Fannie Mae and the Death of Conservatism

George Bush's Treasury Secretary announced today that to save it from bankruptcy, the Federal Government will be taking over Fannie Mae, the mortgage-backing giant. While widely reported in the media, the larger significance of this seems to have been ignored. For those who have studied history, you will remember that Fannie Mae (originally the Federal National Mortgage Association) was originally a government program created as part of Franklin Roosevelt's New Deal. Under constant pressure from conservatives, who insisted that the secondary trading of mortgages could be better handled by the open market, and that it was inefficient and a waste of taxpayer-money to have it as a government-run monopoly, Fannie Mae was privatized in 1968. Conservatives have been swearing by the laissez faire gospel for years; have been drilling into the heads of the American people that the free market can solve all of our problems; that private industry can always handle things cheaper can more efficiently than that dreaded "big government." Isn't it ironic that it's George Bush, a Republican, who finally has to admit that there really are things the government can do better, and make Fannie Mae a government program again? This is truly the death of modern conservatism. Should we expect Republicans to notice the ideological consequences of their own president's decision? Probably not. After all, if they cared about reality it all, they might have given up their ridiculous viewpoint after Calvin Coolidge's policies caused the Great Depression.

Lest I be misunderstood, I'm not advocating socialism. I generally believe in capitalism and the free market. I just think we have to recognize that the market will not solve all our problems, and that improving social welfare requires a large and active Federal Government, because they really can do it better.