I was talking to a friend the other day (a staunch conservative) about the student loans. The following is a copy of the paraphrased conversation:

Friend: The student loan thing is just another example of a government takeover. A takeover that politicians will likely screw up by legislating that the loans be given out as patronage under the guise of helping specific "protected classes". For example, it wouldn't be surprising to find special set asides for midget circus performers in Alabama.

Dave: That's probably true, but they can do that now since the government is the one underwriting the loans. Since the government is taking all the risk, the $87 billion in fees and interests the banks are getting is just a give-away to the banks. The GAO says $61 billion of the $87 billion could be saved if the government gave the loans directly.

Friend: Well, banks should take the risk and the government shouldn't be involved at all.

Dave: But if a bank were to sponsor a loan to a student it would be a high risk loan. Most students have no collateral to put up against a loan default (how do you repossess an education?), and the loan might (if the bank is lucky) start getting paid back in four years, so it ties up the bank's money for a long time. With all that risk, the bank would have to charge a huge interest rate, meaning many people wouldn't be able to afford an education.

Friend: You act like going to college is a right, not a privilege.

(End of conversation.)

I started thinking about it, and that is the fundamental difference between Liberal and Conservative philosophies. An elitist East Coast intellectual with liberal leanings would likely say that America needs a better educated workforce to compete in the global marketplace, and therefore it is correct for the government to provide subsidies to ensure that we remain competitive. There was a time when you could get away with little or no education, but over time, more and more education has been required not only to compete in the work place, but just to function in society. Today, you can't get into the cab of a tractor or step onto a manufacturing floor without knowing how to operate computers.

My conservative friend is fairly well-to-do and his kids are receiving a private school education. They will likely, if they choose, be able to get into a top college and be able to afford to go. If they do graduate with a prestigious university degree, it is a differentiator that will help them compete in the marketplace. Just by going to college, they will have the skills that others do not, and therefore will be among the few qualified applicants for certain jobs. It is in my friend's (and his families') best interest to keep the status-quo by keeping college largely affordable to a select few. This philosophy could be summed up in the following exchange in the movie Caddyshack:

Caddy Danny Noonan, lobbying to get awarded the annual Caddy Scholarship: "I planned to go to law school after I graduated [high school], but it looks like my folks won't have enough money to put me through college."

Judge Smails: "Well, the world needs ditch diggers, too."

Life isn't necessarily fair, and not everyone can be the CEO - a company needs workers too.

The Liberal accusation is that Conservatives are just selfish and using wealth and privilege to justify self perpetuation. It takes an enlightened individual to look beyond one's own interests and the greater good. A Liberal from the far Left would likely take it even farther. Money and potential should not be intermingled. Anyone and everyone that has potential should have an equal footing to compete on potential, regardless of their financial circumstance, and its government's role to ensure that there is a level playing field. And that means all the factors that play into success including schooling, access to after school activities, mentoring, tutoring, quality healthcare, etc...

However, what drive is there to work hard and compete if the ability to provide a better life for you and your family is removed? The Conservative would likely argue that macro picture is made up of the micro. Everyone has their own self interests and agenda, and these are all competing. As a conservative, they believe unilaterally in free markets and Adam Smith's invisible hand. Resources will go to those with the best ideas. In a democracy, if the majority of citizens who aren’t getting college educations got together, they could vote for candidates that would make college available to everyone - but they don't. From my friend's perspective, he's the minority and has to fight harder to maintain the status quo. After all, according to free markets, since higher education is a scare resource, the idea of concentrating it in the hands of a few must be more effective for society since it's won out in the marketplace. Perhaps having fewer well,funded colleges rather than a lot of mediocre ones, allows those who receive a higher education to maximize their potential, which might produce a greater return to society. Furthermore, the Conservative would actually likely call the Liberal looking out for the "greater good" an exercise in hubris. Who are you to say what is best for society? That’s what communists try to do, and we've witnessed the results. They try to set the rules and pick winners and losers. We should let the marketplace decide.

However, I would argue that the basic premise, the universal believe in free markets and Adam Smith's invisible hand theory, is flawed. It isn't always the best ideas that win out. Money doesn't automatically flow where it does the most good. Government does have a role. It has a role in protecting citizens (it's funny to watch Reagan loving, deregulation, free market, Conservative congressmen and women line up at the microphone to demand to know why the National Transportation Safety Administration failed to regulate Toyota and allowed the citizens they represent be put at risk). It also has a role as a referee, for example setting standards such as the size of railroad tracks make the railroad industry much more useful to shippers and helps all railroad industry as a whole. Finally, it has a role in dictating the greater good. If my factory produces a toxic byproduct, in a completely free market society, I'd do what is economically expedient: dump it in the ground. For the want of a couple hundred thousand dollars to properly dispose of the toxic waste, I could do hundreds of millions of dollars of damage to the local farming and fishing industries. Thus, it’s in the "greater good" of society to legislate the proper disposal of toxic waste.

Although it is certainly interesting exercise to crawl inside the warped and degenerate mind of a Conservative, or step into the shoes of an unrealistic and idealistic bleeding-heart Liberal, we at the Party of Commons Sense consider ourselves neither. Thus, the Liberal's idealist goals aren't always practical - resources are scare and often must be allocated, and free markets are one way to allocate these resources. Free markets, within bounds, do work better than planned economies. However, Conservatives need to understand that free markets are not a cure-all - and that they have their limits and government does have a legitimate role in our society. Thus our failing to understand the railings from the Left bemoaning that the Healthcare Bill isn't a takeover of healthcare industry by the government, rather leaving it in the greedy hands of for-profit companies who are making a buck off other's misfortune, while those on the Right are bemoaning that the healthcare bill represents a government takeover over one sixth of the economy. If you've angered both sides, you must have done something right.¹

---

¹ We at The Party of Common Sense regret that in our February issue we announced prematurely the death of the Healthcare Bill. We were sure the Republican stalling tactics along with the seemingly intransigent split within the Democrats would wear down the public until populous outcry would finally kill the bill.