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Collateral Damage Defines Socialist B.S.

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Senator Bernie Sanders gave us a big present last week. In one simple “tweet” he warbled out the essence of his socialism: “You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”

That’s what he broadcast. That’s what this self-​proclaimed socialist wrote — or allowed his staff to write — on his official Twitter account, @SenSanders.

And it is not as if he had the excuse of haste. He was repeating a thought from his presidential campaign account in September: “It makes no sense that students and their parents pay higher interest rates for college than they pay for car loans or housing mortgages.”

To the earlier post, Twitter erupted in criticism. The gist? Have you never heard of collateral, sir?

Lenders can charge less on secured loans because, in case of default, the recourse is to take the collateral, the car or house, thereby recouping the loss.

But an unsecured loan? Well, by law one cannot easily slough off student loans — but one can simply not pay, or pay late. Hence the higher rates.

From its beginnings, socialism — and progressivism and Fabianism and fascism and social democracy, following — has been fueled by complaints about markets.

Without showing any understanding of the logic of markets.

Which is why, when put into practice, socialistic and interventionist programs produce such great amounts of negative collateral effects. Socialism is the philosophy of good intentions that yields collateral damage worse than the problems meant to be solved.

Oh, Bernie Sanders! Your initials say so much.

This is Common Sense. I’m Paul Jacob.


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Bernie Sanders, consequences, socialism, economics, illustration, Common Sense

 

7 replies on “Collateral Damage Defines Socialist B.S.”

Socialists believe they control can control humanity and the market, their first and fatal false premise.  Sen. Sanders is simply proving he is no exception and therefore extremely deluded and therefore dangerous, regardless of his “good intentions”. 

When shopping for a house or a car, I refused to buy one that cost more than I could afford or had a price I simply didn’t want to pay. How about today’s students? How many eschew the higher-​priced Ivy League colleges and attend colleges that cost less? How about using your status as consumers to bring down the price of higher education? How many students (and parents) are being played for suckers by the education establishment? And if Senator Sanders wants to ‘level the playing field’, how about changing the tax code so that all interest on student loans is deductible, regardless of whether or not you itemize or take the standard deduction?

Education is an investment in self,  perhaps both the capital cost and the interest should be deductible under the present governmental confiscation policies, perhaps the capital cost depreciated over the time of the anticipated benefit. 
All this however is moot if a more rational consumption tax replaces income taxation, and ithe disastrous ancillary market misallocations. 

When we apply for a mortgage to buy a house, the bank has the property appraised so that they don’t issue a loan for more than the property is reasonably worth. When we apply for a loan to fund a business venture, the bank requires the applicant to provide detailed financial information and a detailed business plan. No such requirements exist for student loans. This needs to change! 

Another thing that needs to change is the methodology used to rank colleges and universities. I propose that each department at each college or university compile data – many already do – as to how many students who graduate with a batchelor’s degree in a particular major obtain employment in their field within six months of graduation or go on to earn an advanced degree in that major. Each college or university’s score and would be the weighted average of departmental scores. The schools and the departments’ rankings would be available so that students could make informed choices as to school and major.

Nothing too astute to respond here, other than, “Oh, Bernie Sanders! Your initials say so much.” I laughed out loud. Too true!

.… Oh, Bernie Sanders! Your initials say so much. 

.… This is Common Sense. I’m Paul Jacob .… 

They do. 

It is. 

You are. 

Happy New Year and a great, safe, healthy and prosperous 2016 for you and for everyone you love. 

Brian Richard Allen

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