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Occupy Wall Street is about student debt

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Up to this point I hadn’t thought much about the macro reasons behind Occupy Wall Street, assuming it was driven by a general disaffection with economic inequality. But when I checked out We Are the 99 Percent this weekend, I saw a clear common thread among the protesters: the presence of overwhelming student debt.

Student loans are a unique kind of financial instrument. They are the only kind of debt that can’t be forgiven through bankruptcy, even when the loans come from private sources rather than government-affiliated institutions (like Sallie Mae). These loans have been a pretty standard part of the American education system for the past decade, especially among private, for-profit universities, where 96% of students graduate with an average of $33,000 in debt [PDF].

Protestor at Occupy Wall Street

Indeed.

The past 70 years of American education have been built around a simple social contract: go through four years of liberal arts education, and there will be jobs waiting for you on the other side. You can even take on an otherwise unconscionable amount of debt to do it — after all, education is an investment, not just an ordinary expenditure.

Over the past three years, that social contract has been broken. The jobs that used to be available to young people with passion and drive but no appreciable skills are gone, and the graduates who would have taken those jobs are unemployed. But they still bought into the social contract, accepting suffocating amounts of student debt to get the education that didn’t give them the skills they actually needed to get a job. And just when these young people should be at the height of productivity — working hard, inventing things and starting companies — they are left deep in debt with no marketable talent.

So they’re angry, although without the channels or eloquence to express that anger in a meaningful way. So they lash out at the faceless financial-industrial complex — the people who ostensibly have created and maintained this destructive environment from behind the curtain.

But reality is much more complicated. While the folks on Wall Street have managed to hack the system, manipulating a need for liquidity and market inefficiencies to drive incredible financial returns, they’re hardly the only group at fault for a badly broken educational framework.

As a first stop, the frustrated graduates should take a look at the for-profit university administrators who adopted shady, over-promising marketing practices or the government officials who allowed often well-intended laws to be hijacked to saddle students with unforgivable debt. Or perhaps they should take a look at the state education heads and politicians who have resisted a move toward more practical, vocational education for some segments of Americans.

I maintain that unemployment is not high due to a lack of jobs — General Assembly, for one, has plenty of open positions. Rather, it is high due to a colossal mismatch of skills and market needs resulting from a dated and broken educational system.

The protestors at Occupy Wall Street are right to be angry. But articulating the problem is the first step in fixing it.

Written by Brad Hargreaves

October 9th, 2011 at 2:02 pm

The Government Technology Gap

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My girlfriend had the unenviable task of going to the DMV this morning. I’ll spare the gory details, but I think we can all get behind the premise that the level of technology adoption (user-facing as well as internal) within governments lags well behind the level of adoption in the private sector. You see it everywhere, with a recent hot article about NYC spending $722 MM on a doomed payroll system making the rounds. But I would argue that not only is the gap bad, but it is getting worse and it threatens the very nature of our relationship with government.

It’s Getting Worse

An interesting case study is child welfare IT services, as (a) it is typically run at a state or local level, not federal and (b) its failure directly impacts the most vulnerable members of our society. In brief, child welfare caseworkers need to record what they are observing in the field — where are at-risk children, who is threatening them, and who is taking care of them. At a purely logical level, this requires a complex — but not overwhelmingly so — software application.

Before computers, all this information was recorded on paper. But in 1993, the Feds passed laws providing (monetary) incentives for states to adopt software for recording child welfare information. The software had to meet fairly specific specs in order for states to be eligible for the incentives, and states were forced to repay their incentives if they later abandoned those systems. It all seemed pretty logical to everyone at the time.

Fast forward seventeen years, and states are now running the entire child welfare systems on software that was built in the early ’90s. While rebuilding the system to reflect modern standards would in itself be a major cost, that cost is increased by orders of magnitude by the fact that the states would also have to repay the incentives they received in the early ’90s to re-architect these systems. Meanwhile, systems integrators (Accenture, Unisys and IBM, to name a few) continue to suckle from the teat of the taxpayer, knowing that a multimillion-dollar contract is to be had every time any modification needs to be made.

Meanwhile, technology in private hands is not only moving forward, but it’s moving forward at an ever increasing pace. Not only is the first derivative positive, but so is the second derivative — and likely the third as well (e.g., it is accelerating at an ever-increasing pace). Yet government seems to adopt technology as a step function, with steps significantly separated in time and limited in scope. Thus, the separation between public and private technology is quickly becoming a gulf. And the further government IT gets behind, the harder it will be to catch up, as adopting dramatically different modern technologies can require significant shifts in procedure, policy and overall thought. Five years ago, governments were operating native software and mainframes, while private entities were using SaaS platforms. Today, governments are still operating native software and mainframes while everything goes social and collaborative. How big of a leap can governments make in order to catch up, or are we now stuck?

It Threatens Our Relationship With Government

As more of our lives are dependent on interactions mediated by computers, citizens are becoming more alienated with a government that can’t adapt to our preferred media. I dread picking up my snail mail, as I know it is nothing but (a) spam and (b) stuff from financial institutions and governments. In other words, communications from people who either don’t care about how I prefer to be reached (email) or are too slow or bureaucratic to use that media. And if you fit into either of those categories, I probably don’t want to hear from you.

And as web technologies become more accessible to the masses and an entire generation of tech- and new media-savvy people enter the “real” world, the lack of modern technology and media usage by institutions designed to serve us is becoming far less acceptable. When the web was an esoteric world and it took millions of dollars to build an app, it made some sense that government didn’t have a major presence. But now it’s becoming common knowledge that a kid with a couple months on his/her hands can make a site that would take a government years and hundreds of millions of dollars to complete, if at all.

This kills the relationship between a government and its citizens. If I can’t trust my government to communicate and interact with me using technologies that even vaguely resemble the stuff I use on a day-to-day basis, how can I trust that government to provide services, spend tax money, or educate my children? Why would I support any expansion of government or its services, even if those services are (in theory) a good idea? If the DMV is using technology from the Reagan era to process my forms, why would I entrust my money, information or children to the care of the state?

I wish I could end this post on a positive note, but I’m struggling. I don’t see the American government dramatically changing their outlook on technology adoption, as this is ultimately not a technology problem — it’s a policy problem at best and a political problem at worst. And if the Obama administration — the regime of the “Geek President” — can’t effect this political change, who can?

Written by Brad Hargreaves

April 2nd, 2010 at 10:10 am

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