1. They're just tracking the index. Not stock picking, any...

1. They're just tracking the index. Not stock picking, any addition fee helps offset commissions, admin, etc
2. 18% a yr is not petty. I bet every single sub holder would do so if they were legally allowed to
3. Long term prices are not really affected by what's lent out.
To take an extreme example, lets say there's a box with $10 in it. Its currently trading for $9 and someone wants to pay you 10% p.a to borrow it for shorting. Do you really care?
Obviously in the real world the other person might think there's only $2 in the cash box, or that the govt intends to levy a 40% tax on cash boxes.