Are Navient Loans Really the Problem?

On face value, in an article from Bloomberg it looks like Navient is the latest Scape goat of the massive nightmare that is the government-subsidized student loan program. I’m not sure how entangled Navient is, and I am not condoning them, but the article is surprising on its conclusions.

  1. It accepts these student loans were beneficial to the consumer, but then it accepts 1/4 are struggling to repay their loans.

At least 1 in 4 of these loans were not beneficial to the student based on the value derived. Don’t confuse me with blaming the student and parents for a chance at a degree. As a culture, the perceived value is far out of scope with the actual value of a degree. If one goes into debt for a better more independent life, but gets the opposite….the investment was not worth it. Blaming the student or parents would be a misguided approach when there is a massive government promoting/subsidizing a degree’s worth alongside companies benefiting from government mandates.

In an actual free market, both lender and the borrower have incentives to ensure the loan is made for the right reasons and amount. A lender won’t lend if they know they will not be re-paid, and the borrower is evaluating how much is the reason worth justifying the loan. The interest rate is to ascertain the amount of risk a lender is willing to take, and if agreed upon, what the borrower is as well. Together, both parties are incentivized to make the optimal decision, to be better off after the loan is repaid.

  1. It blames a former branch of Sallie Mae as not doing its “job” to help former students pay their debt.

What incentives does a company like Navient actually have to help when it is illegal to walk away from student loans? This alone eliminates any downward pressure on price to ensure loans are of a repayable amount. Additionally, any incentive for a company to work with you to ensure payment is lost. By law the borrower has no escape from an ill-advised decision early in their lives.

Many of these student loans on a free market were bad decisions by any company issuing loans, but this isn’t a free market. Ensuring a loan company by law will receive payment eventually incentivizes more ill-advised loans, and less chance of assistance to pay back.

On this one example in a truly voluntary market, the company issuing loans with a fear of bankruptcy will, A) Not issue the loan to begin with if there is no evidence of possible repayment, B) Should a loan be issued and the student is having difficulty, the company would rather see partial or longer repayment options rather than receive pennies from a bankrupt 22 year old that has no assets to their name.

This article shows me there are huge issues way before Navient showed up. The value of a degree is not what our culture or government promote it to be. Based on the debt and money needed for a degree some are arguably worthless. Not all degrees are equal in value.

Problems with Navient will keep happening but with either different companies, or different people unless the root problem is solved.

The solution is not finding more scapegoats, its allowing education to adjust to its actual value, not subsidized and made more expensive by intervention.

This Bill Is Full of ‘Holes’!

There are currently no laws regulating body piercers in the state of North Carolina. Lawmakers in the state are trying to change that by using a time-tested route: find unrelated troubling statistics, find it concerning that people are left “unprotected,” and create a “common sense” bill designed to protect the uneducated and fearful public.

The politician is credited for being a caring and paternalistic provider of the unknowing and fragile citizens, while the unrepresented small industry they wish to tax, oops, I mean regulate is small enough that few will care.

In an N&O article Representative Kevin Corbin (R-Macon) pointed to HIV and Hepatitis C cases tripling from 2010-2015 as reason enough to sponsor HB 250, requiring professional licensing for piercers, similar to that already required for tattoo artists.

In phone conversations with  Corbin, and later Director of Macon County Public Health Center Jim Bruckner, it was disclosed that this figure is just a generic rate of infection across the state. There is no data on the role piercings or tattooing has played in that increase. Keep in mind this was the evidence that gave them reason to introduce this bill.

This law assumes people are incapable of protecting themselves and businesses have no incentive to provide a high-quality service or safety for their customers. Market competition, however, ensures business are highly incentivized to provide a safe and clean environment. A bad reputation and negative word of mouth from customers can put any company or person out of business. Government does not need to intervene for an industry to be “regulated,” consumer preference delivers the incentives for businesses to provide quality and safety to customers.

So if it’s not going to help, what does this bill do?

Increase health risks: This bill may actually increase the likelihood of problems that politicians wish to fix. Over the phone, I was informed of situations where illegal operations offer piercings at a low rate of $20 or $30 to pierce anything. These rogue piercers operate out of their car trunk with a tin box for their supplies and the unsanitary practice of simply wiping down used piercing needles on their clothes between uses. When inquired why people would use these services, the answer was “low cost.”

If it is the inexpensiveness of the piercing that drives people to get pierced out of a trunk, forcing already reputable piercing studios to incur an additional licensing expense will only drive more piercing customers to black-market providers. Moreover, after a few phone calls, I found $10 to be the common piercing price for studios, raising questions about the story above.

State-subsidized complacency: The N&O reported Corbin saying “I think most people think it’s regulated now.” Assuming this were true, does the state thereby generate a subsidized form of complacency with the public? Would piercing consumers act or react differently if they knew they needed to be cautious of their surroundings?

Regulations induce a form of subsidized complacency value on an industry. Mandated practices like wearing seatbelts are shown to promote complacency and even riskier behavior by consumers. If people believe the government is enforcing safety, they are more likely to be lulled into a false sense of security and as a result be less aware of their actions and surroundings to determine what is in their own best interest.

Revenue generator: The excuse is health, but the real reason is money. The law will do nothing to stop the people at the trunk; in fact, because of prices it may actually drive more people to the trunk of the car for piercings. What this bill does add is an additional licensing step and additional licensing fee generation for the state or county. Many states are already in a battle to deregulate the hair braiding industry and free it from rules that often require thousands of training hours and dollars to obtain a license just to braid someone’s hair. This law puts piercing on the path of being the new hair braiding.

This is purely a feel-good law that only has potential to cause harm and raise costs on consumers as well as the entrepreneurs providing safe and healthy piercing. If Rep. Corbin and the county health officials want to help, I suggest staying out of the way or just stating they do not regulate piercing. That way individuals can make informed and knowledgeable decisions free of coercion, understand the risks as well as benefits of piercing and decide for themselves.

*Originally published at the Civitas Institute 

This Is For The Dogs, But It’s Really Not About The Dogs

If you have ever uttered “there ought to be a law …”, then seeing a dog on a driver’s lap may have been one of those times. I have no patience for people who think this is a good idea, and expressed my opinion a time or two on the ridiculousness of such a risky practice. However, no matter how much of a good feeling one gets thinking about promoting a law, there is the far worse law of unintended consequences.

North Carolina Rep. Garland Pierce (D-Scotland) this week proposed a law to ban dogs/exotic animals on drivers’ laps, stating that: “It protects the motorist. It protects the animal. It’s just common sense.” He is not wrong about common sense, but that is also the reason there should not be a law on this or many other so-called common sense laws. There are other common-sense actions arguably dangerous for driving, such as talking to a child in the back seat, eating a burger, changing the radio station or playlist on your phone, playing guitar, playing a tuba, reading George Orwell’s “1984” (I hear all the good Democrats are reading it lately), and the most risky of all – driving while driving.

I bring these points up to show there “ought to be a law” for many things while driving, but at a certain point, what are we trying to do? Are we helping or are we causing other problems and just making ourselves feel good?

At the end of the day this law will be added to hundreds of other laws for the road. Many of these are rarely if ever enforced, such as laws against texting, talking on the phone, jaywalking, speeding, not wearing seatbelts, cracked windshields, broken tail lights, car seats, etc. etc.

We have a police system already burdened with society’s feel-good laws meant to protect us from ourselves. These oftentimes-unenforced laws lead to increased chances for police to selectively pick and choose, or profile, who they pull over. These types of laws, when they are enforced, increase the occurrence of police encounters, thus raising the likelihood of the tragic incidents we see on the news. Potentially, these feel-good laws are used as the initial reason to pull a driver over to then search for additional infractions, all of which puts people at risk.

The dog law is not really about the dog law. There are more serious potential unintended consequences:

  1. Precious officer time is spent to monitor dog owners, cracked-windshield owners, parents, and teenagers, turning all into criminals at one point or another. (More info here)
  2. Arguably excessive regulations cause people to lose awareness of their surrounding, leaving safety issues for government to decide instead of themselves. (More info here)
  3. The community slowly loses faith in the police, creating a perception the police are here to penalize, not protect. (More info here)

I must say I believe nearly all officers joined the force to do the right thing, to protect and serve their communities. But government officials desiring to create feel-good laws for our officers to enforce are doing them a disservice. Actively finding ways to increase police encounters only raises the likelihood for claims of profiling and corruption. Also, any time an officer pulls someone over there is a huge risk to that officer with no way to tell how the driver is going to react. Using these types of laws to force our respected loved ones into danger over a dog or cracked windshield is ridiculous.

If we respected the police, like most of us do, we should promote a force ready, willing, and able to protect and serve – not a group we demand do our common sense work for us at their and their loved ones’ expense.

 

(First published at Capitol Connection)

3 Immediate Opportunities Waiting for Trump

If President Trump wants to boost opportunities for American to prosper, it won’t be so much the policies he creates as the ones he can eliminate. Over the past eight years, the Obama Administration has built a wall against American innovation and economic expansion. Trump has already gotten to work tearing down that wall with his executive actions paving the way for the Dakota Access and Keystone XL pipelines.

Now Trump should strike down three key Obama executive orders to make the first few weeks a success for the people.

‘Wet Foot Dry Foot’ Policy

Praised by the Cuban government as a way “to guarantee normal, safe and ordered migration,” Obama’s Executive Order ending the so-called “wet foot, dry foot” policy is nothing more than a political favor to a coercive government. The policy originated in a 1995 agreement stating Cuban refugees intercepted off shore would be returned to Cuba, while those landing on shore could stay in America and apply for asylum. That was a step away from the 1966 Cuban Adjustment Act, which made no distinction between wet and dry.

We should be reminded of the poem, “The New Colossus”:

“Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!”

These words enshrined on the Statue of Liberty should guide Trump and America’s policy towards Cuba. If you desire to be free no matter your lot in life, America is a welcoming place.  Bringing back a “wet foot, dry foot” policy would continue to encourage Cuba to change its coercive ways. Ending a speedy pathway for Cubans will only bring more power to a festering Cuban regime.

Overtime Pay

Those on the left are very quick to argue against government involvement in personal relationships, but readily treat business relationships like a plague. Employers and employees are nothing more than voluntary working relationships. Mandating salaried workers overtime pay makes many beneficial relationships illegal.

Currently overtime pay is mandated on hours worked above 40 if total earnings are less than $23,360 per year. Obama recently enacted an executive order that is currently blocked by a judge, increasing the salary threshold to $47,476 per year for employees subject to incurring mandatory overtime pay. (Before this rule, no employer was banned from offering overtime pay if they desired to.)

This means fewer hours and opportunity for those most in need. When an employee is hired to perform work at $10 an hour, they must produce more than $10 worth of value during that hour. Forcing an employee to be paid $15 an hour with no increase in productivity, the employer will stop the employee from working beyond 40 hours a week. The employee never sees overtime pay and new employees would be hired at lower salaries to compensate for the lack of overtime.

If the employee agreed to work 50 hours before, they could have brought home $100 more that week. Under the Obama-era executive order, an employee could legally earn no less than $150 more for the extra 10 hours—with anything less a punishable crime. The very people who need and have the most desire to improve their plot in life are banned by executive order.

Work for Welfare

Welfare should be judged not by how it grows, but how it shrinks. That seems to be an idea forgotten during the Obama presidency, which saw the gradual disappearance of a long-standing work requirement for welfare recipients under the Temporary Assistance for Needy Families program.

President Bill Clinton signed TANF into law in 1996, It mandated 20-35 hours of work each week in exchange for benefits for households with children. The goal was to incentivize parents to earn a living without government assistance, and keep families together. The work requirement and time limit on benefits helped families seek work and gradually pull away from the welfare cliff.

Trump could help bring sanity back to an already overburdened welfare system by reversing Obama’s executive order ending the work requirement. That would encourage families to live by their own means, not at the pleasure of the federal government.

It’s safe to say many Americans have reservations about Trump. But a population suspicious of a centralized authority may be the key to recovering our liberties. These three necessary executive orders would turn back some of Obama’s instances of overreach. But to secure liberty for future generations and ourselves, more power must be taken away from the president no matter who holds the office.

 

(First published at Opportunity Lives)

Liberty In Potatoes

(Fun old article I wrote 2 years ago for Independence Day)

This week, in honor of the Declaration of Independence declaring “that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”, I took the liberty to pursue happiness and dig up one of my potato plants (potatoe in case you are Dan Quayle). Above the soil the browning leaves indicated my labor had brought about some spuds underneath.

As you can see in just a few months I turned ¼ of a potato into 7 delicious Yukon golds (9 if you include the bite size ones). These 7 potatoes represent thousands of years of knowledge, genetic manipulation, and labor; plus my time tilling, planting, and watering to transform them soon into a meal my family could enjoy.

The potato, since it first sailed from Peru across the Atlantic Ocean on a Spanish ship around 1570, has brought millions upon millions of individuals needed nourishment and an escape from the perils of weather, hunger, and government plunder. The new food staple brought nutrition to a European diet that arguably was worse than that of hunter and gatherers. What is unique about the potato is it factors in perfectly for human sustenance. In fact a man can easily subsist solely on a diet of potatoes with an occasional splash of milk for any vitamins missed by this tuber. Not much of a life, but still a life.

When first brought to Europe this tuber had dozens of benefits. The potato could weather government destruction by being kept underground away from plunder during a war, even away from a thief or pesky taxman attempting to reap the spoils of a peasant’s labor. In addition to theft through war and taxes, peasants were typically forced onto worthless land unwanted by the ruling class. This was especially the case in Ireland, but the potato knows no limits and flourished to feed the thousands of hungry souls.

This escape from hunger is a huge step in the improvement of life, liberty and happiness. Without the threat of hunger, and the ability to save for future needs, man is able to move onto larger and greater endeavors rather than just subsisting on the land to live another day.

In 1783, across the sea on the oppressive Isles Americans had just overthrown, there had been a debate by those in power about whether to let the potato become a stable crop of the British held islands. Many argued against allowing the potato to be grown for the reason grain/ bread was the crop of civilization. If grain crops failed populations of peasants would be kept in check. Limited grain supplies were Gods plan for population control. Limited grain meant less children surviving birth and fewer people surviving the cold winter. Others argued on philosophy against the potato, it was so easy to grow, “since the Irishman are and grew his own potatoes, and since the potatoes (unlike wheat flour) could not easily be stored or traded, they never became commodities and were therefore, like, him subject to no authority but natures own” (pg.205: “The Botany of Desire” Michael Pollan).

Alongside the ideas of individualism and liberty making possible the industrial revolution, perhaps it was the potato that too contributed by allowing the individual to escape the toils of hunger and focus on their individual pursuits. Prior to the potato thousands of more labor hours, and therefore men were needed to feed themselves and others. Europe was plagued with famine due crop failure from weather or war. Grain crops were not reliable and took many more hands and labor hours to grow than a potato. Releasing individuals from the land to work in factories, to pursue and create greater value elsewhere was a huge increase in energy available to progress man into the future.

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Perhaps two more noteworthy facts related to liberty and the individual before we all head back to work from the great weekend celebration of Independence.
Perhaps an urban legend but after a few trips to France, Thomas Jefferson was so impressed with the way the potato could be cooked he involuntarily popularized it in America. He would regularly serve the fried spud in the manner of the French to guests. This fried spud in the manner of the French was cut up potatoes deep fried in oil. Perhaps you had some of these this weekend?

Finally, the most interesting part about the potato is its transition from wild poisonous weed to cultivation. The original tuber was loaded with solanine and tomatine, very natural and poisonous chemicals. Prior to discovering less poisonous spuds, hunter gathers in South America could only eat potatoes with a “gravy” of clay mud. The chemicals in the mud would attach to the toxins and “more” safely pass through the body without being absorbed. It is only through thousands of years of genetic selection by man that we have a potato that we can safely eat.

Hope everyone’s Independence weekend was a blast and I hope you got to eat the liberating tuber known affectionately as the potato.