George the Socialist?

This is another one of those, "I’m not saying I support the policy, and I’m not saying I oppose the policy, but I don’t understand why. . . ?" posts.

Just a few weeks ago, conservatives were calling Barak Obama a socialist because Obama supported a progressive tax system. So why aren’t they chanting outside the White House, or outside the Treasury Building, shouting, "Socialist!" because the Bush Administration is actually using the $700 billion rescue/bailout of the banking industry to buy, not distressed assets (how the plan was sold), but an equity stake (read, shares of stock) in the companies themselves.

What, the government, buying shares in "private" companies? The government, buying the means of production? There’s a word for that, right? Yeah, it’s called "socialism."


George the Socialist?

Some pundits are calling it socialism. I mean pundits on the Right. There are even some pundits on the Left calling it socialism, but with a sarcastic tone.

I'm not surprised. The British plan was explicitly intending to buy an equity stake in their banks. Even the Economist wrote favorably about it. There was support for it by some writers in America too.

I'm not sure if it's good or bad, but it doesn't seem that far removed from what the government did during the bank crisis in the 80s, when the Resolution Trust Corp took over a lot of banks. If anything, the government isn't intervening nearly as much.

What I am finding interesting is how the plan was so influenced by Bernanke's theory that the Great Depression was fundamentally a liquidity crisis. The banks and bankers, however, don't seem to agree. It seems that their hoarding is more motivated by trying to buy banks to protect the profitable assets, and let the credit crunch persist, and also let the mortgages default.

Now, on the third hand, there's all this rhetoric about "saving homes" or keeping people in houses. Fine. But a really socialist solution to that problem would be to provide housing, or have the government take ownership of the houses that are foreclosed, and allow the residents to rent (subject to some limits of course).