Latest / Stephanomics / China ‘Banks’ Time for Its Elderly While U.S. Seniors Drown in Debt

Transcript

China ‘Banks’ Time for Its Elderly While U.S. Seniors Drown in Debt · Stephanomics

• 0:05
  Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the
• 0:08
  Speaker 1: global economy to you. We have two takes on aging
• 0:12
  Speaker 1: this week from opposite sides of the world. First, from Shanghai,
• 0:16
  Speaker 1: we hear how the Chinese Communist Party is turning to
• 0:19
  Speaker 1: an old idea time banking, to help them deal with
• 0:22
  Speaker 1: the looming challenge of a fast aging population. Then from
• 0:26
  Speaker 1: the US, a piece on student debt, which could surprise
• 0:29
  Speaker 1: you sky. Higher university fees and the heavy burden of
• 0:32
  Speaker 1: student debt have been big issues on the campaign trail
• 0:35
  Speaker 1: in recent U S elections. But if I asked you
• 0:38
  Speaker 1: to conjure up a mental image of the people saddled
• 0:40
  Speaker 1: with all this debt, it probably wouldn't be a seventy
• 0:43
  Speaker 1: or eighty something retiree living in Florida. It turns out
• 0:48
  Speaker 1: the burden of student debt is growing fastest among the
• 0:51
  Speaker 1: over sixties. In a few minutes, we'll hear from some
• 0:54
  Speaker 1: of the people struggling with this and learn how government
• 0:57
  Speaker 1: programs seem to be making it worse. We'll also here
• 1:01
  Speaker 1: why menu prices are quietly soaring but many of your
• 1:05
  Speaker 1: favorite restaurants. But first let's head to Shanghai for that
• 1:09
  Speaker 1: report from Bloomberg Economy reporter Charlie Juma. What you heard
• 1:26
  Speaker 1: is parking music for some elderly folks in Shanghai. It's
• 1:30
  Speaker 1: five pm on a Monday. About a dozen elderly men
• 1:33
  Speaker 1: and women were already gathering at the leafy downtown street
• 1:36
  Speaker 1: side park in Shanghai to get ready for one of
• 1:39
  Speaker 1: their routines, dancing in the squares or guangchang wu in Chinese.
• 1:48
  Speaker 1: It's a familiar side in cities across this vast nation,
• 1:51
  Speaker 1: which is rapidly aging. The latest census data show the
• 1:55
  Speaker 1: country has two sixty million residents aged sixty and above,
• 1:59
  Speaker 1: more than eight percent of its population. By twenty fifty,
• 2:03
  Speaker 1: it will be one in three. To diffuse this demographic
• 2:08
  Speaker 1: time bomb, the Chinese Communist Party is turning into a
• 2:11
  Speaker 1: foreign invention. Time banking, the brain child of Japanese lady
• 2:16
  Speaker 1: Taruku Missushima in the nineties seventies. Time banking involves people
• 2:20
  Speaker 1: providing social services to others in exchange for time credit
• 2:25
  Speaker 1: that the participant can use to access similar services later
• 2:28
  Speaker 1: in life. On a recent Wednesday morning, I went to
• 2:36
  Speaker 1: see a time bank for myself at an elderly care
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  Speaker 1: home in Shanghai's Changning district. A handful of Time Bank volunteers,
• 2:49
  Speaker 1: mostly retirees in the sixties or seventies, are busy working,
• 2:54
  Speaker 1: each wearing badges bearing the logos of the Time Bank
• 2:56
  Speaker 1: the workforce. One was teaching an elderly neighbor how to
• 3:00
  Speaker 1: use a stationary bike in a small gym another word
• 3:03
  Speaker 1: advertising bathroom and kitchen accessories designed for seniors. For the work,
• 3:09
  Speaker 1: the volunteers will get paid not in money, but in time.
• 3:12
  Speaker 1: They can use their accrue hours to access services from
• 3:15
  Speaker 1: other members of the bank. One I met was Fundundi.
• 3:19
  Speaker 1: The seventy six year old former travel services manager, is
• 3:23
  Speaker 1: one of many so called empty nest seniors. Her husband
• 3:26
  Speaker 1: passed away several years ago, and her only child is
• 3:29
  Speaker 1: married and lives in another part of the city. She
• 3:33
  Speaker 1: started working for the Channing Time Bank as a part
• 3:35
  Speaker 1: time receptionist at the senior care house two years ago.
• 3:39
  Speaker 1: More recently, she ventured into something slightly more challenging, teaching
• 3:43
  Speaker 1: her fellow seniors how to download pictures on Wi Chat,
• 3:47
  Speaker 1: the Chinese super app used for everything from instant messaging
• 3:50
  Speaker 1: to payment. Asked why she came here to do this,
• 4:01
  Speaker 1: she said she wanted to save time dollars for her future.
• 4:04
  Speaker 1: What's probably more important, she said, the job is the
• 4:08
  Speaker 1: past time for her either. It feels kind of lonely
• 4:12
  Speaker 1: at home. It's staying by myself for too long. I'm
• 4:15
  Speaker 1: afraid i will get in mania. I'm not really happy
• 4:18
  Speaker 1: to hand around with other seniors. Fun has accumulated eight
• 4:23
  Speaker 1: time dollars so far, a sum that would have been
• 4:26
  Speaker 1: much higher if not for the pandemic last year. She
• 4:29
  Speaker 1: told me she has no plan to spend it now,
• 4:32
  Speaker 1: and she's keen to save more for future. China launch
• 4:35
  Speaker 1: a pilot time banking program in some cities a few
• 4:38
  Speaker 1: years ago. The trial has since spread to about a
• 4:41
  Speaker 1: dozen metropolisis from Beijing to Guangzhou and the financial hub
• 4:45
  Speaker 1: of Shanghai. Shanghai is planning to extend the trial to
• 4:49
  Speaker 1: the entire city from just a few districts. The reason
• 4:52
  Speaker 1: to broadened experiment is straightforward, a rapidly aging population, rising
• 4:58
  Speaker 1: cost of senior care, and shortage of care facilities. Nin Teger,
• 5:04
  Speaker 1: head of China's National Bureau of Statistics, expressed concerns about
• 5:08
  Speaker 1: China's demographic train last month when he announced China's latest
• 5:12
  Speaker 1: census result at the press briefing don't go and do.
• 5:17
  Speaker 1: The aging of the population is further deepening. China is
• 5:23
  Speaker 1: facing the pressure of long term sustainable development of its population.
• 5:29
  Speaker 1: The data showed the number of Chinese people aged sixty
• 5:33
  Speaker 1: and above has reason by forty since two thousand and ten,
• 5:37
  Speaker 1: while China's births have fallen to their lowest in almost
• 5:41
  Speaker 1: six decades, putting the country's population on course to peak
• 5:45
  Speaker 1: within the next five years. The demographic clifvage, of course,
• 5:51
  Speaker 1: is a problem of government's ownmaking. After decades of imposing
• 5:55
  Speaker 1: a heavy handed one China policy, China has announced its
• 5:58
  Speaker 1: planning to raise the retire manage allow all couples to
• 6:02
  Speaker 1: have not two, but three children. But most urgent is
• 6:05
  Speaker 1: strengthening the care for elderly citizens to be sure. Challenges
• 6:11
  Speaker 1: facing time banking and China bound from a lack of
• 6:14
  Speaker 1: public understanding of the concept to maintaining the quality of
• 6:17
  Speaker 1: services and securely storing time dollars. Yet some industry experts
• 6:22
  Speaker 1: are optimistic, citing the government's commitment and the widespread use
• 6:26
  Speaker 1: of mobile phones. Among the optimists, it's Siging who runs
• 6:31
  Speaker 1: the time back in the central Chinese city of Wuhan
• 6:37
  Speaker 1: in the comers in China has its own characteristics. It
• 6:44
  Speaker 1: usually has grand plans for a lot of things with
• 6:47
  Speaker 1: top down designs. Under such a leadership, I believe different
• 6:53
  Speaker 1: places will come up with different ways to promote time banking.
• 7:00
  Speaker 1: The reason for Shanghai to push forward time banking is compelling.
• 7:04
  Speaker 1: The city has almost six million residents who are sixt
• 7:07
  Speaker 1: and above, or nearly a quarter of its total population,
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  Speaker 1: far above China's national average and about the same as
• 7:13
  Speaker 1: some developed countries. Set Up in two thousand nine, the
• 7:18
  Speaker 1: Chinese Time Bank has signed up more than two thousand members.
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  Speaker 1: They have deposited over two thousand furs into the bank,
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  Speaker 1: translating into some fifty five R and B or eighty
• 7:30
  Speaker 1: dollars in the value of senior care services based on
• 7:32
  Speaker 1: Shanghai's minimum wage. Only a fraction of the time deposits
• 7:36
  Speaker 1: has been used, as most members are fifty to seventy
• 7:40
  Speaker 1: euro retirees who have pension income but worry about rising
• 7:44
  Speaker 1: costs of senior care. In a recent interview, Good Zoo,
• 7:51
  Speaker 1: an official of the Shanghai Municipal Civil Affairs Bureau, told
• 7:55
  Speaker 1: us that unlike overseas time banks whose members are from
• 7:58
  Speaker 1: various age groups. Shanghai is mainly pushing for the model
• 8:01
  Speaker 1: of so called young old serving the elder in light
• 8:04
  Speaker 1: of the city's demographic structure. Due to the age of
• 8:08
  Speaker 1: its members, the scope of the services the Chinese time
• 8:11
  Speaker 1: bank provide is limited to helping with essentials such as
• 8:14
  Speaker 1: paying utility bills and doing the grocery shopping. Time banking
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  Speaker 1: is a concept from abroad. During the process of localization.
• 8:25
  Speaker 1: We have to twicket according to the needs of elderly
• 8:27
  Speaker 1: care for a big city like Shanghai. Wild time banking
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  Speaker 1: never really took off with a strong arm of the
• 8:34
  Speaker 1: Chinese Communist Party behind it. China just maybe the country
• 8:37
  Speaker 1: where it does this is Charlie Drew for Bloomberg News
• 8:41
  Speaker 1: in Shanghai. M h, well, you heard there about the
• 8:58
  Speaker 1: Chinese government encouraging able to say for their retirement with
• 9:01
  Speaker 1: their time as well as their money. But in the US,
• 9:05
  Speaker 1: older Americans are being actively encouraged to run up debts
• 9:08
  Speaker 1: which could make their old age considerably worse. In the
• 9:12
  Speaker 1: last three years, student debt student debt among Americans over
• 9:16
  Speaker 1: sixty two rose by nearly eight In a minute, I'll
• 9:21
  Speaker 1: talk to Bloomberg Senior editor Alex Tanzi about what's driving
• 9:24
  Speaker 1: this problem. But first I wanted to play you this
• 9:27
  Speaker 1: introduction by Bloomberg Quicktake producer Madison Paglia. I should say
• 9:32
  Speaker 1: she's a video producer. Quick take producers videos. And if
• 9:35
  Speaker 1: you want to put faces to the voices you're about
• 9:37
  Speaker 1: to hear, you can go online and search for older
• 9:40
  Speaker 1: Americans frontline student debt crisis, or just embrace the magic
• 9:45
  Speaker 1: of radio and produce the pictures for yourself. What turned
• 9:51
  Speaker 1: out to be about thirty tho dollars student loan is
• 9:54
  Speaker 1: now seventy never I'll die before I'll never be able
• 9:59
  Speaker 1: to pay that off. It's kind of like a death
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  Speaker 1: sentence from me. I'm in a life sentence, I should
• 10:03
  Speaker 1: say to pay those student debts. Student loan debt in
• 10:08
  Speaker 1: the US is now at one point seven trillion, and
• 10:12
  Speaker 1: it's growing fastest among older Americans. There are now about
• 10:16
  Speaker 1: eight point seven million Americans over the age of fifty
• 10:19
  Speaker 1: who are still paying off college loans and who have
• 10:22
  Speaker 1: seen their debts increase by about half since And this
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  Speaker 1: is my son. He graduated in two thousand and eight
• 10:28
  Speaker 1: from Bridgewater College with a degree in biology. I didn't
• 10:32
  Speaker 1: want him to be stuck with having the debt that
• 10:35
  Speaker 1: a lot of kids have when they get out of college.
• 10:37
  Speaker 1: So I assumed that loan seventy seven year old Frank
• 10:40
  Speaker 1: Sizer Jr. Is a retired prison warden living in Atlanta, Georgia.
• 10:44
  Speaker 1: By the time he is ninety six years old, he
• 10:46
  Speaker 1: will finally be finished paying off his student loans. The
• 10:50
  Speaker 1: parent plus loan that I took out was through the
• 10:53
  Speaker 1: Department of Education, and of course they then transferred everything
• 10:58
  Speaker 1: over the navyant. But I think I started in two
• 11:01
  Speaker 1: thousand and four. I'm still paying it and according to Navy,
• 11:07
  Speaker 1: and I'll be done in two thousand and forty. My
• 11:14
  Speaker 1: former job was ahead of the Atlanta City Jail, and
• 11:18
  Speaker 1: before that, I was the warden of three different federal prisons,
• 11:22
  Speaker 1: and of course I ran the prison system in Maryland.
• 11:25
  Speaker 1: My main source of income, of course, is my retirement
• 11:28
  Speaker 1: income and of course social Security. I sort of assumed that,
• 11:32
  Speaker 1: like most loans, you pay it off in a reasonable
• 11:34
  Speaker 1: amount of time, and I expected that I would have
• 11:37
  Speaker 1: it paid off before I retired. But for a period
• 11:41
  Speaker 1: of time while he was in school, I was just
• 11:43
  Speaker 1: paying interest rate on the loan. Right now, a balance
• 11:46
  Speaker 1: of about fifty two dollars. God knows what the original
• 11:50
  Speaker 1: amount was interest rate compounding, and it just continued to grow.
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  Speaker 1: It came as quite a shock to me to find
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  Speaker 1: out that I'm going to be label with this, probably
• 12:03
  Speaker 1: for the rest of my life. As you get older
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  Speaker 1: and you don't have the income that you did when
• 12:08
  Speaker 1: you were working, it has a big effect to take
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  Speaker 1: about five dred a month from y'all retirement income to
• 12:16
  Speaker 1: pay a student loan. These are the type of buses
• 12:19
  Speaker 1: that we drove. Alma Pett used to be a school
• 12:22
  Speaker 1: bus driver in Stockton, California, but back to back traffic
• 12:25
  Speaker 1: accidents led to debilitating medical issues and ultimately put her
• 12:30
  Speaker 1: out of a job. My main objective after that was
• 12:34
  Speaker 1: to go back to school. I was in the middle
• 12:36
  Speaker 1: of a divorce and was a single parent. I took
• 12:40
  Speaker 1: out student loans too, not only to cover my books
• 12:45
  Speaker 1: and the classes, but to help assist in my daily bills.
• 12:49
  Speaker 1: Almost medical issues have caused her to be in and
• 12:52
  Speaker 1: out of work over the years, and she is currently
• 12:54
  Speaker 1: collecting state disability. At this age, I can't be the
• 12:58
  Speaker 1: same worker that I was before that. I just don't
• 13:01
  Speaker 1: see a way out. I've been trying to pay it.
• 13:04
  Speaker 1: I've had medical problems, lots of jobs, debts in the
• 13:07
  Speaker 1: family where I had to stop work, my husband got
• 13:10
  Speaker 1: laid off, and in between times I couldn't pay the payments,
• 13:13
  Speaker 1: so I had to ask for forbearance. The interests accrued.
• 13:17
  Speaker 1: Like big time borrowers who defer all loans can face
• 13:20
  Speaker 1: severe consequences such as capitalized interest, which can cause the
• 13:24
  Speaker 1: original loan balance to skyrocket. Alma didn't complete her b A,
• 13:28
  Speaker 1: but took enough units to earn a certificate. Today, Almah's
• 13:32
  Speaker 1: debt has more than doubled. She and her husband have
• 13:35
  Speaker 1: filed for bankruptcy. It's quite um disheartening, troubling, UH to
• 13:44
  Speaker 1: be in the situation like this. I just don't understand
• 13:49
  Speaker 1: why the government allows this to happen. For a thirty
• 13:54
  Speaker 1: tho dollar loan to become a seventy tho dollar loan.
• 13:58
  Speaker 1: I don't come from family with a lot of money,
• 14:01
  Speaker 1: and I wanted a further my life in to provide
• 14:05
  Speaker 1: from my family a better future. So I felt like
• 14:09
  Speaker 1: the need to have to do it. At the time,
• 14:12
  Speaker 1: I didn't. I didn't realize it was gonna get to
• 14:14
  Speaker 1: this monster that it's at now. Both Frank and Alma
• 14:18
  Speaker 1: are among the more than forty million federal student loan
• 14:21
  Speaker 1: holders were scheduled to begin making monthly payments again on
• 14:24
  Speaker 1: October one, once COVID nineteen debt relief measures expire. Right now,
• 14:29
  Speaker 1: obviously with COVID nineteen, it's not accruing anything, and I
• 14:33
  Speaker 1: don't have to pay right now, but it's soon going
• 14:36
  Speaker 1: to start again, and with me not working, I don't
• 14:38
  Speaker 1: know how that's gonna be feasible. And unfortunately this is
• 14:43
  Speaker 1: not covered by bankruptcy. I would like to thank that
• 14:46
  Speaker 1: loan forgiveness what happened. I'm very pessimistic that that will happen.
• 14:52
  Speaker 1: You know, if you can't do a way of student loans,
• 14:54
  Speaker 1: do away with the entrance on those student loans, because
• 14:56
  Speaker 1: that's what really runs that cost uff and burden people.
• 15:02
  Speaker 1: My hopes for this issue for myself is for me
• 15:06
  Speaker 1: to be debt free from it completely. I know President
• 15:09
  Speaker 1: Biden talked about releasing us from all debt, so if
• 15:14
  Speaker 1: he's not gonna give us the blessing of canceling this
• 15:18
  Speaker 1: student loan debt, I would hope and pray that at
• 15:22
  Speaker 1: least he changes the laws so that it could be
• 15:25
  Speaker 1: included into a bankruptcy. If education is important as everyone
• 15:30
  Speaker 1: make it out to be, in which I agree with,
• 15:33
  Speaker 1: that should be a better way. The wealthy not our issue. Well,
• 15:37
  Speaker 1: I think the average person don't have that luxury. Quite honestly,
• 15:41
  Speaker 1: I'd like for my son to go on and get
• 15:44
  Speaker 1: his master's, but on that's going to have to be
• 15:47
  Speaker 1: on his dime. I'm joined now by one of the
• 15:56
  Speaker 1: people who helped uncover this story for bloom Bag, senior
• 15:59
  Speaker 1: editor for the Real Economy team and one of our
• 16:01
  Speaker 1: best data journalists, Alex Tanzi. Alex, thanks for being on
• 16:06
  Speaker 1: Stephanomics U. I should start by asking you how you
• 16:09
  Speaker 1: came across this story. It wasn't something that I had
• 16:12
  Speaker 1: heard about, this idea of of really much older people
• 16:16
  Speaker 1: laden with student debt. So for a number of years now,
• 16:20
  Speaker 1: student that's becoming a more prominent problem in the US.
• 16:24
  Speaker 1: It's up to one point seven trillion, so we've really
• 16:28
  Speaker 1: in about that several times. And in the past years
• 16:32
  Speaker 1: before there was forbearents for the pandemic delinquencies on student
• 16:36
  Speaker 1: that was the highest of any consumer debt. So a
• 16:39
  Speaker 1: lot of people are going into a lot of debt.
• 16:41
  Speaker 1: The government wasn't getting any of this money back. So
• 16:44
  Speaker 1: it's been an issue we've been kind of focused on,
• 16:47
  Speaker 1: and lately we've taken a deeper look at how different
• 16:51
  Speaker 1: parts of the population have different types of debt and
• 16:56
  Speaker 1: the loan program for parents wanting to help their kids
• 17:00
  Speaker 1: with the student debt um that seems to be causing
• 17:05
  Speaker 1: particular issues. So what are the problems there? Why are
• 17:07
  Speaker 1: people running into difficulties. One of the issue there is
• 17:11
  Speaker 1: that type of debt. That portion of student loans is
• 17:15
  Speaker 1: rising much more rapidly than any other portion. So a
• 17:19
  Speaker 1: lot of parents are trying to do the best thing
• 17:21
  Speaker 1: for their kid and incurring a lot of debt to
• 17:24
  Speaker 1: send them to college. And the debt is not cheap.
• 17:28
  Speaker 1: It comes with a four percent more than a four
• 17:30
  Speaker 1: percent origination fee, So right off the top, you're paying
• 17:33
  Speaker 1: four percent more than everyone else. And the interest rates
• 17:36
  Speaker 1: are over seven that's extraordinary. There's a huge gap between
• 17:42
  Speaker 1: the student loan interest rate and say the tenure. The
• 17:45
  Speaker 1: US tenure it wu the last dozen years, it's average
• 17:49
  Speaker 1: more than four d basis points. Well, that's four percentage
• 17:53
  Speaker 1: points more expensive. And what is I mean? I think
• 17:57
  Speaker 1: we obviously have seen in as Over the last few
• 18:01
  Speaker 1: years in the US, it's been a very prominent feature
• 18:03
  Speaker 1: student debt, not so much the parent debt, but the
• 18:06
  Speaker 1: certainly student debt. And there's lots of proposals for helping
• 18:09
  Speaker 1: people with it, but what's the politics of of helping
• 18:13
  Speaker 1: older people with this kind of debt. So in the
• 18:16
  Speaker 1: last election, for the first time it became a campaign issue.
• 18:20
  Speaker 1: UM it rose to that level of prominence overall student
• 18:24
  Speaker 1: that not necessarily the parent portion, but it became, you know,
• 18:29
  Speaker 1: campaign issues, So a lot of different politicians were running
• 18:32
  Speaker 1: on UM forgiving everything. Biden's kind of been opposed to that.
• 18:38
  Speaker 1: So far, he hasn't really staked his ground, but he
• 18:42
  Speaker 1: said he was willing to do a smaller portion of forgiveness.
• 18:47
  Speaker 1: But for parents in particular. You have a lot of
• 18:50
  Speaker 1: people now at the age when they should be saving
• 18:53
  Speaker 1: for retirement, at the age when they are retired, and
• 18:56
  Speaker 1: there's still paying student lens. So you have some people
• 18:59
  Speaker 1: collect in Social Security retirement income and paying student loans,
• 19:04
  Speaker 1: which UM is not a good scenario, and it's not
• 19:09
  Speaker 1: a it's not a straight Democrat Republican split, is it.
• 19:12
  Speaker 1: People feel differently on different sides of the are now
• 19:16
  Speaker 1: you know, everything is political these days in Washington. But
• 19:19
  Speaker 1: under Trump, the fellow appointed to be in charge of
• 19:23
  Speaker 1: student loans, he resigned and he said the whole system
• 19:27
  Speaker 1: can't be fixed, and he recommended a universal, um, a
• 19:34
  Speaker 1: universal for parents. Um, you know, have the government pay
• 19:37
  Speaker 1: off all these debts. He simply said, the system is
• 19:41
  Speaker 1: broken and there's no good solution to fix it, and
• 19:44
  Speaker 1: the country as a whole is better off just starting
• 19:48
  Speaker 1: from scratch. And it was interesting because I think that
• 19:50
  Speaker 1: guy he actually and he blamed the schools for the
• 19:55
  Speaker 1: universities for putting students in this in this problem. There's
• 20:00
  Speaker 1: a massive misalignment and incentives, so parents and students can
• 20:06
  Speaker 1: take out this money very easily. There's no background check
• 20:10
  Speaker 1: of any type. Um, it's much more difficult to get
• 20:13
  Speaker 1: a five thousand dollar small business loan than say a
• 20:16
  Speaker 1: fifty dollar loan to go to college. At the same time,
• 20:21
  Speaker 1: schools have no incentive, they have no skin in the game,
• 20:24
  Speaker 1: so they have no incentive to keep costs down, and
• 20:27
  Speaker 1: you know, they're happy to have more and more kids
• 20:30
  Speaker 1: paying a lot of fees. The government, you know, gives
• 20:34
  Speaker 1: this money out pretty easily, probably a lot easier than
• 20:38
  Speaker 1: they should, Um, there's no type of distinction on the
• 20:43
  Speaker 1: type of college you're going to, the type of major
• 20:47
  Speaker 1: you're studying. Everyone's paying the same rate, and they do
• 20:51
  Speaker 1: that for you know, particular reasons. But at the same time,
• 20:55
  Speaker 1: if there was a different incentive, and you know, if
• 20:57
  Speaker 1: you're going to a very good school, your grades are
• 21:00
  Speaker 1: it and you're studying, say a field that's in high demand,
• 21:04
  Speaker 1: you know, and on the in the private market, you
• 21:06
  Speaker 1: would probably pay less and interest Um, you know, with
• 21:10
  Speaker 1: the government running things, everyone is paying the same and
• 21:13
  Speaker 1: it's creating a misalignment of incentives. And I guess one,
• 21:18
  Speaker 1: I mean, one reason why it's probably easy to get
• 21:20
  Speaker 1: is it's much much harder to write off. I mean,
• 21:22
  Speaker 1: if you that the normal bankruptcy rules don't let you
• 21:25
  Speaker 1: write it off the way you would be able to
• 21:27
  Speaker 1: write off other kinds of consumer debt or indeed, mortgage
• 21:30
  Speaker 1: debt that you could just walk away from. In the US,
• 21:32
  Speaker 1: it's extremely difficult to get it written off. Lately, there
• 21:36
  Speaker 1: have been some, you know, very few cases where people
• 21:40
  Speaker 1: have been able to get the debt reduced, but for
• 21:44
  Speaker 1: the most part, you know, you're stuck with it, and
• 21:48
  Speaker 1: you know, people are stuck with it so last year
• 21:51
  Speaker 1: that the Partmit of Education was able to claw back
• 21:53
  Speaker 1: five billion dollars from people's social security incomes or tax
• 21:59
  Speaker 1: refunds or other parts of um, you know, government income
• 22:04
  Speaker 1: when someone wasn't paying their student learned that that's an
• 22:07
  Speaker 1: incredible figure. I mean, I guess that the human, the
• 22:11
  Speaker 1: human aspect of this is and I remember learning this
• 22:13
  Speaker 1: many years ago, that some of the different repayment rates
• 22:17
  Speaker 1: relate to how people feel about the debt and if
• 22:20
  Speaker 1: you people will try very hard to hold onto their
• 22:24
  Speaker 1: homes and to carry on paying their mortgages. If you
• 22:26
  Speaker 1: took it, if you did a degree and actually it
• 22:28
  Speaker 1: didn't help you much and you didn't get a great
• 22:30
  Speaker 1: job out of it, you don't have the same kind
• 22:32
  Speaker 1: of association. You don't feel the same kind of determination
• 22:36
  Speaker 1: of pride in in paying it back if it hasn't
• 22:39
  Speaker 1: worked out so well. So it's I think there's an
• 22:41
  Speaker 1: element of of psychology around this. But in the UK
• 22:45
  Speaker 1: you can write it's written off after thirty years student debt.
• 22:48
  Speaker 1: I wonder whether do you think that might make sense
• 22:51
  Speaker 1: in the US too. I think it would definitely makes sense,
• 22:54
  Speaker 1: especially for older people or people that become disabled. One
• 22:58
  Speaker 1: issue is people's incomes and their lives are not always
• 23:02
  Speaker 1: a straight line. People get divorced, people have health problems,
• 23:05
  Speaker 1: people have a death in the family, so their incomes fluctuate.
• 23:09
  Speaker 1: They lose their jobs, so it's difficult to always pay
• 23:13
  Speaker 1: the same amount every month with student debt, and for
• 23:17
  Speaker 1: some people they are more than two hundred thousand dollars,
• 23:20
  Speaker 1: so it can be quite a significant amount every month
• 23:23
  Speaker 1: that has to go out. There's also the St. Louis
• 23:27
  Speaker 1: FED has done some studies on the outcomes for college graduates,
• 23:33
  Speaker 1: and for many that don't necessarily go to the best
• 23:36
  Speaker 1: school and don't necessarily have the best grades, there's not
• 23:40
  Speaker 1: much benefit to go to college. It's not much better
• 23:43
  Speaker 1: than a high school degree. So there is um. There is,
• 23:48
  Speaker 1: Like you're saying, there's a lot of problems with people
• 23:51
  Speaker 1: feeling good about getting this that if they can't find
• 23:55
  Speaker 1: a job that helps them pay for it, there's a
• 23:57
  Speaker 1: massive investment. Is not very high. Turn well, Alex Tansy,
• 24:01
  Speaker 1: thank you so much for talking us through it. Thank you,
• 24:03
  Speaker 1: thank you very much. In case you hadn't noticed, inflation
• 24:15
  Speaker 1: is back. The headline rate of inflation in the US
• 24:18
  Speaker 1: hit five percent last month. That's the highest since two
• 24:21
  Speaker 1: thousand and eight. We've talked before on this podcast about
• 24:24
  Speaker 1: rising commodity prices and the record cost of shipping. Now
• 24:27
  Speaker 1: it's diapers on nappiece and restaurant meals. Diaper banks have
• 24:32
  Speaker 1: seen a jump in demand in many US states as
• 24:35
  Speaker 1: low income families deal with the consequences of price hikes
• 24:38
  Speaker 1: by the two companies which dominate the U S diaper market,
• 24:41
  Speaker 1: PNG and Kimberly Clark. And now you can finally go
• 24:44
  Speaker 1: to your local restaurant, you're probably finding that prices have
• 24:47
  Speaker 1: gone up there as well. US Economy reporter Olivia Rockman
• 24:51
  Speaker 1: has more on that last story. Olivia, tell me why
• 24:54
  Speaker 1: restaurant chains are feeling the strain and needing to hike prices.
• 24:58
  Speaker 1: And one side, they're getting a lot of pressure from commodities,
• 25:01
  Speaker 1: so that could be chicken, beef, even shipping costs for
• 25:05
  Speaker 1: their products. Chicken, for example, is at a decades high
• 25:09
  Speaker 1: in terms of price increases. And on the other hand,
• 25:12
  Speaker 1: they're being hit with with wage increases that they're having
• 25:15
  Speaker 1: to take in order to attract workers. Because in the
• 25:18
  Speaker 1: US we've had a lot of generous unemployment benefits, which
• 25:21
  Speaker 1: is not motivating many people to return to the workforce,
• 25:25
  Speaker 1: and so it's really on every end of their cost
• 25:27
  Speaker 1: cycle that they're facing these pressures and then in turn
• 25:30
  Speaker 1: having to raise prices. Yeah, and I think it's always
• 25:33
  Speaker 1: worth remembering when people talk about the fear of inflation.
• 25:36
  Speaker 1: I mean, there's lots of things to worry about inflation,
• 25:38
  Speaker 1: and often it does affect poor people the most because
• 25:41
  Speaker 1: they haven't necessarily got wage increases rising in line with inflation.
• 25:46
  Speaker 1: But on the other hand, you know, some of this
• 25:48
  Speaker 1: inflation is about increasing people's incomes, people getting paid more
• 25:52
  Speaker 1: um to work in restaurants and other places. And what
• 25:56
  Speaker 1: companies are we seeing increased prices and what what kind
• 25:59
  Speaker 1: of peace we've seen. The first big company that we
• 26:02
  Speaker 1: saw do this was Chippotle, Mexican restaurant chain here in
• 26:06
  Speaker 1: the US, and they had taken a wage increase a
• 26:09
  Speaker 1: couple of months ago and then shortly after announced that
• 26:12
  Speaker 1: they were raising their prices about four percent. We saw
• 26:15
  Speaker 1: the same with Cracker Barrel and other restaurant chain. McDonald's
• 26:19
  Speaker 1: has talked about needing to take price increases soon because
• 26:23
  Speaker 1: of wage increases, and we're hearing it from small businesses too.
• 26:28
  Speaker 1: And they do come up with a few sneaky ways
• 26:30
  Speaker 1: of hiding this from us. You don't you don't necessarily
• 26:33
  Speaker 1: know that the price has gone up. Yes, so companies
• 26:36
  Speaker 1: in their earnings cause will say they're looking at their
• 26:39
  Speaker 1: pricing strategy, or they're going to take pricing, or they're
• 26:43
  Speaker 1: looking at their price calculation, and they won't overtly say
• 26:47
  Speaker 1: that they're increasing prices. And so it is sort of
• 26:50
  Speaker 1: a game that they're playing between their investors and their customers.
• 26:54
  Speaker 1: But if you're a customer, you're gonna notice. I mean
• 26:56
  Speaker 1: they also trying to shrink the pulsian sizes or do
• 26:59
  Speaker 1: something I know that often happens with consumer products. You
• 27:02
  Speaker 1: find that your favorite chocolate bar is actually more than
• 27:06
  Speaker 1: it was a few years ago. Yeah, we heard from
• 27:08
  Speaker 1: Wingstop at Chicken Company that they're starting to use every
• 27:11
  Speaker 1: part of the chicken to make their products rather than
• 27:13
  Speaker 1: just the legs are just the breast that they used
• 27:15
  Speaker 1: to use. So there are some creative cost manipulations going
• 27:19
  Speaker 1: on as well. I'm surprised that they wanted to publicize that.
• 27:21
  Speaker 1: It doesn't make me want to jump in, but maybe
• 27:23
  Speaker 1: that's it's good. It's good environmental grounds. You should use
• 27:27
  Speaker 1: every last drop. Thanks very much, Olivia. That's it for
• 27:38
  Speaker 1: Stephonomics this week. I'll be back next week with a
• 27:41
  Speaker 1: special episode on the future of the global economy, featuring
• 27:45
  Speaker 1: a discussion with former US Treasury Secretary Larry Summers and
• 27:48
  Speaker 1: big name investor Ray Dalio. So tune in for that
• 27:52
  Speaker 1: and follow as Economics on Twitter to hear more economic
• 27:55
  Speaker 1: news and analysis from Bloomberg. This episode was produced by
• 27:59
  Speaker 1: Magnus Hendrick Soon. The report from China was written and
• 28:02
  Speaker 1: reported by Charlie jou, Lyn Ju and Daniel Away, with
• 28:07
  Speaker 1: special thanks to tong Jiang Dong, Doug Huang, Madison Baglia,
• 28:11
  Speaker 1: Alex Tanzi, and Olivia Rockman. Mike Sasso is the executive
• 28:16
  Speaker 1: producer of Stephanomics and the head of Bloomberg Podcast is
• 28:19
  Speaker 1: Francesco Lea.