The United States of socialism

The nationalization of Freddie Mac and Fanny May marks a major shift in the US policy of free-market, deregulated economy (to a more socialist policy), or does it? With my rant against the the bailout out of the way, lets see if this really is something different that the US government has had to do to save its skin.

The answer is actually “No”! The US has a noteworthy history of socialistic policies:

  1. Agricultural subsidy: Since 1933, the US government has been subsidizing its agriculture. Even though it marginalizes small farmers and mostly serves the agri-business gaints [source], has adverse impact on developing nations economy [source], and many economists see it as a waste of resources [source]. The subsidy still remains, and is still antithetical to free-market capitalism.
  2. Social security: Social security was introduced in the US in the 1930s to help recover from the great depression (yet another spectacular collapse of free-market economy). On a side note, it is interesting to see how every time free-market economy falters, the government steps in with a socialist solution and yet feels insulted when called out on it. Its a program that is still in practice, and is arguably one of the largest socialist program in existence in the world. Despite several criticisms of the program, the White House is steadfast in its commitment to this socialistic program, and will not have anyone saying anything otherwise.
  3. S&L Crisis: The Savings and Loans Crisis of the 80s and 90s demonstrated the socialist tendencies of the US yet again. The of the chief causes for this crisis, among others, was the rampant deregulation of the economy (allowing greater influence of free-market forces). When the fit hit the shan, guess what the US government did? Yup, it bailed the parties out, much like Freddie mac and Fanny May. In fact of the total loss of about $160 Billion, the US government, and hence the tax payers, paid for over $124 Billion! They just couldn’t let the market heal itself, a socialist relief simply had to be provided. On a side note, its ironic that the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 which was enacted in response to the S&L crisis put Freddie Mac and Fanny May in charge of supporting mortgages for low- and moderate-income families. Guess who needs saving in the new free-market precipitated crisis now? That’s right! Freddie Mac and Fanny May!
  4. Public Education: Yet another (expensive) example of socialism in the US is that public education system. This includes federal (soft) loans, education grants, the public school system, etc. With the US spending over $11,000 per student per year, the public school system in the US is one of the most expensive in the world, and with a 100% of it being provided for free to the students out of the tax payers pocket, this is yet another example of America’s socialist policies.
  5. Unemployment benefits: Uncle Sam pays any unemployed citizen a fixed amount as.. well… a hand out, a give-away. Its called unemployment benefit. There are similar welfare programs for other disadvantaged demographic in the society to equalize the opportunities available to them. Now if that isn’t socialist, I don’t know what is.
  6. The Arts: The US government support for the arts through the National Endowment for Arts is yet another use of the tax payers money to fund a ‘greater social good’. And not everyone is happy about it. be anything other than a socialist program. Why? Because if free-market were to drive arts, then you’d have private buyers/parties funding the arts, and not the government, as simple as that.

There probably are many more such examples, but I cant think of any more off the top of my head. But I guess six are sufficient to make my point. Despite all the rhetoric of the glories of capitalism, free-market, and the spiteful opposition to socialism, there are many US policies that are strictly socialist, and yeah, Freddie Mac and Fanny may bailout is not in the least bit unprecedented (remember the S&L crisis bailouts), or a marked jump towards socialism. Its simply business as usual in the US of A. So the next time someone says US was always capitalistic and socialism is an evil that needs to be uprooted, you’ll know better than to waste your time arguing with them.

Image Source: http://www.clas.ufl.edu/users/wbeal/images/socialism.gif

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