Friday, September 9, 2022

Perfection is the Enemy of the Adequate

Expecting the world to be perfect is not only a recipe for depression, it is a form of it.

In my previous posting, I groused a bit about student loan debt forgiveness. It is not that I am against it, only that it is an uneven application of relief and bound to cause more trouble in the future.  Some folks who have good-paying jobs or came from wealth no doubt said, "thank you for the free ten grand, I think I'll buy a new big-screen tee-vee!"

But such is the nature of government - in managing 330 million people, it cannot be precise and exact with all of them.  We have a tax system and it is unfair to some and overly fair to others.  What's more, a certain percentage cheat on their taxes and we just have to accept it, up to a point, just as retailers accept a certain level of "shrinkage" (losses to damage and theft) as part and parcel of doing business.  The world is not an exact place.

As others have noted, many "businesses" got "PPP" loans which were suppose to protect paychecks of employees, not the employers, and those loans - larger than $10,000 each - were eventually "forgiven" which dumped hundreds of thousands of dollars (sometimes millions) into the laps of business owners and sometimes even politicians (wtf?) often the same politicians complaining about student loan forgiveness.

Am I pissed?  You bet.  Because you see, I closed my "business" in 2018, just a year or so shy of the pandemic, and I could have tapped that sweet PPP loan money myself!  I kid,but who am I kidding?  If I was still in business, I would have filled out the government forms, and if I qualified, would have applied for the program.  Provided I wasn't breaking any laws, why not? 

As it is, I get a $360 a year subsidy on my WiFi hotspot thanks to the Affordable Connectivity Program.  I get a whopping ten grand (at least) per year in Obamacare subsidies.   And in two years, I will qualify for medicare (which could potentially cover millions in health care bills) and of course collect at least 20-30 grand a year (if not more) in "my" Social Security money.  Heck, I could get the latter right now, if I wanted to.

After 9/11 my business was kind of flat.  I was wondering what to do when I opened my (quite large) mailbox and found a huge package of materials from a government agency.  There were seven Patent disclosures and instructions to prepare applications and charge "my normal fees" as this was a "no bid" job.   It seemed that after 9/11, government agencies were told to spend their budgets in order to stimulate the economy.  You hand out a few thousand (or a few million) to a government contractor, the money gets into circulation and the economy chugs along.

What is the economy, exactly, anyway?  For years, many economists posited that all economic activity began on the farm and anything not farm-related was basically parasitic activity.  I'm sure some farmers still agree!  But the reality is, we as humans have to keep busy doing something, whether it is farming or designing smart phones or being Internet "influencers" - and the economy pays each person, roughly, based on their "worth" - although I wouldn't value an "influencer" more than two cents, myself.

Of course, this means the economy is inherently unfair.  People who work the hardest seem to reap the least, and those who are in the right place at the right time, are rained with money.  The government, being part and parcel of the economy (but not the economy) suffers from the same problem. It is not 100% efficient or fair.  Decisions made are subject to bias and influence.  It chugs along, clanking and wheezing, like some defective robot - a defective robot that does work, after a fashion.

The alternatives sound appealing - a "strong man" or committee to tell us all what's right and wrong and decide the best course of action.  But history has shown - recent history - that such "strong men" usually end up lining their own pockets and that of their supporters, in order to consolidate power and stay in power.  The excesses of capitalism and the failures of democracy pale in comparison to the track record of communism and dictatorship.

But to listen to some folks (bots and trolls from dictatorship countries, of course) the USA is a horrible place and makes North Korea look like a socialist paradise in comparison.   But of course, such comments and ideas come from outside our country - albeit a few "useful idiots" sign onto such nonsense.  These "useful idiots" are depressed people, railing against the injustices of the world and convinced their personal problems can only be solved through revolution.

It is a little known fact, but Karl Marx wrote his manifesto because he was stuck with intractable credit card debt.  Seems he ran up a bill with MasterCharge buying trinkets and bling for the misses, and had no way of paying it off - at 22% interest.  Poor Karl!  Look what MasterCharge wrought! (P.S. - the money he made from his manifesto wasn't enough to pay down the credit card balance, either!).

People talk about "moral hazard" of student loan forgiveness, and to some extent, this is an issue.  If you make it seem like loans are just for funsies, people will be bitterly disappointed when, down the road, they find out that the car loan and credit card debt are not similarly forgiven.  Thanks to bankruptcy reform, it is harder than ever to weasel out of debts.

And maybe bankruptcy-reform-reform should be considered.  Let people skip out on debts and see what happens.  What happens is banks charge higher interest and stop loaning money to sketchy people.  This usually means that you end up not getting the loan, particularly if you are a minority.  That is the problem - we created loan guarantees and made even non-student-loan-debt survive bankruptcy and what happens?  Banks loan out tons of money and people can't pay it back.  Now we have to "fix" the fix we made to stimulate the economy.

Some argue that maybe it would be best if the government stayed out of all these businesses - stop guaranteeing home loans, for example, or stop making home loan interest tax deductible.  Such measures never made homes "more affordable" but instead just jacked their prices through to the stratosphere.

But pining for such a "perfect" system (as depressed libertarians often do) is pointless.  We are so wound up in the present system that dramatic changes end up upsetting everyone's apple cart.  Besides, you don't want your loan guarantees or tax deductions curtailed, do you?

The problem with student loan forgiveness is that it doesn't solve the underlying problem.  Many students are still stuck with staggering debts.  But the real problem is that colleges have raised tuition at several times the rate of inflation, and because grant and loan money is so freely available (funny money) the universities raise prices accordingly and the deans (and there so many of them, even in a small college) award themselves half-million-dollar salaries and call it a day.  Meanwhile, professors never get tenure and half the classes are taught by grad students.  It is like GM in 1979 all over again.

Of course, economics can only be distorted by government actions (or the madness of crowds, see. e.g., Bitcoin et al.) for so long, before something breaks.  In the case of colleges, it could be they price themselves out of business - and indeed many have recently.  Like a '79 Caprice, the quality of the end product is lacking and the cost is too high.  People will seek out alternatives, and already many companies are dropping "college degree" as a job requirement, even for highly technical jobs.

But however the situation resolves itself, personal choices still outweigh societal ones.  The guy who took out $50,000 in student loans is still pretty much screwed.  The guy who took out only $10,000 is now debt-free.  And going forward, taking on more debt with the idea it will be "forgiven" in the future is probably a really bad idea.

It isn't a perfect world we live in.  But it ain't a horrible one,either.