At $1.2 trillion student debt, we may only be 60 percent along the way, but rest assured that it won’t take but 3 to 5 years before this spectacular bubble bursts… and it will do so on the economic backs of the poor, and the ghostly – ghastly might be more apropos – remnants of a fast disappearing middle class.
Two weeks ago, while doing a final screening of old papers kept for no-apparent good reason, I came across a few notes from a graduate business course which I taught over three decades ago. An underlined hyphenated-word stood in front of me teasing both my memory and reason for its use: PornoEconomics. Then, I quickly recalled that my reason for its use had absolutely nothing to do with the economics of adult industry; and how I explained to my class – mostly graduate engineers with families trying to attain an MBA attending evening classes to improve their chance for career advancement – with my intended meaning appearing in parenthesis in the notes: “worthless economic activity for no other reason than to stimulate and fulfill greed.” It would be more than a decade later that the true father of PornoEconomics, and Federal Reserve Board chairman, Alan Greenspan, would show up (December 1996) with his celebrated cute-ism of Irrational Exuberance… as prelude to the infamous Dot-com bubble burst (1999-2001).
Politicians under our anarchical capitalist system either shrug off their shoulders to the inevitability of economic cycles that citizens must endure, or simply acknowledge a need for change, and often the establishment of much needed controls. However, at the end of the day, both Republican and Democratic politicians embrace the same laissez-faire attitude and leave the doors wide open in our economy for anarchy to come in; after all, if we accept Darwinism, and the idea of a predatory continuum in the animal species, why not let the course of natural events reign over economics as well? Contrary to all irrational promulgations by self-proclaimed spiritual prophets, the meek will not inherit the earth… it will continue to stay in the hands of the ruling class, the elite in possession of all wealth.
Whether Alan Greenspan at the helm, or his two successors, Ben Bernanke (2006-2014), and Janet Yellen (currently), whatever was/is their intent when establishing fiscal policy, the results have been, and continue to be, the same: an accelerated redistribution of wealth from the poor and middle-class to the wealthy elite; the last bubble to burst in real estate (2008) shifting the wealth distribution in this nation to obscene extremes. Now we are putting the final touches to the next entry in this bubbly parade: a $2 trillion float (or rather, hearse) representing student loans unlikely to be repaid in our existing Barbell Economy. And the moment of reckoning is just around the corner…
We in the United States are superbly entrepreneurial when it comes to Ponzi schemes or pseudo-economics hocus-pocus in matters of greed. Needless-to-say, politicians in America thrive at the prospect of simplistic answers solving society’s problems with little or no effort required from them; and student loans, guaranteed by an irresponsible government, have been a panacea for politicians hiding our nation’s true level of unemployment, our flight of jobs overseas, and a leadership throwing us to unplanned-globalization to be devoured by waiting predatory international capitalist wolves.
“Go and get educated, you weakly fools, learn to compete; it’s a tough world out there.” And with that push by the Knightly Elite, Americans by the millions have entered a path offering them skills or greater opportunity, instead of taking the alternate route to an almost guaranteed permanent welfare. In their obsequious tradition of creating self-serving opportunities and promoting waste, legislators have allowed the creation of a field of uncontrolled helter-skelter, unqualified schools (new or existing) offering shelter to mostly unemployed or unemployable men and women wearing student uniforms. Yet, as this throw-away part of society gets “educated” there are none-to-few jobs waiting for them. These “money advances,” appear as the only way to subsist.
But if these last three decades have proven to be the golden age for bureaucracy in our traditional colleges and universities, creating inefficiencies parallel to those rampant in military procurement, we have seen the advent of something even worse: proliferation of presumed “learning centers” (trade schools, ‘colleges-universities’…) which for the most part (if not all!) have a selfish mission, regardless of the PR-statement; and that is, questionable, unmerited profits – for profit-making institutions; or undeserved benefits and compensation to “principals” of non-profits. In either case, the resulting ongoing scam, and the bubble thus created, will bury us deeper in debt.
And no, there appears to be no light at the end of this corrupt-politicians’ tunnel.
What about all these certificates of completion, bachelor degrees, masters and PhDs by the bushel… doesn’t that make us a more educated, productive society? If such were only true! It would be research-worthy and interesting to qualitatively measure the societal capabilities of the average American with 14 years of education and the average European/Asian counterpart with just 10. I have my own idea how the comparison might go, and it’s not flattering to our investment skills in education.
For now… we’ll just wait until this bubble bursts.