Obama and The S-Word

Despite all the influence of the Chicago School on Barack Obama, with some even labeling Obama a left-libertarian, some on the right have been erroneously referring to Obama as a socialist. This is primarily because segments of the right are heavily into name-calling regardless of the facts, but with the government now owning General Motors some believe this claim has some credibility.

Obama is responding to a crisis by doing things which are contrary to the economic views he would be following if not for a time of crisis, which is far different from running for office on a platform of nationalizing businesses. More significantly, the goal here is to help a company survive which might not survive without massive government involvement. The goal here is to ultimately have a viable private company–which is quite different from the goal of a true socialist.

It’s fair to call the General Motors deal or the AIG takeover examples of socialist policy; government is directly intervening in a private concern. But it’s not fair to say that the Obama administration is socialist per se because socialism is an -ism, a system, a guiding philosophy, and it’s clear that putting the government in charge of private production is not the Obama administration’s guiding philosophy. When some conservatives try to insist otherwise, that’s when they look over the top. Maybe there’s a point when these socialist policies add up to actual socialism (or in the banking system, lemon socialism) but we are far, far from it.

If the Obama administration had come into office without an economic emergency, they wouldn’t be involved in these firms — don’t forget that the first big government takeovers came under George W. Bush and that the management and directors of the auto companies asked for government help. The current administration has made clear they don’t intend to be in the auto making (or banking) business for very long, and voluntarily laid out various guidelines to keep politics out of business decisions. Obviously, lines will be fudged and there are plenty of opportunities for conflict, but this is clearly not an administration whose every answer is “seize the means of production” — see, for instance, this graph, or the administration’s deep reluctance to take over insolvent banks despite a fairly large constituency for such an action. Ultimately, then, I’m not sure it’s productive for conservatives to call the administration’s response to the auto makers “socialism” — although, hey, maybe some political points in that — but rather to harp on the fact that the government has made a pretty unfortunate investment because it thought the collapse of the industry presented a systemic risk to the economy.

More broadly, though, as Henke recognizes, one of the reasons the “s-word” has become somewhat meaningless is that it is used by some conservatives to describe things that just aren’t socialism at all, like regulations or the income tax, rather than recognizing our hybrid economic system and debating within its framework. We can argue over whether more or less regulation is a good thing and what the appropriate income tax rates ought to be, but neither one represents a socialist policy. Another reason that this socialism debate hasn’t taken off is that liberals aren’t really in the business of defending socialism, so my response, at least, to the socialism debate is generally, “yup, that’s not a normatively good idea, but strategy demands it.” I would really have preferred to avoid a government takeover General Motors, but the consequences of not doing so seem catastrophic.

John Henke responds at The Next Right:

…the real question is one of degree.  Obama is not socialist.  But he is more comfortable with centralizing economic power.  As that centralization proceeds, the focus of public interest will shift from “how do we fix the immediate economic problems?” to “how do we fix the problems we created when we tried to fix that temporary problem?”  That is when the pendulum can swing back towards decentralization and individual empowerment.

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  1. 1
    Mike says:

    But for the crisis…contrary to the economic views he would be following.  Ok, I’m frequently asking about definitions on this site.  I’m not the definition expert. But from my view, Obama is a socialist. My view of socialist, or more specifically a socialist mentality is that government, while not perfect, is Always the better solution to ALL problems.  Thus, although America would not stand for a complete dictatorship (yet), the socialist believes the more the government has and controls, the better off we all are because the government always has better solutions for all problems.  Taxes and regulations are by themselves not socialism per se, but the greater the tax and the more the regulations, the more leverage and power the government has.  Now even if I’m correct about my defintion, and maybe I’m not, why or how do I see Obama fitting that definition?  1) His words, granted any politian would find it hard to sell the idea that they want to be elected to “not fix” things. But Obama wants to fix and/or “invest” into everything, health care,  science, fight against poverty,education, world poverty, climate change, technology, and let us not forget infastructure. 2) His actions, got to hand it to him on this one, I was really hoping a lot of his spending plans were empty campaign promises, but they aren’t.  Crisis spending? Are you kidding me? He was promising all this spending before my bank fell (Indymac) in June of last year.  He is like John Paul Jones, yelling: “I have not yet begun to spend!”  What, if anything, does Obama think can be fixed by capitalism, or the private sector, or just plain old non-government individuals?….(did I just hear a pin drop?)Global warming? No, he wants to shove cap and trade on us.  Education? No, if public education is a problem, let us not try and reform it, or at least wake it up with some private sector competition, let’s just dump more money into the bureaucracy. I’ve sent my kids to private schools in Wyoming, Georgia, and Texas.  Always, the cost for the private schools was far less than the per student dollar amount the public schools got.  The academic scores for the private schools as a whole where always higher and they did it with less money.  In helping the poor, I forget the link, I believe it was in the discussion of liberal compared to conservative, and talk radio has blasted a lot about how in individual, personal giving to charities, Obama has given paltry percentages over the years.  It isn’t because he doesn’t care about the poor, he just doesn’t see the answer (to anything)  in the non-government sector.

  2. 2
    Fritz says:

    People are doing an amazing amount of projection in pronouncing “what Obama REALLY wants”.  It might be because, well, America elected a President without all that much of a voting history to track him by. 

    Ron, you are a great guy and have a great blog — but your continuing mantra that this incredibly skillful Chicago politician Really Does Not Want the economic power he now wields and is only reluctantly forced into having it because of this crisis — well, let’s just say I find that to be a dubious hypothesis.

    As for all of the supposed influence of the Chicago School of Economics on his actions… um, not seeing it.  Sorry.

    I do agree that Obama is not a socialist.  He is a masterful acquirer of power.  That does not require an ideology.

    So — any thoughts on my proposed bet on how long the Feds own half of GM?

  3. 3
    Mike says:

    I may not respond to every post, but I do read virtually every comment. I caught your reference to COBOL.  You know what I see as a great personal irony.  Despite considering myself more of the mindset of the religious right, it is they who I fear most likely to some day implement a dictatorship in this country. Now before all the lefties cheer my conversion, it is my absolute belief that it is Obama type, call it what you will, policys that are paving the way for exactly that kind of control. Have every stinking thing flow through the hands of government, then have government change hands, and BAM! Then you have some Super Christian, doing all sorts of “good” but in reality being as anti-christian as one could possibly be. Yes, anti-Christian…AntiChrist.

  4. 4
    Ron Chusid says:


    That might be your definition of socialist but it has virtually nothing to do with the actual meaning of socialism. You also vastly exaggerate the degree to which Obama supports government.

  5. 5
    Ron Chusid says:


    Obama might not have much of a voting record but he has written books and has given a lot of in depth interviews which indicate his beliefs. We are not seeing as much of the influence of the Chicago School because at this moment in time we must do things differently to get through this crisis. Even people from the Chicago school such as Richard Posner are saying this.

    Why would Obama want the government to own this much of GM? Besides being contrary to his economic philosophy he doesn’t gain from it. It is far more of an extra burden on his administration than anything he benefits from.

    The Feds will own GM as long as it takes for it to become a viable company–which is the goal, as opposed to nationalization. The president of the new GM claims it will take 2/12 to 3 years (meaning it will probably take some time longer than that).

  6. 6
    b-psycho says:

    He clearly wanted the power, otherwise he would never have ran for president.  People that want power…tend to seek it.

    Note that I’ve never argued against him wanting the power, only why he wanted it.

  7. 7
    Ron Chusid says:


    He obviously wanted the conventional power of the presidency. Whether he wanted the expanded economic power such as owning a majority share of GM is a different matter. He certainly did not seek the presidency in order to nationalize companies such as GM.

  8. 8
    b-psycho says:

    To clarify, I’m not talking about the GM takeover itself.  That seems to me more like a balancing act whereby his administration wanted to prop up the company but knew yet another straight-up bailout wouldn’t play well.  I’m referring to the power of the presidency overall.

  9. 9
    Ron Chusid says:


    I didn’t think you were speaking of GM, but you sort of wound up in the middle of a running debate between Fritz and I. Your comment in the middle makes it look like you are agreeing with Fritz when it looks like your view on this is closer to mine. Obviously anybody running for president wants the usual power of the presidency. The question is whether he was really seeking the additional power which he wound up with as a result of the crisis, such as with the GM takeover.

  10. 10
    Fritz says:

    Already, Congress is getting upset about cost-cutting:


    WASHINGTON (Reuters) – General Motors Corp and Chrysler LLC, both bankrupt, will try on Wednesday to ease congressional concern, and in some cases anger, over their plans to slash more than 2,400 dealerships.

  11. 11
    Mike says:

    While essentially stating I was just giving my own view of  the S-word.  Some of what Wikipedia says on socialism seems to support what I was saying: Some socialists advocate complete nationalization of the means of production, distribution, and exchange; others advocate state control of capital within the framework of a market economy.
    Where I may have been off of the definition, one strand within that definition is the control of capital within the framework of a market economy.  The government directing the spending of money in seemingly every area of the economy, I believe aligns with that part of the meaning of socialism. Yes, I have a style of exaggeration.  But in a more moderate, pensive, and serious way, let me ask the question again.  Is their any problem or issue that Obama advocates a solution (or solutions) through individuals or the private sector, and not through government intervention?

  12. 12
    Fritz says:

    Ron, I don’t think the Obama administration sees this as a burden.  Maybe Obama as a private person would have a different philosophy, but that is moot speculation.

    The Obama administration sees this as a political opportunity to expand power and control.  It’s going to be an interesting ride.

  13. 13
    Ron Chusid says:


    By definition socialism is government ownership of the means of production. Conservatives try to blur that by calling any government involvement by Democrats in the economy socialism, but that makes the word rather meaningless.

    In reality we have a mixed economy with some government involvement in the economy. At the moment we have more, as during the depression, but that is a temporary response to a crisis. We would be seeing this regardless of party, with these actions beginning under Bush. Any Republican who won would have also expanded them as opposed to appearing to be a modern Herbert Hoover.

    The Republicans pretend that it is Democrats who back government in the economy but in many ways they are even more guilty. In the Bush years we had Dick Cheney’s energy task force. Bush’s Medicare D plan was basically a joint effort with the insurance industry to funnel them government money in return for all their financial support to him. The Republicans in the Congress were no better with the K Street Project. Go further back in time and we had the ultimate perversion of the market system under Richard Nixon with wage and price controls.

    Obama supports using government in areas where the private sector is unable to solve the problem, such as health care where the private system is collapsing. In general he supports less intrusion from government than we have had under the Republicans.

  14. 14
    Ron Chusid says:


    Your conspiracy theory here simply defies logic. If it was the goal for the government to take over GM they would not structure it in this manner which limits the role of government. They would be putting government bureaucrats right on the board and in top positions. They also would not be structuring this so that the goal of the company is to regain independence.

    If they were really a bunch of power hungry socialists they would also be plotting to take over more companies, not reluctantly getting into companies which requested this assistance as opposed to going under. For that matter, they would be taking over viable companies, not ones which are struggling for survival.

  15. 15
    Fritz says:

    Ron, that’s not a conspiracy theory.  I’ve got some of those, and they are much livelier.  🙂

    I’m just saying that this is viewed as an opportunity, not a burden.  I predict government control will expand, not shrink.  You predict the opposite.  I guess we can check back on that question in a year or two.

    And I agreed that they are power-hungry but not ideologically socialist.

  16. 16
    Fritz says:

    Here’s an article on the fun we are entering into:


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