Point-Counterpoint: Student Debt

Jane, you Ignorant SLUT!

Sorry about not posting up a Feature yesterday, but I have been having a fabulous debate with Ashvin Pandurangi on The Automatic Earth, and it absorbed any time I had to edit up an article here on DD. What I will do here though is drop on the last 3 of the ripostes in the debate from TAE, which so far is very entertaining 🙂 Read the whole thread on TAE.

(All Ashvin’s comments are in Italics)

Tell that to their spouses/children/beneficiaries who are not only left in the world without them, but have to fork over their potential inheritance to a fascist government or a ruthless debt collector.


Well Ash, I don’t think people should be allowed to inherit anything at all. Inheritance is part of what creates the classes of Haves and Have Nots. In any event, Debt collectors may try to go after assets held by those remaining alive, except the assets aren’t worth anything. Their labor is not worth anything. There is nothing to collect, and there never will be. So the debt is irredeemable. It CANNOT EVER be repaid. You are down a Rabbit Hole here which you just don’t seem to get, or perhaps are just willfully ignoring because it doesn’t fit your narrative of debt slavery.
Anyhow, by no means am I making the case that people are escaping from problems that come from debt repudiation. There will be many. Just not really likely to be the sort of problems you paint a picture of. At least not IMHO.
RE

Well Ash, I don’t think people should be allowed to inherit anything at all.

I can agree with you that, theoretically, it would be nice to have systems of socioeconomic organization without private property, and, therefore, without inheritance of said property. OTOH, I recognize that many people have structured their lives around a completely different system, and it will be extremely painful for them when those sand castles are washed back into the sea. Not to mention the injustice of their property becoming the property of someone else in the 1%, rather than returning to aid any common good.

In any event, Debt collectors may try to go after assets held by those remaining alive, except the assets aren’t worth anything. Their labor is not worth anything. There is nothing to collect, and there never will be. So the debt is irredeemable. It CANNOT EVER be repaid.

Care to explain those blanket statements? I find it very unlikely that productive assets and resources, human labor being one of many, will be worth nothing, to anyone. Or maybe I just forgot how energy is harnessed, food grown, water cleaned, shelters built, etc. If we are talking about “assets” such as money/cash flow/investments/etc., then they will most certainly be worth something until the monetary system completely collapses, never to return.

You are down a Rabbit Hole here which you just don’t seem to get, or perhaps are just willfully ignoring because it doesn’t fit your narrative of debt slavery.

I brought up debt slavery as one possible scenario that people may find themselves in (and many around the world already do). You, however, have constructed a narrative in which there is only one outcome that will arrive with certainty, and it involves a mass die-off within relatively short order. Oh yeah, and, those who have the luck/skill to survive will be free to “start over”, because the cost of using any productive assets they possess, including their own labor, will be too much for anyone to handle.

ashvin wrote:

Care to explain those blanket statements? I find it very unlikely that productive assets and resources, human labor being one of many, will be worth nothing, to anyone. Or maybe I just forgot how energy is harnessed, food grown, water cleaned, shelters built, etc. If we are talking about “assets” such as money/cash flow/investments/etc., then they will most certainly be worth something until the monetary system completely collapses, never to return.

Sure.

On the asset side here, first off more than 50% of the population has no more than 2 months worth of bills in savings, no pension, no investments. If they are living in a McMansion, they are likely underwater, its not an asset.

Of the remaining population the main 2 assets any of them have is their House and their Car. If both are paid off, these probably are not people with student loans.

Even if both are paid off, as gas becomes unavailable, neither the car nor the McMansion are worth anything at all. The suburban ring road model doesn’t work without the automobile, so suburbia essentially ends up a Ghost Town. The car is just worth its scrap metal value.

Insofar as the worth of Human Labor goes, in an overshoot situation all people are liabilities, not assets. It costs more to feed and clothe them than you can get return in value added labor. Like a Car that has no value because the Gas is too expensive to feed it, a Human Being in Overshoot has no value if the food is too expensive to feed it. Dead People hold more value than slaves do, because dead people don’t eat.

Far as this being the only possible outcome, no I do not make that case; I just make the case I think it is the most likely outcome. I also cannot fix an absolute timeline to this. As I have said before, I think we will be going through a period of extreme Fascism here that could last quite some time, 20 years maybe even more though I doubt it. During this period in order to survive you probably have to make yourself useful to the Fascist state in some manner, probably as Soldiers which of course under Conscription is a form of Slavery itself.

Will there be Chain Gangs of Debtors in this scenario? Perhaps, but I don’t think its all the irredeemable debt of the past that matters, many people even non-debtors who did not take out Student Loans will also be so impoverished that their only options will be to serve the State in some sort of low paid job which just provides enough for subsistence living.

The debt system is so oversaturated with debt at all levels here that once Da Fed stops supporting the TBTF, they are not going to be able to replace that money through taxation or slave labor of debtors, its simply too great a debt in Energy terms, not monetary terms. If Da Fed perpetually prints new Debt to keep the TBTF solvent, then the money to roll over all the old debt is not coming from the labor of J6P, its just being conjured up out of thin air on a perpetual basis, further running up the numbers. So under neither paradigm does J6P ever actually pay off this debt, because as I said in Energy terms it cannot be repaid. The stuff is just well and truly gone here, at least the High EROEI stuff.

Its all in how you look at it Ash. I take a fairly long view of things, I’m generally looking 50-100 years down the line here, but I think much of this will become evident inside the next 20 years. I don’t see any way a significant Die Off will be avoided, and by significant I mean on the order of 50% or more of current world population. Under such a situation, I do not see how anything resembling our current monetary system will be perpetuated, so maost of the debt, Sovereign, Corporate and Public will simply be incinerated. The FSofA is never going to pay back its Trillions in unfunded liabilities, McMansion Debtors are not going to repay their mortgages, and Student Borrowers are not going to pay their Student Loans. The system has reached the end of the line, or at least it is very close to it. We will get Political Upheaval, Nation States as they exist now will disintegrate, they will be no more. Property Titles and Deeds issued under these Sovereign States will not be honored, any more than Confederate Dollars were honored after the Civil War.

Is this going to happen tomorrow or the next decade? Probably not, but its the writing on the wall that I read and I think it is the most likely outcome.

RE

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