George Gilder: Why Student Debt Should Simply Be Wiped OutUniversities are preparing students to resent, not join, the new decentralized economy
Recently, Steve Forbes, Chairman and Editor-in-Chief of Forbes Media, interviewed George Gilder, tech philosopher and author of Life after Google. Of his guest, Forbes says, he predicted the rise of the smartphone. Experts dismissed Gilder as delusional, except for Steve Jobs who “read what Gilder wrote and took it to heart.”
In the podcast, The Creativity of Capitalism And The Post-Google Era, they discuss key current issues: why entrepreneurship cannot just be automated, what’s with Google’s corporate “nervous breakdown”, and why student debt should be wiped out (below):
In the third segment [19:28], Gilder tells Forbes that universities that have grown rich on government loan guarantees are teaching students “how to stop things rather than to start ‘em.” That poorly prepares them for the age of decentralized computing (the “cryptocosm”), which will make Google obsolete. He begins with a discussion of Bell’s Law.
Gilder: Well, Bell’s Law is that every ten years of Moore’s Law (the doubling of computer power every couple of years) produces a collective total thousandfold rise in computer power which, in turn, requires a complete new architecture. And fortunately, it’s on its way.
Forbes observed that one outcome of the rise in computer power is that information from a large central source can now be spread over millions of computers. That reduces the need for—and hence the value of—centralization, leading to the development of cryptocurrency systems and other decentralized innovations.
Gilder: What it does is put the whole database on every node of the network, which is only possible because microchip storage technology advanced so much faster than any other dimension of computation.
Forbes: So, to use a bad analogy, it’s effectively saying, rob half the banks in the world or rob one bank.
Gilder: That’s right. That’s a good analogy. I like that.
The discussion turned to the way in which current culture hampers technological innovation, both in business and at universities.
Forbes: One of the fruits of this new world is IPOs [initial public offerings of shares]. You have mentioned and others have mentioned that regulation and other factors have killed IPOs and we have a fraction of what even China does. But now…
Gilder: China has three or four times more IPOs than we do. …
There has been for the last 20 years a 90% drop in IPOs and this is a really serious problem. It has resulted in a shrinkage of the stock market to less than half as many public companies as it used to be. It’s really depleted the entrepreneurial energies of the US economy; it’s a crisis…
Forbes: Socialism! You famously said in Wealth and Poverty (1981), the idea is kaput. Why are so many people today looking at socialism even if they don’t seem to know what it really is?
Gilder: I think capitalism has been suppressed and restricted so much that its creative fires are no longer self-evident to lots of people and they think we’ve reached the end of the line. In which case, the economy is viewed as a zero-sum game, where somebody has to lose. And that model leads to a desire for the state to take care of you. And, I mean, all the universities are teaching the decline and fall of capitalism and its futility and its pollutant characteristics— and that leads to this neo-socialist propensity.
He sees perverse incentive as the underlying cause.
Gilder:The government guaranteed loans to all the students. That means they aren’t loans. They’re just subsidies and a kind of bank benefits, and it’s really destroyed the universities. The universities didn’t have to be inventive, they didn’t have to compete, there was always more money, so why not build another gym and hire another fifty diversity officers and a transgender center…
And that’s another way, he notes, that China is different.
Gilder: I’ve just visited all the leading colleges in China. (Believe it or not, I’m never invited to leading colleges in the United States.) They’re just terrific students; there’s none of this evident craziness. They are in a communist regime but as a result of that, they really believe in capitalism.
Forbes: So… you propose the one and a half trillion of debt should be wiped out?
Gilder: I really think so. I think that the debt should be wiped out.
Forbes: Would that be with the proviso of no more student loans, no more…
Gilder: No more guaranteed student loans. And the colleges that just took this money and enriched themselves, and hired hundreds more bureaucrats should have to give the money back. I mean, many of them have vast endowments and here they stuck money on their students to finance their crazed indulgences.
It really is an outrage. We should understand, what is going on in our universities is an outrage. It’s not meritocratic, they’re cultivating racism…
Forbes: Why their hostility to real science, to manufacturing, to technology, portraying it as oppressing us rather than…
Gilder: They’re teaching everybody how to stop things rather than to start ‘em. This is because it produces wealth beyond their reach, beyond their capabilities. Each of them gets assigned to some sort of narrow niche of research that yields some utilitarian PhD that’s useless in the world. And they want to discredit the world.
They turned to a discussion of net neutrality, which Forbes, as a publisher, regards as “just a fancy way of saying regulating and price controls.”
Gilder: If you impose federal price controls on every link, it just stifles investment. It’s quite evident. These bandwidth companies are buying content now. They’re buying the Huffington Post and all these Time-Warners. They’re leaving the bandwidth business in order to produce, to “go Hollywood.” It’s always been a sure sign of a failing company when it goes Hollywood. That just really means they have no idea what to do with their money and they’re going to waste it on Harvey Weinstein.
Forbes and Gilder closed with some thoughts on their mutual favorite hobbyhorse, worries about the trade gap between the United States and other nations, which they see as overblown:
Gilder: Well, yeah, the trade gap is just being an attractive location to invest.
Forbes: And I think you’ve pointed out that roughly that the US, for 350 out of the last 400 years since Jamestown, had a merchandise trade deficit. And just look around at the terrible results!
Previous: Why entrepreneurship can’t just be automated
Why does Google seem to be having a corporate nervous breakdown?
Further reading: George Gilder explains what’s wrong with Google Marxism in discussion with Mark Levin, host of Life, Liberty & Levin
George Gilder: Life after Google will be okay
Imagining Life after Google A compendium of comments from reviews
More on Bitcoin and cryptocurrencies:
George Gilder: The Creativity of Capitalism And The Post-Google Era
Further reading on Bitcoin and other cryptocurrencies: How do Bitcoins work, anyway? And what’s their future? A roundup for non-geeks
How Bitcoin works: The social value of trust (Jonathan Bartlett)
Is Bitcoin safe? Why the human side of security is critical (Jonathan Bartlett)