Education

Be Chrool To Your Scuel

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Jacob T. Levy takes note of some grade inflation at National Review's higher education blog "Phi Beta Cons" (which sounds like it should have been the name of a late-eighties comedy with Danny DeVito, Judge Reinhold and Ray Walston).

They were going to call it "Harvard of Brown," but that title tested horribly.

In this case, PBC refers to an attack by Sen. Lamar (Lamar!) Alexander (R-Tennessee) on the Obama Administration's changes to the system of federal student loan guarantees. PBC headlines it "Alexander: Obama's 'Soviet-Style' Takeover of Student Loans." Says Levy

Notice that banks would be free to continue to make student loans. And they're not having their existing assets taken. All they're losing is the ability to make publicly subsidized student loans in the future. A comparison with Soviet nationalization is just nuts. And it's not even what Alexander said.

Anyway, the headline-post gap wasn't what first struck me about this. Neither was the surrender of National Review to being the microphone handed to current Republican office-holders. Rather, it was this:

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 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.

I mentioned a few weeks ago, and will reiterate in an upcoming print column, that the move from guaranteeing student loans by private lenders to lending directly to students is a "marginal improvement in a diseased system." It's an idea that dates back at least 15 years, and it streamlines the lending process. I had hoped that, with the Treasury Department lending directly and student loan defaults increasing, it also might make the government more scrupulous in examining the credit risks of students it lends to. But all the experts I consulted say that's a pipe dream.

The great mental trap of public/private partnerships is in believing that because private parties have found a way to privatize profits while nationalizing losses, something has in fact been "privatized." The federal government should not be in the business of creating more college customers: Americans already value education highly enough, and college diplomas still have enough market value, that there's no need to encourage demand. The student loan reform doesn't solve that problem, but it's hardly an example of President Obama's love of Soviet-style centralization and government control. (You can find enough real examples of that without stretching for evidence.)

In fact, there might be an advantage in having Fannie Mae and Freddie Mac, for example, make direct loans rather than guaranteeing loans made by private players. If nothing else, when the market collapsed it would be obvious even to the dumbest among us that the problem was not the greed of unregulated capitalists, but the inevitable and foreseeable result of public policy.

P.S.: I think that should be "distinctly," not "distinctively." I wish people still learned and internalized Fowler's argument against the proliferation of syllables.

P.P.S.: Be Chrool To Your Scuel:

P.P.P.S.: Dogs in college, courtesy of a 1930 MGM "Dogville" short so bad it will make you wonder how talkies caught on:

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  1. Neither was the surrender of National Review to being the microphone handed to current Republican office-holders.

    Say what?

  2. I love the assumption that “free market” means “whatever economic system Republicans currently believe in.”

  3. Really convoluted prose. I would have written:

    Neither was the surrender transformation of National Review to being the microphone handed to mouthpiece for current Republican office-holders.

  4. Lending directly to students will also create more govt jobs.

    1. Don’t know how closely you followed the bill, but it was pretty hilarious the way both sides kept claiming their way of doing it would create more jobs. Rather than, I don’t know, maybe saying that their way would ensure that qualified students get affordable loans or some crazy goal like that.

  5. Just trying to keep that higher-ed bubble inflated, baby.

  6. And once they turn collecting the loans over to the IRS, the circle will be complete.

    These aren’t student loans any longer, they have become reverse tax payments on future earnings.

  7. Sen. Lamar (Lamar!) Alexander

    That never gets old. I mean it!

  8. Were those dogs on scholarship?

  9. Say what?

    Bad sentence aside, spammy press releases and speech reprints from pols and their feeder orgs are becoming increasingly common there.

    Mark Steyn and John Derbyshire still talk some impolitic shit sometimes, but NR‘s post-Bush shift from showcasing miscellaneous right-wingery to declaring the bounds of Tory acceptability has pretty much wrecked the place.

    If nothing else, when the market collapsed it would be obvious even to the dumbest among us that the problem was not the greed of unregulated capitalists, but the inevitable and foreseeable result of public policy.

    Ask a random dipshit who (you gotta say “who,” for the lulz) Freddie Mac is. The least stupid answer you’ll get is “The second Bell Biv Devoe record.”

    Then ask them what (you gotta say “what,” so they have some incentive not to say “Bush”) caused the housing clusterfuck. The best answer you’ll get is “Mexicans.” If it’s someone who watches the news, they’ll say “deregulation.”

    We’re boned.

  10. I welcome the federal gov’t directly lending for student loans. It is always easier to expose a farce when it’s not hidden behind multiple veils of obfuscation, like the previous system of federally guaranteed loans. There will no longer be any corporate bogeyman to blame when it sees constant defaults and tuitions continue to climb.

    Of course, had the gov’t just backed out of student loans altogether, it would have been a far, far better thing.

  11. Let me be clear.

    “Dogville” is a great film.

    1. Call me philistine, but I found the 1930 film clip with actual dogs many times more watchable than the Lars Von Trier art film Dogville.

      1. I like the Dogville shorts, and in fact blogged briefly about them far too long ago.

        The Dogway Melody has a surprisingly shocking attempted doggy sexual assault scene.

    2. I was just glad no one got shot by an overzealous SWATZI uber-douche.

  12. Burying it in the “Health Care” Bill gave it that extra-fishy smell.

    Why couldn’t they bring it to the floor, all by itself, debate its merits, and have a roll call vote?

    *laughs hysterically*

  13. My only real hope here is that now people can see exactly who to blame when the program inevitably fails.

    Now to go fill out that FAFSA form…

  14. As I understand it, the folks at NRO weren’t defending the current system as anything close to a free market. the point, rather, was to argue against liberal incrementalism against the free market, by first enacting subsidies (loan guarantees) and then taking over the enterprise entirely. you know, just like with healthcare.

  15. The reason why “the view that there’s something distinctively [un]problematic about private lenders with public guarantees has been completely lost” is because when it comes to student loans, that battle was lost many years ago. If you are upset about a current policy, it does little good to complain about decisions from years ago. Yes, the blog post had a sensationalistic title and failed to fully address all aspects of the issue, but that is the nature of blog posts.

  16. The argument that no one is stopping banks from making education loans misses a number of points. First, no one has yet demonstrated that civil servants, even with the aid of government conractors (which incidentally make risk-free profits), can more efficiently and economically operate a trillion dollar loan program. A lot of reasons have been offered for why the private sector sucked at doing it. But this is not a choice between one party that sucks at itand one that does not. Both will mishandle it, but the issue is which one does a better job.

  17. This is an outrageous government takeover of a…er, government program.

  18. Wow never saw Dogville before. All I can conclude is that anyone associated with it was really, really drunk. One of those good idea at the time things.

  19. Isn’t there a danger of an administration manipulating loans to push certain industries. I try not to tinfoil hat it up, but passing a bill that is directly related to financing the education of doctors with a bill that is most likely to increase the need for doctors seems a little too easy. Seems like a social engineering push more than a “we are going to save a ton of money and give it back” push.

  20. Obama Love

    Obama he is my man, he shows his anger, to the public he gives no dam.

    He is a progressive in every way, killing jobs is how he earns the union’s back deal pay, in action he is a socialist even when he is just simply issuing a stay: He says he for the free, but he is bent on one single deed, providing a permanent May Day for all of America to see.

    He oppresses many while calling them every name, then claiming he and his party is the victim, to help soak in the more fame, he is very hypocritical in his blame, knowing every time it’s always the same, this is Obama’s favorite game.

    He blame’s others like the Tea Party, Insurance, Racist, Big banks, and Israel. Many of us knows his policies have already failed. He shows the signed of being dangerously narcissistic, but our media loves him, as he can fool them into believe he just pessimistic.

    He is for big government every time, hurting our economy so we can’t save a dime. He knows the socialism role, will be to take away all our dough. He made a promise not increase the deficit, this promise he knew, to be untrue, but if he created enough civil unrest, he could find some else to have the blame rest, for all his ugly mess, this is where Obama is truly the best.

    With government spending billions in waste, I know our government will make it sound great and a honorable place, so they offer money to their cronies in this and every case.

    President Obama helps unions gain their dues, no bill is done with out their un-ethical sausage dew. Soon our education system stench will endlessly protrude, and he has no care if you find this rude.

    Go Obama, lets have Government take away more freedoms, come on man, you can transform, again claim the public is misinformed. Go Big G, rah rha ree, lets help our government take us to our knees

  21. debate its merits, and have a roll call vote?

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