Learning to Love Corporate Welfare

Here’s a good post from Jacob Levy:

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).

Advertisement

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.

And of course you see something similar in the fulsome conservative defenses of the prescription drug tax giveaway that the Affordable Care Act repealed. This is how the political right operates — there’s a lot of rhetoric about free markets, and a lot of institutions that are staffed by people who very sincerely believe in free markets, but no real organized political movement on behalf of free markets except insofar as market-talk bolsters Republican Party electoral fortunes or rich people’s desire to pay lower taxes.