THE EDUCATION BUBBLE

My latest issue of the AARP mag has a piece in it about people whose Social Security retirement checks are being threatened with attachment to pay off delinquent student loans. The federal courts are trying to figure out whether this is legal.

Got that? These are retired folks whose student loans have been pending for upwards of fifteen years. The article indicates that they are not lifelong deadbeats. They just never got a chance to make all that education pay off well enough to pay for itself.

They are, undoubtedly, the tip of the iceberg. I know a couple of people who are on the verge of retirement and still paying student loans. The situation is apparently not unique. I myself am a member of the last generation of lawyers to enter the profession with no student loans hanging over me. I graduated in 1977.

What’s a bubble? you may well ask. The cutest and most memorable one is probably the Tulip Craze in 17th-century Holland. For reasons best known to gardening enthusiasts, everybody suddenly went wild over tulips. Preferably tulips with unusual colors or fancy stripes and dots and streaks. Tulips, it seems, are unpredictable. You don’t know what a tulip is going to look like merely from knowing its ancestral stock. It’s a gamble. So people started buying into tulips as an investment, much as some people buy into art today. They were betting on what kind of tulips they could produce, but mostly they were betting on how much other people would be willing to pay for them. This went on for several years. And then, suddenly, the Craze faded. Nobody was interested in tulips any more. Which left a lot of people with a lot of tulips on their hands, for which they had paid (and often, borrowed) a lot of money, and could now recoup absolutely nothing.

Today, a number of economic mavens worry about a real estate bubble. People are bidding up the price of houses and condos. When you buy a home, you expect it to be worth three, or five, or ten, or even one hundred times what you paid for it, one of these days. So far that’s been a good bet. Our own humble condo is now worth at least five times what we paid for it 25 years ago. And, like most homeowners these days, we have refinanced it to the hilt. So, like the economics mavens, we occasionally worry that the bottom might drop out of the housing market, leaving us with a mortgage worth more than the property behind it.

Well, friends, that has already happened to James Lockhart and Dee Ella Lee, the parties to the court cases mentioned earlier, and to lots of other people too. The educations they bought, and borrowed money to pay for, are no longer worth the price. Possibly they never were.

Part of the problem is that, unlike a winning lottery ticket, the value of an education depends partly on the demographics of the purchaser. Education pays off less for women than for men, less for racial minorities than for whites, less when purchased by middle-aged workers than by twenty-somethings.

Yet another determinant of how well an education pays off is at least as speculative as the Tulip Craze—how much a student seeking a particular credential will be “worth” when it is finally obtained. The longer it takes to get the credential, the harder it is to guess what will happen in the meantime to the job market it gets you into. Engineering credentials are always zipping up and down like a roller coaster. People who go into engineering programs this year because engineers are “hot” right now may graduate just in time for their degrees to be a dime a dozen. Medical degrees are worth a lot less now than they were ten years ago. You get the picture.

In short, the value of some kinds of education is already less than what the graduates paid (and borrowed) for it, and this seems to be an accelerating trend.

Analysts of education trends among racial minorities and “lower socioeconomic groups” (poor people) decry the unwillingness of youth in those groups to take out student loans and get all the education they can mortgage. The result of that unwillingness, often, is a lifetime spent in dead-end jobs with no benefits. But the alternative may often be a lifetime in the same dead-end jobs with the vultures circling to pounce on the one dependable asset such people will ever have—a Social Security check. Scary, folks?

A NEW CONTRACT FOR AMERICA

For the first time in literally years, we are hearing the words "moderate" and "Republican" in the same sentence, not merely once, but repeatedly. This has been going on for nearly a month now, and shows no sign of stopping. Republicans who had been pounding their chests and proclaiming their conservatism on every possible public occasion are now, suddenly, backing off from supporting Bush's proposed budget, not merely for rhetorical purposes, but to the point where he cannot get it passed.

A few postings back, I mused about the possibility of a New Bull Moose Party, led by John McCain. Now it's starting to look as if the moderates could actually take back the Republican Party, leaving the Hard Right to form their splinter party (Christian Republicans?)

And, quite a while earlier, I also mentioned how badly the Democratic Party needs some Southern governors in the presidential pipeline. Well, they have one now: Mark Warner, the former governor of Virginia, who just proved his potency by getting his successor elected governor.

At this point, the Democrats need to stop battling about who the 2008 candidate is going to be, and start working out a serious platform for him. Pundits are suggesting a Democratic version of Newt Gingrich's 1994 Contract for America. I think that's going a little far, but it does have possibilities. Let me make some suggestions:

1. Health care. Handled properly, this could be the magic bullet. The current system of employer-based health insurance is not only bad for workers, it is horrendously bad for business. It puts American businesses at a huge disadvantage in dealing with businesses in nations where health care is the responsibility of government. It has been the major or only cause of most strikes and labor disputes over the past ten years. It adds $1500 to the cost of every American-made automobile. It is a historical fluke, the result of a deal with the devil made by Harry Truman and John L. Lewis. WE CAN DO BETTER.

2. Science. Another area in which American business is getting trounced: most of our science and engineering graduates come from outside the US. Most of our research and development is happening in military areas, funded by DoD money. Our research in genetics is being forced outside the country by government fiat against funding stem-cell research. WE HAVE TO DO BETTER. WE CAN'T AFFORD NOT TO.

3. Tax fairness. Teddy Roosevelt knew the value of requiring the people and corporations who have been enriched by the American system to repay the favor. Let's get back to that model.

4. "Moral values." Fiscal responsibility is perhaps the most important positive moral requirement for governments. We cannot keep piling up deficits for our grandchildren to pay. We now know, (as we did not before the Clinton administration) that a US government can not only eliminate deficits, but accrue surpluses. We've done it before, within living memory. Let's do it again.

5. And the other "moral" issues? This is perhaps a more daring proposal, and not quite so much of a slam dunk. But how about the Democrats becoming the party of Minding Your Own Business? Back in the '90s, I was suggesting that the next Democratic platform include a promise that no American will ever again be required to testify under oath about sex between consenting adults. I still think that's a worthy goal, and might be a very popular one.

Closely related and even riskier, but worthy of serious consideration, would be the end of the War on Drugs. It has cost huge amounts of money. It has not reduced drug use appreciably. All it has done is created new, cheaper, and more dangerous drugs of choice, most notably methamphetamine. (The house my husband grew up in, whose most recent owners turned it into a meth lab, has been all but destroyed by the resulting fire and explosion.) And all the War on Meth has brought us is more hassle in trying to treat our own cold symptoms. (Have you tried to buy Sudafed lately?) If this trend goes on, the next recreational drug will probably be made with aspirin and milk of magnesia, and over-the-counter self-medicating will become impossible.

So let's decriminalize recreational drugs, regulate them at least as strictly as we regulate alcohol and tobacco, and put some of the savings into addiction treatment programs. This will also free our prisons to accommodate the really dangerous criminals, and to rehabilitate those who will sooner or later end up back in our communities.

Oh yes, and what about abortion? I still like Clinton's goal of making it "safe, legal, and rare." And I have been uncomfortable for a while about both the Democratic Party and the women's movement making the right to abortion the keystone of their ideology. I believe there is a lot more to both liberalism and feminism than the right to choose abortion. I also believe that most abortions result from either:
a. ignorance--we are doing a lousy job of sex education
b. poverty--anything that makes single motherhood more difficult makes abortion more likely, or
c. sorry, guys, male irresponsibility. We need to educate young men to be willing to ask themselves, when contemplating unprotected sex, "Would I want to be paying child support to this woman for the next 18 years?" (BTW, some young men apparently ask themselves this question after a pregnancy has occurred, and their answer is sometimes homicide, which is now the leading cause of death among pregnant women in the US.)
So why can't the Democratic Party espouse sex education programs and job training and child care for young women and men?

6. Education for non-college bound youth. Which is closely related to the issues involved in abortion, and also to crime, drug use, and poverty. And, BTW, the success (such as it is) of the military in recruiting young people for whom we have not set out any other path toward useful adulthood. We do not expect a new high school graduate to have any useful skills or knowledge, but we offer very few affordable and accessible ways to attain them.

In the first place, we need to reshape high school education so that it teaches more (and more positive) intellectual and vocational skills, and fewer negative social skills (like bullying, binge drinking, and casual sex.) We need to create a generation of high school graduates who can support themselves and take the next steps toward adulthood with the help of the communities they live in. Then, we need to make post-high school education available to every high school graduate.

Stay tuned.

INKLINGS OF HOPE

Tilly Smith, 10, put her geography lessons to good use last year. By quickly recognizing the warning signs of a tsunami [last December], the British schoolgirl saved about 100 people from almost certain death at a Thai resort. On November 4, she got an award for it. I'd like to see an award named for her, and given regularly to somebody who saves lives by remembering and using something learned in elementary or secondary school. It would be such a refreshing change from the perpetual "English was my worst subject," "I hated math," and, worst of all, "I don't remember anything I learned in high school."
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This has been a wonderful autumn for leaf colors here in Chicago. The weather mavens had predicted the usual around here--overnight, the leaves would all turn brown, and the next night, they would all fall off. Not this year. We have had wild displays of red and orange and yellow and brown and green-gold for the last two weeks, despite several episodes of wind and rain. A lot of leaves have fallen, but there is still a lot of beauty out there.

THE INVISIBLE POLL TAX

Does anybody today remember the poll tax? It was an iniquitous device of the Jim Crow South, requiring people to pay a tax for the privilege of voting. The amount of money involved was usually enough to put the vote beyond the purchasing power of most poor people and almost all African-Americans in the South. The Twenty-fourth Amendment, ratified in 1964, outlawed the use of this tax (or any other tax) as a pre-condition in voting in Federal elections. The 1966 Supreme Court case Harper v. Virginia Board of Elections held that the poll tax as applied to state elections violated the equal protection clause of United States Constitution.

But careful examination of voter demographics in the US and in other Western industrial countries tells us that poor people are a good deal less likely to vote in the US than elsewhere. Is there some obvious factor that could account for that difference, now that the official poll tax has been abolished? Well, yes, I think there is. In every other industrial country in the world (and, so far as I know, almost all of the other countries that have elections at all) elections are held on a non-working day, usually a Sunday. (Iraq's latest election was held on a Saturday.) In this country, elections are ALWAYS on a Tuesday. Which means that people in the lowest tier of the job market, who typically get no paid time off for any reason, have to take unpaid time off from work to do it. Losing money for the privilege of voting is--let's be blunt about it--a poll tax. The mere fact that government doesn't collect the money is beside the point. The effect is the same, and is, I suspect, intended to be the same. This has the makings of a really interesting lawsuit.

TRUTH IN CAPITALISM?

We keep hearing that the free market is the best way to organize production and consumption. But do its proprietors really believe that? If they did, wouldn't they be willing to give the people they deal with complete information about the deal? Like, wouldn't they tell a job applicant what they actually pay the other workers? Wouldn't your television tell you exactly how many minutes of commercials to expect in the next break, so you'll know whether you have time to nuke your dinner? Wouldn't your local merchant tell you the actual markup on his product, so you could decide whether it's worth it? The economists consider these deficiencies in information an "imperfection" in the market, but obviously it's just perfect for the people who profit by concealing the info.

For that matter, employers certainly don't want a really free labor market--a market in which people are free to refuse to work under inhumane conditions, even when those are the only jobs available. One of the reasons married women used to have a hard time getting decent jobs (back in the '50s and earlier) was that the employer presumed that a woman who was dissatisfied with her job would have no qualms about quitting, since her husband could support her. ( Now, of course, it takes at least two incomes to support a middle-class family, so that is no longer an issue.)

The only improvement in informative capitalism is that those who make products which can cause harm to the user or other human beings or (sometimes) the environment are now under legal pressure to warn the consumer, especially in the area of health-care. They don't always do it, but they are often sued (sometimes successfully) for not doing it.

I'm not crazy about capitalism, but I could live with a system of rational, completely above-board capitalism (one which recognized, for instance, that products which shorten human life are ultimately bad for business.) I don't expect to see one anytime soon, however.

ODD LOTS # 12

Walt Whitman. George Gershwin. Danny Kaye. Larry King. Ellery Queen. Beverly Sills. Malcolm Forbes. Mae West. Norman Mailer. Louis Gossett Jr.