Tuesday, March 30, 2010

Anti-Monopoly Liberal “Progressives” Create a Student Loan Monopoly

Liberals, who nowadays prefer to call themselves “progressives,” share many beliefs with the Progressive movement of the turn of the Twentieth Century. One of the goals of the Progressive movement was to eliminate business monopolies. But the liberal “progressives” of today have created a new business monopoly themselves – a government one.

Today, United States President Barak Obama signed into law a bill that fixed the law which federalized health insurance that he had signed last week. Included among the new law’s provisions is one that also federalizes the student loan program. No private lender will be able to participate any longer in the program. The “progressives” have thus established a federal government monopoly for student loans.

The liberal “progressives” argue that the federalization of student loans eliminates the private middleman, which would lower costs. But it also means that the federal workforce will have to grow, at the loss of the private workforce, as lenders will no longer require the services of student loan specialists. Government overhead will also grow. With the growth of the federal government, there will be increased deficit spending, which will add to the rapidly growing federal debt.

Moreover, a government monopoly is as dangerous as a private one. It means that there will be no free market competition to keep prices (in this case, in the form of interest rates) down. The rates will be whatever the federal government wants them to be. Without the fear of a loss of business, there is also no incentive to save costs or to provide for good customer service. Indeed, bureaucrats are not known for innovation.

Conversely, federal politicians could make promises to lower student loan interest rates or to make riskier loans than private lenders would for political expedience – at the expense to the taxpayers. Students are now among the Americans who are being made by the Obama Administration and the liberal Democratic Congress to be increasingly more dependent on the federal government they control.

The liberal “progressives” would argue that a public entity is responsive to the will of a people in a representative republic, but a bureaucracy is less responsive to the people than a private business is to customers who can take their business somewhere else. It has become increasingly apparent that the liberal “progressives” believe ideologically in government control over the private sector, regardless of the economic consequences.

The takeover of major financial institutions by the Obama Administration and its predecessor was a cause of concern, although it was intended to be temporary. However, the federal takeover of half of the mortgage industry and two of the three major automobile makers (and the manner in which the latter was accomplished, whereby labor unions were favored over bondholders), the federalization of health insurance and now the takeover of the student loan industry are alarming. With more and more centralization of power in the federal government, there is less and less liberty for the states and the people.

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