The Big Reason Student Loans, and More, Need to Reference the 1970s
After my recent article that placed student debt forgiveness in an economic context dating back to 1970, an email from a reader arrived. This person found the use of experience in the 1970s “disheartening” and “irrelevant”. Looking at the period from 2000 to 2022 would better reflect how “debt is distributed” and its impact on those who hold it.
The Big Questions: Was a ’70s baseline nothing more than an attempt “to silence the critics?”
A good question. The answer is both yes and no.
As the previous article mentioned, “What used to be possible – ‘Oh, I got myself through college working for $100 a week in the summer when gas streetlights lit up the sidewalks, so why can’t the kids today? – is no longer so for many, if not most. Pretending it is becomes another form of gaslighting.
There’s absolutely a deluge of comments and kid fingering these days. And, as I mentioned before, it’s not like either side has completely drifted over the shoulder of the road and left the world of reality for a fantasy. Yes, there are those who want to pretend that what was possible before is still possible, even if they are far from the everyday economic life of young people, although perhaps their grandchildren are struggling with the question.
And there are also young people who left with student loans and managed them, even without starting salaries so high they invite nosebleeds. Then again, there are people who can run a four-minute mile (let alone a three-minute one), feed 30 people in a timely manner, or memorize the first hundred digits of pi.
Society does not live on the periphery, but in the expansive milieu. Today it has largely become an experience of wages not rising enough to sustain a solid life even as corporate profits soar, the very wealthy become so unimaginably rich, and the world burns for lack. of action. Things have gotten progressively worse in many ways, it’s almost tempting to use the cliche “frog in a pot of water which is then boiled”, except that according to biologists the frog will always jump. They do not tolerate life-threatening conditions, unlike people who often are.
That was the yes, and the problems with that approach. Now for the no, because looking back to the 1970s is a way of reminding people, especially younger people, of what they’ve lost. It is essential to look at a period since 1970, because that is when the country began to change. It was the end of an era when more corporate profits went to wage growth. Milton Friedman and others pushed an ideological argument that corporations had only an obligation to increase shareholder value and no other responsibility to employees, society, or the world. It’s the kind of nonsense you get when people without practical business experience argue that key stakeholders weren’t important. Greedy investors and thoughtless executives gobbled it up the pitcher.
When it comes to higher education – for when the discussion narrows to student debt cancellation, it’s easy to forget how outrageously expensive college has become – in 1970 even the lowest household incomes lower were often higher than the average annual cost of tuition, tuition, room. , and counseling in a four-year institution. This is no longer the case.
The issue goes far beyond education. Look at the houses. Yes, their price has exploded and there aren’t enough of them to shop around and keep prices more reasonable. But if we compare the median house prices at the beginning of the year to the median annual wages by economic segment, we obtain the same pattern. Here is a graph to show it:
(As a reminder, rather than a single median income, the graphs show quintiles of socio-economic status. The first quartile corresponds to the 20% with the lowest income, the second to the 20% with the next highest income, and so on. The income for each in a given year is the highest number a household could have and remain in that quintile. The highest value is actually the ceiling for the top 15% wealthy, not the top 20%. It not only marks the top of that group, but also the bottom of the top 5% of households, all of whom earn at least that.)
And those prices are without the huge jump home values have taken during the pandemic. Is it any wonder that so many people end up renting instead of buying?
Again, something changed in the 1970s. What had been a more or less enduring pattern, with some people earning a lot more but still maintaining a type of American Dream availability that eluded most.
If people don’t understand how different things were, they look at more recent results rather than seeing the past as a blueprint of what should be possible now. If you’re younger and this frame makes you angry, this should do it. You get the always shortened end of the stick.