In the wake of Paul Krugman declaring the bailout of the financial markets as socialism, I should probably re-evaluate my own comment of a week ago: “Since we are dealing with finance, there isn’t much point in discussing socialism. Every economy regulates the money supply.” I understand the polemical usage, but it is something that annoys me, because the same polemic is used when I and others advocate for national health care. Life was a lot simpler when everyone understood and acted like socialism was about the allocation of productive assets. While the collapse of investment banking is nothing to sneeze at, people are quick to forget that there are a number of parts of the country that still haven’t recovered from the steel industry collapse a generation ago. As the Big 3 continue to hemorage jobs, their associated suppliers continue to hemorage jobs, and Michigan’s recession enters a fifth year, one has to wonder if anyone cares about the production and distribution of goods anymore rather than just the production and distribution of money. And while no one wants to emulate the Japanese economy at the moment, the changes over the past month have moved us closer to the banker capitalism exercised there than it has to socialism.
As far as the polemics go, one can’t argue with Krugman and others claim that a number of businesses are set up distribute profits as quickly as possible and to dump losses on the greater society. The mortgage brokers typified this as they started going into bankruptcy two years ago. The banks were supposedly indemnified from the risks of early default and fraud from the business sold by the mortgage brokers. The only problem was when they went to collect, these little-more-than shell companies had exhausted what little capital reserves they had. The canary in the coal mine was found passed out dead. You certainly won’t get an argument from me that what amounts to blessed fraud is bad.
The laissez faire-ists want to argue though that this wasn’t a true free market, a site rarer than Bigfoot in bad times but as common as Canadian thistle (a socialist plot surely) in good times. Some have taken to arguing that this was a socialist plot because the government was encouraging homeownership, particularly among minorities and poor people. More broadly however the argument suffers because the idea that panics and manias are absent a free market system is laughable. There wasn’t much argument that housing prices were ultimately unsustainable, particularly on an income-to-debt scale. I take that back, there were a number of people who play free market advocates on the weekend that thought it was sustainable and though it was just the miracle of the free market allowing us to do what all empirical evidence suggested would not be able to persist.
Update: To try and move this back on track, here are some items from Socialist Party USA’s platform.
1) We support tax benefits for renters equal to those for homeowners.
2) We call for all financial and insurance institutions to be socially owned and operated by a democratically-controlled national banking authority, which should include credit unions, mutual insurance cooperatives, and cooperative state banks. In the meantime, we call for re-regulation of the banking and insurance industries.
Housing
The Socialist Party recognizes the right of all people to high quality, low cost housing.
1. We call for a vast increase in Section 8 housing subsidies as one element of major public investment in the construction of low cost, scattered site, community-based, high quality housing.2. We call for rent control for all rental units, and the right of tenants to organize.
3. We support the formation of non-profit land trusts and of socially owned, tenant controlled housing cooperatives.
4. We call for the organization of a housing rehabilitation program aimed at renovating and remodeling existing homes to bring them up to housing and safety codes, as part of a broader public works program.
5. We call for an end to home foreclosures
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