Reactions to student debt forgiveness
Why did my smart friends disagree?
My two largest groups of friends had opposite reactions to student debt cancellation. I don’t think the difference was how “left” they are. Rather, I think the difference comes from day-to-day professional experiences outside vs. inside politics.
Group 1: Investors and techies
My friends in this group generally have jobs analyzing complex data to make the best possible decisions (e.g. what to invest in, what features users want, etc.). As part of these jobs, second-order effects like moral hazard and market distortion are everyday considerations; political realities are far from their minds. These folks want to see government implement technically well-designed policies.
With regard to student debt, I’d summarize this group’s views as concern that it’s a giveaway but not targeted at the most needy; will just lead to higher educational prices without fixing underlying problems; will increase already-high inflation; and that all of those may end up harming the most needy.
Group 2: Political professionals
My friends in politics generally have jobs that involve fighting to get the government to help people (and facing many defeats along the way). This often gives them a close-up view of real peoples’ struggles, which make the needs especially salient. Also salient are political realities, which are part of regular discussion. A policy’s second-order effects easily become secondary to getting anything done. These folks generally want to see the government do things that help people; and in general, the faster and bigger the help, the better.
With regard to student debt, I’d summarize this group’s views as believing that the vast majority of debt cancellation will help those in genuine need, and that this is non-competitive with helping those even needier. Regarding bad second-order effects, they’d point to technical reports that these effects may not be large, and figure that such issues can be addressed later.
Synthesis
Both groups’ goals are good and worthy. Obviously it’s good for policies to reflect our best technical thinking. Similarly, it’s obvious that impacting government requires working through political realities that often force technically suboptimal policies.1 My professional background is in Group 1, but since entering politics I’ve gained a lot of sympathy for Group 2.
Whichever group you’re in, I hope this helps you better understand the other.
Some in Group 1 would argue that student debt cancellation was so technically suboptimal as to likely be medium-term harmful. For those with that belief, obviously the policy is inexplicable no matter how much one understands Group 2’s perspective.