America's pensions can't beat Vanguard but they can close a hospital • Hacker News Board

Re: America's pensions can't beat Vanguard but they can close a hospital

#121

Post by positron26 » Tue, Feb 17, 2026, 4:37 PM UTC

lokar wrote: post #39

epistasis wrote: post #24

> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…

One round of loan forgiveness is fine, but it builds an expectation of it in the future. All of the loans, growing larger and larger, just encourage universities to grow fatter and raise costs to students. If students could not borrow enough to attend, they would be forced to lower costs (not necessarily the very top universities, but all the rest).

Just can't help humming in my head reg yoo la toe ree cap chur

Any system that can juice itself by increasing both funding and cost will scale both until the natural incentive gradients (are you smart? do you actually want to do stuff or do you just want a desk job?) vanish into the noise. When everyone went to college, nobody learned anything.

University is one of those things you always want to be capability rather than means gated, but those of means will always want their kids to get in regardless of how they were raised. After all, they worked hard. Why should their kids? They will ally with every convenient rationalization in order to moralize for the politics, taking advantage of arguments about "disadvantaged backgrounds" etc to treat everything as a means problem, but the goal is to dilute the capability aspect, and that robs talent.

If you have exceptional talent, you need to know the truth. Systems naturally try to optimize the dumb-rich to smart ratio so that there's a lot of subsidy available for anyone who actually needs to be there, but consequent GPA inflation demands that we make the education somewhat meaningless, so you're really on your own to set goals, and any good ones are way higher. Check the boxes, take the free lunch, and then treat the overall coddling like a charade that must be ignored. Then again, isn't self direction always that way?

Re: America's pensions can't beat Vanguard but they can close a hospital

#122

Post by paulsutter » Tue, Feb 17, 2026, 4:38 PM UTC

epistasis wrote: post #24

> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…

Student loan forgiveness yes, paid for by the schools that let people rack up debt for low value degrees.

In the olden days student loans qualification depended on the students degree program and grades, and there wasn’t any repayment problem

Re: America's pensions can't beat Vanguard but they can close a hospital

#123

Post by Aurornis » Tue, Feb 17, 2026, 4:39 PM UTC

codexb wrote: post #68

jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

I’m always surprised that student loan forgiveness appeals to anyone who should otherwise be able to think about all of the bad second order effects.

The more we inject money into the education system, the higher prices go. Setting a precedent that the government will just pay off your loans if you don’t pay them off only encourages more people to take out loans without thinking about paying them back.

There are so many things wrong with this idea that I can’t believe it continues to be popular. The only thing I can think of is that it’s a litmus test for who can and cannot consider second order effects of economic decisions, or who believes money can spent en masse without altering the system.

Re: America's pensions can't beat Vanguard but they can close a hospital

#124

Post by drakythe » Tue, Feb 17, 2026, 4:39 PM UTC

codexb wrote: post #68

jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

That's why it should be a one time event in conjunction with reworking the whole system.

Why can I, as an 18 year old, sign for a loan that _cannot_ be forgiven, graduate into a crashed economy, and still be held accountable for choices that impact me when I only had a small part in them? The system needs reformed, and we need to do something for the people still on the hook of the old system (and I say this as someone who has paid off all my student loans).

Re: America's pensions can't beat Vanguard but they can close a hospital

#125

Post by NoboruWataya » Tue, Feb 17, 2026, 4:39 PM UTC

sidewndr46 wrote: post #5

vondur wrote: post #4

CalPers, the largest public employee retirement system in the US was not getting the kind of returns that they needed. They were restricted from purchasing stocks in certain industries, such as oil, weapons, etc.. However, they recently switched to investing in private equity funds and now they are getting much better returns, without all the pesky moral issues involved with it.

So is that basically a pensionwashing scheme?

Washing what, exactly? If you are suggesting that pension funds are investing via PE funds in assets that the pension funds themselves are prohibited from investing in, that's not how it works. The mandate between a pension fund and the PE fund will be quite clear on what assets the PE fund may or may not invest in on behalf of the pension fund, and will mirror the restrictions that apply to the pension fund.

Re: America's pensions can't beat Vanguard but they can close a hospital

#126

Post by ineptech » Tue, Feb 17, 2026, 4:39 PM UTC

epistasis wrote: post #74

steveBK123 wrote: post #50

Earlier quoted context omitted.

> bank depositors are not engaging in risky behavior Supposedly intelligent investors leaving money in accounts above FDIC limits ($250k per holder per bank, so $500k for joint account) were engaging in risky laziness.

So what do you do when your payroll is more than $200k? The depositors were not treating SVB as investment, they were bank accounts for doing transactions.

The depositors were using SVB because SVB was willing to hand out loans to startups with no revenue that other creditors wouldn't fund, right? Using a less reliable vendor to get a better rate is a risk, whether that vendor is supplying labor or parts or banking services.

One could argue that the depositors didn't know SVB was unreliable, but that's kind of undercut by the fact that there was a run on the bank in the first place.

Re: America's pensions can't beat Vanguard but they can close a hospital

#127

Post by SpicyLemonZest » Tue, Feb 17, 2026, 4:41 PM UTC

cj wrote: post #107

codexb wrote: post #68

Earlier quoted context omitted.

Ok, but forgiving student loans doesn't do that. It signals to borrowers that they don't have to repay high loans if their career can't support it. It tells borrowers that they can make risky loans without a chance of default. It tells universities that they can keep charging exorbitant tuitions because kids can still get loans to pay them. The solution is to allow judges the discretion to default them in bankruptcy…

Allowing student debt to be canceled during bankruptcy would be a good first step (possibly even better than canceling student debt across the board). To your point, making it easy to cancel debt teaches borrowers that debt isn’t a serious thing. Requiring someone go through bankruptcy (and all of the associated negatives on your credit score, etc) seems like a good tradeoff. Allows you to get out from under the debt…

People who start lobbying for it quickly discover that 87% of people who petition for their student debt to be cancelled in bankruptcy get it (https://www.cnbc.com/2025/12/29/bankruptcy-student-loan-borr...). I support removing the special treatment entirely, but ultimately most student debt holders don’t go bankrupt.

Re: America's pensions can't beat Vanguard but they can close a hospital

#128

Post by MontyCarloHall » Tue, Feb 17, 2026, 4:41 PM UTC

Isn't the main problem with pensions today the dramatic increase in life expectancy post-retirement? They were never intended to support decades of retirement: in the old days, you retired at 65 and there was a good chance you'd be dead by 70, at most 75. (When Social Security was established in the 1930s, life expectancy was only 61.) Nowadays, there's a good chance you'll live beyond 90, with expenses increasing disproportionately towards end-of-life. Combine that with a shrinking birthrate, and no feasible increase in ROI/worker contributions can sustain pension-funded retirements of 25+ years.

Re: America's pensions can't beat Vanguard but they can close a hospital

#129

Post by paulsutter » Tue, Feb 17, 2026, 4:41 PM UTC

etchalon wrote: post #70

jazz9k wrote: post #45

Earlier quoted context omitted.

I disagree about student loans. The entire system needs to be dismantled. Universities don't care if their majors will result in a job and the student loans are a source of risk-free money. They need to start taking on the risk of all student loan, not me, the tax payer.

So you believe universities have taken advantage of students by crafting, encouraging and financing education programs with an understanding that those programs would not result in jobs which would be sufficient to repay the debt needed to complete them, but you think the 18 year olds who were taken advantage of should be forced to suffer for their failure to make perfect decisions at 18. Cool. Cool.

No they’re saying that the schools should repay the loans, not the government

Re: America's pensions can't beat Vanguard but they can close a hospital

#130

Post by Aunche » Tue, Feb 17, 2026, 4:41 PM UTC

lotsofpulp wrote: post #31

epistasis wrote: post #24

> Larry Summers warned against “moral hazard lectures” and demanded SVB depositors be made whole immediately in 2023, months after calling student loan relief inflationary and unfair. Moral hazard for borrowers, bailouts for banks. Not lost on the public. I can't believe I'm about to say something that could be construed as a defense of Larry Summers, but here goes: bank depositors are not engaging in risky behavior,…

> bank depositors are not engaging in risky behavior, Because the taxpayers (and all users of USD) repeatedly bail them out. I could define anything as not being risky if I knew taxpayers would bail it out. More importantly, if there is no risk, what purpose does a bank serve? They’re a pretty bloated middleman if their sole purpose is to update a database to reflect incoming and outgoing cash flow. The government sh…

> Because the taxpayers (and all users of USD) repeatedly bail them out.

The taxpayer didn't pay for those bailouts. They were funded by the DIF, which was replenished by premiums that banks pay.

> They’re a pretty bloated middleman if their sole purpose is to update a database to reflect incoming and outgoing cash flow.

Did you just look into what banks do at all before making this claim? If that were the case, companies like Apple, Bilt, and Robinhood wouldn't be relying on real banks and could easily start their own.