Saving Capitalism, Part 1 (Joe Rothstein's Commentary)

June 1, 2009

By Joe Rothstein
Editor, EINNEWS.COM


For most of my adult life, when Republicans have wanted to pin back the ears of Democrats they have hurled the word, “liberal,” at them like a venomous dart. “Liberal! Liberal! Liberal!” How many times have you see that show in 30 second political spots? And it's been a good run for the Republicans. By my rough count liberal-mongering has been an effective Republican strategy since about 1976.

But “liberal!” didn't scare most voters in 2006. Even fewer in 2008. That explains why now, more and more, the Republican chant has changed from “Liberal! Liberal! Liberal!” to “Socialist! Socialist! Socialist!”

This is not just Rush Limbaugh-Ann Coulter stuff. At the Republicans' national committee meeting May 20, the party leaders passed a resolution that said this: "Resolved, that we the members of the Republican National Committee recognize that the Democratic Party is dedicated to restructuring American society along socialist ideals….”

For the Republicans, “Socialist” is now the new “Liberal.”

Before trying to rebrand the Democrats, Republican leaders should have paid attention to a Rasmussen poll released in April. In that poll, 53% of those responding said capitalism is better than socialism. But 20% disagreed, and said socialism is better. Another 27% weren't sure. That means 47% of Americans either prefer socialism to capitalism or are open to a discussion about it. That's quite a startling change for a nation that's been immersed in the freest of free market capitalism. Most surprising, among those 30 years old or younger, the choice was evenly divided. Only 37% of America's young people preferred capitalism.

The most basic definition of “socialism” reads like this: “a political theory advocating state ownership of industry.” That's not something being advocated by President Obama or any other Democrat I know about.

But Democrats are not very pleased with the way the capitalist system has been functioning in the U.S. And that puts them on the same page with the majority of Americans. The congressional battles about to unfold are at the nexus of capitalism's reform, not its abandonment.

We've just come through a generation or more of what might be called (in the most mixed of metaphors) the invisible hand of capitalism running amok. Problems with airlines, or banks, or phones, or communications networks? Deregulate them. In fact, deregulate everything. Free trade? The freer the better. Health costs? Let people bargain for better rates from their doctors and hospitals.

OK. So now we've tried all of that. Some things work better, some don't. Some people have become fabulously wealthy. Most family income has stagnated. The U.S. has gone from being virtually debt free when Jimmy Carter left office in 1981 (less than a trillion dollars) to ten trillion in debt when George W. Bush took his last ride in Helicopter One. Even more threatening, the nation has hemorrhaged its manufacturing base, its jobs, its intellectual property and tens of trillions of dollars in wealth.

Now the nation's in the mood for some fixes, and the Democrats, far from being socialists, have taken it on themselves to try to save U.S. style capitalism.

A vivid example of what's been wrong and how to correct it was on display over the weekend with the General Motors bankruptcy.

According to “the invisible hand" theory of economics, GM should be allowed to fail---along with its vast supply chain of parts makers, tens of thousands of employees, the communities that depend on them, and all the GM retirees who count on pensions and health care to sustain themselves. In bankruptcy, without U.S. government intervention, GM would have shed itself of obligations to its workers, its retirees and its communities and possibly emerged as a much smaller, leaner company.

What kind of company that might have been was written into GM's original bankruptcy plan. It would, among other things, build new factories in China to manufacture cars to import back into the U.S.

That's an American company?

As a result of Obama administration intervention, the China plan has been shelved and those new cars will be built in the U.S. The pensioners won't be left high and dry. Neither will a lot of current auto workers and auto parts makers. Neither will a lot of U.S. communities. Because of the administration's intervention the U.S. is doing what all other nations do---protect its industrial base and its own people. Anybody got a problem with that?

The plan, like most reorganizational plans, is to try to get GM back in shape to compete as an American car company and turn ownership back to private owners. The long term plan decidedly is not to have the U.S. government permanently own and operate a car company.

Call this anything you want, but it's not socialism. After so many years of being mismanaged by flawed economic theories, let's call the government's approach what it really is: Common sense.

I'll have more to say the subject of improving capitalism in future columns.

(Joe Rothstein can be contacted at joe@einnews.com)