Dear Friends,
It seems to me that any capitalist enterprise is always held to a much higher standard than any governmental or public entity. This seems to be universal as far as I have looked. If anyone knows of a confounding example please let me know. The more I look however the more the theorem appears proven, but, just because I look to no avail for black swans, that doesn’t necessarily mean there are no black swans, there may be an example, of a public entity being held to some standard, in history.
One recent example is the appearance of for profit colleges on the scene. They fill a valuable niche for non traditional students, (who are far more at risk of defaulting on student loans). The government has recently passed regulation that applies to them only, not public universities. The government seems to be in the process of, ensuring many people stay unemployed or under employed by regulating this sector of the economy, with the intent to wither it on the vine.
Cost is one argument against for profit colleges. But they are a new sector in the economy and as in all things new, patents, copyrights and new ideas, there is value in being the first with new innovation… monopoly profits. As new people enter the new market they naturally drive down the profit until, if lasses fair regulation has been implemented, the sector will reach perfect competition and the cost will approach close the cost of production.
How, you may ask, did the government do that? Because the government guaranteed loans that for profit college students have, government claims, make up 50% of the defaults, while they constitute, less than 50% of total student output. Some students claim, that they cannot get the job they studied for, because the school has not been accredited. No one has claimed, to my knowledge, that their education is in some way was or is inferior, just that government will not recognize their degree as being valid.
With no means of testing to see if the requisite knowledge in the applicable fields, government effectively closes the doors for those graduates, then when the older graduate, who is more at risk to default for many factors, cannot get employment at the career he or she studied for then inevitably goes into default, the government has something to point to and scan then subject one, politically disfavored segment of the education sector, to onerous regulation, while ignoring the other, politically favored, sector.
To complete the government’s, behind the scenes play, was that, last year, the government nationalized the tuition loan segment of the banking and loan sector of the US economy. Creating a whole host of pernicious incentives, that mirror the government’s, unexamined, hands in the home loan debacle that so recently hobbled the American economy and is still holding the ankles of the US economy at an unnatural angle.
But government never comes under examination. It’s like government’s, politically favored groups and segments of society, have an invisibility cloak. They simply swoosh it over themselves like Dracula and do whatever they want… because they are invisible. Anyone who questions them is called crazy, a conspiracy theorist and a kook. Ridicule and vitriol are heaped like dung in a barn.
Take Fanny Mea and Freddy Mac’s role in the recent housing crisis. It was government regulation that required loans be given politically favored groups regardless of their ability to repay. Those that formulated the policies must have believed that the bad loans would be absorbed by a less politically favored sector of society. Redistributing wealth underground so to speak.
The resulting tidal waves of bad loans grew in frequency and magnitude until the financial levees were overcome. Many very old and cagy institutions fell and many people lost millions of dollars. Government immediately pointed the finger of greed at the banking executives who were the politically unflavored group that was supposed to absorb the bad loans in the first place.
We have had Oscar winning examinations into the actions and motives of Wall Street executives but not a single one about Fanny Mea and Freddy Mac’s roles or especially government regulation or the proponents of those regulations. But don’t worry… we won’t. The Elite cover for the Elite. There will be no peering documentaries about the role of regulation in the financial crisis.
Because government, while criticized daily, is never actually critically examined, but capitalism, which is the font of our prosperity is constantly poked and prodded to find even the smallest fault. Like a Dane who examines his levees with a microscope, while the dams holding back the sea are pouring rivers in behind him. I wonder… Is it the Dam’s fault of the Dane’s his land is being lost to flood?
