Not a Socialist

so⋅cial⋅ism

–noun

I cringe every time I hear the Right Wing Media machine continue to label Obama a socialist, a liberal, or even progressive. He’s undoubtedly maintained more status quo from the previous administration than not. There have been a few marginal changes in laws impacting GLBT civil rights, women’s reproductive health, and a return to civil rights in general, but creeping back towards the middle after a big lurch right does not earn him an leftish label in my book.

I’ve used the phrase crony capitalism before to describe Obama’s approach to the economy and the power structure within the beltway. Michael Barone, Senior Political Analyst for The Washington Examiner goes into the numbers vs. the rhetoric on lobbyists and lobbying in the New World Order of Obamanomics. The bottom line is that Obama likes his friends rich and works to ensure they get richer. That is not capitalism.  That is not socialism. That is actively creating the formation of monopolies and writing laws to protect monopoly interests. This is the antithesis to both capitalism and socialism

Fast-forward to the present day. Lobbyists, reports the Center for Responsive Politics, had a record 2009 in Barack Obama’s Washington. Despite candidate Obama’s promises to shun them, they raked in $3,470,000,000. Somewhere up there, Tommy Corcoran is chuckling.

Last week, amid Washington’s blizzards, Obama was asked about the $17 million bonus awarded to JPMorgan Chase Chief Executive Officer Jamie Dimon and the $9 million bonus for Goldman Sachs CEO Lloyd Blankfein.

“I know both these guys; they are very savvy businessmen,” he said. “I, like most of the American people, don’t begrudge people success or wealth.” So much for campaign-trail denunciations of “fat cat” bankers and bloated bonuses.

It does not take any savvy to take advantage of government bailouts, near zero loans of capital from the FED, and announcements by the FED of planned buying of you and your buddies toxic assets. It also does not take savvy to be on Timothy Geithner’s best buddy list when things are coming apart at the seams when he can move the market in your direction. Consider this from Baseline Scenario today.

At 9:30pm on Sunday, September 21, 2008, Goldman Sachs was saved from imminent collapse by the announcement that the Federal Reserve would allow it to become a bank holding company – implying unfettered access to borrowing from the Fed and other forms of implicit government support, all of which subsequently proved most beneficial. Officials allowed Goldman to make such an unprecedented conversion in the name of global financial stability. (The blow-by-blow account is in Andrew Ross Sorkin’s Too Big To Fail; this is confirmed in all substantial detail by Hank Paulson’s memoir.)

We now learn – from Der Spiegel last week and today’s NYT – that Goldman Sachs has not only helped or encouraged some European governments to hide a large part of their debts, but it also endeavored to do so for Greece as recently as last November. These actions are fundamentally destabilizing to the global financial system, as they undermine: the eurozone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets. When the data are all lies, the outcomes are all bad – see the subprime mortgage crisis for further detail.

A single rogue trader can bring down a bank – remember the case of Barings. But a single rogue bank can bring down the world’s financial system.

Goldman will dismiss this as “business as usual” and, to be sure, a few phone calls around Washington will help ensure that Goldman’s primary supervisor – now the Fed – looks the other way.

This is not socialism. This is not the way either perfectly competitive markets nor centrally planned economies work. In both situations, the result should be widespread distribution of goods, services and income. This is simply re-writing the rules of the game to benefit the already rich and powerful. Even rightwing blogs get the picture, but many right wingers find the wrong bottom line. Here’s an example from SayAnythingBlog.com. This part is the correct part. The conclusion is a bit of the mark. Some of the commenters are way off the mark. Screaming Marxism with no real knowledge of what it is does not help a conversation, yet alone lead to a solution of the basic problem.

This is what happens when the government has too much power. Rather than the economy being about who can offer the best goods and services at the most reasonable prices, who can outperform everyone else to provide citizens with what they want at prices they can afford, the economy becomes about who can lobby, bribe and coerce the best deal out of the government.

Grease the right palm and you get government contracts, bailouts and favorable taxation and regulation. Grease the wrong palm and you get demonized by grandstanding politicians and summoned to explain yourself in front of Congress.

Businesses under the vision of a perfectly competitive market–essentially the Invisible Hand concept set up by Adam Smith–are not supposed to be BIG. In the 18th century world of little trade guilds, thousands of small farmers and merchants, and a few monopolies (like the India Tea Company), the original concept of the market did not include megacorporations, huge trade unions, and a democratically elected government that does anything to enable its benefactors. The crony capitalism we see now had its roots in the Civil War, and as Barone points out, most recently the World War 2 period. Remember, Dwight David Eisenhower was the president who termed military industrial complex. A lot of the first lobbyists came from the War Lobby. Lincoln saw the dangers of huge businesses, making money off wars, lobbying congress for the creation of further laws in 1863. Again, all of our monopoly laws are rooted in the Sherman Antitrust Law of 1890. Lenin’s big academic analysis was about J.P. Morgan, interlocking directorates, and huge corporations. The father of modern day socialism/Marxism would have been just updating his old arguments which are pretty much the same thing you see quoted above from the right wing blog. Barone argues that FDR used cronies to win a war, but that Obama is using it for something completely different.

Crony capitalism is now the order of the day in the United States. The government and the United Auto Workers own General Motors and Chrysler, which aren’t likely to pay back their billions in TARP money any time soon, if ever. Meanwhile the government tells Americans to stop driving Toyotas.

The government was going to remake the health care sector, and so Billy Tauzin and other health care industry lobbyists were busy in the White House cutting deals to keep their clients above water. The government was going to remake the energy sector, and utility CEOs and lobbyists have been busy flaunting their green credentials.

As my Washington Examiner colleague Timothy Carney has been documenting, Big Business has been busy lobbying Big Government for “reforms” that serve big companies’ interests. Wal-Mart backs a health care mandate, Philip Morris shapes tobacco regulation, General Electric is setting up a joint venture to trade carbon offsets (wasn’t that Enron’s line of work back in the day?).

The picture is not pretty. Government’s pets or, in the president’s words, “savvy businessmen,” use government to get policies that will give them competitive advantages and stifle smaller competitors. Pleasing their masters in government is now absorbing the psychic energy of CEOs who used to concentrate on meeting consumers’ needs in order to make profits.

This is not capitalism. This is not socialism. This is not Marxism. This is not progressive politics. This is not the policy of some one who is too liberal. This is the policy of a beltway that seeks to stay in power and privilege by enacting laws that provide unfair advantage to their cronies. This is not what many democrats or republicans of past would have found tenable. It’s an unholy alliance between huge business interests and the government of the ‘people’. It can be measured in terms of lobbying dollars and the numbers of Tom Daschles and Billy Tauzins; former elected officials who have joined the ranks of lobbyists.

I’ll give the Financial Times, the bottom line in an article called “Obama fails to turn back lobbying cash tide.”

The lobbying frenzy peaked in the fourth quarter of 2009, which hit a record of $955m spent, just as negotiations over the now stalled healthcare reform supported by the Obama administration were ramped up on Capitol Hill.

“Lobbying appears recession-proof,” said Sheila Krumholz, executive director of the Center. “Even when companies are scaling back other operations, many view lobbying as a critical tool in protecting their future interests.”

The pharmaceutical and health products industry broke all records by spending $267m last year, in what the Center’s analysts said was the “greatest amount ever spent on lobbying efforts by a single industry for one year”.

Not all of those funds were spent rallying against healthcare, however. The pharmaceutical industry’s main lobby group, the Pharmaceutical Research and Manufacturers of America (PhRMA) spent $26m lobbying in favour of healthcare reform after it negotiated an $80bn deal with the Senate and White House last summer that critics said was a gift to the industry.

The chief negotiator of that deal, former congressman Billy Tauzin, yesterday announced his resignation as president of the trade group. Mr Tauzin, who has run the association since 2005, said he would formally step down in June.

This is wrong, wrong, wrong. It doesn’t help to correct the problem by mislabeling it. The right and the left both see problems with this. The name calling has to stop in order for us all to work for the better interests of our country.

mo·nop·o·ly mo·nop·o·lies

-noun
1. Exclusive control by one group of the means of producing or selling a commodity or service: “Monopoly frequently … arises from government support or from collusive agreements among individuals” (Milton Friedman).
2. Law A right granted by a government giving exclusive control over a specified commercial activity to a single party.
3. a. A company or group having exclusive control over a commercial activity.
b. A commodity or service so controlled.
4. a. Exclusive possession or control: arrogantly claims to have a monopoly on the truth.
b. Something that is exclusively possessed or controlled: showed that scientific achievement is not a male monopoly.