Why Do You Think They Call It Progressivism?

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When building a just and equitable society, what comes after the right to retirement (Social Security), the right to own a home (Fannie Mae), and the right to healthcare (Medicare for the old, Medicaid for the poor, and Obamacare for all)? If you answered the right to a college education you've been reading the news. If you muttered "using other people's money," then you understand half of the formula anchoring the panoply of manufactured rights that define the Progressive movement.

The second half of the formula can be seen at work in a provision tucked into the Healthcare Reconciliation Bill through which the college loan market will become an exclusive arm of the government. Decades in the making, Congress succeeded in turning a private market into a private market with subsidies into a price controlled market with a public option into such a fiscal mess that it was able to justify eliminating the private market altogether. This last step was done in order to save the taxpayer money so that these "savings" can be spent on something else. Call that a Progressive twofer. The lesson that liberal pundits draw from this twisted logic? Our beneficent government had to step in to save us from yet another market failure.

What was that infamous quote from the Vietnam War? "It became necessary to destroy the village in order to save it?" Such will be the epitaph carved on the gravestone of the American Free Enterprise system.

First you lend a helping hand for a worthy cause, castigating stingy critics who claim this is the first step of a takeover. Then you ramp up the flow of subsidies creating a new dependent class. Once the dollars get big you have to enact regulations to make sure taxpayer money is spent wisely. This, of course, never happens as you begin outspending even the wildest forecasts. Hoping to control costs you introduce a public option, demonizing profiteers. Soon you are wallowing in waste and fraud, allowing you to position yourself as a reformer. Predictably, the reform is eliminating private competition altogether.

This is the time honored way to slowly overcome the distrust most citizens have when the government tries to take over large swaths of the economy.

Why do you think they call it Progressivism?

Across the decades it took to nationalize the student loan business college tuition, like healthcare costs, has climbed far faster than the rate of inflation. What else could the result be in a "market" where buyers, sellers, and middlemen are all invited to help themselves to other people's money?
Twenty eight years ago, a mere seven years after Pell Grants made the scene, Congress created a government-sponsored enterprise called the Student Loan Marketing Association, or Sallie Mae. Its goal was to make college affordable. How did that work out?

But no matter, it's the intention that counts - another key tenet of Progressivism. Like its larger cousins Fannie Mae and Freddie Mac, this subsidized creature of Congress turned into an opportunity to loot the treasury. Aided and abetted by private bankers happy to feed from the troth, it's hard to feel sorry for the loan officers whose jobs have now been eliminated. But this is inevitably what happens when political entrepreneurs displace market entrepreneurs.

Barring an electoral revolution, the gradual elimination of private markets by subsidization, regulation, runaway spending, and nationalization is exactly where we are heading with healthcare. This is not just a forecast; it's the stated goal of the Speaker of the House and will happen as soon as she has enough votes to reform the reform just passed. It is no secret that a single-payer system in which private health insurance is outlawed and doctors and nurses are government employees administering medicine as allocated and prescribed by government experts is the cherished end game of the Progressive movement.

One thing that the inventor of Social Security, German chancellor Otto von Bismarck, understood was the tendency of democracy to evolve into socialism. "Universal suffrage is the government of a house by its nursery" the Iron Chancellor once said. How many voters can resist the appeal for the many to enjoy benefits at the expense of the few? Hoping to forestall this process by co-opting the burgeoning socialist movement, Bismarck adopted many of their programs in exchange for establishing a unified government of muscular militarism. Binding his citizens to the state through their pocketbooks, his strategy created modern Germany.

A people dependent on the government for their daily bread, stripped of individual responsibility, often becomes the tool of a charismatic leader. When the Great Depression brought the nostrums of socialism back to the fore in both the US and Germany, the next chapter of the story got ... ugly.

Maybe history won't repeat itself. Maybe hyperinflation is not waiting just around the corner. Maybe unemployment will magically disappear as government payrolls swell and private payrolls shrink. Maybe investors and entrepreneurs won't begin leaving the county. Maybe we can all live the good life and someone else will pay the bills. Maybe, according to Bismarck, "There is a Providence that protects idiots, drunkards, children and the United States of America."

Bill Frezza is a fellow at the Competitive Enterprise Institute, and a Boston-based venture capitalist. You can find all of his columns, TV, and radio interviews here.  If you would like to have his weekly columns delivered to you by e-mail, click here or follow him on Twitter @BillFrezza.

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