I Prefer My Socialism Unfiltered

So Ben Bernanke is promising yet again that Citi, Bank of America, et.al. won’t be nationalized.

Which prompts this unabashed free-marketeer to wonder: Might nationalization be preferable to what the Fed and Treasury and doing now?

Nationalization is a loaded word.  It invokes the specter of socialism, another loaded word.  But really, which is better: Continued federal support for these zombiefying, turning-Japanese banks under nominal private control — or a nationalization that would wipe out existing shareholders and unsecured creditors, remove incompetent managers, discharge the bad assets, and sell the good ones to stronger hands in the prviate sector?

Not a free-market solution by any stretch.  But Sweden did it (more or less) and the world didn’t cave in.  Heck, it was done in this country (more or less) with the Resolution Trust Corporation after the S&L crisis reached the point of no return.  A darn sight better than the perpetual privatization of profit and socialization of risk that’s put Japan in the tank for two decades.  Give me my socialism unfiltered!

Perhaps there are just too many powerful forces at work behind the scenes to allow that to happen.  Sounds conspiratorial, I know, but look how little transparency there’s been to this whole process; Bloomberg and Fox Business have to sue the Fed and Treasury to get them to come clean about who’s getting their assorted bailout and guarantee funds, and for what purpose.

That’s bad enough in the finance sector.  But we see this same bastardized-socialism dynamic and its attendant lack of transparency at work in all three areas the new president made priorities in his address to Congress the other night — energy, health care, and education.

Key to his energy plan is a scheme for new environmental regulation — carbon credits, cap-and-trade, whatever you want to call it.  I’ve never understood this.  If you’re going to clamp down on the emission of greenhouse gases, why not issue a bunch of regulations and be done with it?  (Especially when polling data shows more support for going that route.)  But instead, we’re going to have a “market” for carbon, which presumably will make a bunch of intermediaries quite wealthy.  Who are these people?  Darned if I know.

Health care?  Same thing.  For all the carping about “socialized medicine” both now and during Clintontime, the comparisons to Britain and Canada are completely off the mark.  The insurance companies had a prominent seat at the table in Hillary Clinton’s secret task force, and they’ll have a prominent seat at the table in whatever this present administration draws up.  The advocates of real socialized medicine (they prefer the term “single payer”) are consistently shut out.  Whatever emerges from the backroom deals this time will continue to privatize profit while socializing cost and compromising patient privacy.

Education?  There were all manner of private firms who made a mint off George W. Bush’s “No Child Left Behind” atrocity — including one owned by Bush’s brother Neil, which marketed software that school districts lapped up as they desperately sought any quick fix that would goose the all-important test scores.  The new president’s education secretary (Quick aside: If Arne Duncan did such a great job running Chicago Public Schools, why didn’t Obama see fit to put his own kids in the system?) is a big proponent not only of the testing regime, but of that private-public mongrel known as “charter schools.”  Someone stands to make a lot of money if he pushes this trend, still a localized phenomenon, on a national basis.  Who are those people?  Darned if I know.

Yes, I think I prefer my socialism unfiltered.  At least that way you know it’s only the Party elites who are living large at everyone else’s expense.  Besides, when you think about it, this bastardized socialism isn’t socialism at all.  What’s the word that better captures an iron-clad alliance of Big Government and Big Business?

It’s fascism, of course.  But you can’t use that word to describe policy made in Washington, D.C. without basically shutting off all discussion.  Use it to describe Bush administration policies, and you’re tagged as a terrorist sympathizer.  Use it to describe Obama administration policies, and you’re tagged as a militia nut.  So I’ve never bothered with the word.  But it does capture the essence of matters in recent years, and especially at this moment.  It provides the sort of clarity that “socialism” does not when so many private parties with clout and connections stand to make fortunes.

The Daily Reckoning