Predatory Student Loans Not Contributing To Washington Economy
The good news is that Washington experienced a net gain of 5900 jobs in October. The bad news is that more than two thirds of those jobs were in the public sector. Admittedly, my formal training in economics is limited to about 8 units several decades ago, but I’m reasonably confident that a job market that creates two public sector jobs for every private sector job is not sustainable. It is the private sector that creates the wealth that provides sustenance for the public sector, and there is simply no way that a single private sector employee can generate enough wealth to support his own family and two others. The 5900 jobs “created” in October bring the 2010 total in Washington to 6000. That’s all. For the whole year.
October’s private sector job creation included 1500 professional and business services, 800 service jobs in the wholesale trade, 400 service jobs in information, 400 service jobs in the financial services sector and 300 jobs in retail sales. All of these jobs are in the service sector. No one was hiring “activists.”
Meanwhile, the manufacturing sector lost 400 jobs, as did transportation. Another 200 disappeared from the mining and logging industries as did 300 in hospitality and leisure.
So if you’re coming to Washington looking for a job, don’t plan on actually creating or building anything.
Another news story I read this last week noted that the few private sector jobs that our country is creating are mostly in low tax, right-to-work states, which certainly makes sense. Washington’s high tax, union dominated political climate recently drove Boeing to start construction of a new 787 assembly plant in South Carolina.
Even someone with my limited economic training can figure out that this is not going to last. If Washington is ever going to dig itself out of its economic hole, its ruling class will have to look past the interests of its traditional campaign contributors and power brokers and take difficult decisions.
Unfortunately higher education in this state (and in every other state for that matter) is not contributing as much as it could to economic vitality. For all of the hand wringing and political posturing dedicated to the problem of underwater mortgages, mortgages in which the principal balance exceeds the value of the property, higher education is creating a bubble of its own with underwater college degrees.
Universities are pouring out graduates with degrees in subjects that have little or no market value. And to get these worthless degrees the students have accumulated mountains of student loan debt which will weigh heavily on their own futures.
Mortgage lenders have become favorite targets of our ruling class for their supposed “predatory lending practices,” otherwise known as subprime mortgages. Subprime mortgages invited people with poor credit histories and lower incomes to purchase homes that they otherwise could not afford. This practice was forced upon lenders and was once touted by the same ruling class that now condemns it as a means to provide lower income people with an opportunity to accumulate equity. It worked until it collapsed under its own weight.
In its own way, higher education has engaged in its own predatory lending practices by encouraging student to incur heavy debt loads with the promise that a college degree will increase future earning potential sufficiently to make that loan a good investment. Unfortunately, this is not always the case. I recently stopped by a booth at an academic fair to pick up a recruiting brochure that was being handed out to prospective freshmen. It included a fanciful list of careers that this particular academic major supposedly prepared its graduates for. One of those jobs was as that of an “activist.” I don’t know that there are all that many jobs for professional troublemakers but I do know that the few that do exist don’t pay well and certainly do not contribute even one thin dime to wealth creation. It will take some time for an activist to pay off $50,000 or more in student loans. A recent New York Times article told the sad tale of a woman who accumulated $100,000 in student loan debt earning a degree in women's studies and is now discovering that her Bachelor’s degree is worth less than a high school diploma. Some investment.
Colleges and universities are not necessarily trade schools. But we do no one any favors by turning out graduates who won’t even be able to pay off their student loans.
October’s private sector job creation included 1500 professional and business services, 800 service jobs in the wholesale trade, 400 service jobs in information, 400 service jobs in the financial services sector and 300 jobs in retail sales. All of these jobs are in the service sector. No one was hiring “activists.”
Meanwhile, the manufacturing sector lost 400 jobs, as did transportation. Another 200 disappeared from the mining and logging industries as did 300 in hospitality and leisure.
So if you’re coming to Washington looking for a job, don’t plan on actually creating or building anything.
Another news story I read this last week noted that the few private sector jobs that our country is creating are mostly in low tax, right-to-work states, which certainly makes sense. Washington’s high tax, union dominated political climate recently drove Boeing to start construction of a new 787 assembly plant in South Carolina.
Even someone with my limited economic training can figure out that this is not going to last. If Washington is ever going to dig itself out of its economic hole, its ruling class will have to look past the interests of its traditional campaign contributors and power brokers and take difficult decisions.
Unfortunately higher education in this state (and in every other state for that matter) is not contributing as much as it could to economic vitality. For all of the hand wringing and political posturing dedicated to the problem of underwater mortgages, mortgages in which the principal balance exceeds the value of the property, higher education is creating a bubble of its own with underwater college degrees.
Universities are pouring out graduates with degrees in subjects that have little or no market value. And to get these worthless degrees the students have accumulated mountains of student loan debt which will weigh heavily on their own futures.
Mortgage lenders have become favorite targets of our ruling class for their supposed “predatory lending practices,” otherwise known as subprime mortgages. Subprime mortgages invited people with poor credit histories and lower incomes to purchase homes that they otherwise could not afford. This practice was forced upon lenders and was once touted by the same ruling class that now condemns it as a means to provide lower income people with an opportunity to accumulate equity. It worked until it collapsed under its own weight.
In its own way, higher education has engaged in its own predatory lending practices by encouraging student to incur heavy debt loads with the promise that a college degree will increase future earning potential sufficiently to make that loan a good investment. Unfortunately, this is not always the case. I recently stopped by a booth at an academic fair to pick up a recruiting brochure that was being handed out to prospective freshmen. It included a fanciful list of careers that this particular academic major supposedly prepared its graduates for. One of those jobs was as that of an “activist.” I don’t know that there are all that many jobs for professional troublemakers but I do know that the few that do exist don’t pay well and certainly do not contribute even one thin dime to wealth creation. It will take some time for an activist to pay off $50,000 or more in student loans. A recent New York Times article told the sad tale of a woman who accumulated $100,000 in student loan debt earning a degree in women's studies and is now discovering that her Bachelor’s degree is worth less than a high school diploma. Some investment.
Colleges and universities are not necessarily trade schools. But we do no one any favors by turning out graduates who won’t even be able to pay off their student loans.
posted by Michael at
5:59 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home