Can any conservative differentiate for me "Privatization of gain" vs. "Socialization of loss?"

Question

It seems to me that Capitalism only applies to situations where companies are prospering, and that Socialism is applied when American government gives tax dollars to Big Corporations when they fail.

Recently Americans have witnessed bush bailing out the predatory mortgage industry, and yesterday we witnessed bush bailing out Fannie Mae and Freddie Mac.

WHY do conservatives say CAPITALISM is "the American Way" as an excuse to s***w the worker -- yet use SOCIALISM to bail out those same companies when they fail?

>>>>Privatization of gain, but socialization of loss.<<<<

Which will always squeeze out the average taxpayer, and substantially increase the wealth gap.

Think about it.

Answer 1

What we are seeing is a manifestation of state capitalism. The United States is currently controlled by the rich and powerful and their lobbyists.  Congress, and especially the current Executive branch, doesn&#039;t serve the People. That&#039;s why we are witnessing socialized losses long after the privatized gains have been paid to the plutocracy. In a true capitalist economy, those firms which bankrupted themselves from their reckless financial and business practices would be allowed to fail. But the Federal Reserve tells us these firms are &quot;too big to fail&quot;, fearing their failure is systemically risky. That can only mean the &quot;system&quot; is now designed around dangerously intertwined private interests, whereby the state becomes beholden to their racketeering and moral hazard. Rather than fixing the system to serve the people, they are &quot;fixing&quot; the system to serve the existing financial interests in the name of protecting the People from the adverse consequences of the same failed system.

In a true socialist system, the profits and losses would be socialized. In this form of state capitalism, profits are privatized and losses are socialized.

In my view, something as systemically important as Fannie and Freddie (which prop up the housing market and the value of Americans&#039; largest asset) should never have been privatized. If they had kept Fannie and Freddie socialized not only would oversight have been more responsible, but any profits could have been reinvested in the U.S. housing stock or other necessary residential infrastructure. Ideally, they could be non-profits but the other mortgage aggregators (who also create mortgage backed securities) would cry foul.

Answer 2

Interesting point.  I&#039;d never thought of it that way!

It all boils down to Fascism.  Nothing more Nothing less.

I&#039;m no economics expert but I have certainly noticed the trend of average hard-working Americans that keep getting Screwed and the Rich who keep getting Richer.  

Our Government doesn&#039;t represent us the People anymore.  They do work hard for Big Businesses and their interests.  

You&#039;re right about the Socialism part!  America does embrace socialism in a lot of ways.  And Capitalism would not be a problem if it wasn&#039;t for the criminals high up in our government who tilt the scales to favor the Big Businesses.  

But without a strong thriving middle class our economy will fail miserably.

Interesting article on how America is Fascist:

http://www.couplescompany.com/Features/P...

Answer 3

Well obviously you are not paying attention. Conservatives don&#039;t want these companies bailed out. Maybe some republicans do , which would include bush but not many Conservatives.

And to my knowledge it has been the Democratic controled congress that has advanced the bail outs you mentioned

Answer 4

Yes you&#039;re right, of course.  

There is a great depth of fear of socialism when we talk about health care and social welfare.  The rats come running from beneath the walls in abject protest spewing fear all about.

However, when we use corporate welfare to help corporations get even more wealthy, to support rich farmers making up to 2.5 million a year, to subsidize Haliburton through uncontested contracts in Iraq and just so much more the socialist nay sayers don&#039;t blink.

It&#039;s a very sad state of affairs as we all applaud the killing of innocents in Iraq and Afghanistan.

Answer 5

hey momma, you have ben doin your homework~!!!

thank you~!!!

Answer 6

Whoa girl... great question! Tough one though!

Basically, if I am getting this right, you&#039;re questioning the hypocrisy of corporate welfare?

There is a lot of b:tching and moaning when it comes to &quot;bailing out&quot; for example, someone who has had their house foreclosed on or Universal health care. Those against spending tax dollars on helping out the average American are outraged by these ideas.

BUT, those same people rationalize bailing out major companies.

Personally, I think those people are living in the past. Capitalism -the way they define it- no longer works. Yes, everyone should be able to make gobs of cash, and start businesses... yadda, yadda. But, the culture of greed has forced them into a cycle of laying off workers and losing their businesses.

I agree with you, it is a load of c**p. I have a small business. If I went under and could no longer pull a paycheck, nobody would bail me out. But when it comes to the huge corporations... they are personally bailed out by the president.

Its total hypocrisy. Another example of how greed and lack of integrity is dissolving the core of this country.

Answer 7

Well Im not a conservative, Im a libertarian, but I understand the confusion. I agree with you to a degree in your basic premise. But don’t confuse “capitalism” with being a conservative. Even a socialist can be a capitalist and in fact, the only form of socialism that abhors capitalism is “communism.” All nearly all socialists have come to accept that an economy cannot sustain itself if there is no individual incentive for prosperity. So what socialists disapprove of is not capitalism, rather it is the free enterprise system, free market or liberal market order, whichever moniker you prefer.

But you are correct in that businesses tend to favour private benefit in addition to public loss. I personally believe that corporations/tradesmen have done more to push the US in the direction of socialism than any politician ever could. But you have to understand also that the idea of protecting companies from loss is also demanded by the people themselves, particularly the unions who fear the loss of financial security. Additionally many (though certainly not all) of the factors which cause businesses to fail are specifically related to bad government policy: tax policy, regulation, labour policy, environmental protection, trade policy, etc. Interferrence with the free enterprise system for the expressed purpose of fixing it, always and predictably leads to its destruction. In many cases this is the purpose of such interference and in other it is merely the result of the Law of Unintended Consequences. So naturally politicians are apt to assuage the negative effects of those policies as the act of rushing in as savior both gets good press and increases government control over what is deemed the “private sector” of the economy. For government this is you classic Win-Win situation.

Nevertheless, I maintain that businesses should rise and fall on their own. The US no longer has a free enterprise system. It now has a mercantilist system. And the free market was supposed to destroy mercantilism forever.

Thanks for a great question.

Answer 8

No, they can&#039;t. Conservatives value corporations over ordinary people. They&#039;re corperatists and social Darwinists. They believe corporations are important so they should be bailed out whenever their existence is threatened where as ordinary and poor Americans are replaceable and not of vital importance to the economy so if they have bad luck they should clean up the mess themselves or simply suffer. To the &quot;free&quot; market fundamentalists either one is fine as long as they are not required to show any form of solidarity.

&quot;Fannie Mae and Freddie Mac have been at the center of the housing market speculation that generated billions for Wall Street investors and CEOs and has now come crashing down, precipitating the greatest financial crisis since the 1930s. The two companies are massively leveraged, holding a combined $81 billion in capital to back the mortgages they own or guarantee—a ratio of capital to debt of 1.6 percent.

Their Ponzi scheme structures have been undermined by the collapse in home prices and the virulent spread of foreclosures. Over the past nine months they have lost a combined $11 billion and their stock has fallen by as much as 80 percent—a decline that turned into a rout last week as their stock values were cut nearly in half.

Their debacle is the latest and to date most spectacular expression of the decay of American capitalism. It is another refutation of the myths promoted by the US ruling elite about the miraculous workings of the capitalist market—supposedly the pinnacle of human achievement.

At the same time, it exposes the cynicism behind the official mantra of “free enterprise.” When it comes to big capital, losses are socialized. Only profits remain private.

Paulson’s plan to use taxpayer funds to rescue Wall Street were worked out over the weekend in feverish closed door consultations between the Bush administration, the Fed, the big banks and investment houses and congressional leaders. They were under enormous pressure to come up with a plan before the Asian markets opened Monday, and the crisis atmosphere was compounded by the fact that Freddie Mac was scheduled to market $3 billion in short-term debt. A catastrophe was looming if the banks and investment houses refused to buy the company’s bonds.

There can be no doubt that Wall Street exploited the situation to extract from the government the broadest possible guarantees and assurances for its interests. But the entire scheme had to be sanctioned by the Democratic Congress, since it required changes in the charters and legal regulations governing the two companies.

The immediate and vocal support announced by key Democratic legislators for this massive taxpayer-funded bailout demonstrates the most important fact of American political life: the utter subservience of both parties and all of the official institutions to the financial aristocracy.

Rep. Barney Frank, the chairman of the House Financial Services Committee, proclaimed his agreement and pledged to have emergency legislation ready for Bush’s signature by the beginning of next week at the latest.

Senator Christopher Dodd, the chairman of the Senate Banking Committee, similarly signed off on the blank check for the mortgage giants. Senator Charles Schumer, a senior member of the Banking Committee, said, “The Treasury’s plan is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to US taxpayers.” He added that the plan would “be reassuring to investors, bondholders and mortgage-holders that the federal government will be behind these agencies should it be needed.”

The corporate-controlled media did its part to boost the scheme by portraying it for the most part as a boon to homeowners.

Suddenly, the much bemoaned “gridlock” in Congress vanishes. The Democrats, who have sought to explain away their repeated votes to fund the Iraq war by pointing to the supposedly insurmountable opposition of the Republicans to their “redeployment” plans, claiming “the votes aren’t there” for their partial withdrawal schemes, now march in lockstep with the minority party to rush through laws demanded by Wall Street. Other initiatives, such as those on immigration, have died as a result of unbridgeable differences between punitive and even more punitive bills. But on this issue, Congress moves with military dispatch.

There is nothing mysterious about the abject subordination of both Congress and the executive branch to Wall Street. Paulson, whose worth is estimated in the hundreds of millions, was chairman and CEO of Goldman Sachs before taking over the post of treasury secretary.

The Center for Responsive Politics reported in 2006 that about half of the Senate’s 100 members were millionaires, with an average net worth of $8.9 million. In 2004, 123 members of the 435-member House of Representatives earned at least $1 million.

The buying of legislators and their votes by corporate interests is carried out openly and shamelessly. Members of Frank’s House Financial Services Committee received over $18 million from financial services, insurance and real estate firms this year. Frank himself raised over $1.2 million, almost half of which came from finance and related industries.

Senator Dodd’s top contributor in the 2003-2008 election cycle was Citigroup, followed by SAC Capital Partners. He raised $4.25 million from securities and investment firms.

Senator Schumer’s top contributor was likewise Citigroup. He raised $1.4 million from securities and investment firms, his most lucrative corporate sector.

The government-corporate nexus is awash in corruption and bribery. This has grown apace with the so-called “financialization” of the US economy over the past three decades. The ruling elite has systematically scrapped large sections of industry and increasingly amassed its wealth through forms of financial speculation divorced from and destructive of the productive forces. The result has been an immense growth of financial parasitism alongside a brutal assault on the social position and living standards of the working class.

Social inequality has grown to unprecedented levels, along with a new financial aristocracy that dominates all aspects of public life.

The counterpart of financialization is the criminalization of the American corporate-financial elite. Fannie Mae and Freddie Mac—which have their roots in social reforms enacted during the New Deal—epitomize these twin processes. Virtually unregulated, they have engaged in massive speculation, bolstered by accounting fraud and bribery, to provide multi-million-dollar salaries for their top executives.

The former CEO of Freddie Mac, Leland C. Brendsel, paid $16.4 million in fines last year to settle charges of mismanagement at the mortgage company. The year before, the company paid a penalty of $3.8 million for illegal payments and perks to members of the House Financial Services Committee.

Fannie Mae, for its part, was fined $400 million for accounting manipulation from 1998 to 2004, during which time top executives reportedly received more than $90 million in bonuses.

Nor will the proposed bailout of these companies halt the deepening crisis of American and world capitalism. It will inevitably further undermine global confidence in the US financial system, intensify the crisis of the US dollar and stoke inflationary pressures. What is emerging is a crisis in which the solvency of the US government itself is called into question. As the Wall Street Journal put it on Monday, “But with financial woes mounting, some investors are betting they may profit from weighing an unthinkable question: Could the US government default?”

The bailout with public funds of Fannie Mae and Freddie Mac will set a precedent for a far broader use of taxpayer money to rescue major financial companies. Last week Paulson and Bernanke went before the House Financial Services Committee to demand legislation institutionalizing federal intervention to bail out failing Wall Street firms. The response of key Democrats such as Frank was to urge the regulators to call for such measures now, rather than after the new Congress takes office next year.

The cost of such bailouts will be borne by the working class, in the form of deeper cuts in social programs, education, housing and basic infrastructure, and new waves of corporate downsizing and wage-cutting.

The working class cannot defend its vital interests through pressure on the Democrats or any other institution of the American plutocracy. In the coming class battles, it must organize itself as an independent political force to fight for t

http://www.wsws.org/articles/2008/jul200...

Answer 9

I&#039;m not really sure what your question is. I believe free market capitalism is the best form of economy we have come up with so far. As a result, I think it is completely wrong for the government to bail out private industry when it fails. Failure is part of being a free market. I don&#039;t really see how people use capitalism as an excuse to &quot;s***w the worker.&quot; If you are unhappy with your wage, you can find another job, or increase your marketable skills in order to achieve a higher salary.

HAHAHAHA - predatory lenders! Give me a break. People lie about their income and take ADJUSTABLE RATE mortgages that they really can&#039;t afford. How is that the lenders&#039; fault? Get real.

Pray tell how am I wasting your time by telling you to find a job that pays more? Is that too difficult of a concept for you? Why don&#039;t you cry more about how unfair the world is and how big mean rich people are holding you back.

Answer 10

You make a great point.  I don&#039;t think TRUE conservatives think like this, though.  Both the Republican AND Democratic parties have been taken over via people with ulterior motives...this is exactly the reason I am no longer a Democrat and owe ZERO loyalty to either of the parties at all.

IMO, a TRUE American Patriot thinks with the Constitution and Bill of Rights, and what is best for America, NOT THE REST OF THE WORLD.  Most Americans no longer think like this and would just rather watch TV and the only news that they get is from the media... How many of them actually have READ the &quot;Patriot&quot; act or any of the recent bills coming out of Congress?  It takes time, but protecting your rights do.

To answer the question which you asked, you are right.  Socialism is exactly that.

The New World Order that Bush Sr. has talked about is in the process of happening and this is the result.  Businesses that they want around will succeed, and ones that the elite don&#039;t care about will not succeed.  

The poor get poorer and the rich get richer...trickle down theory is just BS.

Answer 11

Excellent question.

Answer 12

Well the thing is that even in a capitalist state there are always socialistic programs.  For example, social security where we pay in money to make sure everyone is covered after retirement.  Potentially universal health care is another.

There are also loads of government subsidies, including of the oil and agricultural industries.

So while conservatives tend to argue that the free capitalist market can solve all problems, that&#039;s basically just a theoretical argument and not a practical one.  Sort of like how communism might be a great conceptual idea, but it doesn&#039;t work well in practice.

Even conservatives accept the need for some socialistic programs.  They might not be happy about it or admit they&#039;re socialistic, but that&#039;s the reality of the situation.

Answer 13

superb question that gets the first star i&#039;ve given out in over 6 months.

look forward to conservatives avoiding this sort of question altogether.

but it is amazing that the congress can move so quickly to bail out predatory lenders who preyed on taxpayers with such alacrity, but drag their feet when it comes to issues that impact the quality of the lives of the american taxpayer.

you are right - when i invest and lose, i am lectured about how greedy i am and how i knew the risks of investing before i went the markets.

but when a large, wasteful and immoral company loses billions of dollars there will be no accountability and those same taxpayers who were victimized by those corporations end up paying the multi million dollar salaries of senior executives who administered these colossal failures.

so much for free market economics, free enterprise and the capitalism that conservatives love to lecture us all about.  when one of their campaign contributors is threatened because of horrible decisions that they made, they are quite simply never held to account.

this has happened over and over again and there can be no doubt where the true loyalties of our elected officials truly lies.

our govt and in particular the republicans are nothing more than a watchdog group for large corporations who can no longer actually compete in the free market.

just watch as the republican shills scream that american taxpayers should give away millions and million of acres of more land to highly profitable oil companies for pennies on the dollar so that they can exploit our beautiful nation so that 10 years down the road they can sell oil from OUR land to india, china and japan.

Answer 14

ok, I&#039;ll answer the question, but I&#039;m not sure I buy into your notion that the govt. GIVES money to big corporations when they fail

but the answer is this...the free market is the best way to run our economy, but if a major industry, like the automotive industry or airline industry, is hurting, it&#039;s in the govt&#039;s best interest to keep these companies afloat if possible because it saves jobs...corporate welfare is a great way to think of it, but it&#039;s not socialism