A thought on student debt

He’s my “Thoughtpinion” of the day: It’s criminally irresponsible to be pushing massive, undefaultable loans to 17 and 18 year olds. Due to underdeveloped decision-making and judgment brain centers, we don’t trust them to drink, we barely trust some of them to vote, and we (as a society) more or less don’t trust them to be having sex — let alone to start families. Why? Because these are big decisions with potentially huge and permanent consequences.

But let’s have them sign giant loans they might not be able to repay so they can go to a school they can’t afford to attend because it was well marketed to them? That’s a decision we trust them to weigh?

And then when they get there, all the vulture scammy credit card deals — often backed by the school — help these teens get hooked into unrepayable consumer debt cycles for life.

Later they will be told it was their fault for being so irresponsible and for making bad choices. At age 18.

A higher minimum wage would mean higher demand

Since I worked closely on it during the editing process (and because it’s a great piece) I wanted to present some key highlights from a new article on the U.S. minimum wage in The Globalist by George R. Tyler, author of “What Went Wrong: How The 1% Hijacked the American Middle Class and What Other Countries Got Right” and a former deputy assistant U.S. treasury secretary under Bill Clinton:

In both the United States and EU, insufficient aggregate demand has replaced the business cycle as the bugaboo of economists, underemployment its hallmark. And the only place to find inflation is in history books and full employment awaits the next bubble. “We have become an economy whose normal state is one of mild depression,” is how Paul Krugman puts it.

The traditional macro tools seem unhelpful: monetary policy is all-in and fiscal policy remains hampered by politics and excessive public debt. Others solutions such as inflation, negative interest rates or public investment should be pursued, but are not sufficient remedies.
[…]
The most promising option is to raise real wages. That proposition won’t puzzle European scholars familiar with the Australian and northern Europe wage determination mechanisms. For decades, these countries have effectively and providentially linked real wages there to productivity growth.
[…]
The relatively high marginal spending propensities of lower income Americans suggest the demand impact would be maximized by raising the minimum wage.

Germany will soon be imposing a nationwide minimum wage of €8.50 an hour ($10.50 or so), which will spur domestic demand. The latter would be a step in the right direction of moderating its hot-button current account surplus.

In Australia, the minimum wage exceeds U.S. $11 adjusted for purchasing power. Yet, its growth in GDP has exceeded the United States for years and Australia has an unemployment rate of 5.8%, below that of the United States. Labor participation is also higher than in the United States. Clearly, a high minimum wage has not destroyed jobs or crippled growth.

The United States should similarly support demand by raising its nationwide minimum wage, now set at $7.25 per hour, which is well below rates abroad. Federal Reserve Bank of Chicago economists have concluded that a $1 increase in minimum wages would raise incomes in affected households by $250 per quarter and spending even more the following year.

Raising the minimum wage floor will ratchet up wages for as many as 30 million other employees. Moreover, research by economists such as Arindrajit Dube is concluding that raising minimum wages can even have a tiny positive impact on employment, with employer costs ameliorated by reduced labor force turnover.

Importantly, both Germany and the U.S. should adopt the Australian and French policy of indexing minimum wages to productivity growth as well as inflation.

That step would also see the bizarre American taxpayer subsidy to low-wage employers like McDonalds or Walmart wither away. A Democratic Congressional study found that last year public healthcare subsidies alone averaged $3,015 for each Walmart employee in the typical state of Wisconsin. Other subsides raise the total to as much as $5,800 per employee.
[…]
Raising labor costs will slow job creation, but an extensive analysis by economists at the International Labor Organization recently concluded that the impact on aggregate demand in the European Union (EU) of a broad one percentage point real wage increase was nonetheless sufficient to raise employment on balance.

Above all, the weight of decades of evidence in Australia and northern Europe document that linking wages to productivity growth in this fashion will not jeopardize U.S. competitiveness or engender wage drift.

The piece, which I encourage you to read in full, is both an argument for a higher minimum wage in the United States and a rebuttal of arguments against the idea of a minimum wage.

Communism, political Islam, and resistance

Yesterday in a post about the Uighurs wrongfully detained in Guantanamo Bay for over a decade, I made an allusion to U.S. Cold War policies toward anti-colonial movements in developing nations, which I want to explore further today:

And the United States in particular needs to stop lumping together every rural Muslim male with a gun as an “Islamic terrorist.” It’s not a helpful approach to the conflicts from southeast Europe to northwest China and everywhere south of that (including much of Africa now). It’s just as bad as our refusal to make nuanced distinctions among different Communist-affiliated nationalist independence movements in Africa and Asia during the Cold War.
[…]
We’ve heard this before, after World War II, when the United States decided to fight pro-American independence groups like the Viet Minh because of their Communist alignment, instead of embracing fellow anti-colonialists.

 
In hindsight, many American intellectuals can see that there were alliances to be made, which we rejected to our detriment. But even today, a lot of people — particularly on the conservative end of foreign policy — are still refusing to make the distinctions.

We saw this come up a few weeks ago in discussions over the legacy of Nelson Mandela. The Cold War mentality produced a lot of tangled, unlikely, and unfortunate alliances all around, for both the Americans and the Soviets. Nelson Mandela, while not a communist himself, was willing to work with communists who shared his core principles of anti-colonialism, anti-imperialism, and often (but not always) a unitary nationalism.

The United States ought to have joined in that approach, rather than siding with the crazed white supremacist regime that Mandela was resisting. But we couldn’t see past the communist involvement in the movement.

Why communism?

The reality of the situation in much of the developing world after World War II was that the communists were often the best organized members of the wider nationalist independence movements in those nations. And their affiliation with the independence movements — while sort of contrary to original Marxian views that all borders, boundaries, and national divisions were lies intended to divide the global working classes and turn them against each other — was not a huge surprise, given the influences of Lenin on 20th century communism around the world.

Lenin, the founding father of the Soviet Union, certainly had a range of terrible policies as a leader. But before he became a dictator, he was a key contributor to communist theory.

Perhaps his biggest contribution was toward explaining the merger of colonial economics and political imperialism. When other thinkers were still purely obsessed with overthrowing industrial governments in Europe, Lenin was actually raising pointed criticisms of colonialism and explaining how the extractive relationship was harming poor and working class people both in the colonized and colonizer nations.

(The low-cost or enslaved labor of colonized nations, Lenin felt, had made possible the manufacture of so many cheap goodies back home in the colonial powers that The People in those countries were content enough not to rise up. He further argued that colonialism was just one tool of a global financial system geared toward big business capitalism and that it provided the cheap, raw resources necessary to fuel the wealth accumulation of the industrialists’ growing mega-companies. Lenin wanted to cut the legs out from under the big capitalists and spur their European workers to rise up, and neither development was helping.)

So the Soviet Union, despite what was essentially its own colonization of the outer periphery of the former Russian Empire, ended up expending a lot of energy and resources in aiding independence movements in developing regions. The deal was that you would get help in exchange for becoming a communist and pledging to support the Soviet Union.

And so it was that many activists in the developing world joined communist movements out of a sense that Lenin’s theories and Soviet assistance offered the best route to political and economic independence for their home countries.

More broadly, they also saw communism as a way toward a more egalitarian and inclusive society than the divide-and-conquer political strategies of the occupying powers and the economic inequality they were fostering as they created ruling elites, whether white or native.

The Soviet Union, while actually quite socially progressive compared to much of the West at the time, was of course deeply flawed in many ways and extremely brutal at times.

But from the perspective of someone already living under a brutal, unequal, and impoverished colonial occupation (or post-colonial system like the apartheid regime in South Africa), it makes sense to consider communism as a way out.

Communism was offering colonized and occupied peoples self-determination, a path toward industrialization, and the promise of widely distributed and improved living standards that were probably higher than what colonialism and apartheid were offering. Even if the improvements communism could achieve might be less than what well-regulated and politically free market-capitalism might have been able to achieve, neither of those — simply put — were on offer under colonial and white supremacist rule. So communism would have looked pretty good at that point.

Rebuffing potential friends

Even so, many communists in emerging nations during their independence and early post-colonial movements actually tried to befriend the United States because they saw it as a freer alternative to following the Soviet model and they believed Americans — who had thrown off mercantilist colonial rule first and held certain truths to be self-evident for all men — would be sympathetic to the struggles of people who wanted freedom from colonialism, national independence, and upward social mobility for all.

Unfortunately, Americans were often too blinded by ideological taxonomies — and, of course, concerns over maintaining business interests of American multinational firms in developing nations. This resulted in classifying everyone as Red or Not-Red, even if that meant opposing friendly movements that identified as predominantly communist during their resistance phase against oppressive colonial and post-colonial regimes.

It also often meant supporting brutally undemocratic regimes who happened to identify as anti-communist, usually because that country’s main national opposition was communist or because pitching one’s self as a guardian of American business and political interests was a convenient means of acquiring military aid to suppress one’s populations.

Nelson Mandela wasn’t communist himself. But in the communists, he saw brothers-in-arms who shared many of the same beliefs and were willing to help oppose the apartheid regime of the Afrikaner white minority rulers. The United States was ambivalent toward the regime at the best of times and actively refused to oppose the apartheid government at the worst of times.

Rather the criticizing these past associations as we consider the passing of Mandela, Americans should reflect on how ideological blinders have warped our global relations in past eras and what we can do to ensure we are helping the right people and not helping the wrong people in future.

The more we provide help to those who need it and the less we offer aid and comfort to oppressive regimes, the less likely people will be to join radical and violent movements or to associate with movements and ideologies we consider harmful.

The United States must lead by example, not lecture, and must help economically and politically oppressed populations wherever we can.

The challenge today

With the end of the Cold War and the fizzling of many of the remaining “communist” movements in the developing world, “communism” is no longer the source of dangerous American foreign policy conflations. These days, as I suggested in my earlier post, the United States needs to do a better job of making distinctions between resistance movements that use political Islam as a convenient and unifying force against their oppressors or poor living conditions (but which do not pose a threat to the United States and likely don’t even oppose us) and those movements that use an extremist twisting of Islam as part of a delusional plan for a “global caliphate” or whatever.

The latter are angry, unemployed young men who have heard too many conspiracy theories explaining their circumstances and just want to watch the world burn. The former are also dissatisfied with present conditions and see the organized structure and shared identity of political Islam as a means of reorganizing a society away from corrupt and failed rule that benefits a few and toward a system that distributes benefits to the needy and provides basic social services as well as law and order. Some in that category also see a need to incorporate the militarism of early Islam as a motivating force to overthrow the status quo whether it derives from bad local/domestic leadership, a distant and unrepresentative central government (as in Russia or China), or foreign occupation. But this doesn’t automatically mean anti-Western/anti-American views. It’s just one type of response to local conditions.

We shouldn’t be the arbiters of the right to armed resistance oppression, but we do need to recognize who is resisting their oppressive local circumstances — poverty, corruption, occupation, inequality, dictatorship — and isn’t just trying to burn down everything for the sake of it. Between alienating moderate Islamist political parties and frequently blowing up civilians accidentally in predominantly Muslim nations because they might be near someone with a gun, we’re doing pretty badly on that front right now. And again, we don’t need to arbitrate the issue of whose armed resistance is most legitimate if we are pursuing policies that support liberation of all oppressed populations and encourage non-violent solutions.

Unlike with the past “threat” of “global communism,” there are way more people today who identify as Muslim than those who identified as communist at its peak. Learning to employ and display a nuanced understanding of who the real enemies are — the dangerous radicals who seek global revolution, chaos, and general violence — will be crucial to earning trust and good will from a large portion of the planet, whether they live under oppressive or free governments.