Swans Commentary » swans.com November 21, 2011  



A National Students' Recovery Bank


by Manuel García, Jr.





(Swans - November 21, 2011)  Tensions are rising rapidly in many of America's cities, between the anti-capitalist protesters of the Occupy Wall Street and Occupy Public Spaces movement, and city administrations badgered by chambers of commerce, business associations, property owners, and apprehensive residents, to deploy larger troops of police that sustain more intense (more violent) anti-protest offensives that quickly disperse the demonstrating crowds and prevent their reassembly.

While many Americans sympathize at a distance with the plight of the-crash-of-'08 debtors and the jobless, especially its cohort of young adults who once thought they were born into the middle class and were destined to work in it, Americans have no sympathy at close range, when the protest encampments attempt to assemble "in their backyard," which is to say within the neighborhoods where they conduct their businesses and carry on their private affairs.

American society is still too atomized and indoctrinated to acquisitiveness and careerist attention seeking for social solidarity to overcome the reflex to defend one's own material status and economic advantages. The conditions of financial hardship are not yet sufficiently widespread, nor sufficiently deep, to force most Americans to see each other as all in the same boat. That economic lifeboat has sprung so many leaks that its remaining fretful rowers have tossed the Occupy movement people over the side to keep the rowers afloat, and they aren't looking back. It is painful to imagine the degree of devastation that would be required for the emergence of unrestricted solidarity in American society.

While the population of the Occupy movement is diverse and holds many grievances as a whole, one numerically significant and highly visible class of participants is that of young adults. Many are present or former college students, and many of these have debts for education loans and cannot find non-menial (or any) employment. This segment of the nation's young adult population is pouring its energy and enthusiasm into the Occupy movement. Forced to rethink their plans for the future and their images of themselves, by the collapse of the economic foundations upon which those imagined futures would have been based, they have found each other in this movement, which is both a shared exhilaration of self-discovery, and a personal comfort of group acceptance.

Regardless of how any member of the student-age population in the United States today arrived at his or her level of indebtedness for education loans, and condition of under-employment or unemployment, it is absolutely wrong for the rest of the nation to accept discounting this population as either excess or bankrupt. It was these older generations of Americans that destroyed the economy that would have supported the entry of a new generation of job-seekers, would-be professionals, and would-be tradesmen into productive occupations. The young people of the Occupy movement are protesting the theft of their futures by the rapacious greed of their elders in financial corporations. However callow, impatient, even bratty we may see the youth of the Occupy movement, the "good job" generation of American children born in the late 1980s and early '90s (and raised by spoiled-brat parents who are late Baby Boomers, or the children of early ones) they indeed have a point, they were set up to fail. They reached their maturity ready to assume the capitalist roles American education and media had trained them to aspire to, and that American capitalist economy evaporated before them as they stepped forward to continue it.

Instead of marshaling more police, and draining city coffers into police overtime pay, to keep the youthful energy of the Occupy movement from interrupting the stream-of-consciousness of those self-absorbed Americans myopic to all except their own self-interests, the nation should "recover" this youthful population in the same way it recovered the bankrupt Saving and Loan Industry in 1989, and the bankrupt commercial banking industry in 2008: a public bailout in the form of a federally-funded bank that lifted the troubled out of their distress by refinancing their existing debt into far gentler terms. In 1989, this was the Resolution Trust Corporation established by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, and in 2008, it was the Troubled Asset Relief Program established by the Emergency Economic Stabilization Act of 2008. Let's call the new bank the National Students' Recovery Bank (NSRB).

The NSRB would refinance the education loans of students over a long term and without interest. Payments would be limited to a low fraction of monthly income (under 10%), so periods of low-paying employment, or unemployment, would not cause loan penalties. Incentives for prompt repayment could include forgiving the remainder of the loan if 50% of it were repaid within ten years, or some similar formula. The purpose of the NSRB would be to remove the anxiety, the mounting cost, and the impediment to productive activity that the debt liability of a student loan in its originally contracted form, without significant income from skilled employment, would entail.

A generous nation could just forgive all such debts, and release this young generation to apply its energies to help raise the nation out of its depressed economic state. A less generous nation might still be practical enough to establish a NSRB, so this young generation could stabilize its financial situation for the long term, and thus begin a productive engagement with the nation's economic, political, and social life.

The idea of making students pay for their education loans made sense in times past, when they could easy secure high paying jobs in a growing economy, out of gratitude and because they would find it affordable to repay the public's investment in their being trained for more rewarding and remunerative work. By the same logic, it makes no sense to force students to pay for education loans when the economy they are graduated into offers them nothing. It would make more sense for the government to prosecute its economic forecasters who justified the underwriting of these loans for incompetence, and the private banks that issued such loans, and the universities and colleges that readily accepted this loan money, for swindling students by selling them false or fictitious "careers" and "advancement."

The NSRB would be similar to a domestic Grameen Bank, a community development bank established as an act of intergenerational solidarity, which would recognize the great potential of the currently indebted young generation as a trapped asset of far greater value to the nation than the current balance of their education loans, that loan balance having become a nuisance that impedes the unfurling of this young generation's productive capacities.

Happy Thanksgiving.


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About the Author

Manuel García, Jr. is a native of the upper upper west side barrio of the 1950s near Riverside Park in Manhattan, New York City, and a graduate engineering physicist who specialized in the physics of fluids and electricity. He retired from a 29 year career as an experimental physicist with the Lawrence Livermore National Laboratory, the first fifteen years of which were spent in underground nuclear testing. An avid reader with a taste for classics, and interested in the physics of nature and how natural phenomena can impact human activity, he has long been interested in non-fiction writing with a problem-solving purpose. García loves music and studies it, and his non-technical thinking is heavily influenced by Buddhist and Jungian ideas. A father of both grown children and a school-age daughter, today García occupies himself primarily with managing his household and his young daughter's many educational activities. García's political writings are left wing and, along with his essays on science-and-society, they have appeared in a number of smaller Internet magazines since 2003, including Swans. Please visit his personal Blog at manuelgarciajr.wordpress.com.   (back)


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Swans -- ISSN: 1554-4915
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Published November 21, 2011