Privatize Gains; Socialize Losses
September 20th, 2008 by Sonja

I’m so angry right now I almost can’t sleep at night.  It’s a boiling, gutteral fury.  When I try to speak of it, I begin to sputter and use bad language because I don’t have enough words to express the utter depth of my rage.

My In-lawsMy in-laws turned 70 this year.  My mother will turn 70 early next year and my father is 75.  My parents are extremely fortunate because a relative left them unexpectedly very well off about 14 years ago.  However, my in-laws are not in that place.

My father-in-law worked hard all his life.  He still works hard.  He is 70 years old and with a bachelors degree in economics he works in a hardware store.  This year they will not be taking their annual three month winter trip to Florida as they cannot afford it.  Financially.  Unfortunately, their children and children-in-laws are all holding their breath for the toll this will take on their health.  They are good people who depend on the vagaries of the stock market for their fixed income retirement package.  They are good people who were depending on the stability of real estate to sell their home of 35 years when they needed to to supplement their retirement income.  Now they can do neither.

Remember when I said that the first national election I ever voted in, I voted for John Anderson?  Well … I had turned nineteen that May and Ronald Reagan won that election for those of you who remember which race John Anderson ran in.  So, for the entirety of my adult life, I have heard lessons on the economy from the conservative side of the street.  In a nutshell, those lessons may be summed up by saying, “The market will correct itself, the government does not need to regulate it.”  and “We’re not a socialist state, keep the government out of the market.”  Don’t fool yourselves, Bill Clinton was no liberal when it came to economics.  There was a very good reason why he kept Alan Greenspan in charge of the Federal Reserve for almost the entirety of his presidency.  Clinton was a fiscal conservative and only barely a social liberal.

Yet, every time I turn around these same fiscal conservatives … these Republicans who hue and cry about the government staying out of the market … run to the government for a bailout when their greed fails them.  When their pride, hubris, greed and foolishness fail and put all of us in jeopardy … they run to the government teat, just like a welfare mother in the projects.  I am way past disgust.  Just where exactly do they think that government money comes from?  The trees?  No … I have news for these financiers of great and immortal fame … it comes from me and you.  We are now paying for their foolishness.

Those men of millions and billions, who ran their companies into the ground, ran to Uncle Sam for help cleaning up the mess, are now keeping the millions they gained personally and have the unmitigated gall to fight for their 60 and 70 million dollar severance packages.  They are keeping their houses (multiples each), their personal jets, their yachts, their jewelry, their … whatever, whatever, whatever AND all their money AND we get to clean up the mess they made; AND we get to pay the court fees for the battle that they’ll stage to keep their severance packages.

The ugly thing about this is this is privatizing gains and socializing losses. So when things are going well, the managements make out, the shareholders make out, the counterparties are fine. All the private sector people do well. But when something goes wrong, when decisions are made that turn out to be bad decisions, the U.S. taxpayer has to take on the problem.

And there’s something very wrong about that. Because all of those people that made all that money are running off here into the distance with the money, carrying it in their bags. And the United States taxpayer is on the hook. Gretchen Morgenson of the Times on Bill Moyers Journal Sept. 19

So … when does the market correct itself?  I’m just curious.

I think these people need to help pay for the mistakes and help clean up the mess they’ve made … just like I do with my children.  The only thing anyone “needs” is one house and one car.  Strip them of everything else and use that money to begin the bailout … that’s market correction.  Because I want someone, anyone, to help my in-laws out of this mess.  They have lived life well, made responsible, wise, and even generous decisions … so why on earth should they and everyone else who have done likewise be made to clean up this mess?

After all, the only people who didn’t see this coming were those who don’t know their history.  That would be … almost everyone.

13 Responses  
  • Sonja writes:
    September 20th, 20088:34 amat

    I’m going to make the first comment here too …

    There will be no name-calling. No demeaning or humiliating comments. If you cannot keep what you want to say dignified and honorable, then I will delete your comment. No snark allowed. This is a place for conversation. If you want to disagree, that’s fine, but figure out a way to do that without being mean, bullying, ugly or violent about it. And, yes, I do get to decide who is doing that. And, yes, I am probably biased. That’s the nature of these spaces. If you want to write something ugly, violent, demeaning, etc. … do it in your own space. This is a space for constructive conversation and dignified discussion. Thank you very much.

  • Steve writes:
    September 20th, 200810:34 amat

    I agree that it is bad to socialize losses yet privatize gains. Socialisim would have us socialize both, and conservatism/libertarianism would have us privatize both. Both of those seem cogent — except that socializing everything removes our individuals freedom… because for freedom to exist people need to be able to make their own choices and feel the full brunt of their choices’ consequences — whether good or bad. It should be our friends, family, and/or church (or nobody) who help us… NOT the government.

    Where there are needs among us there is opportunoity for us to glorify God by helping each other — and by sharing the gospel to those who need help and don’t know Jesus. Christ only gets the glory when we do what we do in HIS name… not in the name of secular governmental socialism. This is why (along with infant-murder) Jesus would not vote for Obama.

  • Justin Carroll writes:
    September 20th, 200812:25 pmat

    When the welfare of capitalism is threatened it looks to socialism to bail it out – extremely ironic indeed.

    Not that socialism is the answer to everything but I would like to see it coming in the form of healthcare. It has worked beautifully for our public library systems, police stations and fire stations.

    Basically, I don’t mind paying more taxes if I’m getting something that we can all immensely benefit from in return.

  • Will Humes writes:
    September 20th, 200812:51 pmat

    Thanks Sonja for this well thought out and passionate post. I could not agree with you more, and I can’t help but think of the millions of people who have suffered at the hands of corporate greed and will continue to suffer, perhaps even more, as our government seems intent on helping only those in power and not those who are truly in need.

  • Liz writes:
    September 20th, 20084:29 pmat

    wow. I actually agree with this. I have a friend who is going to vote for Ron Paul for this very reason. Not that she thinks he will win, it’s a conscience vote on her part.
    Up where I live there are a lot of realtors that got very greedy. Now they are wringing their hands. Too bad, so sad. Being reimbursed honestly for your work and making a profit is good. Greed is bad. Many many social problems rest at the root of greed. The problem is, there are a lot of things that are bad, but really, how can yo control them???
    I believe it was Benjamin Franklin (who wasn’t a Christian btw) who said that a free society rests of the people having a moral compass. Meaning basically Biblical values, even if one isn’t explicitly a Christian. And we sure have fallen a long way in our society. Personally I think God is giving us the leadership we deserve due to our moral depravity as a country. Frightening.

  • Patrick O writes:
    September 20th, 20088:17 pmat

    It’s unfair to note Republicans, and just Bill Clinton. The Congress has been led for many years now by Democrats, and a number of those involved in the present crisis, the be-yachted business leaders are Obama fundraisers and supporters. Men like George Soros have funded the Left, pouring countless hundreds of milliions into and such while manipulating the markets for their own gain. Indeed, the contemporary Left is, essentially, funded by such people.

    We see this across the world. History does not speak well of the compassion of socialized controls. Those in charge, and the pigs who illustrate them, show this again, and again, and again.

    Such people play with politics on both sides, some like to use the name “poor” more often, for votes and power, but in the end no one helps the poor, all types pretty up their philosophies and the poor lose out.

    Which is why our hope is not in the politicians. Even if, sadly, our comforts and plans are. I know that all to well.

    This is precisely the issue where our faith pushes us to see the emptiness of both Left and Right, who differ in rhetoric but are brethren in greed. We look at the scandals in congress, and across history, across this world, and the poor lose out while liberals and conservatives each sometimes help the poor in some ways, but only if they can find a substantial piece of the pie for themselves.

  • Ken Berggren writes:
    September 20th, 20088:18 pmat

    It’s tough. I feel for your in-laws, but from your description, they will be fine if they can wait awhile. I mean, they own their home, right? They don’t HAVE to sell it, right? Their income has taken a hit, so that’s tough, but perhaps things will get better and the market will rise again. It did after 1929. Rather quickly actually. It was the ones who panicked that got clobbered. Remember George Bailey in “It’s a Wonderful Life”?

    Regarding capitalism vs. socialism, I would point you to a brief interview with Milton Friedman on Donahue. You can find it here:

    But here is the conclusion:

    “Is it really true that political self-interest is nobler somehow than economic self-interest? You know, I think you are taking a lot of things for granted. Just tell me where in the world you find these angels who are going to organize society for us. I don’t even trust you (Donahue) to do that!”

    But I would be fascinated to read your rebuttal of Friedman’s two minute response. Have at it.

  • Mary Beth writes:
    September 21st, 20087:09 amat

    Per comment number 7: um, that’s the problem: CAN 70 year old people wait awhile? Maybe, and maybe not!

    My parents are 83 and 76, and deciding which of their meds they can afford (we are helping as they will allow us…) I’m with you on the outrage. So well said!

  • Sonja writes:
    September 21st, 20087:58 amat

    @Steve, I agree with you about the drawbacks and prospects of each system. That’s the problem … they are governmental systems and we Christians are to be a Light that shines and shows glimpses of another world into this one. Almost like a hologram. Meanwhile though, we struggle with the frustrations of the system in which we live.

    @Justin … yes … I don’t mind paying more taxes if they are going to positive ends. That is the rub though, isn’t it? I think most everyone would say that, but coming to an agreement on what a “positive end” is is difficult. But, like you, I think if we can do all this, perhaps we could provide better healthcare.

    @Will … :) Thanks, man!!

    @Liz … you might be surprised by how much we agree on.

    @Patrick … point well taken. I should have been more clear that I was thinking of Presidents and their appointees to financial institutions (i.e. the Federal Reserve). But you are very correct that over this period of time the Democrats in Congress have gone along with these notions as have left-leaning financial leaders, as it has suited them. Perhaps the point is … that this version of fiscal conservatism (regardless of political orientation) has been in vogue for my entire adult life. There has been very little control of the markets, until there’s a problem, then the taxpayers are expected to fix that mess. I’m just getting sick and tired of it. If we’re to be a market economy, then let’s go for it. If not, then let’s do that. But let’s not have the worst of both (which is what we currently have and it’s eating us alive).

    @Ken … you really surprised me this time. Here I am making a classical conservative argument for an open capitalist market; that the pain of bad decisions needs to be felt by those who made them and you still disagree with me. Are you quite sure you’re not being a kneejerk conservative? 😉 I’m arguing that either we need to be capitalists and let the market decide, OR we need to be socialists and control the market. But right now we have the worst of both worlds and in so doing we’re hurting the little people on both ends. I’m actually a free market girl, but you made so many assumptions about me as you read that you didn’t hear any of that. Go back and read it again. These financial executives are just like crack whores … they’ve been addicted to the crack of greed and the meth-amphetamines of hubris for a long time now. You fly too close to the sun and it will melt the wax on your wings.

    @Mary Beth … thanks, you made my second point to Ken very nicely. Not only might time be of the essence for people who are 70, but they live in Vermont. I happen to know that Ken lives in Kentucky. Vermont winters are very different than Kentucky winters … especially when you have crippling rheumatoid arthritis as my mother-in-law does, and a lifetime’s worth of ills brought on by inadequate medical care during his tour in Vietnam as my father-in-law does. No, that annual trip to Florida is for their health, not for fun. And, btw, they make the trip in a tiny 12 year old RV that is rusting out; held together with prayer and duct tape. They are trying to sell their home because they can no longer care for it, not so they can cash in on it. It is crippling them. But … maybe … Ken … you’re right. The pain of greed and hubris should be paid by the little people, not the pigs who engaged in it … is that the real conservative ethic?

  • LightMother writes:
    September 21st, 20089:57 amat

    As far as I can see the best way to make change is for everyone of you to become involved in your local government – that’s where this all begins. It takes persistence and tenacity to stay involved but you must if you want change. We can whine and complain about the dems and republicans but they are in the driver’s seat. Possibly the only way to ever get a handle on this is the same way as eating an elephant – one bite at a time – it will take a long time, but it will never happen until we get started by getting people with a clear moral compass into government no matter if they are agnostic, christian, jewish, islamic, buddist or any other belief.

  • K.W. Leslie writes:
    September 21st, 20081:33 pmat

    I see a few folks saying socialism isn’t the answer. I would disagree. It could be. But the folks in our government aren’t socialists; they’re oligarchists. They’re too deep in the pockets of financiers to ever pass reasonable laws that would favor society over their cronies.

    The bailouts of the big financiers and brokers is because their collapse would put us into another Great Depression. The government did the right thing in bailing them out. I am not happy about it, because the companies should never have got themselves to the point they needed a bailout.

    This is the perfect time for a politician to step up and say, “We need to make sure this never happens again,” and pass a comprehensive reform package that would require the bailed-out companies — and anyone else who, in the future, might need to be likewise bailed out — to practice restraint in their business dealings. But those whose ties to business are deep and necessary — in other words, every politician — will likely do nothing but support the status quo, even when it violates their conservative or liberal principles. If your power isn’t based on your ideology, money trumps it every time.

  • Ken Berggren writes:
    September 21st, 20084:55 pmat

    Surprise, Sonja, is a good thing, right? :)

    Actually, I’m not sure I was disagreeing with you in my previous post. I was reacting to a perception of your sympathy for socialism. My perception could be out of touch, but I don’t think so. You reiterate your sympathy in your response. “…we need to be socialists”. I know, you meant one or the other. But I think such sympathy is ridiculous for reasons Dr. Friedman describes. Similarly, on the other hand, a pure laize faire capitalism would be wicked for reasons of which you seem most cognizant. No, please, no. Not one or the other! Interestingly, Dr. Friedman recommends that government stay out of the markets because generally government sides with the most powerful against the weak, not otherwise. So, where do we find those angels?

    What we have in the events of the last few weeks is like a government insurance policy. In a way, insurance always “rewards” failure. That is what it is for. But insurance is helpful when it promotes risky behavior that benefits everyone. The “bad paper” sub-prime loans were not risk-taking that benefits everyone, but it was a disease that had infected a lot of otherwise good companies. I’m told AIG is about 3/4ths solvent and strong. Only the parent company was infected, and that company is now 80% owned by Uncle Sam. I understand if things go well, we tax-payers will turn a profit.

    I am no economist. I am convinced that anyone who thinks they understand the economy just doesn’t understand the economy. Still, in my humble opinion, the buying up of AIG and pooling the “bad” debt was probably necessary to keep this fear from spreading. If it doesn’t work and the economy keeps sinking, then we will know just how bad off we are. We’ll know whether the fundamentals of the economy are still sound as some say, or whether everything is based on smoke and mirrors and the economy comes crashing down around us all.

    If that crash happens, your in-laws’ loss of Florida would be the least of their worries.

  • Jaime Sada writes:
    January 29th, 20092:16 pmat

    Dear Obama:

    Given that your government has decided to help financially key corporations in order to help the current economic crisis, let me suggest what I think it’s the best way to do it:
    Give every corporation, and every citizen, a credit equal to “X” past years of their taxes paid (Sales, Income & Property) to be exclusively applied within “Y” time, first to debt and if there is a remainder, to investments.
    This government subsidy credit can be structured as either an interest free loan payable in “Z” years, or simply as a “tax return”.

    In the first case, it is a set off against the National Debt (Treasury Bills) , as it is now the individual citizens who owe the government, and not viceversa. You have created money, through credit, just as the banks do, when they lend.
    This way, everybody shares your government favor; their share is exactly proportionate to their actual contribution to the country, and the “money” is exclusively applied to the 2 most important factors affecting banks & financial institutions, corporations and individuals. The money will not be squandered, as it is applied only to what matters most.
    Spending will increase obviously, but this time, through investments (savings) as the driving force and not more debt.
    Credit is at a halt, for good individual reasons, but once you, the government lend out under this plan, trust will be restored.
    Banks and financial institutions will be paid, corporations will not go bankrupt, individuals will not suffer foreclosures and you will effectively “jump start” the economy with perfect fairness.

    It´s simply called “just retribution”.

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