Suchergebnisse

The development of the institution of loans and borrowings from the times of the Roman Empire and the present is analyzed. The main features of the agreement, characteristic of Roman law and modern national legislation of Uzbekistan, are considered, that is, the signs of a loan agreement under the Civil Code of the republic.

Jeffrey Miron


This article appeared on Substack on June 29, 2023.
Later today, or next week at the latest, the Supreme Court will announce its decision in two cases that challenge the Biden administration's cancellation of $400 billion in federal student loan debt.
The legal issues are beyond my expertise. Regardless of the Court's decision, however, loan forgiveness is deeply misguided as a matter of policy.
Those who took out loans did so willingly. Presidential cancellation, at taxpayer expense, undermines the rule of law and makes a mockery of people who honor their commitments, or accept the consequences of failing to do so, even when that is difficult.
If this forgiveness stands, future borrowers will take out even more debt, believing that future presidents will likely cancel some of it. They will probably be right.
This moral hazard increases the cost of the loan program; more and more is paid out, and less and less is re‐​paid.
Worse, subsidizing education loans, and especially forgiving them ex post, discourages potential borrowers from using common sense to decide how much education to acquire and whether borrowing to pay for it is sensible.
Some amount of, and certain kinds of, education are beneficial for almost anyone.
Yet more and more education is almost never the right choice. Any decision to acquire education should balance the benefits against the costs (including explicit costs, like tuition, and the opportunity costs of foregone income). By making costs artificially low, loan forgiveness encourages excessive or poorly chosen kinds of education.
Students loan forgiveness, moreover, mainly helps higher income borrowers, since they take out disproportionately larger loans. Thus Biden's proposal is regressive.
Last, loan forgiveness by executive action is ripe for political abuse; politicians will do so in ways that benefit voters they can "bribe" into staying or becoming their supporters.
In Libertarian Land, governments would not subsidize student loans. Such a policy, however, at least has good intentions. Presidential loan forgiveness is just politically motivated theft.