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Socialist bailout destroys America’s future A look at how the bailout package will compromise capitalism

Posted on 06 November 2008 by Adam Ryback

For many years Democrats have been working toward turning our free market economy into one that resembles a social market economy. However, we are now at a stage in our country’s history in which there is no longer strong and popular opposition to this trend. Thanks to legislation such as the Emergency Economic Stabilization Act of 2008 (H.R. 1424), both Republicans and Democrats are giving full support to socialist solutions to free market problems. They prefer to bail out companies rather than let them fail, even though the corporate executives in these firms made bad decisions. If I fail a course, the teacher doesn’t bail me out by just giving me the points I missed. Imagine if I was a physician who had received unearned grades. If this was to happen, I would enter the workforce unqualified and would be a danger to my patients. We are doing a similar thing with our economy. By bailing out bad businesses, we are merely allowing them to continue destroying our economy even further. This is the opinion of former Wisconsin candidate for U.S. Senate and businessman Ed Hou-seye, as explained by Marquette University history professor Stephen K. Hauser.

Hous-eye sides with the late Senator, William Proxmire, on corporate socialism which Proxmire strongly condemns. Hou-seye and Proxmire believe that if you are going to condemn socialism which favors corporations, you should condemn socialism which favors people, based on the fact that a corporation is seen as a private citizen by the law, as stated by Professor Hauser. Therefore, in order to be a capitalist nation, we must be against all forms of socialism, regardless of the outcome.

The issue that Proxmire was dealing with in 1971 was government bailouts for corporations like Penn Central, Lockheed etc. Hou-seye quotes Proxmire saying: “ ‘If we bail out one, where do we stop!’ Do we bail out every incompetent and inefficient American corporation, or only the big ones?’ ” The issue that we are dealing with now is similar to that of 1971. However, today we have made the jump to both bureaucratic and corporate socialism with the Economic Stabilization Act of 2008. Due to the encompassing nature of this bailout, it affects everyone. This bailout involves the assets of major corporations, which are in control of the mortgages of people’s houses. So now the government has control over businesses and the average person.

Some may argue that this bailout will merely just give the economy enough time to improve and then the government will back out. After all, doesn’t this provision exist in the bill itself? Well, that is a true statement, but does the government ever really step out once the crisis is over? In Stranger in the Arena, John Schmitz, a Marquette graduate and former presidential candidate, examines the Economic Stabilization Act of 1971, which involved price and wage controls during emergency situations. Schmitz says: “I wrote and spoke against this bill … several months later when we were still being assured they would never be used, that this was strictly a political ploy to embarrass the Democrats. Then in the summer of 1971 a price and wage freeze was imposed…” Lest we let history repeat itself, we should learn from our mistakes.

However, some people may still say that the bailout of 2008 is not socialist in nature. In response to these people, it is necessary to look at what socialism is. And who better to discuss socialism than Ferdinand Lassalle, a famous 19th century proponent of socialism. Lassalle proposed that “the major means of production and transportation would be owned and controlled by the government” according to Professor Hauser. Nevertheless, Lassalle would “still allow for elections and freedom of speech.”

Now is probably a good time to examine what the bailout says. We all know that the government is merely using its (or rather our) money “to provide authority for the Federal Government to purchase and insure certain types of troubled assets”, as the bill itself states. In other words, the government owns a portion of the collapsed businesses. Seeing as how the companies were bailing out businesses which were on the verge of collapse, we can just imagine how much money the government has in each of these companies. Logically, the government would want to manage certain areas of the business, seeing as how its moneya is at stake. For this reason, Section 104 of the bill provides for a Financial Stability Oversight Board. In other words, the government controls and owns the business. If we refer back to Lassalle, we can see many similarities.

However, this is not pure socialism. As mentioned earlier, Lassalle wanted “the major means of production and transportation” in the government’s hands. However, the concept is virtually the same when you consider the fact that Lassalle was from the 19th century, and industry was different than it is today. And we have to remember that this bill provides for partial control in the housing market. And that pushes our government closer to Marx than to Lassalle.

At any rate, this bill is not a product of capitalism. At best, it is crony capitalism. Even then, we would be using socialist tactics. Congressman Ron Paul was correct in saying we “can’t save free markets by socialism.” There is something distinctly socialist about this present bill. Since the Great Depression we have been moving steadily closer and closer to a social market economy. Now the government is ready to bail out any and all companies that show signs of failure. We should expect that as our economy continues to decline, more and more companies will require bailouts. And more and more people will also continue to need to be bailed out. Then American citizens will be totally dependent upon the government for everything, and therefore be virtually enslaved by the government. Socialism is an ever-increasing danger to our society, and unfortunately neither of the two major parties is willing to make a serious stand against it.

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