Debt, Student Debt, and GM Debt; the Futility of Government Planning (UPDATE)

The NYT reports on the difficulty that a disabled, younger father had in obtaining a discharge in federal bankruptcy court from his $89,000 of student loan debt.  On the other hand, the government enabled GM to shed much of its debt and GM didn't even have to deal with federal bankruptcy court, much less the obstacles in it peculiar to student loan debt.  This happens in a "planned" economy, regardless of the good intentions of the planners.  The economy is simply too complex to be manipulated in a way to avoid such absurd results.  (h/t Instapundit.)

Especially pertinent to this point is a speech this past week by Andy Haldane, the executive director for financial stability at the Bank of England, at the Jackson Hole Conference where Bernake also spoke (and made headlines).  Finance journalist Jason Zweig writes about Haldane's speech in the WSJ.  Here is part of Zweig's report:

In his speech, “The Dog and the Frisbee,” Haldane warned that the growing complexity of markets and banks can’t be controlled with increasingly complex regulations. Tapping deep into behavioral economics, Haldane argued that regulators need to bear in mind five fundamental limitations of the human mind:

1) since even computers can’t track all the necessary variables in the massively interlinked financial world, there is little hope that humans can;

2) intense information feedback from markets makes signals almost impossible to detect in the noise, so that “the more complex the environment, the greater the perils of complex control”;

3) even when the variables that decisively affect outcomes are known, it’s hard to know which ones will matter the most in a given situation, and it is hard for regulators to resist the temptation to pay more attention to the most vivid factors;

4) regardless of the massive amounts of data available, the sample of financial crises remains relatively small, making it hard to form reliable conclusions about what works best to prevent or cure them;

and 5) complex and detailed rules lead regulators and financial institutions alike to “manage to the rules,” tiptoeing right up to the hot red line at which a crisis can be triggered.

I am reminded of Proverbs 19:21:

²¹ Many are the plans in a man’s heart,
    but it is the Lord’s purpose that prevails.

UPDATE:

Regarding Bernake's speech:

[E]conomists and central bankers wondered more openly than usual if the Fed had the tools to fix the problems of the day and expressed frustration that four years of super low interest rates and extraordinary money-pumping by the Fed hadn't done more to spur the slow-moving economy.  

-from today's WSJ website article entitled "Bernake Faces Skepticism Over Policy."