Invest in the Pits, Not the Puddles

On SCOTUS, Student loan debt, and government restraint for the greater good

This week there’s been a lot of hand-wringing about the recent SCOTUS decision on student loan debt (among others), corresponding, helpfully, with the end of the reading group I’m in on Dave Schmidtz’s Living Together. In celebration of that somewhat meaningless coincidence (and also America!), I’m throwing out a call for unity, albeit a possibly counterintuitive one.

But I think we might be able to find unity (maybe) when we focus on the pits and not the peaks.

Focusing on injustice pits is one of Dave’s main points in the book, as I’ve mentioned in previous posts. His argument - briefly - is that we should focus on pits of injustice and not on peaks. His reason for this is that the pits are the universals that everyone can agree on. The peaks are pretty subjective. He argues they’re entirely subjective, but we don’t need to get into that here.

To make this more concrete, take your average kid. When we’re trying to figure out what decent parenting looks like, we tend to focus first on preventing the kid from falling into a pit and we (usually, when we’re using common sense) have a pretty good idea of what those pits are. Kids who don’t have enough to eat or a roof over their head or a stable adult to rely on - those are the pits because those are the things that children need to develop properly into functioning adults.

Once kids are out of the pits though, things get a lot fuzzier. Am I preventing my daughter from becoming a violin virtuouso by not starting her at age 3? I mean, yes, in some sense. But is that a bad thing? Probably not, if neither of us has any particular affinity for the instrument. The peaks of human experience are really subjective and rely a lot on individual talents and proclivities, development of interests and talents over time, and subjective preferences. If my kid ends up an astronaut instead of a violinist, is that a bad thing? It’s a meaningless question.

Student Loan Debt: Pit or Peak?

So how does this all relate to the SCOTUS decision on student loans, you ask? The main way is that the student loan crisis seems to me to represent neither a pit nor a peak but a puddle. And in that sense, it represents a broader failure of policy that we need to reckon with more clearly as Americans (and probably in the developed world generally).

I’m not a constitutional scholar, so I’m leaving behind the constitutional merits of these cases. The more clearcut problem is that most student loan forgiveness is a dumb idea and Biden’s plan was a pretty dumb version of an already dumb plan in large part because it would spend a lot of money attacking a problem that’s not a pit at all.

There are, of course, other reasons Biden’s plan wasn’t great:

1. Federal student loans are not the worst pits of students loans and having student loan debt isn’t exactly a pit, though it’s not a comfortable place to be (I know from experience).

2. Canceling federal student loan debt furthers the crisis by failing to address the vicious cycle of college affordability in the first place.

3. There are already ways for federal loans to be deferred or canceled, unlike private student loans.

These are all good reasons to not think forgiving student loans is a good idea, even if you or people you care about would clearly benefit from the policy.

But more clearly, as laid out by a few different people this week, student loan forgiveness of the kind Biden is proposing is, in fact, a middle class welfare transfer and not a particularly well thought out one at that (see Josh Barros’ interesting constitutional analysis here and solid substantive concerns on loan forgiveness here). And as such, it represents an enormous expenditure of money on addressing people who are confronted by puddles, not pits. And that’s a problem from a justice perspective, a policy perspective, and a lot of others.

The problem of middle class welfare programs isn’t limited to student loans. The vast majority of wealth redistribution in the United States goes to the middle class. This is true both in terms of means-tested programs like food stamps/SNAP, and Medicaid but also true of entitlement programs like Social Security and Medicare. And it’s also true of large-scale government spending that we don’t traditionally associate with welfare but should, like the military.

It’s always fun when you find something that Cato, the Brookings Institute, and the Heritage Foundation all agree on. But it’s more or less true: libertarians, progressives and conservatives all agree that we spend far too much money on middle class entitlements and transfers.

The explanation for the growth in middle class welfare spending is simple politics: middle class people vote and middle class people call their legislators and middle class people attend lobby days and participate in campaigns. Middle class people get politicians elected. So when it comes time to distribute money, politicians appeal to those who will deliver the votes.

You can find appeals to saving the middle class on any Democratic or Republican campaign website: catering to the middle class is one of our few remaining non-polarized past-times.

Government Should Focus on Pits, Not Puddles

Whatever one thinks of an expanded social safety net, there’s one thing everyone should agree on: Spending more on social safety nets for the the middle class only makes sense if we’ve actually gotten everyone out of pits in the first place. Investing communal resources into making sure that everyone has rubber boots to protect their feet from puddles only makes sense if there aren’t people also drowning in water-filled pits two feet away.

To be clear, I’m not saying that government is the best actor to solve these problems. I actually think a mix of government, markets, philanthropy, mutual-aid, and a generally pluralistic policy ecosystem is the best approach. But I am arguing that government in particular should not be spending tons of time and resources helping people in puddles when there are millions of people stuck in pits. This is not only because in practice people in puddles have many more non-government options than people in pits do, but also because justice demands that we should triage scarce public resources to the most needy.

And in 2023 America, we still have a lot of people in pits. A non-exhaustive list of pit-dwellers who desperately need more (and better structured) assistance could start with:

1. The seriously mentally ill, who we’ve essentially divested from and continue to divest from.

2. Individuals with intellectual and developmental disabilities and their families, who need far more care and support than existing programs offer (and who are victims of our terribly stupid health insurance structures).

3. Kids in foster care, who suffer from a revolving door of homes, poor support programs, minimal foster parent training and perverse incentives, and lack of oversight, including an almost total failure to invest in training and support for parents to prevent removals in the first place.

4. People struggling with addiction, who too frequently land in prison because we don’t prioritize harm reduction models and don’t provide rehab support.

5. Folks in prison or stuck in the jail churn, especially those who want access to opportunities to get an education to contribute productively to society when they get out, but who currently lack extremely limited access (or no access at all).

6. Probably also low-income students with student loan debt from predatory for-profit institutions.

Some of these people suffer from a combo platter of issues; there are not enough resources to go around and the policy fixes that are offered aren’t that great. Take for example the policy whiplash around de-institutionalization for the seriously mentally ill. The left (on humanitarian grounds) and the right (on cost-saving grounds) agreed to close down the only places for people in crisis to get inpatient psychiatric care, which (predictably) led to overburdening ERs, prisons, and homeless shelters. At the same time, we’ve pulled resources from that population and diverted them to other places. The result is extremely poor outcomes for people suffering from serious mental illness and very few programs to combat them.

Of the list above, we could probably get bipartisan agreement on more funding for 1-3 and maybe 6, even if we’d hit a wall on 4 and 5. But even just investing more (and better targeted) resources into better support for folks in pits 1-3 would represent a huge reduction in human suffering and provide a refocused societal contract (of a sort).

Pits vs. Puddles: Definitions Matter

To better spend our resources as a community, we need to get better at identifying the pits in the first place. This will take deliberation and political jockeying and a lot of other stuff. It’s not easy. But it’s worth it. If we could eliminate even a small fraction of the internal middle class transfers we spend most of our time and money pushing around, we could focus our resources on those stuck in the pits, making a real difference in their lives.

We can also get better at identifying people - however vocal and visible and vote-y - who are either in puddles or doing perfectly fine and who don’t really need government assistance at all.

A non-exhaustive and certainly controversial list of people who are probably in puddles and not pits includes:

1. The military generally, particularly those in the Reserves (which we should just abolish altogether).

2. People who got expensive educations they couldn’t afford and now regret those choices, but who will still benefit from the increase in earning power their education affords.

3. Middle class families who get state-sponsored subsidies for upgrading their cars or appliances or whatever (I say this having gotten a huge NYS subsidy for a new furnace last year that I justified because NY already takes a lot of my tax dollars, but this was probably still motivated reasoning).

4. Wealthy older people collecting Social Security (they’re not even really in a puddle and I know it’s sort of *their* money but it’s also not and we could do this so much better if we just tried even just a little bit!).

5. Middle class families getting SNAP or Medicaid. Similarly, middle class and wealthy women getting free breast pumps from insurance as a result of ACA mandates (I also plead guilty on this one).

6. Middle class and wealthy elderly Americans receiving subsidized Medicare.

At least a few of my readers will be annoyed with my inclusion of one or more of these, and that’s ok! And there are obviously particular members of each of these groups living in pits because there’s overlap across human categories and intersectionality is a thing. But these are exactly the conversations we need to be having. If you think that someone I categorized as being in a puddle is actually in an injustice pit, make the case! But your case can’t be that this person would have less discretionary spending if we removed state funding because having less of a surplus isn’t a pit. So we need something else.

As I mentioned above, part of the reason we shouldn’t invest as many scarce public resources in puddles as we do is that people in puddles have better access to alternatives like markets and civil society than people in pits. A person in a puddle can move money around, make hard choices about spending, pool resources with others, or ask family and friends to help out. A person in a pit is… in a pit. By definition, they have few options to get out.

The real pits aren’t just not having as much as other people. Real pits are a fundamental lack of access to the resources - rule of law, food, water, and shelter - that all humans need to survive. Lack of access to education and healthcare can be pits too, but we have to be more careful here (as with shelter too, probably), since an education pit needs to be defined very clearly to not avoid precisely the weird redistribution to the loudest complainer that happens across our political landscape.

I can’t provide a definitive answer to what’s a pit and what’s not in this post - though I’ll be working to get to a more clear definition - but at the very least we need to be honest about whether we’re spending our scarce resources on pits or puddles and what the tradeoffs are of each.

Focusing on Pits Improves Politics

Another handy thing about focusing on the pits is that doing so has the potential to improve our political discourse at the same time.

1. Most people agree on the obvious pits. Agreeing that something is a pit as a starting point makes it easier to generate bipartisan support and encourage depolarization of potential solutions.

2. The pits animate human sympathy, while the peaks animate a money-grab.

3. Focusing on the pits can help undercut some of the vicious cycles we find ourselves in, like the one that is animating the student loan crisis, where loans fuel ever-rising college costs that in turn fuel greater loans - onward and upward.

4. The pits are a better and more objective test for the use of shared resources than the self-interest of the average voter. We still have definitional problems, no doubt, but these are easier to determine than deciding which middle class group is more deserving of some slice of the pie.

5. There are different ways to solve pits and puddles, but markets are more accessible to people in puddles and that can be a self-correcting force. If we triages government spending to the puddles, that leaves plenty of bandwidth and creative solutions for puddle dwellers.

As always, let me know what you think! There’s lots here to disagree (or agree) about, so drop your ideas and thoughts and concerns in the comments. And - as always - please share!!!