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We Done All Lost Our Minds!

Last night, I mentioned to my wife that I thought nationalizatin of the banking industry, at least in the near term, was "highly unlikely." I was wrong. Very, very wrong.

What most disturbs me about this is that, after the last 8 years of warrantless wiretapping and various other abuses of government power through proxy corporations and private enterprises (Blackwater, anyone?), it is many liberals and progressives most loudly supportive of this move (notably, I do not at this moment believe Obama has expressed support for it, and I have noticed several prominent lefty bloggers who appear openly skeptical of it).

Liberals/Progressives ought to rethink their support of nationalizing the banking industry. If we are talking only short-term nationalization, then so be it, as long as there is a clear date by which government dumps its ownership (not that I support even short-term nationalization; I just don't think it would be completely disastrous). But if we are talking about something more long-term, then this creates a severe potential for true corporatism/fascism.

To demonstrate, I simply point out how the warrantless wiretapping program began - the administration approached the phone companies about instituting the program. Those who agreed to do so were rewarded; those who didn't, not so much. Now imagine the danger created when government decides which businesses do and do not get credit, which is so often a necessary requirement for business growth and survival, both large and small. Isn't it rather easy to imagine large corporations getting loans conditioned on their willingness to go along with the ruling administration's "Policy X"? Nationalization of the banking industry, in this sense, allows the ruling administration to do an end run around the Constitution by getting corporations and business to "voluntarily" do things on behalf of the government that the government would otherwise be prohibited from doing itself.

At a minimum, long term nationalization of the banking industry creates a situation that is rife for corruption. Take a look at some of what occurred in South (yes, South) Korea in the 1980s, where, IIRC, only one of the 30 largest corporations refused to play along with the ruling party's demands (for bribes, kickbacks, and IIRC compliance with party policy preferences). That one corporation suddenly found, amongst other things, that it was no longer able to obtain credit.

Perhaps a President Obama would be rather benevolent in his use of these powers afforded by nationalization, and maybe he would try to ensure that his underlings were in fact fair and neutral in making determinations on the issuance of credit. Problem is that: 1. there is no guarantee he will win, 2. we have no idea who will be in power 4 or 8 years from now, and 3. even the most benevolent of leaders will be tempted to use this tremendous power as a way of serving his concept of the "greater good" under the view that the ends justify the means.

Indeed, point 3 is precisely what has been the problem the last 8 years. While I think the Bushies have dramatically overstated the threats we face to national security, I also don't doubt that they believe those threats are real and severe. And therein lies the rub - because they view the "greater good" of national security as so important, however honestly, almost anything done in service of that "greater good" can be justified.

Admittedly, the details of the takeover plan have not been announced yet, and it does not appear that the government will be taking a controlling interest in the banks (as the Fed did with AIG). If the details contain a plan to divest the government of whatever interest it takes in the banks over a period of time (and that plan is complied with) and it does not exercise control over day-to-day decisions on issuance of credit, then perhaps there is not much to worry about. But if the details are otherwise....well, Switzerland is looking better by the day.

Mark blogs regularly at Publius Endures

What Matters Most

I've long abandoned any pretense of supporting Obama. But that doesn't mean I still don't think he's a less-bad choice than McCain. As much as Obama has increasingly come to parrot the foreign policy establishment consensus that has held sway in Washington for, well, a really long time, Obama's consensus view is far less dangerous than the reflexive aggression characterized by the last eight years and, yes, Senator McCain. It is the rejection of this reflexive aggression, which adds trillions to the national debt, destroys American credibility and moral standing, and directly destroys untold thousands of lives both at home and abroad, that I view as the single most important issue this fall.

The events of the last week or so related to the conflict in Georgia/South Ossetia, and the responses of the candidates do a good job demonstrating this. To be sure, McCain is now receiving plaudits for immediately blaming Russia when hostilities began in earnest last Friday in a way that not even President Bush was willing to do. But Hilzoy points out why, exactly, those plaudits are entirely undeserved - the bottom line is that at the time McCain's statement was issued, the known facts made clear that both Russia and Georgia were at fault in their own way. Although the facts on the ground have changed and Russia is now clearly going far beyond any sense of a proportional response, this does not change the fact that McCain's statement was simply wrong at the time it was made to the extent that it laid all blame for the situation on Russia.

McCain's response reflects a simplistic world view in which those nations deemed inherently enemies of the US are reflexively blamed in toto for any conflicts, wars, or disagreements. Those deemed allies are reflexively held to be innocent - and not only innocent, but also bastions of liberal virtue and democracy.

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Four Legs Good, Two Legs Bad

There is an assumption in both conservative and libertarian circles that anything that the private sector is inherently better at doing things than the government. And on many things, this philosophy is, I think, correct (it is also something that liberals/Progressives agree with more than they get credit).

But where it gets tricky is when you get to the concept of "privatization" of various things. Libertarians and conservatives hear the root word "private" and they reflexively think that it is better than "public." But "privatization" is different from "free market," and in many cases "privatization" can mean the worst of all worlds.

For instance, if by privatization, you mean the contracting out of various government services and needs, you are often just asking for trouble. Why? Because this is a setup for the epitome of "crony capitalism." Sometimes, to be sure, this kind of "privatization" is a necessity in instances where the government is seeking to obtain products or services that it simply has no ability to provide on its own. Frequently, however, where the government is contracting out a product or service it already provides or can easily provide, this kind of "privatization" at best has the effect of doing no more than adding an extra layer of bureaucracy. At worst, though, it is an invitation for corruption and a particularly convenient means of avoiding government accountability. Far from allowing market forces to take over, this kind of privatization creates a market that would not otherwise exist, in which firms seek to please only one customer: the government. And contrary to popular belief, "the government" is not synonymous with "the people," but is rather more frequently synonymous with "elected and/or appointed government officials." What privatization does in this context is to make the purpose of the service provider to please the government official who awarded them the contract - not to offer "the people" with the best possible services at the lowest possible price. Oftimes, pleasing the responsible government official means nothing more than shielding the official from responsibility for the implementation of that official's policy preferences.

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The Myth of the Moderate - Why the "Political Center" is Meaningless

There has been much discussion of late regarding Obama's long-awaited "move to the center," (essentially his break from his party's so-called "base") as well as to a lesser extent McCain's tilt right on various other issues. Most notably of course has been Andrew Sullivan's praise of Obama's position shifts.

The implication is that this is smart politics by Obama because in so doing, he is seeking to increase his appeal amongst so-called "moderate" or "centrist" voters who are allegedly unaffiliated with either party, or are at least more independent-minded than more ideological voters. The problem is that this argument, which is so often taken for granted in the press and by many people who should know better, has very little basis in reality. At its base, this conventional wisdom assumes a one-dimensional politics in which we are all just varying degrees of liberal and conservative and/or Democrat and Republican. Under this view, American politics consists of exactly three factions, with a couple of radical extremists on the fringes: center-left Democrats, center-right Republicans, and moderate independents. By "moving to the center" a politician in theory succeeds in getting more votes by expanding the portion of the spectrum willing to vote for him, or at least unwilling to vote for the other guy.

But this ignores political reality: independents and "moderates" or "centrists" are two very different things. For instance, libertarians and populist Lou Dobbs supporters would both be smack dab in the middle of any linear conception of politics - these days, both are about equally likely to support the Dems as they are the Republicans on any given issue, and neither could be remotely consider "moderate." But the views of libertarians and populists are almost completely opposite to each other. This is equally true of many - probably even most - of the other groups in the so-called "center." By "moving to the center," a politician isn't necessarily winning over the support of many of those groups, and may even wind up hurting his standing with a majority of those groups.

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