The Socialization of America

During the Presidential campaign of 2008 a firestorm of Socialism talk hit the air waves when Candidate Obama told Joe the Plumber (who is neither a Joe nor a plumber) that by increasing the marginal tax rate on the highest brackets we could “share the wealth” so that everyone benefits. Now the reality is that the progressive tax code used in the US has been in place since 1910, and that changing the rates up or down do not equate to anything remotely resembling Socialism. But it made for great debate about the role of government.

Now that we are 5 or 6 months into the Obama Administration, the tax code remains unchanged. So perhaps these cries of Socialism were nothing more than campaign rhetoric. Or were they? President Obama has proposed significant deficit spending both as an economic stimulus and as the basis for his budget blueprint. But deficit spending is nothing new, and it’s not Socialism.

President Obama has also made headlines with his outing of the so called “torture memos” and basically dueling former Vice President Cheney on national TV with contrasting speeches about the handling of the threat of terrorism and the treatment of detainees. But still no Socialism.

Socialism has various meanings, but a basic concept found in all forms is state or collective ownership of the means of production. Almost all forms of Socialism believe Capitalism to be a system that favors the few at the expense of the many. What we have seen in our economy since the implosion of the sub-prime mortgage and the ultimate collapse of AIG, Lehman Brothers, Washington Mutual and many other companies is a clear danger of Capitalism. The wealthy take great risks to get wealthier, often with other people’s money. When the risks payoff, everyone wins but the big guys win more. When the risks don’t payoff, everyone loses, but the big guy doesn’t lose as much. He has protected his assets and has friends in high places where he works. They take care of each other and pay each other handsomely with other people’s money.

So the government panics as credit freezes up, AIG faces billions of dollars in claims against policies they’d written that they literally thought they would never pay claims on, and bank after bank goes under and gets taken over by the FDIC. Suddenly the government becomes the lender of last resort. But this is on a scale never seen before. President Bush, Treasury Secretary Paulson and Fed Chairman Bernake tell Congress that if we don’t immediately bail out the banks and AIG, our entire economic system is in peril. Despite what we now know about how the bailout was handled and what the companies did with the money, to be fair to the Congress, with warnings like that most people would have approved the bailout.

In comes the Obama Administration and they must continue the process of cleaning up the economic maelstrom. The automakers are in need of help after decades of rising legacy costs and slowing auto sales. The rising unemployment rate and plummeting stock market has caused consumers to draw in the reigns on spending and even the ever profitable Japanese auto makers report losses for the first time. The government again becomes the lender of last resort. But there’s an interesting twist here; General Motors files for bankruptcy and with plenty of government participation will come out of bankruptcy with new owners; the Federal Government. The Federal Government will own up to 70% of the new General Motors company when it returns from bankruptcy protection. The government already owns approximately 80% of AIG after saving that company from the brink of collapse. Socialism? Now we’re getting somewhere.

The United States of America is the world’s largest exporter of weapons. There are thousands of companies in America involved in the defense industry, and their customer is the Government. Federal, State and Local governments make purchases from these companies for everything from bullets to fighter jets. Lockheed Martin, Boeing, Northrop Gruman, Raytheon, General Dynamics, United Technologies are some of the largest companies in the United States and their sole customer is the government. Of course they have foreign governments as customers too, but private citizens aren’t lining up to order C-5 aircraft.

During World War II, the United States totally mobilized all her natural resources to the war effort. Following the war, a new war began; The Cold War. Massive defense spending on a scale never seen before began, and new businesses emerged with the government as their customer base. Dwight Eisenhower defined the Military Industrial Complex in his farewell speech at the end of his Presidency. He warned of the dangers of a nation allowing her military spending to overtake other priorities, in essence creating a dependency on, and possible motivation for, military action to support the economy.

If the nation’s economy depends on government spending to sustain itself, and thousands of businesses sole source of income comes from the government, is that nation not Socalist? Let’s go back to the definition of Socialism which has as one of it’s major tenets the state or government owned means of production. If the largest manufacturing segment in America is based on government spending, does not government own the means of production?

Clearly there are other aspects to Socialism:

  • A fierce sense of nationalism
  • tax funded social programs
  • providing a basic level of care for the country’s citizens

I don’t believe there’s much room for argument that there is a strong sense of national pride in the United States. Our political leaders surround themselves in flags when they appear on televsion and end almost every speech with “God bless America.” Clearly we have expansive social spending in the US, and this is not controlled by either political party. The Republicans under Republican President George W. Bush created the largest increase in social spending the US had ever seen with the Medicare Prescription Drug program. Medicare, Medicaid, Food Stamps, Welfare, Disability and other forms of basic care already exist for our citizens and there is talk of potentially bringing affordable health care to every American once and for all.

So is the United States moving toward Socialism, or has it been a Socialist leaning entity since at least World War II? The larger question may be, if the US is moving toward a more Socialist system of governing, is there anything particularly wrong with that?

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