Socialism and Capitalism: A Wonderful Relationship
Novoselic in NYC
As I write this from downtown Manhattan, Wall Street’s going through one of its most hellish periods in recent history. As the housing crisis takes lenders down, and the quasi-governmental Fannie Mae and Freddie Mac are thrown a lifeline, the pro-capitalist chants of not so long ago are still fresh in my memory.
What happened to that “government regulations are hindering trade” talk? Before this crisis, when oil was relatively cheap and housing prices were never gonna come back to earth, people argued for the natural law of economics—the incentive of potential profit and the dissuasion of potential loss. In other words, people tend to put their money where they think it’s treated best.
Nobody likes government until they need it, as illustrated by the recent turmoil in the financial world. But when markets fail, the first place people run to is the state’s safety net. In the United States, the marriage of socialism and capitalism is usually a successful, happy relationship. We enjoy public roads, schools, and law enforcement, among other services.
Regardless of this arrangement, conservatives still disparage socialism. It’s like some kind of dogma left over from the Cold War. Even the slightest utterance about some kind of public-health system will elicit the derogatory term “socialized medicine.” But public systems already steward health issues.
I’ve put together a short narrative to make my point: Let’s say there’s a community living on a river. One day, people downriver start to notice sewage floating on the water. Someone upriver is obviously dumping shit in the water! And they’re doing so because it’s easy—the river is transporting the waste away from their property.
Instead of installing a septic system, the dumper is passing the expense of that onto the people downriver. And it’s a tangible cost. Downriver dwellers are getting sick because of the polluted water, so they now need to pay medical bills. The fish are dying off, and the smaller catch means higher prices for food. Property values are declining as buyers are not interested in living next to pollution.
Eventually, the folks downriver have had it! Enough of them get together and, through our democratic process, government regulations are created that make the dumper stop passing the cost of their waste disposal onto everybody else. To enforce the regulations, fines are imposed on violators. On top of that, the community realizes that a public sewer system would benefit a clean river better than individual septic systems.
There’s not enough money in the community to pay up-front for a proper sewer system. Voters then approve the issuance of a municipal bond. The bond will raise the capital for the project based on a share of future revenues generated from utility user bills. Private investors assess the probability of repayment and choose to buy into the public project so they can receive interest on the money invested. Municipal bonds are a very safe investment and yield a modest interest rate. To encourage the private capital flow into public infrastructure, municipal bond investors pay no federal income tax on interest generated.
It took initiative and coordination to clean up the river. Out of a problem, the community actually created wealth, and the public system is a shared asset. Also, individual health issues were addressed through a public process. But instead of the people paying directly for medicine and treatment, there was a comprehensive solution: The river was healed.
There will always be a tension between socialism and private initiative. That’s a good thing. As we’ve seen with the current financial crisis, deregulation can cause big problems. At the same time, government can be overbearing. Let’s not tilt the balance with rigid ideology one way or another. There’s no need to flush either socialism or capitalism down the drain.
13 comment(s)
Jim says:
I don't really know if this works in the USA, but private investment in government-related projects has proved to be a rather risky activity in other places. I'm not talking about some small developing country, I will draw your attention to the Channel Tunnel (Tunnel Sus La Manche) that connects Great Britain to France, and certain airports in England, prominently in the Midlands. Private investors have lost a lot of money under dark circumstances, while the governments (on local and national levels) seem like they are doing their best to keep it in the dark. So I wouldn't be too sure that this is the ideal solution unless things in the USA tend to happen in a "full public awareness" kind of manner! The narrative was indeed a nice theoretical example, but care needs to be taken when it is going to be turned to practice!
Posted On: Wednesday, Sep. 17 2008 @ 1:22PM
philliesphan says:
The Government should have never bailed out Freedie Mack and Fannie Mae. This is the fault of the stupid people who buy really nice homes and then realize, "Ops! I guess I shouldnt have bought that home because I work at McDonalds." Lets punish those moronic home buyers!!
Posted On: Wednesday, Sep. 17 2008 @ 2:56PM
Steve says:
Yes it's ironic that this should all be happening under the watch of a GOP administration.
Posted On: Wednesday, Sep. 17 2008 @ 5:13PM
Elliott says:
It's mental whats happening, hopefully it shall pass though.
Posted On: Thursday, Sep. 18 2008 @ 3:50PM
Grant Stuart Frazer says:
Krist, I am writing a story about the life of Kurt, I have know him fror his whole life & know the trouth of his lifes story. I is sickening & dis-heartening too see him remembered by wrong viewing + it will be the copy of his incredible great life. Dave Grohl & Courtney know me & my place in his life. Can you make an initial sign of contact then i'll ask you how you can support this.You know Kurt is the best there is in life. Please contact me, Krist.
Posted On: Friday, Sep. 19 2008 @ 10:31PM
Jared says:
Krist Kristofferson...first of all this
public roads, schools, and law enforcement, among other services.
Not a service. Taxpayers pay for that. Therefore it is yours. You own a share of something youll never get back {taxPAYERS]
So throw on some mad max, some society gone madd and tear up the fucking streets because YOU aS A LAW ABIDING, TAX PAYING, NON BREEDING CITIZIN DONT GET JACK. better get married.
AA
Posted On: Saturday, Sep. 20 2008 @ 2:50AM
Anonymous says:
Your pissed that kurt didnt see 9/11. So am I. I miss that bastard. He deserves this pain too.
AA
Posted On: Saturday, Sep. 20 2008 @ 2:53AM
MC says:
If the GOP isn't ready admit to the socialistic aspects of capitalism, would it prefer the label "corporate welfare?"
Posted On: Sunday, Sep. 21 2008 @ 9:39AM
Anonymous says:
I say "NO" to the "bailout" legislation if it doesn't ensure that there will be new rules, accountability, oversight, and transparency directed to this part of the banking system. They should not get a free ride on the backs of taxpayers! It's starting to smell like FASCISM in our country to the last detail.
Providing they do include those measures I also say that the taxpayers who are struggling with predatory junk mortgages should be given some relief with part of the legislation stipulating the terms for their relief....terms that they can step up to and be able to pay their mortgages off eventually without worry of foreclosure until they get the system up and running.
I say yes to Socialism/capitalism Hybrid...as long as it favors "the people" after all this is "our" republic not the corporate undying golems.
To voice a no vote easy and simple to your congress people and or to add your stipulations to them please check out this petition that is being WIDELY circulated at the moment at this site:
Petition to challenge legislation currently under consideration
Respectfully,
Taryn G.
Posted On: Tuesday, Sep. 23 2008 @ 12:02AM
Taryn G. says:
Say "NO" to FASCISM! Government and corporations in kahootz and serious denial rights of citizens.
Say "YES" to SOCIALISTIC CAPITALISM which I term to mean here and now the best balance of government and capital assests that keep our "people" healthy and thriving in our nation and indeed on the rest of the "blue planet"...what is the best balance...that is still in need of discovery...I have my own theories but I would like to hear from you all on yours.
Respectfully,
Taryn G.
Posted On: Tuesday, Sep. 23 2008 @ 1:10AM
hiram says:
I have heard the U.S. system described as "capitalize the profits and socialize the losses."
Posted On: Wednesday, Sep. 24 2008 @ 7:46AM
Kroms says:
Here's the question though: assuming socialism and capitalism finally reach a compromise, will people actually stick to it?
Posted On: Monday, Sep. 29 2008 @ 12:17PM
lisach says:
Dr. Fengbo Zhang: It is time to cease the argument regarding Socialism versus Capitalism and begin the movement towards Peace and Prosperity at
http://fengbozhang.blogspot.com/
A very interesting article, based on his true China, Japan and USA experience.
Posted On: Saturday, Nov. 1 2008 @ 8:50AM