From: Noah Smith
Subject: Defending the Undefendable
Dr. Block –
Years ago (more than 10 or 12) I wrote you and asked what I could do to help the movement. You said, “Donate to the Mises Institution”.
Ok, I did that. Since you are related to that august institution, I’m coming back with a challenge for you.
I think the libertarian position on federally-held student loans should be to forgive them. I would like to say that this specifically should be a one-time deal and only for loans held on the federal balance sheet. It should be accompanied by policy and legal changes to prevent new acquisitions by the state.
My points are as follows:
1. The money to acquire the debt is already out the window. Taxpayers will never see an offset in taxes proportional to the acquisition. From a taxpayer perspective, we will never recoup interest or principal.
2. The debt has an 10-11% default rate. After the pandemic, I’m guessing the delinquency rate will go up. Banks and loan processors are already getting paid to not collect – this “asset” has very little actual value. It has a lot of risk. Taxpayers will never recoup the investment or returns and will be on the hook for all liabilities.
3. The debt is enforced via violence. It cannot be discharged. It is unethical to support a fiscal instrument that is enforced by violence. If you entered into an unethical contract enforced by violence, a judge would dismiss it. This is a commonly accepted outcome as a result of egregious contracts.
4. It helps to strangle the government and reduces leverage. That huge line item is used as a political football and talking point. Getting rid of it gives positive leverage to Libertarians and reduces the leverage that the left and right have in kicking it around every year.
5. It’s a highly populist move with very few downsides.
6. Individuals should be allowed to make their own fiscal decisions – including discharge. Keeping this debt on the books is not like a private contract. It is collectivist. We should not be supporting collective actions at the state level.
7. It is unethical for libertarians to support state contracts. The state should be strangled at every point. If I were asked to support a private contract between consenting adults, I would be in favor (although I would not pay to help one party enforce on the other). The state’s position is that we should all be forced to help pay to enforce their contract.
As an addendum, the states and Feds should also stop granting loans, guaranteeing payments, offsetting interest, and enforcing collections.
So, this is me calling you out – I think I’m right. I think you should accept my position and defend this in your toughest market – other libertarians.
Thanks for your support of the Mises Institute, and for your very thoughtful letter about forgiving student loan debt.
I agree with you, but only partially. I think student loan debt ought to be forgiven for all student who are libertarians, or a political. Not for the others.
I’ve pubished a little bit about this:
Block, 1972, 2002, 2004, 2006, 2007, 2008, 2009A, 2009B, 2010, 2011A, 2011B, 2011C, 2011D, 2012, 2016; Block and Arakaky, 2008, Block and Barnett, 2008, D’Amico and Block, 2007
Block, Walter E. 1972. “The Polish Ham Question.” The Libertarian Forum. June-July, Vol. 4, No. 6-7, p. 5; http://www.mises.org/journals/lf/1972/1972_06-07.pdf; http://mises.org/daily/4054; https://archive.lewrockwell.com/block/block143.html
Block, Walter E. 2002. “Accepting Government Subsidies,” Fraser Forum, February, p. 27; http://oldfraser.lexi.net/publications/forum/2002/02/section_13.html
Block, Walter E. 2004. “Radical Libertarianism: Applying Libertarian Principles to Dealing with the Unjust Government, Part I” Reason Papers, Vol. 27, Fall, pp. 117-133;
Block, Walter E. 2006. “Radical Libertarianism: Applying Libertarian Principles to Dealing with the Unjust Government, Part II” Reason Papers, Vol. 28, Spring, pp. 85-109; http://www.walterblock.com/publications/block_radical-libertarianism-rp.pdf; http://www.walterblock.com/wp-content/uploads/publications/block_radical-libertarianism-rp.pdf; http://www.reasonpapers.com/pdf/28/rp_28_7.pdf; (death penalty justified, net taxpayer, ruling class analysis p. 87)
Block, Walter E. 2007. “Ron Paul and Matching Funds,” October 1;
Block, Walter E. 2008. “Replies to readers” September 23;
https://archive.lewrockwell.com/block/block108.html (libertarians hypocrites for using public school?)
Block, Walter E. 2009A. “Libertarian punishment theory: working for, and donating to, the state” Libertarian Papers, Vol. 1; http://libertarianpapers.org/2009/17-libertarian-punishment-theory-working-for-and-donating-to-the-state/
Block, Walter E. 2009B. “Toward a Libertarian Theory of Guilt and Punishment for the Crime of Statism” in Hulsmann, Jorg Guido and Stephan Kinsella, eds., Property, Freedom and Society: Essays in Honor of Hans-Hermann Hoppe, Auburn, AL: Ludwig von Mises Institute, pp. 137-148; http://mises.org/books/hulsmann-kinsella_property-freedom-society-2009.pdf
Block, Walter E. 2010. “You are a rotten kid (rent control and libertarianism),” February 27;
Block, Walter E. 2011A. “It’s Ayn Rand Bashing Time, Once Again.” February 18; https://archive.lewrockwell.com/block/block172.html
Block, Walter E. 2011B. “May a Libertarian Take Money From the Government?” March 11; https://archive.lewrockwell.com/block/block175.html; https://www.lewrockwell.com/2011/03/walter-e-block/may-a-libertarian-take-money-from-the-government/
Block, Walter E. 2011C. “Toward a Libertarian Theory of Guilt and Punishment for the Crime of Statism,” Journal of Libertarian Studies, Vol. 22; pp. 665-675; http://mises.org/journals/jls/22_1/22_1_33.pdf
Block, Walter E. 2011D. “Hoppe, Kinsella and Rothbard II on Immigration: A Critique.” Journal of Libertarian Studies; Vol. 22, pp. 593–623; http://mises.org/journals/jls/22_1/22_1_29.pdf
Block, Walter E. 2016. “Is It Compatible With Libertarianism to be a Banker? Yes!” September 29; https://www.lewrockwell.com/lrc-blog/compatible-libertarianism-banker-yes/
Block, Walter E. and Chris Arakaky. 2008. “Taking Government Money for Grad School?” May 23; https://archive.lewrockwell.com/block/block100.html
Block, Walter E. and William Barnett II. 2008. “Continuums” Journal Etica e Politica / Ethics & Politics, Vol. 1, pp. 151-166 June; http://www2.units.it/~etica/; http://www2.units.it/~etica/2008_1/BLOCKBARNETT.pdf
D’Amico, Dan and Walter E. Block. 2007. “A Legal and Economic Analysis of Graffiti” Humanomics Vol. 23, No. 1, pp. 29-38; http://www.mises.org/journals/scholar/damico.pdf; http://www.emeraldinsight.com/Insight/viewContainer.do?containerType=Issue&containerId=24713; http://ssrn.com/abstract=1008525
This book of mine might be of interest to you:
Block, Walter E. 2012. Yes to Ron Paul and Liberty. Ishi Press; http://www.amazon.com/dp/4871873234;
Walter2:57 am on July 21, 2020 Email Walter E. Block