Socialism In Perspective


With the right wing claiming that Obama is a socialist, we have a reality check from Conor Clarke who shows in the above chart how much of corporate and business assets are really held by the government.  (Click on chart for larger image.) It is hard to take claims of socialism seriously when it is only about one-fifth of one percent.

If Obama was really a socialist he would be expected to be seizing entire industries, not reluctantly getting involved in companies which requested that the government get in. He would also be expanding his nationalization of business to include more industries. He certainly would not have limited his “nationalization” to companies which are in trouble and which present more problems than they are worth. If the goal was socialism, we would also see the boards become packed with government bureaucrats, instead of businessmen who are working towards making GM profitable in order to terminate the high degree of government ownership.

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.

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  1. 1
    Mike says:

    One doesn’t have to outright own something to have control over something.  By way of comparison, a local gang could control virtually everything that goes on in a convenience store without actually owning it.  I’m not saying the government terrorizes business. But incrementally it keeps exerting more and more influence.  CAFE standards started in 1975 in response to the Arab oil embargo.  Have we seen an ebb and flow of sometimes tightening, sometimes loosening of the standards? No, it just goes up and up.  Now I must acknowledge that in a push to make home ownership more obtainable for more people, the government did relax standards for bank lenders which, in combination with the government backing the loans through Fanny and Freddy ultimately caused the mortgage melt down.  I don’t know, but I suspect Conor Clarke didn’t put Fanny and Freddy in the government owned segment of that pie chart.  But consider this, IMO  12 mat loans (a.k.a negative amortization loans) that have become so toxic, are a lot like the smart cars the government is pushing the auto industry to make. On the upside, you can go a lot farther with less gas because they are so very light.  The 12 mats made payments so very light that you could get either more house for your dollar, or in many cases be able to get a house as opposed to not.  The weakness of both are the same,  when there is a crash in prices, the 12 mat borrower is financially dead because his or her principal keeps going up, making the house impossible to sell or refinance.  The smart car is the same way when it is in a crash. As long as there never ever are any crashes, both are great.  You don’t have to convince me that republican plans like Medicare D , energy task force, or even abstinencetraining programs are bad.  I assume everything from D.C. is bad until proven otherwise.  It may not meet the definition of socialism but if one were to shade in on that pie chart how much the government gets of that pie, about 39% off the top through corporate taxes, then another share through employee income taxes, you could see how much the government is really gobbling up of that pie.

  2. 2
    Fritz says:

    Mike, the difference now is that we have moved from “regulation” and “loans” to outright ownership.  The transition was the request that companies “help themselves” by converting government loans to common stock.  If the proposal had been preferred (non-voting) stock I would be less concerned.

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