is 25k, roughly 2k of tax money, each college year is 10-12k). It turns out there aren't enough average joes to give every kid the opportunity to try multiple studies, so we have to share the burden, at least a little bit. The average joe can pay 70%, and the students 30%. Or the average joe pays 90% of the first curriculum, but if you "reset" once (change majors without transfers), then the average joe no longer pays that share and only pays 50%. But you have to accept that education isn't free and there should be some incentive, even if small, to make sure you're picking something you'll commit to and make it work.

joe_the_user 2y ago
Even if you dislike markets as a mechanism, education is very tricky because it's very very expensive, and prone to important moral hazards when it's free. Education is not inherently expensive. The student loan mechanisms are what allowed the vast expansion of colleges as capital intensive enterprises. You can find a multitude of discussion about how cheap both public and private education was in, say, the 1960s. And that was with primarily state/institutional regulation. Which is to say the student loans were moral hazard crack to compared to state regulation. For most subjects, one needs an informed teacher, a class room and some books. Somehow this costs vast sums now. Guess why?
- novariation 2y ago
  I'm using french costs, these are paid 90% by the government ! The underlying issue does not disappear.
  - novariation 2y ago
    More details: You need practicing, so you need experiments/computers/supplies/projects — this is true both in engineering and art school, any time you do anything that's not completely pen and paper. You also need to divert time from your researchers to teaching activities. You need to pay for classrooms, that's real estate, plumbing, electricity, etc. Keeping up with the state of the art in research isn't cheap, and using part of those funds to purely teach and not compete with other countries is an investment that's not neutral.