- Post 04 November 2008
- Last Updated on 04 November 2008
- By Fred Igbeare
Socialism for the Rich, Capitalism for the Poor?
By Fred Igbeare
Sometime in the early 1990s, I sat in a finance class at Columbia University, trying to decide whether to take the course. The professor made my decision very easy one day. High finance, he explained, was “like gambling”. That was it for me: I left the class and never returned! I wasn’t about to start a career in gambling! It is my fortune today that I will not be counted among the brilliant gamblers on Wall Street who are responsible for the ‘08 global financial crisis. The plan to clean up their mess raises serious questions as to what ideology is truly driving the government initiative. Is it socialism for the rich, and capitalism for the poor?
The concept of a ‘free market’ is now officially dead! It was buried finally with the $700 billion American rescue plan. Even Alan Greenspan, a noted free market prophet, has disavowed the religion! As reported in the New York Time (Oct. 23, 2009), the former Federal Reserve chairman “admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending”.
Greenspan’s sincerity is refreshing. That candor should affect how the financial crisis is solved on Wall Street (for the rich) and on Main Street (for the poor/middle class). In spite of attempts by well-meaning people to ensure that the rescue plan doesn’t ignore the needs of Main Street America, its implementation may end up primarily benefitting Wall Street. The less fortunate are expected to depend on ‘market forces’ to fix their problems of unemployment, foreclosures, rising gas prices and overall diminishing standards of living. That’s duplicity!
The government must intervene to promote solutions that specifically target people on Main Street. The idea of leaving their fate to a ‘free market’ (an imaginary place without restraints) is odd, even malicious, especially in a society governed by laws. It is like promoting anarchy! And forget about the ‘Invisible Hand’ to regulate market forces—it is more an argument for the ‘Hand of Satan’ than for anything else!
My point will become clearer if we compare the free market to free speech. We can all agree that free speech is limited by the laws of libel, right? Why can’t the same principle apply in the marketplace? Why should a few well-trained gamblers be permitted to manipulate the financial system unrestricted to the point where they can hurt everyone? In the classic scenario, your right to swing your arm ends where my nose begins! Swing too far, and I could end up with a bloody financial nose: jobless, penniless and homeless!
I am not arguing for the government to take over the economy which would be a recipe for mass economic suicide! I am making a case for balance. We have indeed seen the dangerous results of total government control of the economy. A great example: the collapse of the Soviet economy/communist system from bureaucratic overload! One extremity, however, should not be an excuse for another extremity. Why replace economic dictatorship with economic anarchy? A middle ground is unavoidable.
The big question now is not whether governments should be involved in the economy. It is by how much? And more importantly, who should benefit from such interventions? Everyone should: those on Wall Street andMain Street! What is not tenable is a mindset that argues for ‘free enterprise’ mainly when it comes to helping the poor. And when it comes to protecting the rich, socialist-styled bailouts abound! That cannot be fair!
Fairness calls for a delicate balancing act to ensure that we are not ignoring the poor while we are shoring up the rich. In China, it would appear the rulers have missed this goal. The Chinese example illustrates how truly similar all human power structures are. Political power translates into cushy privileges whether the system pretends to be capitalist or socialist! China’s ruling class is said to have been shielded from the recent poisoned milk scandal plaguing the country. Guess why? The big bosses have their own exclusive food supply chain! Sounds familiar? Remember the big bosses on Wall Street and their privileged rescue package(s)?
Hopefully those on Main Street America are not doomed to a poisoned financial fate! The American advantage is the democratic process. Whereas removing corrupt Chinese officials may very well require a revolution, American voters have the means to sweep away bad leaders! And that is such a great relief!