Socialism and The Public Bad: Why Government-Owned Corporations Won't Work Any Better Than Corporate-Owned Government
Almost all successful economic systems around the world are created with some balance of the profit motive of private innovation and the humanitarian quest of social and individual welfare. Some would call this a combination of capitalism and socialism, for simplicity's sake, and while I don't think that quite gets us there, I don't want to get hung up on words.
In the United States, the country most known for boasting free market capitalism, state and federal governments pay more than a third of our national health expenditures, guarantee free public education from K-12, provides a modicum of old-age retirement security, and pay for infrastructure for private industry to build on. China, the economy most famous for government control, still allows for large, multinational, non-government owned businesses to employ its workforce and sell to its consumers.
There are no absolutes in economic systems and economic catastrophes usually take place when the pendulum in a given economy swings too far in one direction or another. The Great Depression and the Great Recession were results of unregulated private industry greed, while the collapse of the Soviet Union is probably the most glaring example of economic doom from an economy gripped too tightly into the hands of a government. A more modern example is the collapse of the Greek economy, in which the welfare state was so overcommitted without creating the proper reserves that its debt crisis is still battering Greece even as the world at large has largely recovered from the Great Recession.
There are reasons why this is the case. Without going into too much detail, suffice it to say that the private sector and the government each has its strengths. Governments are great at delivering commodities of scale with cheaper prices to citizens and consumers but are not very good at the consumer technology innovations that turn luxuries into commodities. Private industry, generally speaking, is much better at using profit motive to innovate products and services consumers want, but the same profit motive keeps private industry from providing the products to those who may need it, but cannot afford it.
Think about it. Without the government, most children would not be able to complete high school. But it took Apple and Google to make everyone think they need a smartphone.
But I do not mean for this to become an essay about the comparative strengths and weaknesses of private and public sectors, not least because neither sector itself exists without the other. Medicare pays private doctors and privately owned hospitals, and Apple relies on the government to safeguard its trade secrets.
The purpose of this introduction is to demonstrate that one should be wary of systems that tilt too far one way, and more to the point, skeptical of political candidates who prefer such extreme tilts. One should be no more comfortable with Donald Trump's attempts to cut Medicaid, Medicare and Social Security and to drastically privatize public education than one ought to be with Bernie Sanders's burning desire to essentially eliminate private enterprise and private ownership.
Wait, what? Bernie Sanders wants to eliminate private ownership and private enterprise? But but! He keeps correcting newscasters who refer to him as a 'socialist' by using the term 'democratic socialist', which is basically very well regulated capitalism along with the idea that workers should have some voice in how the companies that profit from the wealth they help create are run. What could be wrong with that?
Nothing. But Bernie Sanders, despite his protests, is not a democratic socialist. He is much more a Soviet Socialist, which is perhaps just one thing responsible for his affinity for Putin and Russia-backed dictators.
Soon after his childhood in Brooklyn and college in Chicago, Bernie Sanders moved to Vermont so he can be among his own kind. When he got there, he joined the Liberty Union Party and was the party's candidate in many elections for multiple offices. He called for the state ownership of the energy industry, banks, electric companies, and drug manufacturers, as well as of factories, along with all "means of production" and capital. In fact, he called for state ownership of all "major industries."
Interestingly enough - though certainly not surprisingly - a combination of bots and Sanders supporter proceeded to tell me how great Sanders's state-ownership views were, and how it made him even better when we pointed out on Twitter that there is nothing democratic about Sanders's socialism. This crowd was overwhelmingly white.
That is part of the problem with Bernie's brand of socialism (which actually is a fairly purist form of it). Given the growing power of corporations and the stacking of a sick amount of wealth and income at the very top, a simple thought often occurs: what have we to lose by having the government take it all over? The government would have a much greater responsibility for equitable treatment of people, and at the very least, those asshole CEOs won't be getting rich! Workers produce the wealth; it's only fair that they - or a body that ostensibly represents them, the government - should have it. State ownership of major industries and means of production would essentially mean an end to the problem of limited tax revenue, the thought goes, and then we can really invest in our people - in public education, in retirement security, in health care, in a jobs guarantee, in infrastructure, in all kinds of good stuff.
This utopia somehow never materializes in places that try this, especially not without disastrous effects on civil rights. China is perhaps the major modern success story in the government's strong-armed control of the private sector, state ownership of corporations, and the rest - at least in terms of economic power. And it has a horrendous human rights record, an unchallenged ruler for life, a militaristic attitude against peaceful neighbors, pervasive censorship, and deeply repressive policies against ethnic and sexual minorities while women have little recourse against sexual violence.
The Soviets nationalized the banking industry a century ago, and if anything it sped up their march towards the fall of the USSR. Greece nationalized its banking in the midst of the most recent financial crisis, and that does not seem to have helped them.
And what to make of the nationalization of natural resources. With the exception of the United States, nearly all major oil producers nationalize the industry, and almost all OPEC countries strictly limit democratic, civil, and individual rights, exploit their poor and enrich their elite.
This is not to say that one should never nationalize any services or industry. Certainly, nationalization of health care, for example, has worked well for many countries. Nationalization of the banking industry in India is credited with being a major tool they used to combat the Great Recession. Major airlines are nationalized in many places, and they work just fine. Hey, I'm certainly glad the US military is nationalized.
But indiscriminate, thoughtless knee-jerk, reactive nationalization of "major industries" simply because they are major industries nearly always leads to devastating consequences for the rights of minorities and women, for civil rights, for human rights, and for the right to live without government oppression. Governments, like corporations, are man-made institutions, and it should surprise no one that just like corporations, handing governments absolute power - defined by absolute economic control of all major industries - has corrupting and corroding consequences.
While corporations are known for all kinds of acts of employment discrimination for which government is the only vehicle to hold them accountable, private initiative, enterprise and industry have often outpaced governmental progress on issues of minority and women's rights. Consider this: prior to 1960, a large majority of HBCUs were private institutions.
In the United States, corporations have often been ahead of governments when it comes to the rights of underprivileged populations. Local chambers, business groups, and individual corporations contributed to integrating workplaces post-World War II and before the Civil Rights movement reached a peak in the 1960s. Long before the Civil Rights Act, workplace integration was a corporate issue.
Major corporations began adopting sexual orientation nondiscrimination policies as well as domestic partnership benefits decades before significant government action. Needless to say that the United States still does not have a federal law outlawing discrimination against LGBT people in the workplace and in housing. In 2005, a survey of all major sectors of the economy found that gay and lesbian government workers were the least likely to be protected or have partnership benefits. By 2006, more than half of Fortune 500 companies offered domestic partner health benefits.
In the way of comparison, even to this day, fewer than half of US states have workplace protections for lesbian, gay and bisexual workers, even fewer for transgender workers. Equal marriage - which ostensibly ensures equal workplace benefits - was not a thing in the US until 2015, a decade after most of Fortune 500 was on board. In much of the US, a gay couple can get married today, go to their honeymoon next week, and get fired from their jobs the following week - unless they happen to work for a private employer that forbids such discrimination by policy. In the 2004 and 2008 elections, voters in multiple states, including California, enacted state constitutional bans on same-sex marriage.
It is not a surprise that no "socialist revolution" has ever been led by women, or by ethnic minorities, whereas the struggles for civil and equal rights, almost always, have been.
Let's think about this carefully. Elected governments are not always more responsive to the needs of disadvantaged citizens; indeed, democratic institutions like independent courts, a free press, and constitutional separation of powers are erected specifically to guard against mob-majoritarian tendencies of elected branches of government. The US government - like other democratic republics, has done both great things and terrible things with its power. The same government that liberated a continent from Nazis interned American citizens at home. The same government that enacted the Civil Rights Act started the war in Vietnam. Difficult as it is to imagine, the same country is responsible for the protection of the Geneva Conventions and the horrors of Abu Ghraib.
Like corporations, governments are capable of greater good and great evil. Just as unadulterated, unregulated private greed is not the answer, neither is indiscriminate nationalization of industries based on their size. A nationalized Citigroup in the early 2000s would not be allowed to offer domestic partnership benefits. Few, if any, historically black colleges and universities would have flourished if higher education was exclusively a federally-run operation.
The solution to our problems is not unadulterated capitalism. Nor is it indiscriminate state ownership. America needs to return to the balance of power that allows for private enterprise to flourish and yet demands that public safety is protected and public resources benefit everyone. Major industries need to assume the actual cost of doing business, and that includes fair wages and environmental costs. The government ought to mandate and provide assistance so that the industry can reach that balance.
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