The issue was discussed at length last month – using the word socialism to scare people silly seems to have stopped working. On Thursday, April 9, there was the release of that Rasmussen poll – it seems that only fifty-three percent of Americans “believe capitalism is better than socialism.” That is a bit startling, as is that, with those under thirty, there seems to be a three-way tie. Thirty-seven percent prefer capitalism, thirty-three percent socialism and thirty percent are undecided. The younger folks just don’t have the background, as Digby noted:
When the McCain-Palin people started blathering on about Obama being a socialist I wondered whether it would blow back on the conservatives. After all, only old people like me, who grew up during the cold war, still have that reflexive freak-out over the word. Young people just see it as another political ideology.
So, when the right-wingers went nuts and started calling this very popular young president a socialist, rather than tarring him with an unpopular label, they ended up validating socialism by applying it to a popular, mainstream politician.
Yes, you read that right – calling the smart, thoughtful, polite and considerate young president, who seems almost absurdly pragmatic, a socialist backfired. Steve Benen at the Washington Monthly looked at the Rasmussen percentages and put it this way:
Perhaps “capitalism” lost some of its appeal when our economy collapsed. Maybe a lot of people heard the media connect Obama and “socialism” – and since they like the president, they figure socialism can’t be that bad. In a similar vein, if right-wing blowhards like Limbaugh keep screaming that socialism is manifestly evil, there may be some who assume the economic model must have merit.
At the New Republic, John B. Judis said this was all silly. The young folks didn’t really mean it:
I don’t think it’s a vote for Soviet-style socialism. While Cold War conservatives did their best to identify socialism, and European social democracy, with Soviet or Cuban communism, the identification doesn’t seem to have survived the Cold War itself.
Instead, what those 30 percent of under-thirties probably mean by “socialism” is a much greater degree of government – and public – control of private corporations and of the market. That would put the United States closer, say, to Sweden, France, or Germany, but would not put it anywhere near the old Soviet Union, which tried to abolish the market itself. Most of all, I imagine, it’s an expression of extreme disillusionment with the magic of the market as preached by Republicans and some Democrats as well.
In short, the word is still really, really, really scary – but European social democracy is somewhat okay. Sweden and France and Germany seem pretty well run, and nice places each in their own way – and set up so no one falls through the cracks, even if that imposes higher taxes than we’d ever pay and restrictions on businesses that result in utterly stagnant, no- growth economies – which neither seem to do, actually. That’s the only model most people have in mind. No one remembers Soviet-style socialism. Even those of us in our sixties, who do remember it, can’t really work up the sense of dread from back in those days. It’s like watching Earth vs. the Flying Saucers – the 1956 black and white hit. Now that movie, on cable now and then, seems quaint. Maybe it was scary back then. It’s hard to remember, but if it was, that certainly seems odd. The same goes for Soviet-style socialism. We worried about that?
But it seems some people have better memories, or really must have a big dollop of nostalgia for the shiver of fear they once felt, or tried to feel. The Rasmussen poll was early April, and this was May 20:
The Republican National Committee backed away Wednesday from a resolution that officially called Democrats the “Democrat Socialist Party,” but instead voted to condemn Democrats for what it called a “march toward socialism.”
The voice-vote came after an unusual special meeting of the party that underlined fractures among Republicans on how to deal with President Obama and the Democratic Party. The original resolution was backed by some of the party’s more conservative members but was opposed by the party chairman, Michael Steele, as well as other Republican leaders. The opponents said the proposal to impose a new name on the Democrats made the Republican Party appear trite and overly partisan, and would prove politically embarrassing.
Of course something was done:
Still, while stopping short of officially trying to rename the Democratic Party, the resolution said the Republican National Committee members “recognize that the Democratic Party is dedicated to restructuring American society along socialist ideals.” It described the Democrats’ “clear and obvious purpose in proposing, passing and implementing socialist programs through federal legislation.”
Endless numbers of party people were saying the Democrats wanted to turn us into France. That’s a problem? Some us old farts thought of Bridget Bardot (then, not now) – and of all the time we’ve spent in France and all our French friends. We just didn’t get that part.
Actually, many of us didn’t get any part of the whole thing. Digby puts it nicely:
Man, if it isn’t Gitmo terrorists coming to our malls and bake sales to kill us where we stand, it’s the Democrat Socialist Nazis who are destroying the very fabric of America. Best gather our guns, jump into our Escalades and take to the hills. (For the week-end anyway.)
It’s that fear thing – maybe you want to live in a 1956 black and white monsters-from-outer-space movie, but that’s a strange hobby. Actually it seems like an obsession – an uncontrollable longing for a true taste of that fifties Cold War frisson, just one more time, like in the old days. But sometimes you just cannot go back. You cannot bring back what’s gone – you know, Orpheus and Eurydice, The Great Gatsby, whatever. It’s fascinating to watch someone try, and it always ends in tragedy, or farce, or the two mixed together.
But going forward is always difficult too. If there are no flying saucers, and if socialism is just another way of describing what we already do with Medicare and taxing everyone to maintain the roads and could extend to other matters if we all agree there’s a need, all sort of possibilities open up. That’s the problem when a really scary word loses its moorings. As Khrushchev is not, at the moment, boasting that communism will bury us – he’s been dead a long time – and socialism is now a big whatever, people get to thinking. And that must scare the snot out of the Republicans, who, while they couldn’t agree on renaming their opposition, did manage to pass a resolution calling them names no one cared about very much at all.
And what might scare them? Steve Waldman might scare them. His idea is that now is as good a time as any, or maybe a better time than usual, to think about credit and national currency and how things really work.
It gets a little complicated, as he says we have to distinguish between transactional and revolving credit when we think about how things really work. Transactional credit is the convenience of using a card to buy what you buy instead of using cash or checks. It’s a form of currency, and this type of credit gets paid off every month. Then you have revolving credit – you deliberately buy more than you can afford. You’ll pay it back over time. It’s a preapproved loan available anytime you have an emergency, or a yen. As such it’s a bit dangerous. Transactional credit really isn’t – it’s just a convenience, and really useful. In fact, he argues it’s actually a public good, and, as such, perhaps should be managed by the government.
So he has a modest proposal:
In fact, while transactional credit provision is a perfectly good business, it might be reasonable for the state to offer basic transactional credit as a public good. This would be very simple to do. Every adult would be offered a Treasury Express card, which would have, say, a $1000 limit. Balances would be payable in full monthly. The only penalty for nonpayment would be denial of access of further credit, both by the government and by private creditors. (Private creditors would be expected to inquire whether a person is in arrears on their public card when making credit decisions, but would not be permitted to obtain or retain historical information. Nonpayment of public advances would not constitute default, but the exercise of an explicit forbearance option in exchange for denial of further credit.) Unpaid balances would be forgiven automatically after a period of five years. No interest would ever be charged.
Let’s think about how this would work. For most people, access to various forms credit – transactional credit, auto and home loans, unsecured revolving credit, whatever – is worth more than $200 per year. Although people might occasionally fall behind, for the most part borrowers would pay off their government cards, simply because convenient participation in the economy is worth more than a once-in-five-years $1K windfall. However, people with no savings and irregular income (for whom transactional credit is a misnomer, since they haven’t the capacity to pay) might well take the money and run. The terms of the deal amount to a very small transfer program to the marginal and disorganized, and a ubiquitous form of currency for everyone else. People with higher incomes would want more transactional credit, or revolving credit, which they would acquire from the private sector.
Republican heads across America explode, but it’s just a new form of currency. Governments issue currency. It’s what they do. Why not this?
That’s the new world – no flying saucers and no Khrushchev and no one deathly afraid of the word socialism. So you get ideas like this.
Matthew Yglesias comments:
Since the government is already in the business of withholding from people’s paychecks for tax purposes, you could even modify this proposal so that someone in arrears had $1 a day garnished for 1,000 days rather than Waldman’s “five years and you’re forgiven” policy.
At any rate, I think that this – or something close to it – is probably a good idea. Our notions of what kind of services should be provided by the state and which should be left exclusively to the private sector have more to do with path dependence and tradition than anything else.
Path dependence? That would be this:
Having a government agency deliver the mail made a ton of sense given the communications technology prevailing in the late 18th century. I’m not totally convinced it needs to be such a high priority today. But modern conditions make this sort of credit proposal seem very plausible to me. Somewhat similarly, rather than requiring people to purchase bare-bones car insurance from for-profit providers (who need to take a cut for profits, and spend money on marketing and advertising and sales) we could put a tax on car ownership and provide the bare-bones insurance publicly. People would save some money, there wouldn’t be as many annoying GEICO ads on TV, and administration of claims would be simpler.
Obviously, when you’re not frightened, you can step back and think in new ways, ways that might actually work better, although, regarding the government transactional card, Kevin Drum has his qualms:
That leaves us with the problem of limiting revolving credit, which is the same problem we have now. Do we need firmer rules on interest rates, fees, and penalties? Better bankruptcy protection? Bans on things like universal default? An end to tricks and gimmicks and fine-print-laden marketing come-ons? More sensible ways of setting credit limits? Maybe. Probably. But unless Steve is suggesting that we essentially ban credit cards entirely – and then create some kind of federal mega-authority to limit every other kind of consumer credit too – those are all the same issues we have now. I’m not really sure what his proposal would accomplish.
And a comment left at his site:
Steve is normally quite sophisticated about finance. So I’m surprised he doesn’t realize how much the US is an outlier in the use of credit cards for transactions. For much of the rest of the developed world, when electronic transactions were introduced they came via debit cards, not credit cards. Credit cards were/are much, much rarer. And their issuance depends, not unreasonably, on personal credit rating.
By making credit cards the standard means of electronic transaction, lots of people like students “needed” them for their payment function, not for their credit function, which they couldn’t actually afford. But the credit card companies preferred the system of making everybody credit “junkies” and charging fees if you didn’t clear up what was essentially your transaction balance within a couple of weeks after the end of the month.
The credit card companies also absolutely hate any thought there’d be a difference in what the merchant or customer has to pay for the service, even though in theory the debit transaction should be less expensive because it doesn’t involve as much anti-fraud protection etc.
So the new credit card bill puts some limits on the most outrageous behavior. But it doesn’t really change the perverse logic of the US credit-dominated system. That will require more and more folks shifting to debit cards. And maybe some attention paid to making it easier for people to access financial services through no-frills bank accounts with debit cards attached.
Well – all that may never happen. But people are thinking in odd ways these days. There’s Robert Reich pointing out that the average college graduate today has to repay twenty two grand in student loans, and says that number will skyrocket as university costs go up, as they always do, and state funding goes down, as it must these days. This forces graduates to avoid “good works” and instead head straight to the highest paying job they can find, and that does no one any good, really:
So here’s my proposal: Any college student can get full funding from the government, with only one string attached. Once they’ve graduated and are in the work force, they pay 10 percent of their incomes for the first 10 years of full-time work into the same government fund they drew on to finance their college education.
Now maybe that formula will need to be adjusted up or down to cover all the costs. And surely some people will game the system as they do every other one. But the essential idea is that linking the costs of college to subsequent wages makes college affordable to everyone.
Kevin Drum likes this idea:
Maybe instead of a flat percentage it’s a sliding scale that starts at 2% and goes up to 20% to take account of rising salaries as grads gain job experience. Or something. Sure, you could still game the system, but you’d have to pretty damn dedicated to avoid a job initially because of a measly 2% charge and then keep it up for ten years.
The counterargument, of course, is that college is valuable. It generally attracts people who already have a lot of advantages, and then provides them with a degree that enhances their earning power even more. Why should they be subsidized at all?
It’s a compelling argument. In the end, though, I think society benefits from attracting as many kids into college as possible. I’m no fan of the proposition that we should try to send everyone to college, but I do think we benefit by making it as attractive as possible to the largest feasible set of students who can take advantage it. Keeping the cost manageable is part of that.
One of his readers offers this:
Maybe I’m an old fart, but I believe college has inherent social value.
Thus, a program should be created that enables anyone who enrolls in a 2- or 4-year public (this is important) institution full-time gets tuition and expenses paid for through a government line of credit. If the student demonstrates solid achievement (either through GPA or a GRE style “exit” exam), the government forgives all expenses.
This would create a cadre of high achieving adults with no financial burdens, able to pursue whatever interests or careers they can define for themselves – a critical resource for a democracy (and a society that values all types of entrepreneurship!)
All that will never happen either, but by now Republicans are weeping.
And then there’s the matter of healthcare. Uwe Reinhardt has these thoughts on the issue employer-based health care system.
Yglesias’ summary – “This system doesn’t really work, since it makes it basically impossible to extend coverage to everyone and was put together for no good reason. But it works well enough for the people who currently participate in it. And that’s most people (me, for example) so you don’t want to rock the boat too much.”
The objective of current health reform efforts should not be to abolish the employment-based system to which so many Americans feel attached, brittle and expensive as that system may be. Instead, the aim should be to develop a robust, parallel system of fully portable insurance that individuals or families can purchase on their own, in a properly regulated and organized market, with public subsidies where deemed necessary. As my earlier posts to this blog sought to explain, this can be done in a variety of ways.
The success or failure of the current efforts by President Obama and Congress to reform the American health system can be gauged by the degree to which that goal has been accomplished a year from now. If success in this regard serves to shrink the traditional employment-based insurance system, so be it.
This is important to think about when people are talking about the “costs” of different reform proposals. That term can accurately be applied to the budgetary price of some set of reforms. And that is, of course, an important consideration. But what’s more important is the economic cost of whatever we’re considering. Sometimes there are economically costly undertakings that are nevertheless worth doing for humanitarian or social justice reasons. But there are also social programs that, irrespective of budgetary price, have low-or-negative costs in a global sense.
Oh my – socialism there. But Yglesias argues this is a good thing:
In the context of this discussion, for example, establishing a viable alternative to the employer based system would, even if relatively few people take it up in practice in the short-term, reduce a significant source of labor market rigidities. People with pre-existing conditions would have vastly more opportunity to risk a few months of unemployment for the sake of pursuing some kind of valuable opportunity. And small businesses wouldn’t face the kind of labor market disadvantages they currently have to deal with.
Socialism good for business? One of his readers comments on that:
One would think that small-business entrepreneur-loving Chamber of Commerce Republicans would favor a health-care system that encouraged ambitious Americans to develop innovative, market-based businesses that would diversify and grow our economy, while allowing them to compete for human resource talent on an equal playing field.
Or maybe it’s just me.
Nope, it’s just you. Small-business entrepreneur-loving Chamber of Commerce Republicans are gnashing their teeth and rending the garments. It seems they didn’t get the April 9 memo. They’re still watching those old black and white monsters-from-outer-space movies, and muttering… socialism, socialism, socialism. It happens.