House of Lords reform dropped

[Kuciwalker]

It should take Kuci less than an hour to write up a simulation with the following:

starting assets of +20, 0, -20, -60
incomes of 20, 40, 60
shocks of $(one_year_income), 10k (car?), 10k (medical), 10k (second medical) [probably additional ones of family/etc should be here, but those are reasonable]
put a generous interest rate of 5%, make the initial loan (if it exists) have an interest rate of 5% but make any future 'loans' have interest rates of ~20%
remember that for someone to retire living the life that they 'expect' they should be saving ~50% of their income

You can play with the chances for the shocks a little, but the initial starting assets can play a huge role.

"Shocks" don't mean anything outside of a given hypothesized utility curve, Jon. Without a utility curve you can't get risk aversion.

[Kuciwalker]

It means that poor people will not take them, even if an outside rational observer would see that it was worth it to take them.

So basically the entire problem would go away if we had a successful awareness campaign among the poor that college loans were worth it?

That sounds a whole lot cheaper and way less regressive than taxing the poor to give to the rich.

[Kuciwalker]

This does not have to be true. It is possible to give strong degrees to greater than 50% of the population.

I disagree for the American notion of a university degree but it doesn't actually matter. By construction anyone going to university has many, many people who are poorer than he. We should be giving money to the poorest in society, not taking it from them to give to people who are doing fine.

[Kuciwalker]

They are. They are young.

They are no more "have nots" than someone who has little money but full equity in an expensive house.

If you go for the market based solution you have worse outcomes, your outcomes cost more, and you have greater inequality.

The data you provided don't support that conclusion, for many reasons. The fact that you cite health care (where the same comparison is made with the same methodological flaws) is just more evidence, Jon, that you never have any clue what you are talking about when you try to talk about economics.

You are a legitimately intelligent person, Jon. How you can so consistently believe arguments that don't logically follow boggles the mind.

[Jon Miller]

Taxing those with incomes to pay for those without incomes to be able to contribute to society.

As has been pointed out by BK/etc, even in the US we hardly tax the poor at all.

Smart poor people see the damage that loans due, and refuse to take them (because most loans for poor people are predatory).

Additionally, poor people can not withstand shocks. I have credit card debt right now, because of shocks last year. I would not have any credit card debt right now if I hadn't been paying on student loans, instead I would have been able to weather the shocks that I faced without bad debt.

I agree that student loans are good debt. And I encourage poorer people to take them if necessary to get an education. But it doesn't stop it from being a large negative for who take them and make them a lot less resistant to shocks. And a system where people are not required to take them is a better system (and is also a better system when you look at outcomes).

JM
(And you say, OK... just recover. I plan to, but it is a lot harder recovering from negative than recovering from 0 or small positive. My example of people close to me who experienced a lot of unemployment the last 4 years (and were expecting to retire by now) who are borderline bankrupt/would have foreclosure/etc... this causes real damage to people and real damage to a countries wealth.)

[Jon Miller]

I disagree for the American notion of a university degree but it doesn't actually matter. By construction anyone going to university has many, many people who are poorer than he. We should be giving money to the poorest in society, not taking it from them to give to people who are doing fine.

Starting people with a huge debt means that people who would be doing fine will sometimes not do fine and end up a waste.

For example, if something serious happened to me medically last January, I would have been screwed. My education/capital/etc would have been wasted.

JM

[Bugs ****ing Bunny]

By construction anyone going to university has many, many people who are poorer than he. We should be giving money to the poorest in society, not taking it from them to give to people who are doing fine.

So set the threshold limit for income tax higher.

[Jon Miller]

You are a legitimately intelligent person, Jon. How you can so consistently believe arguments that don't logically follow boggles the mind.

That you consistently hold to logic which is based on economic rational actors boggles mine.

Poorer people are especially not economic rational actors (as a result of being poorer). This has been studied/published in journals.

JM

[kentonio]

1) We have a well-developed system of student loans. People actually avail themselves of this. It allows people to realize the financial value of their human capital immediately, before starting a job, and invest that money in an education.

You're borrowing money in the hope that no unexpected emergencies or other occurances will prevent you from attaining your degree, and then that your degree will get you a high paying job. If any of those things don't happen you've just bought yourself a lifetime of debt. Unless you have rich parents who could just pay it off for you of course.

2) Your observation ("it's easier for the rich to afford stuff") is true of every single sphere of life. That's the entire point of being rich. If being rich didn't mean that you got more/better stuff then who would bother? Taken to its final conclusion your position is literally socialism.

If you take the ridiculous American concept of socialism then yes. The version we actually have says that it's ok to make money and have nice things, but it's not ok for people without money to be denied opportunities (and healthcare lets not forget). Having a rich daddy should not buy you a ticket to a good life and having a poor one doom you to a life of drudgery. If that's what America stands for, then you can keep it.

The rich going to school makes it harder for the poor to? Are you suggesting that education is a scarce resource that the rich outbid the poor for? If so, then how is that different from every other good on the planet which is also a scarce resource?

The entire point of wealth is to grant preferred access to scarce resources.

Universities have limited places yes, and unless you vastly expand the number of university places to a level where a degree is basically worthless, that isn't going to change.

As I said, over here having a rich mummy and daddy is not supposed to buy you a golden ticket to life at the expense of the poor. Rich people have amazing opportunities including private education and so on, but that doesn't mean that you can raise the access bar to levels where poor people are unable to gain things like higher education just because they weren't born with a silver spoon in their mouth. University is supposed to be a place for those with a higher intellect and family wealth should play no role in that.

[C0ckney]

We have student loans here too, but it also acts as a deterrent to the poorer kids because if you've come from a world where £20,000 is a fortune, the idea of coming out of university owing that kind of money is a major turn off.

as i have already said. if you are from a poor family, you do not pay tuition fees.

the idea of putting a price on the degrees is a good one. it will make people think more about the potential value of their degree. if poorer people are put off disproportionately, then the solution is to provide better information about the relative costs and benefits of taking a degree course to those people.

That's true, and I was heavily against New Labours plans to try and increase that massively. I think they should have been aiming to increase low income families opportunities for a decent education to level opportunities for university admissions, not just letting everyone in and cheapening degrees across the board.

yes we could go back to the system where fewer people went to fewer, better funded universities and the state paid for everything. i think that's a perfectly reasonable view, and one i have some sympathy with. however, the people on the anti-tuition fees side seem to want to maintain or even increase student numbers and have the old funding arrangements, without thinking for a moment about the reason the old system became unsustainable. i.e. the massive increase in student numbers.

[kentonio]

as i have already said. if you are from a poor family, you do not pay tuition fees.

That's not really true. The test can mean for instance if you have parents with a decent house but no actual cash that they fall outside the means test.

yes we could go back to the system where fewer people went to fewer, better funded universities and the state paid for everything. i think that's a perfectly reasonable view, and one i have some sympathy with. however, the people on the anti-tuition fees side seem to want to maintain or even increase student numbers and have the old funding arrangements, without thinking for a moment about the reason the old system became unsustainable. i.e. the massive increase in student numbers.

Yeah that's not something I could support, for me we just need an equal opportunity for kids of all backgrounds to reach their potential, but of course that's also going to need a radical reworking of comprehensive education. I'm almost on board for bringing back Grammar schools but even that would need a huge investment in primary education to ensure that we're giving kids a fair shot at the 11+.

[Kuciwalker]

So set the threshold limit for income tax higher.

$ spent on rich college students are $ that could (and should!) go to the poor.

[C0ckney]

That's not really true. The test can mean for instance if you have parents with a decent house but no actual cash that they fall outside the means test.

no. it's based on parental income. i didn't pay any tuition fees, one of my sisters is thinking about going to university, she won't have to pay either.

Yeah that's not something I could support, for me we just need an equal opportunity for kids of all backgrounds to reach their potential, but of course that's also going to need a radical reworking of comprehensive education. I'm almost on board for bringing back Grammar schools but even that would need a huge investment in primary education to ensure that we're giving kids a fair shot at the 11+.

i agree that we need to focus more on primary and secondary education. i'm not convinced that we need a return to grammar schools. we need to offer credible routes into trades and jobs that don't require an academic education. i think the separation should come at 14 rather than 11.

[kentonio]

no. it's based on parental income. i didn't pay any tuition fees, one of my sisters is thinking about going to university, she won't have to pay either.

Actually you're right, its not assets but (at least a few years back) the income calculation was flawed. My folks were self employed and the calculation was either based on income from previous years which didn't necessarily mean you had that money the current years, or something similar.

i agree that we need to focus more on primary and secondary education. i'm not convinced that we need a return to grammar schools. we need to offer credible routes into trades and jobs that don't require an academic education. i think the separation should come at 14 rather than 11.

I never understood why there was such an anti-Grammer school movement tbh, although I think you're probably right about any decision being taken a few years later. The fear with the vocational school stuff is just that you risk channelling clever poor kids into trades while dumb rich kids still go to college.

[Kuciwalker]

That's not really true. The test can mean for instance if you have parents with a decent house but no actual cash that they fall outside the means test.

Good! People shouldn't get to steal money just because they already spent all of theirs on something nice.