MAN'S
SHIRT SAYS: 'CITIZEN'
CAPTION
READS: 'RESCUE BRIGADE'
[Het
Parool, The Netherlands]
The Times of India, India
Is America Turning
Socialist? It Always Was …
"Modern capitalist states are all
welfare states. Enormous bureaucracies have been created to tax the rich, regulate
business, provide subsidies and special schemes to the needy, thwart
environmental harm and health hazards, and so on. The list is long and keeps
growing."
"Between 1970 and 2006, the
number of pages in the U.S. Federal Register (which lists all regulations) shot
up from 20,036 to 78,000. The number of regulators in the service of the
federal government rose from 90,000 to 241,000. In the first six years of the
George W Bush era (2000-2006), the number of pages of regulations increased by
over 10,000, and regulators by over 65,000."
By Swaminathan S. Anklesaria Aiyar
September 21, 2008
India
- The Times of India - Original Article (English)
Socialists like
Hugo Chavez in Venezuela or Indira Gandhi in India, are famous for nationalizing
the largest corporations. But the U.S. government has just taken over three of
its biggest corporations within two weeks. Has the United States turned
socialist? American right-wingers moan that this is indeed what has happened. Meanwhile,
Indian leftists are stunned at nationalizations in a country they view as
pitilessly capitalist.
Two of the nationalized
corporations, Fannie Mae and Freddie Mac, are by far the largest mortgage lenders
in the world, with $5 trillion of mortgages and loans on their books. To put that
in perspective, that's five times the size of India's GDP. The third
corporation, AIG, is the largest insurance company in the world. No nationalization
in countries that profess to be socialist has ever been so large.
Leftists suspect
that the U.S. takeovers are simply aimed at rescuing wealthy shareholders. Not
so. The government will acquire 79.9 percent of the shares of these companies
at virtually zero cost, pushing the share price down close to zero. So wealthy
shareholders have been wiped out, and the bosses of all three corporations have
been sacked.
This isn't a
rescue of the rich. It's a rescue of ordinary people who need mortgages and a
functioning housing market which would have collapsed had Fannie Mae and Freddie
Mac gone bust. The takeover of AIG will save millions of insurance policy
holders from losing their coverage and annuities. The takeovers aim to prevent
financial panic from spreading and dragging down the entire economy, as
happened during the Great Depression of the 1930s.
Posted by WORLDMEETS.US
In a capitalist
welfare state, the usual procedure is to let mismanaged companies go bust, penalizing
the shareholders and managers, and then provide safety nets to those adversely
affected. But when corporations are so large that their collapse would endanger
the entire financial system, it's sensible to have a government takeover before
they collapse - even from a capitalist point of view. This is a kind of pre-emptive
safety net. Moreover, preventing distress wins votes (or at least doesn't lose
them), and that's vital in a democracy.
Does this mean
the United States is becoming socialist? Let's distinguish between two meanings
of the word. For many people, socialism means state ownership of the means of
production, as in the Soviet Union and Mao's China. The U.S. isn't going in
that direction. But socialism can also imply an activist state that provides
basic needs for all people, and creates a safety net for those hit by
misfortune, old age and sickness. The United States has long been socialist in
this second sense, and it's becoming more so.
Modern capitalist
states are all welfare states. Enormous bureaucracies have been created
to tax the rich, regulate business, provide subsidies and special schemes to
the needy, thwart environmental harm and health hazards, and so on. The list is
long and keeps growing.
It couldn't be
otherwise in a democracy. Contrary to Marx's assumptions, legislators get
elected by catering to the masses, even while taking money from corporations. Legislators
constantly create new rules and regulations to protect consumers, retirees and
other groups of voters. Hence, the United States has become a land of rising
red tape.
Between 1970 and 2006,
the number of pages in the Federal Register (which lists all regulations) shot
up from 20,036 to 78,000. The number of regulators in the service of the
federal government rose from 90,000 to 241,000. In the first six years of the
George W Bush era (2000-2006), the number of pages of regulations increased by
over 10,000, and regulators by over 65,000.
Posted by WORLDMEETS.US
This is galloping
socialism, often criticized as bureaucracy run amok. The U.S. is less welfarist
than European countries, but isn't too far behind. U.S. legislators have
expanded entitlements for the aged and sick so greatly that state spending on
social security, Medicare and Medicaid is projected to rise from 7 percent of
GDP today to almost 20 percent by 2020. So much for the myth that the United
States is a heartless capitalist ogre. In fact, it combines capitalism with
welfarism and often tilts toward the latter when the two conflict.
Since American
politicians get elected by constantly promising to save citizens from pain, they
have now saved citizens from corporate bankruptcies that would threaten the entire
economy and throw millions of lives into disarray. This is no more than an
extension of the safety-net principle.
This is far
different from Indira Gandhi's socialism. Her nationalization was aimed at
giving the state a stranglehold on industrial production and seizing the
commanding heights of the economy. These measures didn't benefit ordinary folk
at all.
The American
takeovers, by contrast, are temporary matters, to be followed by re-privatization
once the crisis is resolved. The corporations involved will be obliged to sell
chunks of their assets to pay off their debts and attain stability. They will
then be re-privatized. They will emerge greatly shrunken, and perhaps broken
into smaller units.
Nationalization
is a misleading word for this process. It would be better to call it forced
restructuring by the government, as a pre-emptive safety net. It aims to
save citizens from pain, but within the framework of a market economy.
[Posted by WORLDMEETS.US
September 22, 7:28pm]
