Tag Archives: socialism

Student loan debt forgiveness? Or welfare for banks?!

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“My student loans, car payment + CC debt amounts to cost of a home in one of the more affordable cities. A Master’s degree in this economy seems to be a liability. I AM THE 99%” claimed one occupy protester. She was not alone. The occupy protesters, frequently lampooned by their detractors as having no central purpose or cause, identified student loans as a #1 concern of their movement.

A client once approached me with a problem: her student loan debt was beginning to drastically detract from her quality of life. Federally backed student loans are non-dischargeable in bankruptcy. And she found that despite being employed, her monthly student loan payments were too high. She would make payments, but the payments were not complete. Since collection attempts are charged to the debtor, and become part of the principle debt, she had noticed a troubling pattern. After each payment, she would receive a call from a debt collector. Since the bulk of the payment was against interest rather than the principle debt, the dent she was making in the principle through her partial payments was actually smaller than the additional principle that was being added, each month, by the debt collectors’ calls and subsequent letters. Though she had paid more money against her student loans than she had originally been lent, the principle debt was now larger than ever; and the servicers’ enforcement mechanisms allowed them to sidestep the usual costs of collection through tax refund garnishments, wage-garnishments and social security garnishments that were nearly self-enforcing. It didn’t make sense.

The Moral Hazard of Socialism

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When I first heard that the new pope took the name Francis in an effort to focus the Church on the poor, I thought it could go either way.  St. Francis gave up his wealth and lived in poverty, and Franciscan priests take a vow of poverty to this day. Dedicating oneself to the poor is noble, of course, but I have grown skeptical when the poor are invoked as a call to action. I have found that too often the poor are used as an excuse to expand the size and scope of government, while decade after decade we are told we must redouble our efforts in the War on Poverty.

My fear that the new pope might have a political or economic message rather than a purely moral one was heightened when I realized he was a Jesuit–some of that order are well known for promoting governmental redistribution of wealth, which to me is not charity but theft.

This very thought process, however, made me realize how cynical I had become. I have come to the point where I hurry past beggars and think ill of them, wondering, “Would you sell your vote for cigarettes?” Or being tempted to mutter, “I pay enough, buy your own beer.”

 

‘The Obama Experiment’ Causes Economics Professor to Fail Entire Class

This anecdote taken from facebook gives an analogy of economics through redistribution, enjoy…

 

‘The Obama Experiment’ Causes Economics Professor to Fail Entire Class

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little..

 

Resist and Stack Silver
 

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. It could not be any simpler than that.Remember, there IS a test coming up. The 2012 elections.

These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Read Here…

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