The Screwed Generation

[Zelig]

We need to make moves to turn finance, the internet, housing and education into public utilities. We simply cannot allow these things to be controlled by organizations which see them all as revenue streams.

I don't think housing. I think the cost to actually build a house is about an order of magnitude higher than it needs to be. I'd rather see aggressive government incentives to torpedo the value of private housing via automated/modular construction.

 

[hobbsyoyo]

WSJ reports 5 million millennials are in default on their student loans. The aggregate debt is 1.7 trillion dollars. I get this was an incremental thing; people didn't rack up this much debt overnight.

But we have to start asking ourselves what utility we get as a society by forcing young people to finance their own education at costs that approach or exceed housing costs. This is a massive dead weight on our economy that is going to blow up and hurt everyone except the bankers, who will get their bailouts.

 

[Lexicus]

But we have to start asking ourselves what utility we get as a society by forcing young people to finance their own education at costs that approach or exceed housing costs. This is a massive dead weight on our economy that is going to blow up and hurt everyone except the bankers, who will get their bailouts.

The last bit here is the utility. Shifting the costs of education onto the students and their families is what allows the banks to exact their cut. That's the entire point of it.

 

[Broken_Erika]

WSJ reports 5 million millennials are in default on their student loans. The aggregate debt is 1.7 trillion dollars. I get this was an incremental thing; people didn't rack up this much debt overnight.

But we have to start asking ourselves what utility we get as a society by forcing young people to finance their own education at costs that approach or exceed housing costs. This is a massive dead weight on our economy that is going to blow up and hurt everyone except the bankers, who will get their bailouts.

But in the short term, the share value will make the shareholders lots of money, and that's all that matters.

 

[hobbsyoyo]

They also report that from the 70's to mid 90's, the average level of education required at corporations rose by 1.5 years despite the job descriptions not changing. That is credential inflation, backed up by the fact that the average educational attainment has risen 1.7 years in that same time span. In other words people are being forced to obtain more education than they actually need to obtain employment.

This really is a social issue. We have spent decades raising kids and forcing them (because how many 18 year olds really make these decisions independently) to go to college. Then we decided to stop paying for this through taxes and left the bill with the kids. This is the exact opposite of what families and society should do - they are supposed to leave something behind for the next generation, not saddle with them debt that cannot be written off and that they wouldn't even need if not for the unrelenting social pressure.

 

[hobbsyoyo]

And at the same time as we are saddling them with debt, the jobs are being concentrated in HCOL areas which are being manipulated by investors to become HCOL in the first place.

NYC and LA will never be cheap but there is no rational reason for these areas to be as expensive as they are if we stopped taking a "I got mine, **** you" approach to housing. The primary function of housing should not be an investment vehicle.

 

[Lexicus]

They also report that from the 70's to mid 90's, the average level of education required at corporations rose by 1.5 years despite the job descriptions not changing. That is credential inflation, backed up by the fact that the average educational attainment has risen 1.7 years in that same time span. In other words people are being forced to obtain more education than they actually need to obtain employment.

Well, the Big Lie here is that a college degree ever really served as anything but a status symbol. I don't mean to say a college education is intrinsically worthless, of course, because I don't think that's true, but the question of intrinsic worth, of skill, or whatever you want to call it, is not super-relevant to how the job market works and never really has been.

My view is that we ought to recognize this implicitly by getting rid of the idea that the purpose of education is to prepare people for the job market. Or at least, by embracing a broader view where job market preparation is only part of the story.

 

[Zelig]

They also report that from the 70's to mid 90's, the average level of education required at corporations rose by 1.5 years despite the job descriptions not changing. That is credential inflation, backed up by the fact that the average educational attainment has risen 1.7 years in that same time span. In other words people are being forced to obtain more education than they actually need to obtain employment.

I don't disagree that credential inflation is happening, but it's not so easy to show.

If you posit a world where there *isn't* any credential inflation, but every position requires steadily more production, and a higher level of education to reach said production, it looks very similar to what you described.

 

[Lexicus]

I don't disagree that credential inflation is happening, but it's not so easy to show.

If you posit a world where there *isn't* any credential inflation, but every position requires steadily more production, and a higher level of education to reach said production, it looks very similar to what you described.

I don't think they're mutually exclusive explanations. The problem is that the productivity demanded of workers has steadily increased while the pay they demand in return has not. This is a problem caused purely by politics, or more specifically by the balance of power between employers and employees. All attempts to solve the problem by focusing on the "skills" or "education" of the workforce (looking at you, Democrats) are doomed to failure.

 

[hobbsyoyo]

I don't think they're mutually exclusive explanations. The problem is that the productivity demanded of workers has steadily increased while the pay they demand in return has not. This is a problem caused purely by politics, or more specifically by the balance of power between employers and employees. All attempts to solve the problem by focusing on the "skills" or "education" of the workforce (looking at you, Democrats) are doomed to failure.

This and the fact that we are making kids take out $50k+ loans at the beginning of their adult life just to participate in the workforce.

Everyone agrees college is a good thing and as many people should go to it as possible. Where we got off the rails is when we decided to dramatically cut public funding of college and also allowed shifty private colleges to thrive.

If we were funding college through taxes (and if wages kept up), no one would be complaining about credential inflation.

 

[Broken_Erika]

Soon kids will be taking out 50k+ loans just to get a minimum-wage part-time contract job....

 

[hobbsyoyo]

Soon kids will be taking out 50k+ loans just to get a minimum-wage part-time contract job....

The joke being that this is already the case.

 

[Broken_Erika]

We can't let non-rich people have money, every penny that a non-rich person has is one less penny in the off-shore tax-haven bank account of a rich person. And when that happens, the Commie-Nazi-Terrorists Win!

 

[Lexicus]

If we were funding college through taxes (and if wages kept up), no one would be complaining about credential inflation.

This. We don't even need free college, just make it the way it was when my dad went to college and you could pay for it with a summer job in the cannery.

 

[TheMeInTeam]

College is way overpriced for the value it adds, the loan bubble is real. When you factor opportunity cost it's even worse. There is enormous disparity between what is learned vs used that needs to go away.

 

[hobbsyoyo]

There are two conflicting objectives at work here. On then one hand, we want everyone to go to college so we dramatically lowered the barrier to entry to get there. Admission standards effectively dissappeared (you may not get your covered Ivy League spot but every state school will take you because they have to) but then balked at the cost of this choice. The other hand being while we want people to be educated, we don't want to pay for it through taxes.

Gradually we began underfunding our college system so that it couldn't keep up with demand and could only be solved by shifting the cost down the economic ladder. At the same time we set up incentive structures that made it very lucrative for colleges to continually inflate their costs.

If a kid get a state scholarship that pays X and X happens to be a full ride, then colleges turn around the next year and charge X+Y the next year. They know you will still get X from the state and can take out a non-cancellable loan for Y. This repeats year after year until we finally decided we couldn't even pay X through taxes so now students are stuck with the whole bill.

Plus, we stopped caring about the actually effectiveness of colleges. We allowed a plethora of crappy private schools sprout up which not only churned out clueless graduates but also drove prices up. When the private schools begin charging X+Y+Z simply because they can, the state schools follow their lead. Keeping up with the Joneses doesn't apply solely to individuals.

Edit: Source-
I was an elected college board member for 2 years and watched this play out in real time.

Plus the financial crisis absolutely cratered public college budgets and drove demand for them through the roof.

 

[Hrothbern]

We need to make moves to turn finance, the internet, housing and education into public utilities. We simply cannot allow these things to be controlled by organizations which see them all as revenue streams.

I think that the huge amount of invests in Energy, the renewables and the storage, should be state owned as well.
And not to forget National Health Care.

 

[metalhead]

Soon kids will be taking out 50k+ loans just to get a minimum-wage part-time contract job....

The joke being that this is already the case.

Nah B, the joke is that you take out $50k+ in loans to get an unpaid internship for a year that you hope will one day turn into a minimum-wage part-time contract job.

 

[hobbsyoyo]

Nah B, the joke is that you take out $50k+ in loans to get an unpaid internship for a year that you hope will one day turn into a minimum-wage part-time contract job.

Yup! Labor protections are next to non-existent in the states. Obama did crack down on unpaid internships but not nearly hard enough - real change can only come through legislation and that wasn't a possibility since 2010.

 

[Hrothbern]

My big worry is climate change. Clearly destroying the political power of capitalists is a precondition to addressing climate change in any serious way but we're running out of time. We may have already run out.

The struggle there is imo: "WHO is going to own the new energy sources".

For people not practiced in financial math.

The future cost of energy is NOT anymore based on running cost, the fossil you buy,
but for more than 90% based on capital cost.

IF a government gets loans at less than 3% interest, and private companies will demand a minimum internal rate of return on these invests of 8%....

The cost of energy from private companies is more than twice the cost of state owned energy.

I think it is essential to focus the battle NOW on the ownership issue.