Ambrose: Liberals can't grasp benefits

Republicans in Washington betray conservative principles, they lose elections, liberals once more see themselves in the ascendancy, and what they then do, we are learning, is growl, bark and bite with no sense of intellectual inhibition.

Take, for example, Jonathan Chait of The New Republic.

He recently wrote a piece supposedly demonstrating that privatizing can have more to do with corruption of federal programs than the overreaching of government. The topic was a federal program providing billions in guaranteed loans to college students. He says the evidence was that the feds could do it more efficiently than private lenders, but that conservatives made sure that colleges could choose between the private lenders and the government. The private lenders got a big hunk of this lucrative business by doing all kinds of scandalous favors for college administrators, he says. Big government is at fault? Phooey! Case closed.

But is it? Let’s look at three points.

One. Government competition with private business is a grossly unfair threat to these businesses because the government does not have to get its capital by raising it in free markets or stay in business by making profits. Squeeze these businesses enough with the taking of their money and the shrinking of their business opportunities with this socialist mode of operation, and the private dollars also shrink to the disadvantage of one and all.

Two. The government loan program increases demand for the most expensive college educations by making it much easier for prospective middle-class students to get the money to pay whatever some expensive colleges are asking — with what result? The further inflation of tuition costs, of course. If the government just stayed out of the equation (except for grants to the poorest families), it would helpbring some college costs down and do a greater favor for the students and their families than the loan guarantees.

Three. Because the federal government guarantees the loans, the risk to lenders is zero for huge amounts of cash. The market is thus distorted, which is what caused the scandals Chait bemoans. The unnecessary cost to the economy is hundreds of billions a year and vastly increased difficulties for the poorest among us.

Limited government — government that does not constantly play the hero by taking more and more from everyone to return to some as its own kind of scandalous bribery — leaves it to markets to respond to consumer demands, and all kinds of healthy consequences flow from the fact. Instead of having a few people with inadequate knowledge of the whole allocating goods, you have the decisions of millions who know precisely what they want and need and don’t want and need. But liberals don’t get this and never have and the resulting mischief is endless.

While Republicans did us relatively few favors when they controlled Congress, the liberal, Democratic agenda could be a disaster of major magnitude. A rehabilitated Republican Party could ultimately be the beneficiary of a calamity to come, but the interim won’t be fun.

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