The Slippery Slope to Socialism

Complaint I hear most commonly now about Obama? He's a socialist.

Well, that's progress. It used to be that Republicans insulted Democrats and scared off independent voters by calling presidential candidates "liberal." Now that the L-Word has lost much of its stigma, it's time to go to the next level on the leftie Threatdown.

But here's the question that struck me this summer: Why NOT consider socialism in some form?

This was back before the subprime crisis broke the levy and the markets freaked out, back when the size of the problem was coming into focus and the flaws in the system were being discussed openly. And the more I thought about it, the more convinced I became that we were witnessing a transfer of wealth from the middle class to the upper class.

That's a destabilizing development. As I wrote in the Xarker Manifesto (Section IV, Item 3), America's success is predicated upon a government that creates a stable business environment by finding a balance between the needs of the people and the dynamics of the market. Xarker Manifesto IV.4:

The  ideal government in such a system keeps competition fair, protects the credibility of its institutions and prevents the natural anti-democratic tendencies of each segment of society from gaining advantages on each other. It counterbalances capitalism's tendency toward fascism and democracy's tendency toward socialism.

In other words, simply leaving important matters up to the free market is not really an honest answer to every problem (because the markets here and overseas are not truly free), and letting corporate lobbyists have the run of Washington is bad for business (because it destabilizes the country and leads to upheaval).

So here's the pitch: What if trends in the 21st century have changed fundamentally some basic dynamics of economics? If that's the case, is it enough for us to simply swing back toward a "center" that functioned pretty well in the 20th century?

Here are the things I have in mind:

1. Traditional economic theory makes manufacturers responsible solely for their production and distribution costs. Clean-up, disposal and mitigation costs? Those aren't factored in to the cost of that new appliance, so if those tasks are to be done, they're paid for by someone else. This system privatizes profit and socializes responsibility.

2. Start charging domestic companies for those end-cycle costs and you've given the advantage to unregulated foreign companies. So if you're going to address that issue, you can't just do it by tinkering around the margins here at home.

3. Leaving such matters up to international "free" markets hasn't worked particularly well, in large part because labor isn't free to move where wages are highest. Our trade agreements let jobs and capital flow south to Mexico, but let's be blunt: If we had a similar approach to immigration, half of Mexico would have moved to the United States 10 years ago. Consequently, the incentives of globalization spread free capital to countries with workers who aren't free to leave (or do much of anything else, in many cases).

4. Health care is an enormous cost of doing business (and providing a stable society), and we're paying for it in just about the most inefficient way imaginable.

5. Whatever we do to deal with global warming is going to require a different relationship between profit and cost (see item 1).

I don't see a way to deal with all those things constructively without entering the range of the economic continuum we call socialism.I don't particularly like typing those words, since Americans are hardwired to oppose anything that's socialistic. But all this probably means is that we'll call it something else. Marketing, you know.

As we've proven in the past month, Washington can move rapidly on enormous socialistic spending programs -- what else would you call the nationalization of the secondary mortgage markets? But those were socialistic programs that benefited the people who hire lobbyists, public relations firms and politicians. We didn't see any Red-Scare advertising campaigns when socialism was saving Wall Street.

Will the same be true when we're trying to pass health care legislation? Or re-write our international trade laws to remove unnecessary incentives toward the exporting of American jobs? Of course not. We'll be told that government can't do anything right and that trying to protect people from health-related bankruptcy is a step onto the slippery slope toward Maoism.

But the reality is that there are all sorts of variations within the continuum between the poles of libertarianism and communism, and Germany, France, England, Denmark, Norway, Canada ... well, just about everybody... is somewhere to our left.

The slippery slope of socialism? Depends on your perspective. But it's worth reminding people that slippery slopes run in many directions.   

Comments

[Paul]

In my latest blog entry, I said "I guess my overall point is I support the ideals behind the Free Market theory to a certain degree. But when corporations are operating at a level that can impact people that aren't their investors, employees, or customers, I think the government needs to address that."
http://www.screwtheman.com/2008/10/money.html

[Agricola]

Xark, did you stay up all night? The economic history of this country is replete with periods of governmental intrusion in the marketplace, with little success. Europe, with socialist ideals built into the political systems of each country, is still The Sick Man. If one thinks the EU is the highest form of that branch of political evolution, then we should absolutely avoid even glancing in that direction.

It's fair to say that our model of democracy/free enterprise/capitalism could use a rejuvenative period at a health spa, but it ain't time to jump onto the bandwagon that has demonstratively not worked for our English and French mates.

Maybe we should cast our eyes to the East, where states have managed to fashion a form of capitalism that works for most (remember.....in capitalism there are some losers).

[Agricola]

By coincidence, here is a post by Mark Cuban that offers a free-market to the kind of investing that got us into this mess:

http://tinyurl.com/4wnllx

Sensible regulation, through bi-partisan legislation, free from the nefarious influence of lobbyists, is way better than jumping 2 parsecs to the left.

[Daniel]

I agree -- Job No. 1 should be the Lawrence Lessig "Change Congress" agenda that I promote at the top of the page. Do that and we'll get public-spirited, practical legislation. Ignore it and we'll just stay on the broken merry-go-round.

As I noted at your blog, I'm not interested in solutions that abandon market freedoms. The market will always be the engine.

What we disagree on (maybe... we might agree on this, too) is how you set up the rules in which the markets operate. The discussions that don't go anywhere are the ones in which free-market advocates refuse to acknowledge that government plays any role in setting up and regulating markets and the seldom-heard arguments for replacing markets with government planning.

So: Let's fix congress, recognize that "socialism" is a continuum, and split the difference and jump just 1 parsec to the left. That should put us closer to the middle.

But let's also think about how technology, travel, global warming and globalization have changed things. I have this sneaking suspicion that if we can get the new market rules right, we'll unleash another stunning advancement of abundance.

[Agricola]

Mr. Zulu, prepare for warp speed.....

[Agricola]

Mr. Zulu, prepare for warp speed.....

[Anon.]

"Agricola", who obviously isn't a farmer, wrote: "Xark, did you stay up all night? The economic history of this country is replete with periods of governmental intrusion in the marketplace, with little success. Europe, with socialist ideals built into the political systems of each country, is still The Sick Man"

Are you delusional, or simply ignorant?

Median disposable income is higher throughout Europe, poverty rates are lower, infant mortality rates are lower, health by all measures is better, when surveyed "happiness" (!) is better, transport is better, they're ahead of us in technological development in every field except computing (and catching up fast), they have more popular support for their governments, higher voter turnout, et cetera.

I suppose you think the New Deal -- the most dramatic government intervention in the marketplace in the US -- was a big failure, too. Well, nobody who's actually studied it agrees with you.

[Daniel]

Even though Agricola was arguing against me, I want to argue just a bit on his behalf, at least when it comes to Europe. I lived in Germany for two years in the 1980s and European attitudes towards work, in particular, struck me as annoying.

One of my best friends was an Englishman who was simply living there because he could get a better standard of living on German unemployment than he could back in the East End of London. People had a generally comfortable standard of living and the security of health care and unemployment insurance, but it wasn't a mobile society, and it certainly didn't strike me as innovative.

Since then I've read several memoirs of Americans living in rural France, and there's always a chapter about the American learning to adapt to the French ways of "work," which doesn't seem like work at all to the Americans in the story.

For all those weaknesses, though, there are things that I think they simply do better than we do, and the 21st century is making those things more important. I suspect that some New Deal-style "socialism" (infrastructure projects backed by government spending) may be required to help us catch up... and I also suspect that my friend Agricola believes there are better ways to achieve those goals.