One Year Later: Are we socialist yet?
Filed under: Economy, People, Media, One Year Later
Of all the effects of 2008's economic meltdown, the most significant might be the growing belief that the country is now on the road to socialism. Within days of the government's 2008 bailout of Sallie Mae (SLM) and Freddie Mac (FRE), the media began to resound with complaints about the country's supposed shift leftward; over the next few months, investors and commentators began declaring that the United States was now more socialist than Canada and more communist than China.The first problem with this pink panic lies in its assumption that capitalism and socialism are irreconcilable enemies, that markets are either completely free or completely government-controlled. The truth, however, is far more complex: after all, if socialism and capitalism were such diametric opposites, then one could argue that the first time the government paid an employee, gave a contract to private industry, or loaned money to a failing company, it effectively made the leap into socialism. If this was the case, then America has been socialist for most of its history.
A more useful, traditional definition of socialism holds that a socialist system must fulfill three basic tenets. The public -- or, in this case, the government -- must own the means of production, control the means of production, and distribute the profits of production to the general population.
The first problem with applying this definition to 2008's bank bailouts lies in the fact that America's financial institutions don't actually seem to be producing anything. Traditionally, banks have been positioned as the fuel injector on the economy, distributing the gas of credit to the areas that need it most. Now, however, banks seem to be largely producing scandals and foreclosures. In this context, public ownership of the banks seems to qualify as control of the means of destruction.
Moving on, it becomes worthwhile to ask whether the government does, in fact, own the companies that it has bailed out. On paper, after all, America's taxpayers own 80 percent of AIG, 60 percent of GM, and roughly 33 percent of Citigroup (C). However, the bailouts have been positioned as loans, suggesting that the country has effectively become the bank of last resort, giving emergency handouts to companies with insufficient collateral.
The ownership question becomes even thornier when one considers the issue of control. After all, if a private investor put up 60 percent of GM's finances, he or she could expect to control the board; however, this has not been the case in the companies that have received bailouts. Admittedly, CEO Rick Wagoner resigned when Obama asked, but the key here is that he resigned and Obama had to ask. Obama couldn't summarily fire him. Perhaps more importantly, the president could not choose Wagoner's successor and has not been able to control the company's policies.
The difference between ownership and influence becomes even clearer when one considers Wall Street. When the government moved to place limitations on executive compensation, the ensuing shrieks and squeals were reminiscent of a pig kicking contest. The same goes for Secretary Geithner's attempts to control the bank payback schedule.
The biggest shortcoming of the entire leftward-shift argument lies in the notion of profit sharing. While taxpayer funds have kept much of Wall Street and Detroit afloat, there has been absolutely no discussion about the possibility of nationalizing the profits of America's bailout beneficiaries. In fact, as many pundits have noted, the government support of the past year has, effectively democritized risk while privatizing profit, enabling business owners to benefit from their successes without having to pay for their failures.
This is not an idle or semantic consideration: to put it bluntly, socialism that doesn't economically benefit the people is an oxymoron. In fact, the economic construct that has developed over the past year far more closely resembles corporatism, a form of government in which corporations work together to control government policies and distribute profits among themselves. Effectively government of the corporation, by the corporation, and for the corporation, this system is, arguably, the economic nemesis of socialism, as it consolidates both profit and power in the hands of an elite cadre of oligarchs.
The idea that America is moving toward corporatism gains greater weight when one considers the corporate ties of some of the most prominent government insiders, including Henry Paulson (Goldman Sachs [GS]), Lawrence Summers (D.E. Shaw), Robert Rubin (Goldman Sachs), George W. Bush (HKN [HKN]), and Dick Cheney (Halliburton [HAL]). One need look no further than Secretary Paulson's original no-strings-attached bailout for evidence that these corporate ties have the ability to massively influence policy.
Over the past year, the dire predictions of creeping socialism have carried an implicit warning that the United States is moving closer to the collectivist horrors of Mao or Stalin. The truth, however, is quite different. As one pundit pointed out, "Fascism should more appropriately be called Corporatism because it is the merger of state and corporate power."
The writer? Benito Mussolini.
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Reader Comments (Page 1 of 16)
9-20-2009 @ 4:33PM
LARRY said...
WITH OBAMA IN THE OFFICE THE U.S. WILL BECOME A SLAVE TO CHINA AND A COMMUNISTIC NATION----
Reply
9-19-2009 @ 8:26PM
Dave said...
Dude, China financed Bush's war in Iraq and yes, they own a major chunk of our nation now.
9-20-2009 @ 8:10AM
W McNamara said...
China was opened up by Nixon. China as a supplier grew under Reagan and the Bushes. Obama just put a 35% tariff on tires imported from China. China is protesting to the WTO.
9-19-2009 @ 5:09PM
jack said...
What a Liberal fluff piece. No, when you pay someone, he is an employee. When you take from the taxpayer, and give to the Lazy, you are a Socialist.
The next piece will compare Socialism to Communism.
Socialism is real. Communism is a fantasy. To have Communism, you have to do away with Greed. Everyone works, there is no need for money.
If you were to take 1 million select people, who have a strong work ethic, no greed or laziness, you could make Communism work. When they have children, you would have to teach them from an early age to work.
In a Capitalism you have rewards for hard work. In Socialism, the Lazy have the same rewards (Welfare). Our Government has to be for us, not against.
Reply
9-19-2009 @ 5:56PM
Bob said...
Are you the one to select these people? A$$HOLE !
9-19-2009 @ 6:04PM
lolo said...
Why do you all subject this country ro socialism at this time:
currently: males salaries outnumber women 4 to 1
currently: we have laws we must have automobile insurance
currently: we must pay into workmen comp
currently: we must pay school taxes child or not
currently: we must put into social security
currently:we must pay taxes on food,clothing and gasoline
currently:we have a capital gain taxes
currently: we television is no longer free look at all the taxes on the cable bill;telephone bill gas bill; electric bill etc.
9-19-2009 @ 6:42PM
TONY said...
WHEN THE WELFARE OF THE NATION IS UNDER CONTROL OF THE GOVERMENT AND THE GOVERMENT CONTROLS THE MASSES AND THE MONEY IT IS NOT SOCIALISM IT IS TOTALITARISM OR COMMUNISM. WE WERE MUCH, MUCH BETTER 40 YEARS BACK THAN TODAY, EVEN MAKING LESS THAN TODAY WE WERE MORE HAPPY WITH MORE BRIGHT FUTURE THAN TODAY. WHEN THE PEOPLE OF THE NATION DOES NOT TRUST THE GOVERMENT IT IS THE BIGINING OF THE CAOS OF THE NATION, NEVER BEFORE I RECALL THE MARCHERS IN WASHINGTON'D ACCUSED THE PRESIDENT OF COMMUNIST AND THIS IS WHAT HAPPENED LAS SATURDAY IN WASHINGTON.SINCE THE PRESIDENT TOOK CONTROL NOTHING IS WORKING PROPERLY AND I AM NOT A RACIST. LIKE THE TITANIC WE ARE SINKING VERY FAST, THE WAY AMERICA GOES I DO NOT KNOW HOW TO READ THE FUTURE BUT THE FUTURE IT IS NOT TOO BRIGHT.
TONY
9-19-2009 @ 7:13PM
Ron said...
Jack, You had better check the formal definitions of both socialism and communism. How about if you refuse to take your social security when you are eligible and also medicare when you turn 65? Aren't those programs socialistic. What about public schools, public colleges, highways, libraries, etc. What would happen if the public had to pay for all of those things? They probably would revolt. I am not sure I understand what you are trying to say. Are you suggesting that all capitalists are hard workers and all others are lazy and want to get money for no work?
9-19-2009 @ 9:55PM
Matt said...
Good post, and nice for Mr. Watson. What a joke... maybe people are really that stupid. Keep the Government out of business... PERIOD!
9-19-2009 @ 10:08PM
mesaman said...
Well stated, Jack. The negative replies will undoubtedly come from socialists, many who have yet to learn that they are, in fact socialists. What really worries me is the direction towards communism we are taking. Our president is well-schooled in the ways of the communist.
9-20-2009 @ 6:22AM
kelcalman said...
Well...i guess no matter how you explain the terms in there true meaning, you will have those who can't believe it because their irrationality has taken over their very brains. Capitalism, Socialism, and Communism are three different economies, we all should know that. Those like you who can't understand the difference is what our country has to look forward to. The dumbing down of America is real and dangerous. Whe you have a White woman crying because the president of the United States want to encourage America's youth to do well for the country's sake, we have real problems. Now, when you have people who don't know the dictionary meaning of terms because of the lies they swallow, willingly, and they want to lead us, we are in detriment. God help us all!
9-20-2009 @ 9:50AM
Charlie said...
Jack you said it well.
9-20-2009 @ 2:20PM
JBS said...
Capitalism has not and does not reward hard work. Witness the large sums of money made by wall street executives, bankers, hedge fund managers. Witness the toil of the construction laborer. Capitalism rewards those who can control the means of production and the means of wealth distribution which was demonstrated amply this past year. Capitalism works well with any authoritarianism and that is why the most powerful capitalist country today is Communist China. Now, re-review the definition of capitalism and pure socialism in the writer's piece. They are very similar minus the word government. Conservatism is closer in philosophy to pure socialism. Liberalism is closest to a market economy. This is why the US economy always performs better under democrats compared to republicans.
9-20-2009 @ 11:32AM
D. said...
JACK - -If "In Socialism, the Lazy have the same rewards (Welfare)" holds true, that means socialism has existed for
a long time in the U.S.and didn't just start with Obama. How long has welfare been around, Jack??
9-20-2009 @ 1:16PM
Ed Clemow said...
Whether it is called Socialism or whatever, the long, accelerating trend away from the US Constitution is the root cause of the taxpayer fury that is mounting in this country. Those who seek to denigrate the movement should sit down and read the entire Constitution, the Bill of Rights, and the rest of the Amendments. It doesn't take long, and will result in an understanding of those of us who want to take our country back.
9-20-2009 @ 1:38PM
jack said...
Agian, I get the negitives. In regards to D. Social Security was started by FDR, another Democrat. If they were to give me the moneies taken from me, yes I would take it. As to welfare, it's like a family business. This rewards the lazy, for not working (having children to get raises is not working).
Capitalism was started as, "To improve yourself, you tighten up your boot straps". It rewards hard work, and allows you to succeed. The Government has taken away the right to succeed, by making it imposible to start anything, without Government interaction.
So to answer your question, it has been in around for over 70 years. It explolded in the late 60's. Both times, under Democratic leadership.
Please, if you are going to listen to your teachers, remember that you have the right to research the facts. Most people have, that is why you're getting so many posts against the Government. They have realized that our Government is not supporting us, but the Lobbiests.
9-20-2009 @ 3:39PM
Joe said...
It is the inevitable evolution of free market capitalism. When corporations rule a nation and exploitation of the 'lowly worker' continues to escalate, there is nowhere left to go. Corrupt corporations and their greed is what created our dilemma.
10-01-2009 @ 9:01AM
RHONDA said...
THERE ARE SO MANY THINGS WRONG RIGHT NOW WHO KNOWS WHERE TO BEGIN?WE ARE DEFINITELY BEING SHOVED TOWARD SOCIALISM AT THE SPEED OF LIGHT. ANY TIME HARD WORK=REWARD/BETTER PAY/BETTER LIFESTYLE AND TAKING RESPONSIBILTY FOR YOUR ACTIONS OR BAD DECISIONS ARE NOT BEING PROMOTED WE ARE IN TROUBLE. GIVING MORE TO THOSE WHO DO THE LEAST IS NEVER GOING TO WORK. THIS IS WHY WE HAVE 4TH OR 5TH GENERATION WELFARE FAMILIES. AND WHEN WE HAVE TO WORRY ABOUT OFFENDING SOMEONE WITH GOD BLESS AMERICA-OR MERRY CHRISTMAS-WHAT THE HELL IS GOING ON? WHOSE COUNTRY IS THIS? IF YOU WANT TO LIVE HERE AND WORK HERE YOU LIVE BY THE RULES OF THE COUNTRY YOU CHOOSE TO BE IN. AND IF YOU WANT TO REAP THE REWARDS THAT SO MANY AMERICANS FOUGHT AND DIED FOR-YOU BECOME AN AMERICAN CITIZEN AND PAY YOUR WAY LIKE THE REST OF US.THE GOVERNMENT SHOULD NEVER BE IN CONTROL OF HEALTHCARE,RUNNING AMERICAN CORPORATIONS,OR BAILING OUT THE GREEDY WALLSTREET GANGS-THEY HAVE NOT BEEN IMPRESSIVE SO FAR. EXCEPT IN LOOKING OUT FOR THEMSELVES--VOTING THEMSELVES THE BEST HEALTHCARE PLANS,RETIREMENT PLANS AND BEING ABLE TO CHEAT ON YOUR TAXES AND GETOR KEEP A GOVT. JOB, WHEN THE REST OF US WOULD BE IN JAIL.GIETHNER,DASCHAL,ECT. YOU ARE WHO YOU ASSOCIATE WITH!!!!!!-SO WHAT DOES THAT SAY ABOUT THE CURRENT" CAPTAIN OF THE SHIP"?AND WHICH DIRECTION WE'RE HEADING?--TIME FOR A WAKE-UP CALL!!!!!!!!YES
9-20-2009 @ 6:24PM
jack said...
Thank you Rhonda. I keep posting, and putting up with the Liberal remarks. I also get a lot of positive feedback.
The Liberals seem to think, that the hard working people of America have deep pockets. We don't. We have worked very hard for what we have. We have reaped our rewards for hard work. We have put up with Welfare fraud, Medicare
fraud and corporate fraud. We have had enough.
We are the ones who pay most of the taxes, keep people working with our spending. We are the backbone of the country. We want our country back.
We do not want Government run anything. Our home owner taxes are supposed to pay for schools, police and fire.
We have too many Career Politicos. Once you get elected to Washington, your paid your salary for life.
I have thrown my hat into the ring. I am going to run for congress. My platform: I won't do S&!t. I will come to the office on payday (until my direct deposit kicks in). I will not travel. I will buy a round for the bar, every payday (Or for the night, after I talk to the Lobbiests).
Vote for me, I am honest.
9-20-2009 @ 6:42PM
Robin said...
AMEN!!!