Let’s be clear: There is such a thing as good socialism. The $700 billion bailout plan that was unveiled last month is one such case.
Of course, this bailout, the first ever of its kind and magnitude in American history, was a painful pill to swallow ““ especially for conservatives. That being said, it was a necessary evil that ultimately staved off total economic calamity. Had the government not acted, the credit market would have dried up and we probably would have entered a protracted depression.
But now, two weeks after we elected the prodigal son Barack Obama, Congress is proposing a bailout of a very different ilk. It’s known as “lemon socialism,” and it reeks of partisan government. (Lemon socialism refers to the practice whereby supposedly free-market economies subsidize failing industries.) Just after pledging $700 billion to restore the credit market, Congress is now trying to save the Big Three (General Motors, Ford and Chrysler) from bankruptcy. The price tag: $25 billion. Congress has tried to convince us that this bailout is necessary for the sake of the economy and the millions of people who are employed by the Big Three. What they won’t tell you is that it would be poisonous in the long term: It would prevent the necessary restructuring that needs to happen if these companies are to stay competitive in a global market.
To be sure, the economic downturn has led to heightened panic. And sometimes, desperate times call for desperate measures. But there’s another explanation for why Congress is all too willing to push through another bailout.
What better time for a Democratic Congress to get in bed with industry than during the lame-duck session of a Republican president? Bush gets the blame ““ because it happened on his watch ““ and Obama, Nancy Pelosi and Harry Reid, the Democratic leaders of Congress, reap the benefits for the next four years.
If this plan goes through, Washington will almost certainly be invited into management, giving it inestimable influence in matters of production, fuel efficiency and employee payment for the duration of Obama’s presidency.
Democrats already have a cozy relationship with auto unions ““ Obama got a rousing endorsement from the United Auto Workers. By preventing corporate restructuring, they will protect union interests and preserve the average worker’s inane $73 hourly wage and gilded medical benefits as a juicy favor.
And what better opening to promote a “green” agenda than by partly nationalizing the auto industry?
Nobody believes that the folding of GM or any other auto manufacturer will devastate the economy in the way that the failure of the banking industry might have. But for a Democratic Congress, under the auspices of a Republican president, this is a golden opportunity too tempting to pass up.
And it will not stop there. Congress is also considering another bank-breaking bailout.
The Democratic leadership is hot on another $150 billion to $300 billion “stimulus” package for states with budget deficits. Hence, our profligate government is already fulfilling Obama’s promise to “spread the wealth around,” and it is doing it with gusto. Do they honestly expect us to believe that this bailout trigger finger is only temporary, that it is apolitical?
I should think not. The notion of reaching out to the needy ““ of having “compassion” ““ is the cornerstone of the Democratic Party. Liberals have always seized upon temporary problems to create lasting changes. They did this during the Depression, when they instituted agricultural subsidies that have lasted for 70 years. Now they are shouting “recession!” in a melodramatic fashion to justify intervening in a bevy of other industries. (Remember: A recession entails two consecutive quarters of negative growth. We’ve only had one.)
Don’t get me wrong. Republicans as well as Democrats are complicit in what has gone on in the last month. But whereas the $700 billion bailout that the Democrats, Bush and some reluctant Republicans supported was designed to relieve the financial sector (the lifeblood of the economy), the Democrats are seeking bailouts of a very different stripe.
It’s perfectly logical to be on edge at this point. Congress has already usurped many billions of dollars of taxpayer money. If the economy worsens, it’s anyone’s guess what it will do to “protect” other companies. If the Big Three must be saved, it makes much more sense to try to stimulate consumers to buy cars, instead of cutting a check in the bad tradition of the early 1930s. There’s no reason why this industry should not be governed by the free-market laws that govern all other industries, if not the banking industry. But of course, the Democrats have disparate feelings. A new spirit of socialism ““ never before seen in America ““ is already being felt, and sadly, it is here to stay.
Follow the Daily Bruin on twitter for breaking news alerts.
E-mail Pherson at apherson@media.ucla.edu. Send general comments to viewpoint@media.ucla.edu.