The largest nationalization of any industry in the history of the U.S. occurred last week without much fanfare. The takeover of the Federal National Mortgage Association (FNMA), aka Fannie Mae, and the Federal Home Loan Mortgage Corporation (FHLMC), aka Freddie Mac, now collectively to be referred to as “Fannie Pac”, put a punctuation point on a trend that defies explanation. How can the party of less government, and the party that vilifies anything that remotely hints of socialism, the Republican Party, continue bailing out its corporate buddies without a corresponding outrage by its “government IS the problem” constituents?
The recent bailout of investment banking giant Bear Stearns was also an indication that this administration can’t say no to its billionaire friends in trouble. If the taxpayers are going to share in the losses of these corporate giants, why can’t we share in their profits? We socialize big corporate losses while allowing partners, shareholders, and CEO’s to keep their big profits from the booms. Why is it a one-way street? Hmmm…..Could it be the system is fixed against the little guy? We all pay mortgage insurance premiums until our loan balance is down to 80% of the value of the home. What happened to all that money? Isn’t that insurance for the mortgage company to protect it against homeowner defaults?
Tax breaks and bailouts for the rich combined with service cuts for the poor have been the theme for this version of the Republican Party. Subsidies for oil companies? No problem. A raise of seventy cents in the minimum wage? Now just you wait a minute, podnah! There won’t be no handouts in this administration. We believe people should pull themselves up by their boot straps! Well, ok, they let that one slip by.
If this all sounds a bit contradictory, you’re absolutely right. This year’s mailout of $600 checks to all taxpayers cost the government, that would be you and me, $100 billion. Yet, where’s the economic stimulus that was supposed to come from that stimulus package? It probably all went into our gas tanks, which, of course, ended up in the coffers of Bush’s big oil buddies. Hey, now wait a minute! How do they get away with this stuff?
If you recall, Bush sent out checks to everyone shortly after he was first coronated, er, I mean, inaugurated in 2001. That has been followed by bigger government and correspondingly bigger spending and bigger deficits ever since. It seems every time this “big government is evil” administration faces a problem it throws money at it. Your money! It seems it always gets thrown at their big corporate buddies as well. Hmmm…..Connect the dots.
A new way the neo-cons are throwing taxpayer dollars at their corporate buddies is by privatizing public services. This doesn’t necessarily make government smaller and it doesn’t reduce our tax burden. Public services should be performed by not-for-profit organizations so that the making of profits doesn’t take precedence over the effective delivery of the service being performed.
What has gone awry? The free wheeling twenties without adequate free market supervision led to the stock market crash of 1929 and the depression of the 30’s. Fast forward fifty years and an America lulled into complacency by decades of economic growth and well being was all to ready to undue the watchdog regulations enacted after the crash and burn of the great depression. Reagan ushered in a deregulatory frenzy to eliminate that evil government regulation that was shackling Wall Street and, therefore, corporate profits. Enron, WorldCom, the mortgage meltdown, Bear Stearns, and now Fannie Pac are what we have to show for that unshackling of the market place from its regulatory chains.
In addition, Bush has filled his administration with anti-government regulatory directors who believe a self-regulated market is best. A self-regulated credit rating industry did not work in the mortgage security business where rating agencies were paid by the very industry they were supposed to be regulating. Investment banks could just shop agencies until they got the rating they liked on their ever more exotic, and risky, mortgage backed securities. Lehman Brothers will likely be the next big investment bank to get bailed out.
Capitalism is great, greed is not. After all, there’s a reason greed is one of the seven deadly sins. It’s that, “win at any cost” mentality of the legal entity we call a corporation that needs to be watched. Capitalism and the free markets are definitely part of what has made America great. But when unchained, as we have seen ever since the robber barons of the nineteenth century, there’s the possibility of tremendous abuses which lead to horrible outcomes for workers, taxpayers, and the environment. Smartly crafted regulation only seeks to keep corporations honest and protect the consumer. Combine an inadequate regulatory environment with a U.S. president that is all too willing to bail out the rich stockholders who form his base and we have this corporate welfare state of affairs. Did they learn nothing from the ’29 crash and subsequent depression?
Where are the good ideas to get us out of this mess? What has happened to ingenuity and good old American know-how? Why is bailout always the tool of first choice? Shouldn’t we be focusing on creating new forms of energy instead of perpetuating the one that has gotten us into so much trouble in the Middle East in the last thirty plus years? Stop the “drill here, drill now” political rhetoric. That won’t get us more oil for at least ten years. Why not invest some of those billions that we use to “protect America’s interest” (oil) and create a new energy industry that will create millions of new jobs and make us the world leader in something that the rest of the world actually wants; alternative, sustainable energy? Wouldn’t we all love to be able to thumb our collective noses at OPEC? Wouldn’t it be smart to stop funding the terrorists by buying all that Mid-East oil?
The kind of job creation that would result from the birth of a new industry like that mentioned above along with a stabilized real estate market would not only save this country’s economy but would turn it around to once again be a world leader with a strong dollar to boot.
Unfettered capitalism is only half of the problem. Washington paralysis is the other half. Those guys in D.C. can’t work together to fix health care, immigration, energy or anything else. Although they seem to work together to give themselves regular raises and great health benefits.
We need smart people with innovative solutions in Washington. We don’t need more of the same “don’t worry just go shopping” mentality that free markets are the answer to all of our economic woes. Government isn’t the problem, bad government is. The only fanny pack I want from Washington is the kind you can stuff money into.