The Rise of an American Debtcropper System for the Young

Readers have often been using the term “neofeudalism” to describe the outlines of the new economic order, in which the uber wealthy and a thin cadre of their advisors, managers, and other elite professionals do well, with a network of less lofty managers helping oversee and orchestrate the provision of services to the broad base of the public, and they struggle to eke out a meager existence.

Debt appears to be the “one ring that rules them all” of this emerging order. And if that is the case, it’s likely to be much more like the old sharecropper system of the post Civil War era, where poor whites and blacks were kept on a debt treadmill that turned them into slaves in all but name. As Matt Stoller wrote in 2010:

Debt is not just a credit instrument, it is an instrument of political and economic control.

It’s actually baked into our culture. The phrase ‘the man’, as in ‘fight the man’, referred originally to creditors. ‘The man’ in the 19th century stood for ‘furnishing man’, the merchant that sold 19th century sharecroppers and Southern farmers their supplies for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they were entering, were charged interest rates of 80-100 percent a year, with a lien places on their crops. When approaching a furnishing agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.

They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it ’shocking’. These were the fruits of usury, a society built on unsustainable debt peonage.

Even though readers of this blog recognize the individual pieces of the hardships facing young people, I’m not certain older people can readily grasp the totality. For instance, going to college is seen as being for people who grew up with college educated parents as a basic requirement; it’s a marker of accomplishment, a necessary but no longer sufficient condition for entry into the middle class, and at least in some circles, still seen as desirable in and of itself (as in an opportunity to gain knowledge and culture, as quaint as those ideas may be). High school kids face a decision they are not well equipped to make. Most people suffer from optimism bias, and teenagers may feel not going to college is an admission of failure. And it’s not as if they have great prospects if they go into the job market with only a high school degree.

So the short form is the system is increasingly set up to load young people up with debt. And it’s not just student loans. This comes from a post by EshaC, a college student who traveled to seven cities across the country at the behest of her credit union employer to talk to students about student loans, credit cards, credit scores, and budgeting. The article is written cautiously, but the author casts doubt on claims like “nearly 50% of students know how to use a credit card effectively”. What is “effectively”? They can swipe and sign?

From Dowser:

Lesson #1: Students take out a lot of money they don’t know a lot about.

If you were a college freshman and received a letter from your school, regarding your financial aid award that equated to half of your school’s cost of attendance, why wouldn’t you take this? It’s called an award, so it’s like a gift, right? Well, even though 63% of the millennials I talked to have student loans, 65% of them had little to no familiarity with the repayment of their loans and almost 70% of them don’t know their interest rates. I asked students why they didn’t have “interest” in their interest rates and discovered that students are just more focused on the “here and now” with school and less interested in what lies ahead in 4 years.

There were a few exceptions. I spoke with a student of Creighton University in Omaha, Nebraska that stood out among the rest. He was working two jobs on campus and paying off his student loan bill while pursuing his Master’s in sociology. His family had faced financial struggles all of his life and so he empowered himself to take charge of his own finances while in school to make it less of a burden when he finished school.

I also made a point to visit the banks and credit unions on the various campuses to see what they had to say about this issue. I was surprised to hear that these financial institutions do not offer a lot of assistance in helping students become more financially literate. They will help students if they come in with questions about their private loans, but they seldom will go out of their way to reach out to students. There are some banks that offer budgeting seminars but have had little attendance with, so they opt out of holding these types of services to students.

Lesson #2: We love our credit cards and how much we can max them out to.

67% of the individuals I talked to said that they have a credit card. This conflicted with my preconceived notion that millennials don’t typically have credit cards because they know very little about them. There were quite a few students who had credit cards tied to their parent’s credit card account, which might suggest why students don’t know a lot about them.

We have been engrained by teachers and parents throughout our adolescence that they are nothing but a trap. As students we always hear about the disaster stories – the guy who puts $25,000 on his credit cards and is unable to pay off his debt. We never hear of success stories of the people who pay off their bill every month and are responsible with their credit card debt.

One thing that shocked me the most was that only 31% of these students know their interest rate. In their defense, as I found out in Omaha, if you are paying your credit card bill off in full then there is no need to know your interest rate. The most surprising find was that almost 80% of these individuals know exactly what their credit limit was on their card. From this, it is easy to interpret that students really only care about how much money they can put on their credit card before it gets denied.

I find the discussion of ignorance about student loans particularly distressing. The media has reported regularly about how reassuring college officials are when signing up kids for loans. This is pure and simple predatory behavior (and where are their parents????). And while the college staffers who are directly responsible for the lending are most culpable, it’s not as if the rest of the people in the university deserve a free pass. How many tenured faculty members are decrying what is going on? I can guarantee in five to ten years, they will be targets of resentment the same way teachers in public schools are if they don’t get on the right side of this issue.

So colleges and financial firms are targeting ignorant, uninformed borrowers, and for at least the student loan part, they perceive it to be for an important, if not essential service. And you can see the clear signs of lender recklessness in the default rates. From the Department of Education (hat tip Bill H):

For-profit institutions continue to have the highest average two- and three-year cohort default rates at 13.6 percent and 21.8 percent, respectively. Public institutions followed at 9.6 percent for the two-year rate and 13 percent for the three-year rate. Private non-profit institutions had the lowest rates at 5.2 percent for the two-year rate and 8.2 percent for the three-year rate.

Remember, these are default rates, not delinquency rates. Ugly.

Consider what happens as they graduate and their debt payments kick in. The difficulty most young people have and will continue to have in buying a house puts them at the mercy of landlords. If they can afford to live in one of the few cities where tenants have decent property rights, like New York or San Francisco, that might not be terrible. But in most places in the country, it really does put you in a vulnerable position, although buying with a mortgage with a predatory servicing industry still unreformed isn’t so hot either.

And that’s before you factor in a third issue: that those who have the hardest time landing a decent job in this downturn have the longest lag in catching up. From NBER:

Graduating in a recession leads to large initial earnings losses. These losses, which amount to about 9 percent of annual earnings in the initial stage, eventually recede, but slowly — halving within five years but not disappearing until about ten years after graduation…

Oreopoulos, von Wachter, and Heisz further find that college graduates at the bottom of the wage-and-ability distribution experience larger and more persistent losses, while for those at the top the effects are small and short-lived. The researchers believe that the (present discounted value of) losses in annual earnings could be three to four times larger for the least relative to the most advantaged workers. This suggests an even larger degree of dispersion in the costs of recession, even within the group of college graduates. The patterns discerned in the data support the importance of job mobility and changes in firm quality, the authors conclude, with the exception of those least advantaged, who suffer permanent earnings losses and are permanently relegated to lower wages

So bad economic times increase income disparity even among the young, and that will also make it even harder for them to contend with debt.

I’ll return to this topic, because I think this recitation isn’t adequate to convey how the pieces are being put in place to put bigger and bigger swathes of the public under the debt yoke. And officials act as if this sort of thing is desirable as long as they can pretend it’s “affordable”. This cheery statement comes from that Department of Education release:

“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Secretary of Education Arne Duncan said. “The Department will continue to work with institutions and borrowers to ensure that student debt is affordable. We remain committed to building a shared partnership with states, local governments, institutions, and students—as well as the business, labor, and philanthropic leaders—to improve college affordability for millions of students and families.”

This is completely nonsense unless the Department is working to lower tuition costs on a widespread basis, and I see no evidence of that. All we have is yet another “transparency” initiative, to treat college, like Obamacare, as a shopping experience. While one part of the push is to provide “bigger grants” and “more affordably loans” to “better” colleges, this means they get more tuition dollars. This does nothing to address the underlying cause of price inflation and gold plated administrators.

This is a slow road to penury for young adults, save for those who manage to get on the really big ticket career paths or have parents who can pay for college and buy them a house. We can’t pretend to address the problems of the economy unless we include the increasing debt enslavement of the young along with the pauperization of the old. Otherwise, the Petersons and the Druckenmillers of the world will play them off against each other and keep them both under their boot.

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126 comments

  1. David Lentini

    Yves, thanks for clarifying the (inappropriate) use of “neofeudalism”. While I certainly have no desire to live in feudal society, feudalism was a far more complex political, moral, and social system than what we’re seeing today. I wholly agree with Warren Buffet’s remark that we’re entering into a “sharecropper” soceity, and as you explain, such a society is far more brutal and arbitrary than feudalism, since debt peonage approximates slavery more than vassalage or serfdom. I think this is especially true for Americans, since American culture has traditionally tied wealth with moral superiority. In such a situation, then debtors are looked as morally defective and are therefore less than human.

    1. Banger

      I don’t agree with you on this. While the sharecropper system is one aspect of the current scene the developing neofeudal order will be even more complex than the medieval one you refer to. People aren’t going to accept the sharecropper system and will bind together into formations around churches, communities, militias, powerful families, street gangs, corporate entities both profit and non-profit and so on which will have various levels of coercive features. Some will probably become free-cities probably put together by guilds of highly skilled people, e.g., IT people who hold the keys to everything–eventually these people will find that they have collective power and can raise a ruckus (like Snowden like Anonymous) and become centers of power. The emerging system will be very diverse in my view.

      We have to understand why neofeudalism looks inevitable it is not strictly because of debt–it is a result of a lack of cohesion and social bonding. White collar crime is rampant in the corporate sector because the big-shots in that system have no sense of connection to any collective so see themselves as pirate out for all they can get when they can get it. This situation has always been an issue in the U.S. and has contributed to the dynamism of U.S. culture but it’s always been balanced by a sense of connection with some sort of minimal community structure and fellow feeling for other humans–this has diminished in recent decades first among the elites and now is wending its way downward.

      1. from Mexico

        I think “debtcropping” is capitalism in its most decadent and degenerate form.

        And when through an ancient and still powerful state there spreads a mood of deep discouragement, when the reaction against recurring ills grows feebler…when learning languishes, enterprise slackens, and vigour ebbs away, then…there is present some process of social degeneration, which we must perforce recognize, and which, pending a satisfactory analysis may conveniently be distinguished by the name of “decadence.”

        –ARTHUR J. BALFOUR, lecture at Newnham College, January 1908

        1. from Mexico

          If Marx was right and this is the best that capitalism can do, then we can ring the death knell for capitalism.

          1. AndyB

            We have not had the capitalism of Adam Smith for decades. Instead we have corporatism or croney capitalism which, together with the growing police state, is pure fascism. Hitler’s template has been incrementally followed by the US and Eurpean “shadow Governments” since the end of WWII.

            1. Massinissa

              Like Erewhon, the capitalism envisioned by Adam Smith never actually existed anywhere, ever…

            2. PaulArt

              Capitalism did have a good decent run from the 1940s – 70s when there was enough regulation to muzzle the greedy fat cats along with 90% marginal tax rates. What happened was that while the Greatest Generation remembered the ravages of the Fat Cats which took them through the Great Depression and always voted Democratic pre-Civil Rights era, the Baby Boomers never tasted the yoke of the Greedy Fat Cats. People like Carter and Clinton and the rest of the Right Wing jocks today think that Capitalism is some kind of an ethereal genie in a bottle that can be summoned at will. Most of these morons do not understand that Capitalism always decomposes to oligopoly or monopoly in the absence of regulation. When there is no more ‘market’ then the Greedy Fat Cats step in and create a bubble. Kevin Philips makes this point very poignantly and in an unforgettable manner when he walks us through bubble after bubble after bubble where the 0.1% made off with everything leaving the mugs holding the bag over several centuries.

          2. John Mc

            I tend to look at crony capitalism in systemic stages:

            1) OPEN UP – markets, information, Capitalism is good
            2) ASSESS PROFITS – identity resources/sphere of influence
            3) DEREGULATE – reform, bigger-better-deal, change rules
            4) PRIVATIZE – segregate owners/renters (financialization)
            5) CUT SOCIAL SUPPORTS – public resources, social safety net
            6) PROTECT PROFITS – monopoly or oligopoly power

            *** Replicate this system into all facets of life and destroy the ideas of the commons, shared resources, sustainability.

      2. Yves Smith Post author

        Banger,

        You occasionally run this Southern delusion. I don’t know where it comes from but you are smoking something strong.

        Churches etc do not produce jobs or food or housing.

        Debt is increasingly unavoidable. You need it to buy a house and a lease is also a credit transaction. With education costs continuing to rise, the indebted young adult will be close to universal in a generation.

        Credit scores are used in hiring. They are becoming a pervasive screen.

        And you keep saying people will band up and revolt or help each other. Guess what, they aren’t doing squat about it now. People who are in debt and get behind are treated as morally deficient. TPTB plays the “good debtors” versus the bad ones very successfully.

        Your militias etc are nowhere to be found in the face of increasing authoritarianism and oppression of the middle class. And it wasn’t banding together that ended the sharecropper system, it was the post WWII boom. The sharecroppers left and got factory jobs.

        And IT people? Good luck. Many are libertarians, which predisposes them against organizing. And look what the government did to Aaron Swartz. He was NOT a hacker, BTW, but he’s been branded as one, and hackers are terrorists in the eyes of the government. So they are already way ahead of you in making sure they stay in line.

        It’s really easy to talk optimistically about revolution when you expect everyone else to do the heavy lifting.

        1. Nathanael

          “And you keep saying people will band up and revolt or help each other. Guess what, they aren’t doing squat about it now. People who are in debt and get behind are treated as morally deficient. TPTB plays the “good debtors” versus the bad ones very successfully.”

          That’s what they said in the 1780s in France, too.

          The thing is, the people never rise up *until suddenly they do*. It’s a matter of being pushed one step too far. Everything I’ve seen about our elites says they’re too damn stupid to know when to stop.

          1. Nathanael

            Regarding “not knowing when to stop”:

            Debt compounds like compound interest, exponentially. This means that a system of “debt slavery” can only be maintained as long as wages are also increasing exponentially to keep up with the debt.

            However, our elites are allowing wages to be suppressed while debt increases. Pretty quickly, this means there is no choice: everyone has to default on the debts. It becomes quite valuable to work off-the-books so that your wages can’t be garnished.

            This exponential problem is why debt slavery is less sustainable than chattel slavery, by the way. Chattel slaves keep getting fed, regardless — the slaveholders don’t cut rations every year until they starve, that would be stupid. In debt slavery, the idiot elites effectively do cut rations every year.

            1. Nathanael

              It’s worth noting that sharecropping was in some sense a *replacement* for debt slavery.

              There is a growing movement to try to convert debts into indentured servitude (as in, the worker never has to pay the debt off, never has to pay the interest, but must keep doing a specified type of work forever) — this is what you have to watch out for. Because plain debt slavery is unsustainable.

          2. Yves Smith Post author

            Nathanel,

            I like your comments generally, but you too need to wake up and deal with reality, not fantasy.

            Who are the only revolutionaries evident in America right now? The counterrevolutionaries, as in the Tea Party and their fellow travelers.

            No joke, I don’t know how many times I’ve had arguments with people who say they are on the left who argue for trying to reason with the oligarchs. They are actively talking lefties to talk nice, don’t get people all riled up, the massuh might get the wrong idea.

            This is from a recent e-mail exchange:

            my thought… rejected many times… is that if you play the “class war” card, you lose. the other class knows damn well it’s class war. But the fact is that Social Security has nothing to do with the deficit… even though XXX thinks it does… and you can tell both the rich and the poor that cutting it will do nothing to help the deficit or the debt…. except in the entirely dishonest sense of “if we don’t have to pay back the money we borrowed from Social Security we won’t have to borrow more from “the public.”

            Then, if there is any chance at all you will be taken seriously by the people with the money (that’s the “honest rich,” there may be some around) you need to tell them that the workers have already said they are willing to pay for the needed increase in the payroll tax… about 1% for now, or one tenth of one percent per year would be better.

            There is NO chance you are going to get anyone who matters to go along with “scrap the cap.”

            These guys think the left can win by having a technocratic debate, that the only way to deal with the problem is persuasion. With the technocrats owned by the big money, this is a remarkably naive stance. I argued with him about his “honest rich” (as in I have had met about 10 billionaires, and know lots of 0.1% types between hedgies and PE guys, and even the non-predatory ones won’t go very far in doing anything for the collective good save give to charities, they might volunteer the current system sucks and they benefit from it by aren’t doing squat to change it. Of all the people I know or sort of know, I can think of only 2, Charles Ferguson of Inside Job fame, and one PE guy, who have spent real $ on political statements or policies that go against their economic interest). I got this in reply:

            I continue to be amazed at the love progressives have for creating enemies. I am not rich, but i hardly climb on every rhetorical crusade to save the poor. it turns out, i am reasonably sure, that it is only when you have convinced the honest rich to take your side (progressive) that you actually get any policy changes.

            the “honest rich” do NOT have power. now if you mean the Roosevelts… who ended up more honest than their backers expected,.. they had power, but they had to be careful to keep most of “the rich” on their side. really.

            And he said he didn’t disagree with this post, which argues the reverse, that the only time the progressives got anything done was when they were allied with radicals:

            http://www.nakedcapitalism.com/2011/09/richard-kline-progressively-losing.html

            So to the extent we are going to have a revolt, it’s not the sort you want. This is a counerrevolution against what started in the 1770s and our side is sleepwalking through it.

            And speaking of revolts….when was the last time you participated in a demonstration? Again, it’s really easy to fantasize about revolution when you are expecting other people to rise up and put themselves at risk. But even writing a letter to your editor of your local paper would be a step in the right direction.

            1. RanDomino

              “These guys think the left can win by having a technocratic debate, that the only way to deal with the problem is persuasion.”
              So true. Yet the only anticapitalists who seem to be making an emotional argument, based on seduction rather than persuasion, are the insurrectionist anarchists, best known for Black Bloc. Which clearly is not working, if the goal is to convince people to burn down all the police stations and overthrow capitalism etc.

            2. Dr Duh

              Who are the revolutionaries in France?

              Who is calling for “withdrawal from the currency, the restoration of French border control, the primacy of French law, and what she calls “economic patriotism”, the power for France to pursue “intelligent protectionism” and safeguard its social model.”

              http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025783/time-to-take-bets-on-frexit-and-the-french-franc/

              It is unsurprising that a group that has been characterized as ‘beyond the pale’ is the only one that can challenge the mainstream ‘captured’ parties.

              Huey Long anyone?

        2. Banger

          Well that’s a little harsh and I don’t smoke much anymore.

          I see communities responding to difficult times often ad hoc communities that come together–I’ve seen it in Southern communities and ethnic communities in the northeast these arrangements are radically underestimated by most people in the intelligentsia. People are hard-wired for connection and when motivated will establish communities of interest and aren’t going to tolerate slavery.

          Yves, I really don’t care if you think I’m deluded–the difference, frankly, between the two of us is that I’ve seen things and been in places you haven’t and perhaps what seems to be delusion to you may be a result of a different set of experiences. Similarly, I can learn from you and your unique sets of experiences.

        3. A Real Black Person

          He’s not talking about revolution, he’s talking about something closer to what you have dubbed “devolution”. He’s talking about the possibility of our modern and urban societies being unable to deal with the problems of increasing social complexity and choosing to opt out of break down into simpler, more regional forms of social organization. He’s talking about the end of the melting pot theory. Right now, the United States federal government is dysfunctional because there is increasing political polarization–and it’s been increasing for a few decades–along with economic, religious, and sexual freedom. I don’t think liberals and libertarians like talking about social cohesion. Social cohesion–the feeling that people have that most people are LIKE them and deserve to live with dignity seems to be slipping away. Humans, as a species, has spent most of its existence living in small, homogeneous tribal groups. When humans start interacting with people who are DIFFERENT than us in ways that irk us –we have a deeply ingrained tendency to restrict our interactions with those people who are different from us in ways that irk us. For example, Liberals, over time, have shown to prefer to be around other liberals. Today’s liberal is probably a lot less tolerant of a contrary point of view than 20 years ago. This sorting is happening with people who have certain religious values, socioeconomic statues, and lifestyles. We are “devolving”, fragmenting, and increasingly engaging in some form of tribalism. No one should be surprised that income inequality is increasing either. We are finding it easier to discriminate against strangers who are outside our social network (untrustworthy) and to hoard money in anticipation of future scarcity where we imagine those people who are different from us in ways that irk us will attack us.
          We are growing apart.
          No revolution is needed, just a black swan event (peak oil, mass flooding or droughts) to ignite the fumes of mistrust. As I’ve said before, these are not the problems of Capitalism or social conservatism, they are problems of civilization.

          Civilizations are inherently unsustainable partially because social cohesion becomes impossible to maintain with increasing social stratification and social complexity. Without social cohesion, (sounds like social coercion but it essentially limits the freedoms of individuals so people appear to be LESS DIFFERENT ) well, civilization falls apart.
          see: USSR Russia. The USSR collapsed partially because no one believed in it, anymore.

          1. PaulArt

            All this talk of revolution is pretty silly. If you want to know how successful wealth transfer + income inequality can be in creating a permanent slum class then just board a flight to India and spend some time there. India’s massive numbers of poor people are witness to the fact that a vast majority of people can simply be cowed down using debt. Yes, yes there is an insurgent maoist movement in some parts of the country but besides the odd incident of bombing police patrols they do not get noticed much. Most of India’s visible poor live in city slums. They came there seeking a better life from the country side. They sought a better life in the city because they were share croppers and debt croppers under crippling debt to local money lenders and other assorted thugs who rule the Indian country side. Many of these thugs are politically powerful and supported by the political mafia which in India is euphemistically called ‘Political Party’and go by fancy names like the Congress and BJP etc etc. When the urban middle class walk or drive past slums and poor people, they do not bat an eyelid. They do not tie their knickers in a twist talking about ‘equality of opportunity’. They sum up the poor in one word, ‘Losers!’ or if they are religious as many are in India they use the word ‘Karma’ or ‘Fate’ and drop a few coins into an earthen bowl attached to an outstretched emaciated arm once perhaps part of the material stock called Human Capital now going by the alias ‘beggar’. American billionaire Fat Cats looks at India and marvel at the number of billionaires there and how wonderful things are for Indian Fat Cats. Maybe they even have a joke that goes, ‘Do you know what India’s Medicare Program is called? ‘Mother Teresa!!!’

            I sometimes wonder if many British Conservatives who were fattened on the loot from India learnt excess from the Indian Maharajas. If you read ‘Freedom at Midnight’ there is a whole chapter on them. Revolutions are a thing of the past. We need an alternative to feed our stomachs. If someone is enterprising enough to start a movement that will return our youth to the soil and grow their own food instead of returning to the home of their parents to drain their SS checks, then we might have the beginnings of a revolution. We need to empty the labor market first to start impoverishing the Fat Cat perishers. Once that starts happening they will start to wail and as recorded in ‘The History of Capitalism’ they might start bribing politicians to seize the land etc etc and that will make the Libtards go, ‘What ho? What ho? What? What? Not Cricket mate! Cannot sieze property Old Boy!’. Q.E.D

            1. A Real Black Person

              Excellent post. De-urbanization was my first thought when I started thinking about urban poverty, globally. A bunch of people coming together not to help each other, but to help a few wealthy individuals aggregate their wealth. At this point, I see higher education and sometimes, technology, as part of the problem–smart people constructing rituals, artifacts, and tools that allow the already well-fed to eat more ( but they can’t because they’re too busy working themselves silly.). The professional class, is increasing beholden to the concept of selling an ice to Eskimos.

              There’s no money in helping the poor and unsuccessful, only in making loans to them and hoping that their desperation can be turned into devotion.

    2. from Mexico

      • David Lentini said:

      …we’re entering into a “sharecropper” soceity, and as you explain, such a society is far more brutal and arbitrary than feudalism, since debt peonage approximates slavery more than vassalage or serfdom.

      Yep. What we have now is closer to what existed in the late Medieval period, the 14th and 15th centuries when the wheels had already began to come off of feudalism.

      • David Lentini said:

      I think this is especially true for Americans, since American culture has traditionally tied wealth with moral superiority. In such a situation, then debtors are looked as morally defective and are therefore less than human.

      I find the study of the elaborate moral, religious, and intellectual doctrines and mechanisms the elite concoct to give their unbridled greed and inordinate privilege an air of self-righteous piety to be intriguing.

      skippy linked such a study the other day:

      “Neoliberal capitalism and middle-class punitiveness: Bringing Erich Fromm’s ‘materialistic psychoanalysis’ to penology”
      http://pun.sagepub.com/content/15/3/247.abstract

      Fascinating stuff.

      1. Emma

        Mexico
        – Feudalism emerged farther back in time with the Romans, and the system was perfected by the Normans.
        Interestingly this is how the Mafia evolved as a solution to being ruled by such tyrants who made conquests from which the hoi polloi benefitted none whatsoever.
        Unluckily, the Spaniards continued the habit of feudalism in Sicily….adding censorship of information to the system (yes – alas déjà vu!)… thereby halting progress and access to the Renaissance so the discrepancies in advancement, justice, wealth, inequality etc. only grew more substantially with time, and lo and behold….it became even simpler to subordinate through fear and intimidation and keep the Sicilians under rule of little pinky!
        Unfortunately today in their present similar form, both Republicunts and Democreciles continue the art of feudalism through a farrago of lies, and the virile whims of their almighty masters unequivocally breastfeed off the potent milk of wholesome perpetuality.
        So it is the rest of us, both the young, AND indeed old, Jane or John Does, who are encased in concrete slabs of ruined dreams and destitute hope, sucking up the remains of a dead-filched horse.

  2. Adriannzinha

    The entire scheme is nothing short of brilliant if from a sadistic vantage point of Airstrip One and Ingsoc.

    Indoctrinate and demand obedience and passivity from the kiddies at earliest rings of what they call education. Wave an ever shrinking carrot beneath their glassy eyes that only a minute few have any chance of attaining. Oh and for good measure, saddle them with towering debts that guarantee their subservience.

    Crushing debt being rather, er, crushing in its nature does tend to rather paint people into corners. Many will see their own serfdom as circumstance when it is quite clearly by design.

    It truly is nothing short of e-feudalism for the 21st century.

  3. Clive

    I was particularly depressed to read (https://www.gov.uk/government/publications/mapping-the-occupational-destinations-of-new-graduates) that in Britain, a college degree bought you precisely zip in social mobility.

    Roughly speaking, excluding Scotland, after graduation and three years elapsed, your prospects almost entirely reflect the socio-economic class you started out from. If you’re poor and working class before graduating, your income level will reflect that in your career. If you’re rich and come from a family who’s circumstances enabled you to attend a private (“public” in British English) school then the job you land will preserve or even modestly enhance your prospects.

    This is doubly regressive because if you’re rich (or your family is rich) you can afford to waste money on a college degree and the chances are you or your family paid upfront in cash. If you’re from a poorer background, that’s money you didn’t have so had to borrow.

    Buyer beware, caveat emptor and all that… but selling hope to the kids — and the evidence suggests it is mis-selling — is a pretty mean trick. As the feature states, and I agree, this will store up trouble for the future.

    That’s the UK experience anyhow, I wonder if the much vaunted US “classless society” is more resistant to the sort of network effects, introductions, behavioural, knowing-how-to-not-bump-into-the-furniture influences still all too evident here.

    1. Yves Smith Post author

      No, the US has become a massively stratified society in the last decade or so. It was always more stratified than we let on.

      1. Big blue collar/white collar divide. Overlaps with college educated v. not divide (IT people the only exception)

      2. In white collar, used to be an upper affluent set, the country club/second home sorts. Tended to be top professionals and local business owners. Now of course we have billionaires and more layers between them and the old upper affluent.

      3. Underclass more distinct too. We had rural and urban poor but they used to have some hope of mobility. I know some people my age from disadvantaged backgrounds who got to good colleges. Now you never see that.

      4. Military families are a separate caste, since they need a discharge to leave service.

      That’s very rough, I’m sure readers could fill in. But more indicators:

      People now use the words privilege/privileged and elite. You would have been seen as a Marxist nutcase if you had used the word elite as recently as 10 years ago (which refers more to power than $, privilege is more class oriented, which here is pretty much entirely about $).

      When I was a kid, except for people rich enough to send their kids to private schools (which was a very small group), kids had unstructured time. You might learn an instrument and play a sport, and in high school, you might take on additional extracurricular activities. During the summer, you’d go on vacation with your family or you might visit a relative.

      Now kids from upper middle and higher backgrounds are shuttled about and have tons of activities and play dates. They also go to tons of camps. They learn to play tennis, golf, ski + sail if they are near the coast. They have tutors if their performance lags at all. It sounds miserable to me but that’s what they think is normal.

      1. Bridget

        “We had rural and urban poor but they used to have some hope of mobility. I know some people my age from disadvantaged backgrounds who got to good colleges. Now you never see that.”

        Unless you live in Texas, where admission to every public university in the state is guaranteed to every high school senior graduating from a Texas high school,  poor rural and inner city high schools included:

        http://www.collegeforalltexans.com/index.cfm?ObjectID=6D0B8C2F-C987-12B0-27CAFED91FACC7FB

        And the students seem quite happy with the results:

        http://www.thedailybeast.com/galleries/2013/10/16/20-happiest-colleges-photos.html#4819c01c-ba83-4201-9ca3-85d57a07e277

        http://www.thedailybeast.com/galleries/2013/10/16/20-happiest-colleges-photos.html#332b12d0-2527-4a27-acb2-7e71b83a0383

        1. curlydan

          uhhh..the link you sent said automatic admission if you’re in the top 10% of your class in Texas.

          1. Bridget

            Yes, you are right, the top 10%. Editing on an iphone not my strength. The top 10% of all graduating seniors guaranteed admission to all state universities, including the flagship universities of UT and A&M. Includes inner city high schools, high schools from the poorest and most remote counties in the state, private high schools, all of them.

            And we have an extensive network of community colleges with the curricul coordinated to the four year institutions so that all credits are transferable.
            The cost of the community colleges is quite reasonable. In addition, Texas Tech University has an extensive offering of online courses for college credit, also transferable to every other stat university.
            It is possible for talented students to attend good schools, and lots of them do.

      2. Banger

        There are various ways to look at inequality and social mobility. One interesting study from 2010 by the OECD showed that when measuring the difference between the earnings of an average father and average son that the U.S. ranked 10th out of 12 of selected OECD countries (mainly Europe and Canada). Other studies show similar trends–we are rapidly becoming a country with a stable class-system like the UK. Interestingly France which is very class-conscious was better on that index than the U.S.

        My oldest daughter fills here daughter’s life with a stunning amount of activity which ties her up–so with that and her career and her part-time grad school I have to make an appointment to call her on the phone.

        The word “elite” was once used almost exclusively by the right as in “liberal elite” and now it’s returning to discourse on the left–why did it ever leave as a word? The power of the power-elite did not diminish since C. Wright Mills wrote his classic book in fact it has consistently increased.

        1. anon y'mouse

          the study we looked at in Sociology of Higher Ed. traced intergenerational mobility on a variety of levels between father to son.

          I have forgotten the periods under review, but the outcome was that, for those who failed to obtain a bachelor’s degree, the probability that they would exceed their parent’s level was low to very low.

          for those who had at least a bachelor’s, there was very little correlation with where the children ended up (all over the darn place).

          for those who were from affluence, the trend was once again more predictive.

          the breakaway point, at least for the time under review (which could well not apply now, or seems not to) is the Bachelor’s degree. upon reaching at least that level, what your parents made could not be used to predict what you would make of yourself.

          plumber’s sons become plumbers, lawyer’s sons become lawyers. bachelor’s degrees conferred freedom from this prediction.

          also, in many many studies we looked at, the highest predictor for being able to complete a degree was SES. even worse for higher (graduate) degrees and professional degrees.

          1. Nathanael

            Doesn’t apply any more. There are a number of reasons why, but I think the biggest is that the cost of college loans wipes out all the financial benefits from a bachelor’s degree, in most places.

      3. Jim in SC

        Great observations. Kids from lower income backgrounds did used to have more opportunities. It has long been my opinion that the expansion of activities, classes, etcetera, at the high school level has been for the benefit of the upper middle classes to the disadvantage of the lower income groups. Guess who is going to be in the IB classes, going to take the AP classes, and enjoy the boost to GPA that you get from taking the honors classes instead of tech or regular college prep? By and large, it will be the upper middle class kids. And the weighted GPA determines at least one of the legs that determines whether you get state aid for four year college in our state.

        1. anon y'mouse

          I believe what you are talking about is called extra-curricular enrichment. it not only gives the boost to GPA that you highlight, but also leads to greater cognitive skills (thus better performance in school) and less degradation of skills when summer vacation occurs. add to this list the things that only more affluent, or at least comfortable families enjoy–trips to museums, summer vacations even within the country, summer camp, etc.

          all of the activities provide cognitive benefits which improve school performance, and we haven’t even gotten into the cultural stuff -how to dress, speak and behave in a variety of settings with varied people, plus social networks. how many low-income students are given the chance to play summer volunteer at the local museum? only the connected, it appears.

    2. Chris Rogers

      Clive Sir,

      I’m a little perplexed as to why you were under the illusion that the US was a classless society, when its Federal Constitution as written in 1788/89 mirrored the UK’s political system, with the obvious exception that instead of a non-elected Monarchy, the US had an elected Monarch, namely the President, and said President was elected from the electoral collage of State Senators and State Representatives, Senators themselves being elected via each State legislative – if memory serves me correct.

      Indeed, the last thing on the Framers minds was democracy or a Bill of Rights guaranteeing certain freedoms, the only freedom that mattered was that of preserving wealth and property – the Anti-Federalists put up a good fight, but regrettably were overwhelmed – the Federalist Papers are wonderful propaganda for the ruling elite.

      Fast forward to the late 1940’s and the the well known Political and Sociological theorist, C Wright Mills, began researching the power structure and prevalent class structure in the USA, the resultant book, The Power Elite, makes wonderful reading and is an excellent critique of the De Tocqueville’s Democracy in America published in the 1830’s.

      As for the UK, well as a Post Graduate of our education system from the mid 1990’s one was always aware that it was unlikely that I’d become part of the ruling elite or have greater earning potential than my parents, indeed, I was struck at how the children of the middle class benefitted from the system in terms of jobs and earnings potential – whilst I know a few from working class backgrounds who have become middle class, the fact remains that the UK Public School’s that educate at most 7% of our children, this 7% then accounts for more than 25% intake of the professions, namely, law, medicine, dentistry, accountancy and the Civil Service, it also accounts for by far the largest single segment of intake within Oxbridge.

      Alun Milburn’s recent report on social mobility and poverty just about sums it up, indeed since the Blair administration and all its so called education reforms, social mobility has not only ground to a standstill, we now have higher rates of downwards, rather than upwards social mobility – something to do with neoliberalism and globalisation one is led to believe!

      1. from Mexico

        When it comes to intergenerational mobility, it doesn’t get much worse than either the US or the UK. They are both abominations:

        Several studies have been made comparing social mobility between developed countries. One such study (“Do Poor Children Become Poor Adults?”)[4][21][22] found that of nine developed countries, the United States and United Kingdom had the lowest intergenerational vertical social mobility with about half of the advantages of having a parent with a high income passed on to the next generation. The four countries with the lowest “intergenerational income elasticity”, i.e. the highest social mobility, were Denmark, Norway, Finland, and Canada with less than 20% of advantages of having a high income parent passed on to their children.[21] (see graph)

        http://en.wikipedia.org/wiki/Social_mobility

      2. from Mexico

        And Chris Rogers, I believe you’re quite right about the United States Constitution. It is a conservative document. The only element of the revolution to survive it was the spirit of the revolution.

        But as Tocqueville pointed out, this was at least more than England had, where the anti-politics of Adam Smith’s panegyric of a free and unfettered “invisible hand of the market” reigned almost uncontested:

        Historians…are led to link facts together to make a system…. As it becomes extremely difficult to discern and analyze the reasons which, acting separately on the will of each citizen, concur in the end to produce movement in the whole mass, one is tempted to believe that this movement is not voluntary and that societies unconsciously obey some superior dominating force…. Thus historians who live in democratic times do not only refuse to admit that some citizens may influence the destiny of a people, but also take away from the peoples themselves the faculty of modifying their own lot.

        –TOCQUEVILLE, Democracy in America

        But in America and France the revolutionary spirit lived on. As Jacques Barzun put it:

        [T]he demand for extending the vote, the support for the broader Charter, took it for granted that political power would bring economic relief.

        The conservatives, on the other hand, kept up a very different drumbeat:

        Meanwhile a contrapuntal chorus made plain in its social critique that clamoring for the vote was aimed at the wrong target. Changing political arrangements would not cure the evils of the new industrial order.

        If you haven’t seen it, the

        37. The American Revolution
        The British colonists created a society that tested Enlightenment ideas and resisted restrictions imposed by England.

        and

        38. The American Republic
        A new republic, the compromise of radicals and conservatives, was founded on universal freedoms.

        segments of this lecture series are quite good at explaining what happened with the U.S. Constitution:

        http://www.learner.org/resources/series58.html

        (Maybe you’re the one who originally furnished the link, because I got it from someone here on NC)

        1. Elliot

          That would be me that recommended that series. It’s shown on late nite public tv here, a refreshing antidote to the likes of N. Ferguson.

          Agreeing with Condell and Yves on it not being the profs causing the hideous costs of college..nor being immune to its wreckage. They, like public school teachers, are simply the ones with shins reachable for kicking.

          I have a bachelor’s and a masters’, and am firmly in the camp that the education was vastly worth it, though I will never be rich; that is not what I sought from it. Chances to discuss and understand how to think, to figure out why things happen and how to weigh what one is told, and how to make something new from that——–that is what I wanted, and got.

          STEM is never going to give that sort of training in critical thinking or historical frame of reference. A truck driver’s certificate won’t either, nor a welding course, or beautician school–all things friends of mine have, or their kids have. It’s affordable, and it’s going to help feed the family, but it’s not going to make them lift their eyes and ask WHY?

          BUT.

          What liberal arts education is priced at nowdays is ludicrous and crushing. I got my degrees in a day when a person could work their way through school with long but not inhumane hours and not end up in debt.
          Youngsters I know now, whipsmart and working the same # of hours I did, will end up with something like $50K debt or more.

          There is no way that it costs the schools that kind of money to provide the education. I didn’t have student loans, but friends did, and I’m sure the interest was not what it is now, and there were grants (remember Pell grants?) instead of students being trained to be debtors.

          We are in a double bind in the US now. We more than ever need people who can think outside that box that is being built for us, in order to have a chance at fixing our broken system. But the education that would give our youth the tools to do that is priced out of reach, and the folks who can afford to have the family buy them a degree aren’t generally interested in changing the system since it benefits them immensely.

  4. sufferinsuccotash, stupor mundi

    The only missing ingredient for true neofeudalism is the establishing of criminal penalties for non- or late payment.
    Debtors’ prisons, “Little Dorrit”, etc.. It’s not far from there to actual debt slavery, peonage. There’s a Supreme Court case dating back to 1914 (Bailey v. Alabama, I think) when the Supremes actually struck down such a measure. As for what the Supremes might do now..qui sait, hein?

  5. Jim A

    ISTR reading somewhere that recovery rates on delinquent student loans are something like 120% of the ammount owed. So after all the interest and penalties are piled on the borrower ends up paying MORE than if they had managed to stay current. Now THAT sounds predatory to me.

  6. John

    I just had another conversation with one of the privilaged tenured professors at an ivy league university.

    Not a thought in the privilaged head about the yoke of the students’ debt.

    Not a thought that the rest of America works everyday at least 9 hours a day or more, 5 days a week, many now with NO BENEFITS, no pensions or even the abiltiy to put money into a 401k .

    No, in privilaged ivy league tenured world two classes with all of the summer off and over a month in winter is so rough.

    Someone’s got to pay for that lifestyle. If it can’t be Amerian kids in debt bring in the rich foreigners.

    1. Old Soul

      Thank you for sharing this. I am from an academic family and chose the “real” world of being an active lawyer for human beings over the privileges of the Ivory Tower. It is harvest time in the Midwest and I was thinking of the amount of actual wealth production it takes to support the academic sector. This was acceptable when academics served the greater good, but since now most just serve themselves first and their corporate masters second, having long abandoned the public good, and are now just debt factories, a new model must be conceived. For this new model I look to the end of privately-created, debt-based currency. I dream of a world in which life-long education is available on the basis of production credits, not an esoteric privilege granted to a few. What I see right now with all the corporately-funded miseducated PhDs is a waste of human potential.

    2. sue

      John,

      Are “tenured professors” really to be the next scapegoats for Wall Street economic destruction? The scapegoat round table of schools, professors, immigrants, unions, pensions, government employees, medicare, social security appears to go round and round..

      1. JTFaraday

        Well, tenured professors– who prefer to be referred to as “The Faculty,” by the way– should be close to the issue of what happens to their graduates and yet, for some reason, they’re not.

        I wonder why that is? Because they’re helpless victims of that now legendary “overpaid administration”?

      2. John Mc

        One can see the professoriate divided in a recent CHE (Chronicle for Higher Education) blog post seen here:
        http://chronicle.com/blogs/conversation/2013/10/18/5-things-you-dont-have-the-guts-to-tell-your-students/

        Apparently, some academics object to telling students about “that, which should not be named- Voldemort theory” as it may be too depressing for students or over-encourage ‘second-rate’ behaviors. And then there are the apologists who would prefer to “not rain on the student’s parade” —- (see Robert Oscar Lopez’s comment and Trendisnotdestiny’s response —-> using oldest navigation tab since there are 180 comments thus far as of 4:30pm Tuesday.

        Nevertheless, this speaks to the internal battles between tenured-untenured-adjuncts and their provocateurs who are stirring the pot.

      3. John Mc

        Every simple PR story (reform/foreign war/whistleblowing) needs a scapegoat to deflect the public away from the inconvenient truth(s).

    3. Glenn Condell

      ‘Not a thought that the rest of America works everyday at least 9 hours a day or more, 5 days a week, many now with NO BENEFITS, no pensions or even the abiltiy to put money into a 401k… No, in privilaged ivy league tenured world two classes with all of the summer off and over a month in winter is so rough…’

      Highly scientific that. You’ve met one or two academics that seem to dovetail nicely with your pre-cooked caricature, so I guess you can generalise away…

      The subtext here appears to be: they have ratfucked the rest of us, so you have to be ratfucked too – it’s only fair.

      Not a thought that, rather than level the only halfway independent tower we have left (ivory though it may be) perhaps the approach ought to be from the opposite direction, ie: attack the 9hr day with no benefits. Talk about a race to the bottom, talk about swallowing elite bait whole.

      Here’s a tip, the profs aren’t the problem, the administrators are (or more accurately, the forces whose bidding they do). JT Faraday said ‘ Because they’re helpless victims of that now legendary “overpaid administration”? Answer – yes they are.

      Many of the administrators are of course themselves second rate profs (the best stay where they are), lured out of their backwaters with salaries several multiples of what they could conceivably earn in academe and the quid pro is that they do as they’re told and enforce the new sausage factory world order in education – elite friendly curriculum and erosion of academic freedom, casualised non-union workforce, high fees and massive student debt.

      The profs aren’t ‘privileged’ – how many are 1%ers? They toe the line or they walk the plank. The teflon-coated administrators have no issues toe-ing the line, that is the one quality they all share, but unlike the profs they can indulge in expensive project snafus and fail upwards – I have first hand experience of this. So long as they fulfil their unwritten responsibilities (see above) they can be incompetent all day long, for years. Nasty too, which seems to be a valued attribute. You can handle nasty if leavened with competence, and incompetence if delivered with a smile, but mean and clueless together can be challenging.

      Of course, there are ‘nice’ administrators and arsehole academics, but I have been working at a University for nearly 20 years and the above outline of management take-over is a definite trend.

      ‘Someone’s got to pay for that lifestyle’

      That sounds rather sinister to me, I’m reminded of that one about the banker who sits down to a plate of ten cookies with the tea party-goer and the union man, takes nine of them, then whispers to the TPer ‘watch out, he’s gonna take the last cookie’

      So, the rich impoverish the rest of the nation which means we have very little to go around. Sorry, can’t afford professors any more. And teachers! Lazy good for nothings, work 9 to 3 and have nice long breaks. What about firemen, I mean how many fires are there over year on average? What do they do the rest of the time? Why are we paying for it?

      Let’s leave aside the implicit failure to grasp that intellectual work cannot be Bundy-clocked or time and motioned. That civilisation itself can only germinate when and where time can be granted to those who are better at thinking than doing. I can’t manage to think much on my mouse-wheel existence, but I recognise the importance of people who can.

      Someone has to pay? Well, why not tax the rich bastards that salt their money away offshore, or the bankers who have gorged on the common wealth via fraud and political and regulatory capture, or the military contractor billionaires whose ruddy good health comes from drinking the blood of innocent victims of their guns and drones?

      It’s too hard, I agree, won’t happen. But that is no excuse for scattergun scapegoating like this.

      1. Yves Smith Post author

        I agree, but you are still missing a BIG issue:

        Forbes in then 1990s would write repeatedly about what was wrong with public schools, as in why they cost as much or more per student as their foreign counterparts and delivered worse results.

        The problem: the administrators! The schools had added a huge adminisphere over time.

        And who is getting attacked? The teachers!!

        Trust, me professors will most assuredly be blamed because they are the face of the product. And frankly they do bear some culpability for not criticizing the appalling increases in tuition.

        1. Glenn Condell

          ‘The problem: the administrators! The schools had added a huge adminisphere over time. And who is getting attacked? The teachers!!’

          Well, the comment I responded to falls into that same category – blaming the profs/teachers and ignoring the managerial blowout.

          ‘And frankly they do bear some culpability for not criticizing the appalling increases in tuition.’

          Yes, true of lots of them, esp in the Business School, who also bear some responsibility for (a) helping to create the conditions which ‘justify’ the austerity we must now subscribe to, thanks to their fealty to the discredited economic nostrums that led the way to the GFC, and (b) retailing the sort of bullshit neoliberal management theories that have helped embed the top-heavy admin presence we’re talking about.

          But I also know quite a few who regularly jump on the soapbox about fees. Trouble is, no-one listens, and in our Murdoch-run mediasphere, there’s no platform to preach to anyone who may be unconverted (a feature, not a bug!)

          Academics like that are not likely to be found in the corridors of power. We have several at the top who earn twice or three times what the Prime Minister receives; they are there as fig-leaf stooges, plausible cover for the neoliberal capture of tertiary education. ‘We’re not the enemy, we’re academics!’

          They’re a bit like Barry O in that respect.

  7. Jim Haygood

    ‘We remain committed to building a shared partnership with states, local governments, institutions, and students—as well as the business, labor, and philanthropic leaders.’

    It’s the hoary old ‘biz-gov partnership,’ comrades, with a fresh coat of rouge and lipstick to hide the gangrene. But they forgot one vital member, the MSM. Just listen to the Times-Titanic lecture its middle class victims:

    Five years after the Lehman collapse triggered the deepest recession in eight decades, the middle class may be solving the vexing problems of income inequality and stalled wages on its own.

    Faced with unemployment and dim job prospects, Americans made one significant change that should alter their fortunes and those of the middle class for decades: they went back to school. During the recession, there has been a sharp surge in the number of Americans who are getting a college degree.

    The more education you have, the more you earn. What this means is that the income mobility problem that drives policy makers nuts disappears for those who get a degree.

    http://opinionator.blogs.nytimes.com/2013/10/19/the-middle-class-gets-wise/

    Problems disappear … LIKE MAGIC! As seen on TV!

    DOH! How do you think they PAID for them degrees? Debt, of course — not even mentioned in this transparent advertorial. Student debt, mountains of it, now morphing into the next systemic default crisis.

    But hey — churning out bilge like this pays the bills for the dying MSM, while enriching the ivy-walled rent extractors. Academia: the world’s last, best con.

    1. s spade

      Don’t forget that guy at the Times who wrote that stuff only kept his job by writing it. Can you imagine his career path had he elected to write the truth? What we have is a society in which half the population collaborates in the rip off of the other half, and the fruits of that rip off trickle up.

      As for solutions, they are likely to remain individual. The plumber and electrician I needed this week seem to be doing fine. I understand there is plenty of work for personal chefs, and the Food networks seem to need an endless number of bright young culinary students with imaginative recipes. I can tell you from my own experience that becoming a lawyer sucks. Doctors on average survive to age 58. Computer programmers work on video games and journalism students knuckle under at the Times, if they’re lucky. I don’t have any idea what sociology students are preparing for. As for academics, it seems to me the life they are compelled to live is punishment enough. No need to bash them here.

      Young people should learn to read, count and master the internet. You don’t even need to buy books to get a complete education these days. There remain lots of ways to make money without having a job. If more people pursued them intelligently we might have a saner, more just society. All this talk about jobs implies that corporations and government are going to save us. They never have and shouldn’t be expected to start doing it now. Just my two cents.

  8. Pokey

    How long will it take before the self destructive poor whose window on the wold is Fox realize that their children and grandchildren are being frozen out of the comfortable existence once and still considered one’s birthright in the U.S.? When my generation (early boomer) came along, the child of a widowed school teacher could go to college and escape with a degree rather than an indenture. Society understood that it was in the interest of all to educate the populace, but there was still opportunity for success without college. In the meantime, we have sent jobs abroad, cut support for schools, and liberalized credit, a vicious combination exacerbated by colleges throwing more and more resources away from education.

    The only sensible first step is to amend the bankruptcy law to permit discharge of student debt (and home mortgage debt).

    1. Klassy!

      C’mon now– “self destructive poor”? What do you mean by this?
      Seems like this problem was created by elites and their enablers. Thing is, it is not a problem for them. The problem of college costs can not simply be solved with debt cancellation. Why does it cost so much? Well, we all know it is super valuable. Thatmessage is everywhere. Imagine if the auto industry pumped out study after study showing how earnings correlate with auto ownership and how much you lose over time without owning an automobile (that doesn’t break down with frequency). And, you know what? For most Americans this probably is true. You are f***ed if you don’t have a car. And a car does help you in your job search. But perhaps there are other factors that led to higher earnings? Anyway, I think the NPR set might not take too kindly to an auto maker financed study, but they can’t get enough of these college value studies. I guess they’re comforting.

    2. NotTimothyGeithner

      This is a motivating factor in the shutdown. The GOP true believers who were recruited from the base as opposed to the traditional parasite class of the GOP (Bob Taft, Romney, Bush I types) are very upset about the state of the country.

      In many ways, they don’t see the Federal government working or the effects of Keynsian multipliers because so much of the money is waste, stolen, or centralized in the Washington-metro or Denver. Both parties talk about the debt and the need for deficit reduction constantly. The President has never argued for tax increases on the wealthy. He’s pushed for tax cuts for the wealthy. Obama has legitimized their views because he pushes for them.

      The next three months will be interesting because we are into ACA going live and the economy is still awful for most Americans. I saw a tweet about the dangers posed to money market accounts that Democrats were spreading around, and I began to question how many Democratic voters have money market accounts. Those same Democratic voters who are seeing the budgets eaten up by healthcare costs or can’t afford co-pays do have to deal with ACA. Most voters are stupid, but they do make connections. My guess is the anger is brewing; Obama might have taken “responsibility*” for the glitches, he real anger is that people can’t afford the insurance, are losing insurance, or just don’t understand the new system. There are plenty of healthy people who are expecting to walk into a doctor’s office when they are sick and not pay because Obots just make stuff up and it spreads as rumor.

      *Has he fired Sebelius or acknowledged the foolishness of creating systems to manage complex problems in a short time? No, he just blamed mysterious shadow workers.

    3. Dan Kervick

      They mostly don’t believe it’s their birthright. They have themselves internalized the dominant 21st century ethos that the spoils by right go to the mentally and morally superior – to the winners – but that they are losers and are getting their just rewards.

      People might want to shy away from the term “feudalism”. But that was a characteristic of developed feudalism: a social ideology that taught that there was a divinely ordained social hierarchy, part of a broader chain of being and a tree of commonwealth, within which every human being had his unalterably allotted place.

  9. Jim in SC

    There is a lot of truth in this piece. I know the implication is that the barons of finance and politics have willed this situation of debt bondage to happen, but I think it is more that we have lost the capacity for thrift in higher education, just as we have in medicine, as the ranks of those scarred by the Great Depression have passed from the scene. We’ve also lost the ability to control costs at the Secondary school level. Property taxes go up and up–to what end? I-Pads for everyone!

    A hundred years ago, the transition from agriculture to the factory was eased by the schools, since factory workers who could read, write, and figure were more productive than those that couldn’t. But we knew that the factory jobs existed and needed workers. Today, we’re betting that an even more educated student–‘educated’ in the sense of being exposed to education for two or three more years at the secondary level, not necessarily students that demonstrably know more–will be more prepared for jobs that have yet to be created. We don’t know that the job of the future will be there at all, yet we’re spending as if its future existence is a certainty, and as if we’re sure what its requirements will be. Can anyone say ‘overconfidence’?

    I think that my high school class was easily as well prepared for college as the current crop, at a dramatically lower cost per pupil. What has happened since 1979? We were also better prepared for life, as most of us had had jobs, could drive, etcetera.

    1. Jim Haygood

      ‘We have lost the capacity for thrift in higher education, just as we have in medicine … [and] at the Secondary school level. Property taxes go up and up–-to what end?’

      Your first two examples are oligopolies; the latter (public schools) an outright monopoly. They are designed to inflate costs, not control them.

      Only when competition is restored to these privileged, gov’t-sponsored fiefdoms will they ever become affordable again.

      1. Massinissa

        … Public schools a monopoly? OH NOES. HOW DARE WE LET POOR CHILDREN HAVE EDUCATION.

        How would you ‘fix’ this ‘monopoly’? Charter schools, which by the way will have geographic monopolies anyway? Theres a limit to how far away kids can go to schools.

      2. Glenn Condell

        ‘Your first two examples’

        ie: higher ed and medicine

        ‘are oligopolies; the latter (public schools) an outright monopoly’

        Heh, and here I was thinking they were public goods!

        This tendency to automatically tag everything with a business/econ/finance identity is a peculiarly American tell. Price of everything, value of nothing. Reminds me of Mish Shedlock’s sad championing of Koch-sucking politicians auditioning for the 1% in preference to (ugh!) unions protecting their members… or Peter Schiff’s ridiculous belief that supply creates demand rather than vice versa. The imprinting runs very deep.

        ‘ They are designed to inflate costs, not control them.’

        You are confusing the rider with the horse. The horse simply runs, it is the rider who directs him. Education is a public good, a political responsibility and a human right. Any measures designed to inflate costs or enrich insiders are crafted and drafted by temporary office-holding functionaries, acting more or less ethically than we ourselves might. Don’t blame the victim.

        ‘Only when competition is restored to these privileged, gov’t-sponsored fiefdoms will they ever become affordable again.’

        Oh God it never ends. ‘Competition’, eh? What could possibly go wrong?

    2. H.Alexander Ivey

      What happen? Must be a rhetorical question. Your posting is long on social myths and short on social reality. Case in point, the transition from farm to factory (paragraph 2) was not eased by the schools but was eased after long and bloody fights between “the man” and the workers.

      Don’t trot out education as a solution to economic inequality, it isn’t, at least at the social level.

      1. Klassy!

        Yes, isn’t it weird that when elites talk about solving the problem of economic inequality they never talk about covering more workers with collective bargaining agreements or raising the minimum wage or making the tax code more progressive? Wonder why that is? It seems like these things would help. Oh, I know why. They are forward thinking and incredibly civic minded people that worry about the long term future of American workers and their need for 21st century job skills.

        1. from Mexico

          Really.

          Like this drag queen told the brother-in-law of one of the Forbes Four Hundred at a party I went to, “If you want to impress me with your money, write me a check!”

          But our pollies don’t see it that way. Their solution is to give the Forbes Four Hundred types even more money, and then it will “trickle down” to my drag queen friend.

          Unf*cking believable!

          1. susan the other

            Even tho I don’t like teaching to the test because it produces a lot of people who only know canned answers but not why they know them, I do like the solution of top down education. We should arrange the jobs we want to fill in an orderly fashion and have universities and colleges teach the requirements for those jobs. At the end of the 2 or 4 years, a job is guaranteed at a livable wage. Tuition should be free, housing should be subsidized and every student should receive a stipend. But Elizabeth Warren is all for student loans, without any jobs, in face, without any functioning economy… how strange.

      2. Jim in SC

        My question wasn’t rhetorical. I really would like to know what happened. My old high school was torn down last week. I wrote on the alumni Facebook page–in all seriousness–that they ought to look through the file cabinets for the plan that explained how they did so much with so little money. I think it was the people involved in teaching and administration then. They were conditioned by the Great Depression, and by their parents largely having come off the farms, to do a lot with a little.

        We’re spending a lot to provide opportunities to poor kids who by and large are unable to take advantage of them, through no fault of their own. In today’s high school, where you have majors, etcetera, upper middle class kids are opportunity hoarders. Homework is more important now than in the past, and poor kids are less able to do it because their home lives are more erratic. Strike one. Even state colleges have become so expensive that there is a ten thousand dollar plug that has to be filled for a kid who hits two out of the three legs needed to qualify for state aid to a four year school in our state. (Top 30% of class; weighted GPA over 3.0; over 1100 on SAT). This is to say that a poor kid needs to take on a minimum of fifty thousand dollars in student loans in order to pay for a bachelors degree at a four year state school. Strike two. Furthermore, if they have one bad semester, they lose the aid. Strike three. A poor kid only has a one in 12.5 chance of graduating from a bachelor’s degree program once they start.

        In my old high school, about a third of the top students came from low income families. Today I bet you rarely see that.

        1. anon y'mouse

          we are not living “back then”. the knowledge base has increased exponentially in nearly all subjects except the base ones of the three R’s, which are merely the tools one uses to acquire the knowledge in the others.

          the infrastructure needed is more expensive. computers for all.

          old buildings cost money to keep up. even more than slapping up a cheap block of portables. maintenance is probably huge.

          demands of all kinds are being placed on the schools. get more info in, with newer technology, with more students, with more testing all of the time, with more legal/liability issues, with less money? something does not make sense.

          I want to know, and admittedly don’t and haven’t looked, at how the budgets have changed for all levels of schooling. where has the money really gone? people here trot out the private college tenured professor, but how many of those are there and how many schools do they affect? the costs of all schooling has increased. does this have something to do with the sheer amount of information/subjects one is trying to instruct in? does this have to do with the new infrastructures required to teach these subjects? does it have to do with professors having a stable job? professors that I have met do not appear to be living large in any way, but perhaps they dress waaay down to accommodate the casualness of their students.

          where is the money really being spent? administrators/presidents who make more than Obama? massive new building projects? housing/offering a huge number of services to the students? and really, there are entire buildings at my school which seem to do nothing else than administer various student & social programs (we even have a WIC/TANF office in there somewhere, plus a center for LGBT support).

          I think what you might find at a college like mine is, some people are making too much, and some boondoggles are being built (fancy new gym complex comes to mind–complete with rock climbing wall). but the pot seems to be mostly about providing all of the services a functioning town would to a small-town population. counseling, mental help, tutoring workshops (the writing center), health center, on and on. these are likely the costs of actually supporting students every minute of their lives, which in the old days was done entirely by the student themselves in the private sector, with only the input of their immediate friends and family and perhaps a professor giving some extra tutoring time.

          more examination of why costs have risen needs to occur. then fat (and i’m absolutely sure there is some) can be discussed for trimming.

          1. s spade

            ‘counseling, mental health, tutoring workshops’? I think you could save a few bucks eliminating these. As for student depression, I recommend sleep, sex and alcohol. It worked for my generation (well, mostly, but you can’t expect to save everybody)

        2. Nathanael

          Modern schools waste gigantic fortunes on administrators (who are simply writing themselves checks) and monumental buildings. Since 2000, they also waste money on “security”.

          In the old days, schools spent all their money on schooling. That’s really the differnce.

  10. Moneta

    I sent the following to my Mom and she thought it came from the Onion. When I told her it was for real, she was disgusted. Our society is sick.

    http://www.bpmmagazine.com/benefits_news.php?date=2013-10-08

    Parents’ Advice Important To Millennials

    By 2020, the millennials, those born between 1981 and 2000, will make up 50 per cent of the workforce, says Seth Mattison, of Bridgeworks LLC. However, he told the ‘Engaging Generations in the Workforce’ session at the 2013 CPBI Ontario Regional Conference, these means for benefit administrators face different challenges when communicating company benefit packages employees. A company may have fantastic benefits, he said, but employees have to know what they have and there is no one path to do this or to engage employees when it comes to the millennials. Some companies are taking advantage of the traits on the millennials to communicate with them. This generation, he said, talks to their parents about everything and don’t make decisions without consulting with their parents. To use this, he said one company sends a copy of employment offers and information on the benefits and other programs to the parents of millennial. Another company actually has ‘bring your parents’ to work days for these employees.

  11. Sam Adam

    This too will end with a march to the scaffold. Maybe not with this current generation but most likely within 2 generations. The only real solution: return statute of limitation defenses and bankruptcy protections.

  12. washunate

    Thanks so much for continuing to highlight this topic. Our system has already essentially collapsed for many Xers and Millennials.

    The silver lining of the GFC is that perhaps it is waking up the rest of society to how bad things have become over the past couple decades.

  13. tyler

    My brother has a master’s degree in education is back on the job market. He left teaching after 11 years (because it is extremely stressful) and is now applying for jobs.

    I can’t help but think it’s going to take him a year or more to find a job.

  14. Richard Lyon

    I am not very fond of the notion that what we are headed for is some form of neo-feudalism. While I certainly think that the situation is steadily deteriorating,medieval feudal societies had a built in notion of obligation and responsibility. The lord had control over the lives of the peasants, but he also had obligations to protect them from attack and in times of famine. I don’t see any notions of responsibility in the neoliberal dreams of the future.

    The debt peonage of the past was not limited to agricultural workers. Arrangements where people such as miners and some industrial workers were forced to go into debt to the company store were common.

    1. Sufferin'Succotash

      I’ve never been comfortable with the term “neofeudalism” because it carries with it the medieval concept of mutual obligation, a concept we’re not likely to find among our current economic overlords. “Neocolonial” has always struck me as more appropriate, a setup by which the Help gets throughly exploited with the Exploiters feeling no sense of obligation whatever.

  15. Shizzmoney

    “People now use the words privilege/privileged and elite. You would have been seen as a Marxist nutcase if you had used the word elite as recently as 10 years ago (which refers more to power than $, privilege is more class oriented, which here is pretty much entirely about $)”

    I don’t use the term, “elite”….because I don’t think these people are truly so. They are just fiat hoarders and rentier tightwads who sit on thier ass and collect off their “privilage”.

    I practice Judo and know alot of people in the MMA and jiu-jitsu community. When SHTF, I’ll be glad I align closer to them that some fiat paper pusher or website CEO.

    1. Nathanael

      That’s why I’ve been saying that the current financial greedhead elite are *STUPID*. They’re breaking down the very system of law which prevents them from being killed by people like you.

      1. hunkerdown

        The word privilege descends from the Latin for “private law”. With extra-premium private security, the rule of law would only get in the way.

        I imagine the game plan for elites isn’t much different from the social-justice far left: building a replacement system ready to rise when the rule of law fails catastrophically, in the hope their functioning duchies offer a familiar, modestly comfortable light of order under the rule of men against anomie, chaos and darkness.

        1. Nathanael

          You’re giving them way, way too much credit.

          The plan you describe would be the plan the Burmese Junta used.

          Our elites *mistreat* their private security. Read about how Erik Prince treats the grunts at Blackwater/Xe/Academi.

          This is a critical difference.

  16. stop

    This is an excellent entry.
    Look at dental education and the dental industry to see this encapsulated.
    The cost of dental education, like college education, has dramatically escalated in the past 20 years. Right now, new dentists graduate with $200-300K of education debt. Seeking immediate income to repay debt, new dentists sign on as employees of corporate dental offices (which are owned by private equity funds). Corporate dental offices deliver low quality care (think crowns made in China) and corporate owners take profits. They do not pass cost savings on to their patients. Add to that the corporate owner tax manipulation (see prior NC post on waiving management fees to change revenue to capital gains) which results in corporate profits that are not passed on to patients.
    Students eventually leave corporate clinic for private practice, however the competition they face from the corporate clinics increases as the corporate clinics expand, thanks to even more recent graduates seeking employment.

    Debt enslaves our new dental graduates and drives them into the arms of private equity employers.

    Is it a coincidence that for profit dental schools are rapidly expanding while the demand for dental services in our country decreases?

    Democrats applaud the increasing dental graduates as an answer to expanding dental access to the poor. Republicans applaud the increasing dental graduates as a means to bring down dental costs by increasing supply. Everyone in DC is throwing fuel on this debt driven fire for their own political self interest.

    Meanwhile, dental patients suffer as dental costs go up and quality goes down.

    1. John Mc

      PBS Frontline did an interesting piece called Dollars for Dentists — it supports your thesis. Nice post.

    2. s spade

      Twenty years ago I had a terrific dentist who burned out at age 45 and quit. If it really costs $300,000 to become one why does anybody bother?

      Incidentally, with a $100 irrigation device (not that Oral B dreck) and a tooth brush, does anyone really need a dentist?

  17. getitstraight

    “neo-facsism” or “neo-communism” would be moer actuate.

    These “uber righ”, as you call them are Democrats. They are XIllionare socilists that got their money either indirectly or directly through miling the taxpayer, or supporting the Oligarchical Collectivists in the Democrat party.

    This is the “new econmic order”. Tow cases in point are Obamacare and the Feds various QE hustles. This all is a huge looting of the nation;s well for just one group: THe Leftwing Nomenklatura (and their so call “centrists” enablers).

    You do not see this at all, or you are hypocritcally carrying water for these people. WE keep hearing the same old, shop worn Marxist agit-prop out of you about “plutoctrats” and “oligarchics”. You keep missing the point and cheerlead for these vipers.

    “Crony Capitalism”? Hardly.

    Crony socialism or perhaps–but only perhaps–crony Facsism

    (And no, Fascism is not a “right wing phenomoa”–not now and not historically; fascism is wholly a beast of the left.)

    1. Nathanael

      Um, no. Fascism is always a right-wing phenomenon.

      Right-wing as originally defined in the National Assembly of France, 1789: *MONARCHIST* — authoritarian. Left-wing: *DEMOCRATIC*. They’re not economic descriptions, they’re political descriptions.

  18. Thisson

    Great article!

    The issue, throughout the world, is excess debt. We have it because our system of creating money requires constant expansion of debt as a condition for the “economy” to grow.

    This is a dilemna even for the financially responsible: if you do not want to borrow money to finance your education, lifestyle, etc. you are still negatively impacted when those who do choose to borrow drive up prices when they spend the credit issued to them.

    1. s spade

      The debt explosion really goes back to 1971, when Nixon slammed the gold window and destroyed the Bretton Woods monetary system. Through the Seventies it was Third World Debt, beginning in the Eighties it was Credit Card Debt and Mortgage Debt, and Student Debt, all of which created the phony prosperity of the Nineties and early Oughts. The debt can’t be serviced and the law prevents most of it from being liquidated. The guaranteed result is a depression. Thanks to QE and ZIRP, those who caused the problem have shifted all the losses to the general population.

  19. jk33

    I have a question. Will SallieMae make a settlement on a debt. I’ve heard of them settling with people for between 40-60% of the debt. I also have heard that they couldn’t do that? Will the government buy the loan from Salliemae and then make a settlement? Any ideas on settling the loan or getting it transferred to a more trustworthy place?

    My loan is currently in forbearance. This is my only option and frankly should be prevented by law as interest is capitalized.

    1. anon y'mouse

      I don’t know. and I am not sure who would. someone who deals with bankruptcies and restructuring debts for private individuals. presumably a lawyer.

      any deal you get (if legal) will result in tax liabilities on the ‘saved’ amount.

      if you can swing it, teach or work in the public sector. then after 10 years, I believe they ‘forgive’ the rest of your loan (if fedgov secured).

  20. craazyman

    People think Cormac McCarthy was just kidding when he wrote THE ROAD but I think he was completely serious.

    I wonder how long before armed gangs of tatoo-festoned savages control major interstate highways and take protection payment in human slaves because money will have been abandonded as too metaphorical and abstract.

    Things will reduce to their pyschopathic essence. It’s kind of that way now, when adults load a kid up with $150,000 of debt before they’re 24 under some theory of value that only makes sense if you’re a moron or a psychotic, and then set them out into “society”, reliant upon the kindness of strangers and the capacity to cultivate an animal-like ability to take a beating from almost anyone they meet.

    They have no idea what the game is, at that age. You really have to get lucky, really lucky. And there’s not as much luck around as their used to be, that’s for sure.

    1. CagewasBrahms

      Luck? You mean relying on the unimaginable as distinct from relying on something that derives from a concrete past through a logical development into clearly discernable future? But, that would require a memory. How can you have one, a memory I mean, when we are tied to our technology, the principle requirement of which is, not facts or memory but gratuitous catharsis; something which moves so fast that content is irrelevant, repetition a strength and identifiable shape a weakness. 

      Harold Innis who had much to do with modern communication theory noticed that “If you have a society in which there are forms of communication that will not allow for the cultivation of remembrance , then you will not gain the necessary continuity to hold out against the forces of power.” Just sayin, as I peck away on my “smart” phone.

    2. craazyboy

      You’d think there would be a freshman course kids could take which explains how they will be screwed by their student loans and 10 credit cards.

      Probably never happen. colleges would argue forever whether it should be taught by an associate professor in the math or econ or sociology or philosophy departments.

      I guess going to college doesn’t prepare you for everything in life.

      P.S wouldn’t be disappointing to finally graduate with $150,000 in loans and find out you can get only a job in Asia for $5/hour? That would really screw up those lifetime earnings estimates colleges give there prospective students?!

      P.S.S What about the sorority Dudesses that would major in Phych so they could hang around and snag a more upscale hubby at college? They did away with the dowry system a few hundred years ago – which decidedly threw some cold water on this whole marriage deal concept, IMO – but what if the lucky potential hubby finds out he is marrying into a $150,000 loan??? Yikes!

      1. craazyboy

        Plus, in the middle ages, if you were a good sturdy plow women, you could do ok, even without much of a dowry.
        Course a dowry might make the difference between pushing the plow and pulling the plow. An ox from dad up front can make a big difference!

    3. Nathanael

      FWIW, the correct move in the US right now is to pay for college on credit cards and then declare bankruptcy and cancel the credit card debts. For as long as this remains possible. You get the education without the debt. The “credit score” stuff only dings you for 5 years or so.

  21. anon y'mouse

    the tone i’m left with in this piece makes me uncomfortable. perhaps because I am a college student that has borrowed money and will owe upon graduation and have hoodwinked myself that it will all be “worth it” in the end.

    the problem I see is that it paints college as an extravagance that few people can afford. this is undeniable. but what is also undeniable is that more people need some form of tertiary schooling in order to obtain even the barest hint of a job, much less cope with the complexity of modern life and try to be a productive citizen in other areas (political?) of our collective social/economic world. if not, then what kind of job can they get? what do high-school graduates end up doing in this economy? a few lucky ones work at costco, but the rest do what, exactly? you might work your way up somewhere to Assistant Manager as a high-school graduate, but likely you are penned into a perpetual underclass unless you get additional -specialized- training.

    granted, there are not enough jobs for college graduates, and they frequently stay in their pre-graduate jobs and struggle along, but if you have nothing but a high school diploma, your options are incredibly limited. you can’t even get a home health aid poverty-level slave job without some certification.

    we need the education system now more than ever because our knowledge base has increased, and the specialization of skills it takes to keep it all running has also increased, and costs and debt are a big issue. the tab has increased not only because costs have gone up, but because the state is paying much less than it did in years past (basically, the state’s share is inverse what it was 20-30 years ago. i’m probably misquoting the exact figures, but back then states paid over 70% and the students & their families 30some%. flip that and you have the situation today, which families can ill afford).

    the even larger issue is that there don’t seem enough jobs to go around. how are we running this complexified society? by increasing the retail sector? we certainly aren’t solving the big issues of our country or our time, and I don’t think that you could hope that a citizenry only educated up to the high school level would be capable of even trying to solve those issues.

    we have a forked road ahead. either we start stepping up and solving our problems and employing people to do so at decent wages, and allowing them to get the training they need to become actual taxpayers, or we let costs rise until only the affluent can afford to go and everyone else works at the equivalent of Burger King and merely prays for the minimum wage to rise comparable to cost of living increases. as it is now, people are taking the big risk of debt to cross that divide. it shouldn’t BE a divide! since we are neglecting everything that is not attached to the cancer of the FIRE & military sector, students who have tried to learn and better themselves can’t get the jobs they really want. and most of them that I encounter DO want to help change the world for the better, and hope to merely make a comfortable living at it.

    1. kjboro

      thank you anon y’mouse… this is well said — and if any readers know the percentages of state support vs parent/family/self support, please supply them

      1. anon y'mouse

        ok, after digging through one of my old professor’s presentations, I found a slide which shows this funding switch. it illustrates how exaggerated my mind works, because the proportion of costs now being paid by the student/family is 50.2% as of 2011, with the state chipping in 35.3 and the feds 14.5.

        this in contrast to the the high period of state financing close to 60% (from approx. 1972 to 77) and the family contributing close to 30%. federal contribution at that time was about half what it is now.

        from that high point the ratio lines converge (state going down, student/family increasing) and state vs. student/family proportions of the tab meet in about 1997, then cross until now.

        he attributes the graph to the National Income & Product Accounts.

        but, this does not solve the question of how fast the overall costs have risen, or why. a detailed analysis of this would help complete the picture on what exactly all of this money is being spent for.

    2. Nathanael

      Anon: basically, with an unmanageable college debt, you will probably have the options of debt slavery or revolution. (Peaceful revolution at the ballot box is one type of revolution). That’s the future.

    3. s spade

      You should read this over and ask yourself whether you are simply rearranging the Titanic deck chairs? One guaranteed thing about the future is that it won’t be like the past. It will be worse. Learn to protect yourself. You will find that isn’t easy, and the most valuable part of your education may be what you are learning right here. You are right to be concerned. Power has congealed and those who have grabbed it will not be giving any up. Most of the job opportunities involve serving them, directly or indirectly. And it has been that way for at least fifty years. Good luck.

  22. C

    Don’t forget the role of physical structure in this. By eliminating the presence of cheap or “starter” housing in most cities, and dividing jobs between unlivable urban centers and distant shopping and industrial zones we’ve added an obligation to get a car, pay for gas, and to live in still yet another area. This means that the act of being employed at all, like the sharecropping model, requires substantial initial and ongoing investment (gas ain’t cheap) that can on its own turn a minimum wage sales job from the entry position that you pay down debts on to a slowly sinking morass.

    1. anon y'mouse

      this is an incredibly relevant point. this impacts both the family, and what they are able to save up and eventually pay, and what the student must be able to fork out if they are living away from home or are adults and thus need to generate merely to survive, much less pay for tuition on top of all of that.

  23. Kelly

    Think back to the GI Bill days. Those vets were owed something from the society at large and thats how they were paid back. Conversely those vets probably felt an obligation to society for the opportunity of education. Now, since the 80s society basically left the young, and everyone else, to fend for themselves. The young have no sense obligation to society for their education or anything else. Its no wonder our economy/politics have devolved to shutdowns, brinkmanship, fraud, conflict of interest, bribery etc.

  24. Danny

    You said…”Even though readers of this blog recognize the individual pieces of the hardships facing young people, I’m not certain older people can readily grasp the totality.”

    Time rests for no one,that piece of crap fraud called a Federal Reserve Note passed off by criminal bankers is just as WORTHLESS NOW as it was then.That YOU even suggest that somehow the Federal Reserve has the right to be keep running this usury fraud tells me who does not understand the bottom line. Totality??? give it a rest

  25. JTFaraday

    I think high education debt is a sign of the lengths to which people will go to avoid the “will do anything”—”will work for food” model that depression era nostalgics, who tout the wonders of the WPA and CCC etc, keep putting forward as “progressive” policy.

    We already have a “will work for food” option. It’s called “McDonalds.” You can still get a job there without a college degree. Nobody has the unmitigated gall to actually spin it as a good deal.** That’s at least viewing the world from the right side up.

    I think if there is a youth backlash, it will not be just against higher education, it will make a clean ideological sweep. People keep popping up to tell the nostalgic depression era policy romantics how conservative this is, all irrational emotional attachment aside, and ya’ll keep effectively responding that the peons are desperate so the government can push them around (too).

    Ach, gewalt. It’s like a gang rape. Everyone gets to take their turn I guess.

    ** Well maybe Obama, but only the FanBots still think he’s of sound mind.

    1. hunkerdown

      Rape is a term to be used only in service of divide-et-impera, class privilege and imperial adventure, not against them. Tsk tsk!

    1. Bridget

      Grrrr. I can’t type anything since my iphone upgraded itself. Finding my glasses would help too.

  26. Nathanael

    Debt slavery is exceptionally unsustainable as a system. Actual chattel slavery is more sustaniable.

    Furthermore, the educated and professional classes are crucial for any elite to keep on their side. The educated and professional classes have a great deal of power to destroy elites if they decide to work with the proletariat. Usually they don’t decide to do so, but if the elites are crazy and vicious enough, they will decide to.

    Accordingly, the emerging attempt to impose debt slavery on *the educated classes* is going to blow up big time in the faces of the abusive elites. Our current elites are stupid.

  27. Mark S

    High interest rates compounding in default and fees are the true villains. A loan that started out as a manageable can easily turn into a monster after a default. Then when you are able to start payments if you end up back in default again you can incur fees which in total can cost more than the original loan. My step daughter defaulted on her $14,000 loan. My wife paid $8000 on the loan for 3 years when the step daughter was falling on hard times. Long story short the girl eventually defaulted and now the balance is over $20,000. The$14,000 loan was originated around 2007 and continues to have an increasing balance with an 8% interest rate.

  28. Abe, NYC

    We can’t pretend to address the problems of the economy unless we include the increasing debt enslavement of the young along with the pauperization of the old. Otherwise, the Petersons and the Druckenmillers of the world will play them off against each other and keep them both under their boot.
    These old, aren’t they the parents of the young? Don’t they see their children’s plight at the same time that their own retirement is increasingly in doubt? Also, aren’t these old the same people who protested in the streets in 1960s? Perhaps some of their gunpowder is still dry?

    That’s one of my biggest hopes for ending the degradation of the society. The Petersons and Druckenmillers may be overreaching trying to set parents and children against each other, and it may yet backfire. They have successfully destroyed or severely weakened social bonds, but it usually takes nothing less than a civil war to destroy the bonds of blood.

  29. Gnomedigest

    Although less impactful as wide spread as credit use is, whats effected me the most is attempting to avoid using credit at all. No credit cards. No car payments. Mortgage had to be through my parents because I had no credit score.

    Its becoming near impossible to avoid engaging in the credit system, which while it is argued it can be used “responsibly” (though I find that statement is basically selling the lie of debt peonage), is predatory in nature.

    To use it is to risk.

  30. Chris Maas

    “Debt is not just a credit instrument, it is an instrument of political and economic control.”
    In 1929 the Robert and Helen Lynd in “Middletown” noted the role of “credit” as a controlling influence: “…the tendency of this sensitive institution to serve as a repressive agent tending to standardize widening sectors of the habits of the business class – to vote the Republican ticket, to adopt golf as their recreation, and to refrain from ‘queer,’ i.e. atypical, behavior – will be noted”

  31. Clive

    Unfortunately this will probably get lost at the foot of a long thread (but a very interesting one!). And suffers too from being incredibly long-form. Oh, and don’t be fooled by the tone of the first paragraph, it’s not representative of the whole thing. If that doesn’t put you off, the following captures all the issues in Yves’ original piece and draws them out in all the detail anyone needs to see.

    UK-centric, but definitely relevant to all countries.

    http://www.lrb.co.uk/v35/n20/stefan-collini/sold-out

    1. Clive

      Just as a taster (the whole article is simply devine for NC-thinking readers), here’s a quote:

      “Underlying so many aspects of the policies discussed in these two books is the fallacy of uniformly measurable performance. The logic of punitive quantification is to reduce all activity to a common managerial metric. The activities of thinking and understanding are inherently resistant to being adequately characterised in this way. This is part of the explanation for the pervasive sense of malaise, stress and disenchantment within British universities. Some will say that such reactions are merely the consequence of the necessary jolt to the feelings and self-esteem of a hitherto protected elite as they are brought into ‘the real world’. But there is obviously something much deeper at work. It is the alienation from oneself that is experienced by those who are forced to describe their activities in misleading terms. The managers, by contrast, do not feel this, and for good reason. The terms that suit their activities are the terms that have triumphed: scholars now spend a considerable, and increasing, part of their working day accounting for their activities in the managers’ terms. The true use-value of scholarly labour can seem to have been squeezed out; only the exchange-value of the commodities produced, as measured by the metrics, remains.”

      Loads more like that, as I say, can’t sing the praises of this highly enough.

        1. Glenn Condell

          Hi Clive

          Collini has written several pieces on LRB on these issues, they are all good. If you do a search on the site, do yourself a favour and try to find one where Collini gives Christopher Hitchens a monumental pasting, it will warm your cockles.

  32. Hayek's Heelbiter

    Many, many thanks, Yves.

    I’ve been contracted to write a high-buget scifi-horror, and there’s one particular issue that’s been bugging me for weeks.

    This article sparked a major epiphany that hopefully will resolve this issue.

    Bless you.

  33. Quant5

    A lot of considerate commentary on this thread. May I net out? Demographic imbalance is the cause of our current global woes. In ten to twenty years this solves itself and there will be labor shortage and rising wages.

    If there is no global conflict it will be a LOG period (low organic growth). When money can’t be multiplied by debt it wont be and this college bubble is no different. I would learn a trade such as electrician, plumbing or construction or if technical look at database driven certifications over spending four years and 75k of debt for a chance at a white collar job. Sales is also a way to earn more if you have the people skills.

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