“We’re all socialists now.” “We have to defeat the socialist bailout.” “This is the end of free markets and the start of socialism.” On both sides of the ‘bailout’ recovery plan debate, the word socialism has come fast and freely. Sometimes used in sad irony, sometimes in bitter earnestness, the word always comes.
However I think the word ‘socialist’ is being used too broadly now, without much thought, and as the hammer to drive a reflex rejection of government action. I believe that while this reflex just happens to be useful most of the time, due to the massive expansion of the government in the period 1933-1980, but to be always opposed to government is a liberal (read libertarian in modern language) reflex, not a conservative one.
Please, spare me the quotes of Ronald Reagan. He said what he said for specific reasons, but he was all for government action when it was right. Whether to fight the looming threat of international Communism, to combat crime in America’s streets, or to protect the lives of the unborn from the butchery of abortion, President Reagan was ready, willing, and able to send people from the government who were there to help.
So that is why I use the scare quotes in my inflammatory title. I do not believe that government intervention into the financial markets, particularly in cases of severe distress, is inherently socialist in any meaningful way. Here’s the difference:
I will start with the simplest refutation, and quote the Merriam-Webster definition of socialism: Socialism is “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” Socialists seek to confiscate control over the driving force of the economy: the production of goods that people wish to buy and sell. However, I would argue that banks, brokers, and insurers are not part of
That is a vital distinction. No conservative I know wishes to end government ownership of any property at all, or even the government’s providing of appropriate services to the people. Consider the three legs of the Reagan coalition’s stool so often discussed in the primaries:
- Strong defense: Reaganites favor the ability of the US government to project overwhelming force anywhere in the world, when it is necessary for our way of life to be preserved. Consider that well: we willingly grant the government the authority to wipe out entire cities with powerful thermonuclear bombs as politicians and bureaucrats see fit.
- Strong values: Reaganites favor aggressive government intervention in hospitals and other medical facilities to end the practice of discretionary abortion on demand, literally taking for itself decisions of life and death.
- Strong economy: Reaganites favor a crafted system of taxation and regulation where the suppliers in our economy, the businesses that are the engine of employment, are freed from the burdens of excessive taxation and regulation, in order to keep that engine running well.
I hope there is little argument on those three points. Especially on the last, we tend to believe that the right thing to do is to foster productivity from the people in our economy who produce things, within the bounds of the Constitution.
I assert that the financial recovery bill, and other interventions being made by the Treasury and the Federal Reserve are precisely that. We are not taking a planning role in the economy, outside of the bounds of the Constitution; we are taking control of our money supply, which is one of the duties of the government. We are not confiscating property; we are buying property at prices that are too high if anything.
What we are doing now is a supply-side intervention. The Treasury and the Federal Reserve trying to preserve the ability of the producers in this economy to get the credit they need to produce, to hire, and to grow this economy. They take these drastic actions to counter a panic that is arguably the direct result of prior government action in the Community Reinvestment Act.
This is not socialism. This is government action that may be good, or may be bad, but it has no connection with the radical, erosive ideologies that caused so much suffering in the 20th century, and still do to this day.
So please, to those who argue against the ‘bailouts’ going on right now, argue the policies on their merits. Talk about moral hazard, affordability, or the need for ‘creative destruction.’ But please, don’t talk about freedom, socialism or any of that, because none of it is at stake here. What we’re doing here is supply side economics. Just look closer and you will see.