Republicans, Not Conservative

Jacob Levy confronts the conservative mantra of corporate welfare.

Back in the days of the Savings and Loan crisis, and again in the days of Freddie Mac and Fannie Mae, we saw lots of commentary from the right that the problems couldn’t be blamed on the free market. After all, in both cases massive moral hazard had been created by federal guarantees underwriting the debts, eliminating market discipline. Pains were taken to piously distinguish the free market from corporatism and corporate welfare (a distinction I take very seriously, I might add).

In the last two weeks, I haven’t seen any Republican official or Republican-leaning intellectual make the slightest reference to the problems with a system in which private [student] lenders make risk-free profits by lending on the back of a federal guarantee. The indictment of corporate welfare has been nowhere to be found. The view that there’s something distinctively unproblematic about private lenders with public guarantees has been completely lost. And the (misleading) headline, the reference to a Soviet-style takeover, crystallized this for me. Since there’s been no crisis in student lending, no collapse of the system, the status quo ante has been naturalized; there are people on the right who think that the subsidized revenue streams to which lenders had become accustomed were a kind of property that has now been seized. The ex post commentaries on FSLIC and Franny and Freddie have been forgotten.

So which is it going to be? This little bit of cognitive dissonance and stupidity is rampant in the Republican Party. Granted, there’s cognitive dissonance in the Democratic Party aplenty but I would love to see conservatives and liberals working together and come to a compromise on something. That’s asking too much.

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