Tuesday, September 23, 2008

Is Paulson's bailout plan socialist?

I'm not an economist, so I don't pretend to understand the details or implications of the $700 billion bailout plan. But from the little I do understand, it's totally inaccurate to call Paulson's plan "socialist," as so many pundits and politicians have done.

There are different definitions of socialism, but all of them involve government taking a more active role in the economy in order to redistribute resources from the wealthy to the poor. Although defenders of the plan are arguing that the bailout will help the economy as a whole (which seems reasonable enough), they are pointedly not arguing that the bailout will redistribute resources to the poor. If anything, a major criticism of the bailout is that it will do precisely the opposite.

So let's call the bailout plan mercantilist, or nationalist, or even Keynesian, but not socialist. The government is looking to support (or even own) specific industries and stabilize the financial system in order to improve the national (and perhaps global) economy. It has virtually nothing to do with socialism.

5 comments:

Acrobat said...

http://www.merriam-webster.com/dictionary/socialism

As lableing goes, both intent and effect appear irrelevant.

Acrobat said...

Although, I'm less concerned with its labeling. As has been written elsewhere, it's lousy precedent & atrocious assumption of debt. That said, I'm not privy to the predictions resulting from inaction.

Whether on the level of household, municipality, state, or federal government, none of us are mature enough to delay gratification and spend within our means.

Dan Chong said...

Who are these Merriam-Webster people anyway?!? I'm not buying it. Of course I'm concerned about its implications too, but I'm not smart enough to figure out what those will be. So the least I can say is that it's not useful to give the bailout plan the same label as, for example, a universal health care plan. Seems like they are intended to serve very different purposes.

Acrobat said...

Yes, unproductive labeling.

And yes, conventional/popular definitions can differ from technical definitions. "God" is a great example.

andy said...

Yeah, the government assuming the debt of the wealthy in order to prevent the fall of the wealthy doesn't sound especially "socialist" to me, either. However, if the govt acquired stakes in these companies, and a cut of future profits went to "the people" via these stakes, and the wealthy were forced to pay back their debts to the government, that would be a bit different. But god knows thats not what we're gonna get from Bush and Co. LLC.