The blindness of Bernie Sanders (and others)

At the seminar I mentioned in my previous post, one of the things I noticed about Burke and Tocqueville was their approach was completely political. The economic side of life and the laws that govern it were never on their radar. This isn’t a defect, it’s simply a result of the fact that one person cannot be an expert in everything.

I try to avoid commenting too precisely on ephemeral political issues, but something’s been stuck in my head for a few days and it ties in with timeless issues. There was some Bernie Sanders bit floating around the internet recently about how absurd it was that you could get an auto loan with a 2.5% interest rate but 7.5%, triple the rate, for a student loan. To a person with his background and training, sure, it probably seems absurd. But even the most cursory familiarity with economics makes it completely intelligible. A man aspiring to the most powerful position in history has a duty to familiarize himself with the ideas that he will confront (largely unsuccessfully) if he attains it. It’s possible he really does know and is simply pandering, as I suspect many of them do much of the time, but my subjective impression of him is that he is overwhelmingly sincere even in his completely uninformed opinions. Perhaps especially in his completely uninformed opinions. Those are the kind you don’t get feedback on by definition.

Consider the different consumers of auto loans and student loans. On one hand, auto loan borrowers are much older (read: more mature) than student loan borrowers. They are already in a stable pattern of employment. If they aren’t, they don’t successfully get loans. Lenders have a decent idea of what to expect from them. Additionally, if a borrower defaults on an auto loan the lender can take the car. This isn’t ideal but it makes the loan substantially less risky. Last, the loans are a percentage of the price of a car, not chump change but not massive.

On the other hand, students are young (read: less reliable). The financial future is still wide open for them. In other situations, isn’t this one of their big complaints? They don’t know, and lenders don’t know, if they will be making big bucks when they finish college or if they will be working part time at a coffee shop trying to figure things out. To top it off, education lenders can’t take back a graduate’s learning if the graduate defaults. The lender is stuck holding the bag. Last, the amounts sought after are usually much greater than the price of a car.

Now, if you’re a loan officer at an institution with money to lend, how will you be induced to lend to this second category of borrowers? How will the people with whose money you are entrusted be induced to let you hold it in the first place instead of putting it elsewhere? The lower recovery rate over a longer time must be balanced with a higher payoff in the event of recovery, i.e. a higher interest rate. Interest rates should be thought of as prices: the prices of giving up current money for repayment in future money in all the situations this occurs. Mandating that education loans and auto loans have the same range of interest rates is equivalent to mandating that it shouldn’t be worth any lender’s time to lend to college students unless they are already well off and worth the risk but least in need of the loan. That’s not exactly what Sanders wants, but it’s what he’ll get.

To a politically-minded person this level of detail is invisible. My guess is that Sanders simply doesn’t see it, the way a color blind person walks in the same world as everybody else but doesn’t see things that are obvious to other people. It’s fine if he doesn’t—most people don’t—but it’s a problem if he aspires to order people around based on his blindness. What I think is his preferred solution, having payment for college education be a public financial responsibility, is a natural outgrowth of this blindness. There would be a possible economic debate as a result, the relative pros and cons of private financing (really quasi-private here) vs. financing out of tax money, but where I’ve seen this comparison made by people on his side it’s been mostly a lackluster token effort.

None of this is a slam-dunk argument against Bernie Sanders and in favor of another candidate. That’s not what I do. I think most other candidates, not just now but in general, either don’t know what they’re talking about or don’t care. But he’s the flavor of the week representing this kind of thought, and it’s a common and important mistake that needs addressing.


Burke and Tocqueville on liberty, then and now

This weekend I had the great pleasure of attending a seminar put on by the Institute for Humane Studies. The theme was “Burke and Tocqueville on Liberty”. Both of these writers were important influences on Western political theory and so are still worth studying, even if you don’t agree with how later writers used them. Indeed, it occurred to me during the final day’s discussion that they are still highly relevant in understanding today’s left and right.

It was explicit in Burke and to a lesser extent in Tocqueville that they saw the early modern transition away from strong monarchy toward democratic republicanism to involve the loss of social unity, and Tocqueville, perhaps without knowing it, wrote extensively on the grasping efforts to replace it. This sentiment is echoed in other thinkers as well. Even if social unity under the Ancien Régime broadly considered was imposed and not chosen or commonly understood, at least it was there, and they missed it when it was gone. Both the left and right since that time can be thought of as pushing its replacement.

It came to me while thinking about several passages in Tocqueville and their modern versions criticizing low culture. People where assigned a place under the old systems and society made sense. When history finally allowed the mass of people to choose their own culture, from the aristocratic perspective of both writers the people chose poorly. They chose things concerned elites don’t think have value toward their larger social purposes. The modern left and right take turns bemoaning low culture for this reason. I understand the sentiment and share it on the level of taste but it doesn’t undermine how I think society should operate.

The French Revolutionaries, Burke’s bêtes noires, tried to replace the unity under king and church with a rationalistic patriotism that they more or less created from whole cloth, even a Temple of Reason! Aside from the fact that it led to very undesirable consequences, it wasn’t very successful at creating a new unity. The French underclasses mostly kept right along with their Catholicism, and with some exceptions the revolutionaries themselves seemed unfulfilled. By Tocqueville’s time the monarchy had been reestablished. It’s easy to dismiss this as one powerful segment of society arrogating benefits for itself, but it seems to have been deeper than that, and now I think I see why.

This makes more sense of the late 18th and 19th century intellectual currents emphasizing republican virtue. It wasn’t enough to replace the old forms of government. Something else had to be replaced too, and while the movements that became the modern left and right differed on what the replacement should be they implicitly agreed that they needed one.

This also helps me understand some sociological features of the libertarian movement. As good as I think its arguments are, it’s just not very popular as a total package. It doesn’t offer a replacement for the old sense of place and purpose. Conservatives have religion, tradition, and a sense of patriotism to cling to, and progressives have a sense of cosmopolitanism and a secular millenarianism. Libertarians have…whatever they individually find inspiring, which is why their movement a) is small and b) has the highest average IQ of the ones considered; it doesn’t provide the subconscious, passive satisfaction most people look for.

This also helps me understand thinkers like Smith* and Mill who thought about both moral philosophy and economics/political philosophy. They had great intellects incapable of satisfaction in only narrow channels, but these seemed naturally related to them. They were men of their time. The concern about faction of the writers behind Publius makes more sense in this light as well.

Libertarianism is like atheism in this way, offering an alternative to other modes of thought that isn’t exactly a full replacement for them. I’m not sure what to do about this, but at least I know what the issue is now.

* Smith lived before the storm but it was clearly already gathering.