The monstrous machines created by good-intentions

According to my Thesis 8:

If the government decides to spend money on some noble-sounding program, there will step forward countless businesses and organizations that will be all too happy to "assist" the government in achieving its "noble end." These businesses and organizations will figure out a way to channel a large portion of the government dollars into their own pockets. They will then use a portion of these monies a.) to produce "research" purporting to demonstrate that the government funding is achieving its noble end and that "catastrophic" consequences will ensue if the funds are cut off; and b.) to lobby and influence politicians to continue and even expand the program. Oftentimes, the businesses and organizations involved make use of the latest technological and financial innovations available to maximize the flow of as many government dollars as possible to themselves. In the end, the well-intentioned government program is transformed into a monstrous machine that spins out of control with pernicious results for all of society.

We have seen several examples of this phenomenon over the last several years:

1. The government decided that not enough low- and moderate-income families were able to afford homes. So, the government changed its affordable housing (AH) goals and saw to it that abundant credit was made available to these families. As Peter Wallison and Edward Pinto write:
   The AH goals required Fannie and Freddie to meet certain quotas when acquiring mortgages. The GSE Act had initially specified a quota of 30 percent; that is, 30 percent of the GSEs’ mortgage purchases had to be loans that were made to low- and moderate-income (LMI) borrowers, defined as borrowers at or below the median income in their communities. During the Clinton administration, HUD increased this quota to 42 percent in 1995 and 50 percent in 2000. HUD’s tightening continued in the George W. Bush administration so that by 2008 the main LMI goal was 56 percent, and a special affordable (SA) subgoal had been added requiring that 27 percent of the loans GSEs acquired be made to borrowers who were at or below 80 percent (and, in some cases, 60 percent) of the median income in their communities.

   The banks were all too glad to help out, creating exotic subprime loans and packaging them into mortgage-backed securities and collateralized debt obligations. What was the result of the massive increase in credit that the GSE's brought about? Housing prices soared, making them even less affordable to LMI borrowers, and those LMI borrowers who did manage to obtain loans were financially devastated later when the housing bubble burst. The American economy still has not recovered from the debacle that ensued.

2. The government decided that not enough low-income students were able to afford college. So, the government made available low-interest loans to those students. Predictably, education mills, like Apollo and Corinthian Colleges, sprang up, who were less interested in educating our young people than they were in soaking up all the loan money that the government was putting in students's pockets. The results have been that the cost of a college education has skyrocketed and many students end up graduating from college with a mediocre education and crushing debt.
3. In the last couple of days, several news stories have surfaced about food stamps. Now known as the Supplemental Nutrition Assistance Program, or SNAP, food stamps are another government program designed to achieve a noble-sounding end, namely, that of putting food on the table of low-income families. But, a significant side effect of this program has been that the giant food and beverage companies of America have benefited handsomely. Time magazine reports:
   Sure, poor Americans who get food on the table for dinner, partly with the assistance of SNAP, must appreciate the program. But major corporations and food groups, including Pepsi, Kraft Foods, Kroger, Coca-Cola, and the Corn Refiners of America, also warmly embrace SNAP. All, in fact, have lobbied Congress and/or various states to expand SNAP and make sure that recipients have the most freedom possible in deciding how to use their allowances, including the unlimited purchase of soda and junk food.
   The government has replaced the old food stamps with new high-tech debit cards, so that it is easy and stigma-free for Americans to participate in the program and so that the money from the program flows at the speed of light into the coffers of the food and beverage companies (with a little slice flowing to JP Morgan, the bank that administers the debit cards). Government agencies run ads encouraging Americans to apply for food stamps and giving them instructions on how to do so. One can even find information about SNAP on Facebook. As Time reports:
   Roughly 46 million Americans now get SNAP benefits, up from just 17 million in 2000, and the costs associated with the program have risen from $17 billion in 2000, to $30 billion in 2007, way up to $78 billion last year.
   The end results? An American tragedy. As food and beverage companies grow ever richer, 1 in 7 Americans is now dependent on food stamps and an epidemic of obesity has broken out among those low-income families who use the program.

Progressivism always starts with good intentions. The devil is always in the implementation. There are always businesses and orgranizations out there that are all too happy to soak up all the money the government wants to spend. In the process, well-intentioned government programs are transformed by cutting-edge technology and finance into monstrous machines that accelerate the flow of goverment dollars into their own pockets. These machines eventually spin wildly out of control and threaten to destroy the entire society.

These are the monstrous machines created by the good intentions of Progressivism.