The always-sagely Rortybomb’s got a post up on the potential for student debt strikes, a topic in which I know many of you out there must be interested. In the post, he makes the point that the social democratic states have an advantage in being “Leviathans” (in a deflated Hobbesian sense) in that they can preform functions that the private sector cannot, including universal health care, free public education, police forces, etc. What is scary, however, is when a private sector force becomes, in a sense, “Leviathanized”, or brought up to the level of governmental force via this monopoly, and that’s exactly what happened to the student loan industry after the Bankruptcy Abuse Prevention Act of 2005. In this context, a debtors strike will look very different from anything seen before:
…the game theory model I alluded to is the Rubinstein Bargaining Model, which is still one of my favorites. And there the patience of the relative agents is important. If the other side doesn’t have a huge timeframe – say it needs the factory to be running ASAP, or the costs of the bank foreclosing and having to sit on property in a bad market doesn’t outweight the bargain of some level of payments that can be reached – the strikers have a stronger hand. If the other side thinks of itself as having an indefinite patience and little need to think through cost-benefit analysis on any individual action – as the government does – the strike will likely lose on the material battle.
In addition to the Leviathan reimagined, you still have the incredibly durable private sector forces which wreak havoc on debtors. The Pinkerton army of the 19th century, a privately funded group which terrorized debtors and union workers, struck fear in the hearts of the debt-burdened for decades, but even they didn’t have the power that modern credit agencies posses:
Let’s say, instead of the butt-end of a rifle in your nose, if you fought management the Pinkerton Boys could walk – wait, walk isn’t the right word, teleport instantaneously – to every potential source of credit you could get and tell them to lock down. Then they go to every single employer in the country, and flag you as someone they shouldn’t hire. Then let’s say they could teleport to every insurance company in the company and tell them to start charging you and other strikers more money. And, why not, they zoom over to every utility company in the country, and get them to start demanding deposits and higher rates for things like gas and electricity in the homes of those who are trying to strike.