Monday, September 22, 2008

Having It Both Ways

On Black Tuesday, October 29,1929, the stock market crashed, triggering the Great Depression, the worst economic collapse in the history of the modern industrial world. It spread from the United States to the rest of the world, lasting from the end of 1929 until the early 1940s. With banks failing and businesses closing, more than 15 million Americans (one-quarter of the workforce) became unemployed... Blamed by many for the Great Depression, Hoover was widely ridiculed: an empty pocket turned inside out was called a "Hoover flag;" the decrepit shantytowns springing up around the country were called "Hoovervilles." Franklin Delano Roosevelt, the rich governor from New York, offered Americans a New Deal, and was elected in a landslide victory in 1932. He took quick action to attack the Depression, declaring a four-day bank holiday, during which Congress passed the Emergency Banking Relief Act to stabilize the banking system... The Great Depression and the New Deal changed forever the relationship between Americans and their government. Government involvement and responsibility in caring for the needy and regulating the economy came to be expected.  -

I know there are a good number of people in the United States who will disagree with me, but I don't think the New Deal was a great thing for our country. I believe it laid the groundwork for our decline into socialism.  

"SOCIALISM!! COMMUNISM!! MARXISM!!" All these words and ideas have been screeched at the top of many lungs. So much so, in fact, that people are likely to react to such screeching now with a wave of the hand and the brief thought that somebody, somewhere is over-reacting to something. I know because this is often my reaction when the screechers begin.  

So rest assured, I'm not going to screech. Only educate. Let's begin with some definitions:

Socialism (as relates to Marxist theory) is defined as a transitional social state between the overthrow of capitalism and the realization of communism.

Communism is defined as a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs. 

Proletariat is defined as a worker.

Bourgeois is defined as a business owner. 

To all you progressives out there, I know that this particular piece of writing will be nowhere near nuanced enough. (Ever notice how much the progressives love nuances?) But I'm going to keep it simple. 

Karl Marx lived from 1818 to 1883 and during his lifetime he wrote many works advocating specific political philosophies. His ideas did not become popular until after his death, and once his ideas became popular, they were put into practice in ways that would possibly be frowned on by Marx himself were he alive to witness the event. Marx, in fact, defined communism as the phase reached when class society and the state had already been abolished. It was an utopian idea, really -- one unattainable, given human nature. But in his philosophy, once the initial stage of socialism had been established, society would develop over several generations, into the "higher phase of communism" when bourgeois relations had been abandoned. 

In 1917, Vladimir Lenin masterminded the Bolshevik take-over of power in Russia and was the architect and first head of the Soviet state. With his direct take-over, his efforts to transform the Russian economy to a socialist model stalled the economy, but he was undeterred. He introduced the New Economic Policy. This allowed peasants to sell their food surpluses on the open market, which eventually led to the denationalization of small-scale industry and services. Under NEP, the Soviet economy revived.

Stalin was a nasty Soviet leader who replaced the NEP with "Five Year Plans" in 1928. He confiscated land from farmers and forced the industrialization of farming. Any farmer who refused his "reforms" were derided as "kulaks" (or rich peasants)... Millions were killed, exiled to Siberia, or died of starvation after their land, homes, and meager possessions were taken to form Stalin's "factory farms." 

At the end of the 1930s, Stalin began the Great Purge, a series of campaigns of political repression and persecution. During these campaigns, millions of people who were viewed as a threat to Soviet politics were executed or exiled to Gulag labor camps. 

Okay, I know... I started talking about the New Deal and then delved into a tirade on Russian politics. Strange? I suppose... but I have a point (I think).

Communist governments have historically been characterized by state ownership of productive resources in a planned economy and sweeping campaigns of economic restructuring such as nationalization of industry. While they verbalize "collective ownership," Communist governments have been characterized by a strong state structure where decisions are made by the ruling class. Never has any self-claimed socialist state morphed beautifully into a communal living structure where there are no class differentiations. The very thought of this as a possibility is complete idiocy.

In a true socialist society, you have two classes: the powerful and the powerless. It's no longer about money, but about freedom (or the lack thereof). I would argue the same is true in "State capitalism," where a command economy (or centrally planned economy) is in force. This is simply where supply and price are regulated by the government rather than market forces.

Now consider the following news from the AP:

"Judges could rewrite mortgages to lower bankrupt homeowners' monthly payments as part of changes congressional Democrats are seeking in the Bush administration's proposed $700 billion financial system bailout. Also, companies that unloaded their bad assets on the government in the massive rescue would have to limit their executives' pay packages... The proposal by Sen. Chris Dodd, D-Conn., the Banking Committee chairman, gives the government broad power to buy up virtually any kind of bad asset - including credit card debt or car loans - from any financial institution in the U.S. or abroad in order to stabilize markets... The plan also requires that the government get shares in the troubled companies helped by the rescue.... It also would require that the government come up with a 'systematic approach for preventing foreclosure' on the mortgages it acquires..."

This is frightening enough to me, in and of itself. The government is going to be buying all the bad debt from the financial industry? How stupid is that? The bad debt is what's sinking these giants right and left. Frankly, our government is already in the hole far enough - do we really need to see what it's going to take to bankrupt us entirely? And beyond that, the government is effectively taking ownership of previously private companies. With the entire industry in trouble, the government could own large shares from most of the financial industry. But the article continues...

"Asked if the negotiations could slow down passage of the measure, [Treasury spokeswoman Brookly McLaughlin] said, 'We are confident that we can get a bill done this week.' ...Barney Frank, chairman of the House Financial Services panel, said that Paulson 'is being entirely unreasonable' to expect that Congress will pass a bill right away without examining the proposal thoroughly and adding provisions Democrats want, such as the curbs on executive pay. We want to limit those as a condition for giving them aid. The private sector got us into this mess,' Frank said, 'The government has to get us out of it. We want to do it carefully.'"

This financial mess is a big deal. Fiscal irresponsibility has been reigning for generations - and it appears to be time to pay the piper. But now nobody wants to pay... and the government will bail people out... we can't have the Republican party blamed throughout history for the second Great Depression, after all. But America's jugular has been slit -- and they keep throwing band-aids on it. It's not going to last. And who's going to bail out the American government? The well of taxpayer money will quickly run dry.

I was recently talking with a family member (whom I dearly love,  just in case he reads this). He made the statement that he's totally for the free market, but the bail-outs are necessary. He said that he didn't want to have to go through years of hardship before the free market gets back on its feet. 

But you can't have it both ways. It's not possible to be for the free market and for government intervention in the free market. Once the government intervenes (to the tune of taking ownership of previously private corporations, no less) it's no longer free.

I guess I'm in the minority now, but for me? I'll choose freedom over ease and security any day of my life. 

1 comment:

H.L.Washburn said...

I think Bush is worried about going down in history as Hoover, so he is going to save the country at all costs even if it means the largest government “relief” bill since the Great Depression. Newt Gingrich said last night on Fox that we ride the wave of capitalism when the economy is going up (praising the free market system) but when the wave goes down, we turn to socialism to save ourselves. I hope that McCain rises up to stand against this labyrinth government take-over of private sector business. As Newt also pointed out, Congress, a democrat held Congress, is the one who will be writing and passing this bill. This is right up their ally. They will add things, we will not know for years, they will take over things that should not be taken over, and to give a Treasury Secretary as much power as this bill will give is crazy. What happens if Obama wins, we will no longer have a free market system, the “rich” will be robbed to give to the “poor”, and our economy will be in the greatest peril it has ever been in. Bush has never been a Reagan conservative, a true fiscal conservative who believes in limited government. No Child Left Behind created a huge government bureaucracy that has hindered education more than helped it, so too this proposal to “rescue” banks and the economy will only create an enormous government, one that will be fully socialist if Barack Obama wins the White House.

Great history lesson! I am wanting to study economics more lately, so this might be a good time to start, or it might be a time to ignore that desire because it will only add to my craziness at all the things that go on in government.