Student Loans Suck, Part 2

More of the same, but this time something is done about it

As readers of World know, the opinion (we're all entitled to them) here is that student loans are one of the most insidious of government programs. The kids think they are getting a deal, the extra cash thrown at the schools just increases tuition rates (2 to 3 times faster than inflation), and graduates leave facing debt they don't need, with a world of wage-slaving awaiting. Now it turns out that indeed incentives matter, as the head of student loans at Columbia U. (yes that august institution here in New York) owned stock in the lender he was "recommending" to students.

He got fired this is a good thing. The better thing would be to get rid of the government-subsidized student loan programs altogether. Ironically a Columbia Prof., Robert K. Merton, is credited with coining the terms "role model" and "unintended consequences" (though the latter I think might really belong to Carl Menger).

State-Capitalism in the Worker's Paradise

Big bucks on the back of the people

It is now becoming well-known that the Chinese government (central bank) is trying to diversify away from holding all of its assets in Treasury notes from countries with the major tradeable currencies. China has garnered more that $1 trillion in cash by artificially holding-down (eg not allowing free trade of) its currency, the yuan. This intervention allows Chinese exporters a free ride on the backs of all the Chinese. Because the yuan can't float it can't therefore buy as many things from abroad as it could. Therefore things are more expensive to the Chinese people than they could be. It is the same old story of the elites (exporters) gaining at the expense of the masses. But one knows the Chinese are patient with a long history. The corrupt can't hold power forever, not in a just world.