What is the libertarian analysis of the student loan forgiveness policy now being implemented (subject to Supreme Court approval) by the Biden Administration?
Before we can offer any such examination, let us consider the following. The government first boosted tuition into the stratosphere by requiring all sorts of silly reports of universities, which necessitated the hiring of all types and varieties of academic bureaucrats. At one time, in the history of higher education, professors greatly outnumbered administrators; not any more. Then, in its largesse, this self-same institution lent money to students so as to be able to pay for the resulting enhanced tuition. Talk about creating the very problem you think you must solve.
Now, the proposal is to forgive these resulting student debts. Libertarianism, of course, is the viewpoint that it should be illegal to threaten, or engage in, initiatory violence. With that introduction, we are ready to try to apply this perspective to this issue of the day, student loan forgiveness.
One response to this challenge is to ask who is more worthy, on libertarian grounds, of being subsidized? That is, here is a booty seeking (or rent seeking, as the Public Choice theorists mischaracterize the matter) exercise, on behalf of supporters of this viewpoint. The two groups in contention for these benefits are these students who have not repaid their loans, and the general taxpayer, from whom additional taxes will be mulcted, if the program is executed.
How shall we determine an answer to that question? It must be on the basis of which group adheres more closely to libertarian principles, of course. Someone has to pay for the forgiveness program; either the lucky students if this goes through, or the average taxpayer, who previously paid these monies, and, if these debts are repaid, will presumably benefit, other things equal, via lower taxes than would otherwise have prevailed.
So, which group is more libertarian, and thus deserving of greater wealth? In my view, it is pretty much a tie. It is as if each assembly is worse than the other. On the one hand, the general electorate (apart from ballot box stuffing) is responsible for that senile old coot now occupying the White House. I need not say any more than that. This deviates markedly from libertarianism.
What about the young students? According to that old maxim, if a young man in his twenties is not a socialist, he has not heart. If he still supports that malicious doctrine at the ripe old age of 50, he has no brain. Then, too, through no fault of their own, these young ex students have been brainwashed into wokism, political correctness, virtue signaling, and more, which have been forced down their throats on campus. Probably, if this cohort were the only voters, Bernie Sanders would now be president. On the other hand, these ex students are innocent until proven guilty, and at least so far they are not entirely innocent of rights violations, but more nearly so than the general population. Hence, I call this a draw.
There is another way to look at this matter. So far, we have left out of the equation government, which at least for radical libertarians, is nothing better than a vast criminal gang with excellent public relations ability. First, they engage in the robbery of taxation. Then, they lend some of the money compulsorily taken away from the entire population and lend it to college students. Now, the government wants to forgive these loans, turning these loans into outright gifts.
So, who is further removed from the freedom philosophy? The evil state or these young people? Here, the case is fare more clear. The U.S. government is one of the most malevolent institutions now operating. They are far worse than any passel of recent college graduates. So, should money leave the hands of the devil, and be transferred to relative innocents? Yes, of course. That’s why they call me Walter Moderate Block. By all means forgive these loans, so that money can pass from the more guilty to those who are less so.
It cannot be denied that the government will then have less money with which to perpetuate its wicked deeds. To be sure, they can always, subsequently, increase their tax take, but that is entirely a different matter. And, also, there are limits as to how much blood you can get out of a stone. As Arthur Laffer has shown, raising tax rates cannot always be relied upon to this end. There is a ceiling over which government cannot rise in its rate of intrusiveness. If they now thought is was optimal to raise their rate of theft, presumably they would have already done so.
There is a third and even better libertarian way to look at this matter: via private property rights. Who are the rightful owners of the monies now in question? If we had a God’s eye view, we could easily settle this matter. We have no such vision. All we can do is, ineptly, try to put Humpty Dumpty back together again. The benefit of trying to trace from whence this wherewithal came, into whose hands it now rests, would be a full employment bill for accountants and economists.
On the other hand, and there is another hand, if the government wants to forgive loans, presumably, it is in the interest of government to do just that. This would be the case for libertarians opposing this give away. However, the government is so inept, that we cannot blithely assume that just because it wants to pursue a policy, it really is in their best interest. That would be the case for favoring loan forgiveness. Sorry to be so unclear as to the final determination of the libertarian; but this really is a complex case.
Two more considerations must be mentioned. First, what about those students who have already repaid their loans? By all means, government coffers should be reduced even further in favor of these people, too. Rights violations will thereby be reduced, when the statists have less money (However, those who repaid are not entirely innocent; they rendered money to Caesar, when with the benefit of hindsight, they may not have had to do).
Second, why did so many students have such a hard time repaying their debt to the government? Simple, all too many of them majored in grievance studies. This renders them unusually chatty baristas, but they don’t earn enough money to support their misspent college days.
Walter E. Block is Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans and is co-author of the 2015 book Water Capitalism: The Case for Privatizing Oceans, Rivers, Lakes, and Aquifers. New York City, N.Y.: Lexington Books, Rowman and Littlefield (with Peter Lothian Nelson ).
