A response to Obama's plan to refinance College loans (NYtimes comment)

Most of the people who are complaining about having their taxes pay for student loans went to school when college cost literally a tenth of what it cost now. That was because taxes once paid 80% of the expenses for state colleges, and now they pay only 20%. This also provided the competition that kept private schools affordable. You complainers are the real freeloaders, living off the Republican tax cuts, so that you didn't have to pay the kind of taxes the previous generation paid to make your education affordable. It's about time you coughed up your fair share to pay for the education of the next generation. This plan isn't the best way to deal the problem. What should be done is to restore the old state subsidies, so that the banks don't get a cut in the middle. But it's probably the only viable alternative at this stage in the game.

Those who claim that education loans can be paid off in a few years are being misleadingly vague. A Bachelors degree at the lowest cost institutions can be paid off in a few years. But any graduate degree requires a life time of payments, especially if the person with the degree is a teaching adjunct at a University. Renegotiating those loans would be a powerful economic stimulus that takes money out of the banks and puts it into the hands of people who will spend it, creating a powerful "trickle-up" effect to restore demand for goods.

Most importantly, It's absurd to think of refinancing loans as some unprecedented government intervention into the capitalist process. Practically everyone I know has refinanced their home loan, usually in response to a dropping of interest rates. It's also extremely common for people to renegotiate loans simply because the interest rates make it impossible for the borrower to avoid bankruptcy. The threat of bankruptcy has been eliminated by law for college loans. Obama's program simply partially restores some aspects of the renegotiating power for borrowers that exist in every other loan in this society.

Money for the Arts

The so-called 'moderates" in the Senate are now demanding that items that don't stimulate the economy be removed from the stimulus bill. High on their list is 50 million new dollars for the National Endowment for the Arts. This is less than a thousandth of a percent of the entire package, and less money than the City of Vienna spends each year on Opera alone. So apparently it's not the money, it's the principle of the thing. These people think that art must not be good for the economy because artists don't make money-making their first priority. The fact of the matter is, however, that money spent on the arts probably delivers more stimulus per dollar than almost any other investment. Here are two reasons why.

1) To have a long term effect, the work funded in a stimulus program has to create not just jobs but wealth. Bridges to nowhere won’t create any new wealth. Bridges that increase commerce, and energy plants that create new energy, do create wealth. Art is wealth producing. Picasso regularly took about twenty dollars worth of paint and canvas, and used his skill to transform it into millions of dollars worth of art. This is an extreme case, of course, but every artist transforms raw materials into valuable pieces of craftsmanship. That creates new wealth.

2) One of the biggest problems with stimulus funding is that businesses often don’t do what they are contracted to do. Companies are given tax breaks, even outright cash, to start a business in a location that needs jobs, then they close their local factory because they can make more money elsewhere. Banks are given money to lend, and instead spend it on bonuses, mergers, and thousand dollar parchment trash cans. The way to solve this problem is to give the money to people who would do the work you want them to do EVEN IF THEY WERE NOT BEING PAID AT ALL. Artists are the only productive workers in that category. They will work on their projects on their own time, invest their own money into them, and and will continue to work even when no money is coming in. Because of all the personal capital and sweat equity they have already invested, most artists need just a little bit more capital to take their work to the next level where it can be financially productive.

I'm not talking about artists who allegedly make paintings only in garrets and then never show them to anybody. Every artist I've known actively seeks audiences, and most eventually find them. Those audiences pay them money for their work--just not enough for them to consistently make a profit. (They're rather like automobile manufacturers that way.) A few well-placed grants can turn these artists into productive businesses, that generate jobs for countless other people. A successful concert generates work for ticket salesman, tee shirt vendors and food concessions, creates advertising revenue for newspapers and magazines—the list goes on and on. The fact that art is an essential part of what makes human, and enriches the human spirit, should not cause us to forget that it has many other uses as well.