Why I Defaulted on My Student Loans

1) I agree with what you said about him responding to incentives and making a choice. Which is what I said in my post -- he made a choice. It's not a matter of what I want him to do. What my post did say is that no matter how much he rationalizes his decisions, the actual effect (in a free lending market) would be to make it more expensive for everyone else to borrow -- people like him should drive up default risk and make it more costly for others. It's not the blather he wrote. The rest? I'd love to change the government interference I posted about in the student loan market that has created a Frankenstein mess and has saddled our country with yet more debt and skyrocketing costs for education. Unfortunately, my voice is only so loud.

2) I'm not self-righteous, and libertarian is a term you throw around on here when I post. I haven't called myself that -- or anything else. I am posting my opinion. Rather than trying to always chararacterize me (or in your case mischaracterize me, more often than not) why not just read what I think and respond to what I had to say?

3) John Paulson's donation to Harvard -- and that thread -- has zero to do with this thread.

 

I don't really have a need to characterize myself -- not to mention that I have no clue what Dick, or anyone else, believes a "libertarian" is. Apparently to him, a "libertarian" is someone who believes that people are justified in breaching loan agreements they voluntarily entered into. I believe the opposite, actually. So I guess I am not a libertarian. If I borrow money from someone, my personal feeling is that I have a responsibility to make every effort I can to pay back the principal and interest and otherwise meet the terms I agreed to in return for the money I wanted.

I obviously believe in some principles that paint how I feel about a lot of things. But it's not about a label or being put into a cookie cutter box. It's about *my* beliefs. And when these kinds of threads come up, I am not shy about posting what *I* believe. It's easy enough to just respond to what I actually say, not to whatever label you want to stick on me, or whatever unrelated thing you want to drag onto the thread that has nothing to do with what I posted.

 

I do see theft as a moral issue. I certainly don't see stealing money to pay for something you want as a business decision. Even if I reasonably think I can get away with stealing something without having to suffer any consequences, I don't do it. It gets back to the tried-and-true, "I wouldn't want someone stealing from me (for obvious reasons), so I shouldn't do that to another." The fact that most people behave that way is what keeps us from anarchy.

When you default on a loan because you don't have the ability to repay, it's one thing. But the NY Times guy had the ability to repay what he borrowed and promised to make good on. And made a choice not to. If that isn't a moral issue, I don't know what is. To default on a loan because you don't want to pay it back--whatever his millions of justifications--is theft, plain and simple. There may or may not be consequences -- the moral hazard created by government interference in the student loan market has made it so there probably won't be for lots of people who do the same thing he did. But if you live your life doing cost-benefit analyses to make all of your decisions -- and justify the things you do as "business decisions -- you can justify anything, including theft. If you could rob a bank with absolute certainty that you wouldn't get caught or suffer any consequences, would you do it?

 

To some degree it has in practice -- that is what happens when moral hazard is introduced by populist-driven policy that screws up a market a contractual relationship takes place in. Such as student loans.

But the idea of good faith and fair dealing hasn't gone anywhere.

And that really is a moral question, because the implied covenant comes down to people having a responsibility to deal with each other honestly and fairly.

It's kind of the "do unto others as you would have then do unto you" doctrine.