Wednesday, October 22, 2008

Socialism and Capitalism Comments: Robert Reich and Bernard Avishai

I don't have time to write but I do have time to read.
Two quickies. Here are my picks for this morning's best reading.

Go ahead and complain about socialism. Tell me about how great the capitalist system is.

Bernard Avishai:

Spreading The Wealth

In the early 1970s, when I was a young immigrant in Jerusalem, I found myself the head of my building's co-op committee. The job's main responsibility was collecting co-op fees (for heating oil, stair and entrance cleaning, etc.) from twenty-four immigrant families. Our mortgages had been heavily subsidized by the government; we came from all over the world. (One Iraqi family actually brought a lamb into the elevator at Passover, which never came down.)

On the whole, it was a pleasant job. The problems started with my "Russian" neighbors, from the not-yet-former Soviet Union. I would knock on their door and invariably get a hug and a sweet and a coffee. What I wouldn't get was the 50 pounds they owed to the building. "We refuse," they would tell me, "we hate socialism."

Eventually, only one tenant from Kiev held out, and we all decided to let it go. He had lost his job; back "home," he had been imprisoned by the KGB. When you are young, and up against world-historical injury, you accommodate the odd obsession. Besides, the stupidity of his reason for refusal made a great story. It was also world-historical, in a way. What better way to show the perverted political culture you had in the Soviet Union? Show what happens, as it were, naturally, when the basic principles of democracy (social contract, commonwealth, etc.) are not taught and aggressively defended?

I AM TELLING the story because I heard a debate Sunday on New Hampshire Public Radio between congressional candidates; and the Republican, Jeb Bradley said, among other things, that he was against new taxes of any kind because he was against "tax-payers bailing-out the government." The moderator did not contradict him, nor did his opponent. Nobody seemed to think this remark was just stupid.

The problem, you see, is not simply that Joe the Plumber does not want to pay more taxes, and McCain says he's right. The problem is that Joe the Plumber doesn't want to reconcile two contradictory goods in his mind at the same time (the good of having a few hundred more dollars, the good of having roads, more paying customers, etc.) and the media on his lawn says he's a "demographic." Jeb Bradley and his party take for granted that government, "Washington," is something other than the things we do together. This has been a kind of infection on our democracy since Ronald Reagan started playing George Babbitt. The question is, what has become of our immune system?

Robert Reich:

If They're Too Big To Fail, They're Too Big Period

According to Treasury Secretary Hank Paulson, the biggest Wall Street banks now getting money from the government are just "too big to fail.” Fed Chairman Ben Bernanke uses a different euphemism – he calls them “systemically critical.” The point is that if any of them goes down, it could take the whole financial system with it. So we taxpayers have to keep them up.

We’re hearing the same argument elsewhere in Washington for saving General Motors. It’s just “too big to fail.” So Congress is considering a bailout that would keep GM afloat and sweeten a merger between GM and Chrysler.

Pardon me for asking, but if a company is too big to fail, maybe – just maybe – it’s too big, period.

We used to have public policies to prevent companies from getting too big. Does anyone remember antitrust laws? Somewhere along the line policymakers decided that antitrust would only be used where there was evidence a company had so much market power it could keep prices higher than otherwise.

We seem to have forgotten that the original purpose of antitrust law was also to prevent companies from becoming too powerful. Too powerful in that so many other companies depended on them, so many jobs turned on them, and so many consumers or investors or depositors needed them – that the economy as a whole would be endangered if they failed. Too powerful in that they could wield inordinate political influence – of a sort that might gain them extra favors from Washington.

Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies. They’ve prodded Bank of America to take over Merrill-Lynch and Countrywide. JP Morgan to acquire Washington Mutual and Bear Stearns. And now they’re urging General Motors to absorb Chrysler.

So we’re ending up with even bigger giants, with even more power over the economy and politics, subsidized by taxpayers, and guaranteed never to fail because they’re just ... too big.

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