Privatizing and profiteering
Source: By Robert Kuttner, Boston Globe, April 21, 2007
THE DEEPENING college loan scandal is a classic case of what can happen when government uses private companies as middlemen to carry out public goals. Lately, investigations by New York Attorney General Andrew Cuomo, US Senator Edward Kennedy, and others have revealed a number of problems:
.........The private student loan industry adds nothing of value. The policy of subsidizing private lenders to serve public purposes (and to corrupt our colleges and universities) should be scrapped in favor of the direct federal loan program.
If this saga sounds familiar, it exactly parallels the privatized Medicare drug program and the efforts by the insurance industry to turn the rest of Medicare into a taxpayer subsidy for private industry. Though three decades of government-bashing have left many politicians reluctant to draw the obvious conclusion, it is often more efficient and less corrupting for government to do the public's business directly.