PoliticalAction.com Blog

Texas Straight Talk – A weekly column
Rep. Ron Paul (R) – TX 14

Lately many have characterized this administration as socialist, or having strong socialist leanings. I differ with this characterization. This is not to say Mr. Obama believes in free-markets by any means. On the contrary, he has done and said much that demonstrates his fundamental misunderstanding and hostility towards the truly free market. But a closer, honest examination of his policies and actions in office reveals that, much like the previous administration, he is very much a corporatist. This in many ways can be more insidious and worse than being an outright socialist.

Socialism is a system where the government directly owns and manages businesses. Corporatism is a system where businesses are nominally in private hands, but are in fact controlled by the government. In a corporatist state, government officials often act in collusion with their favored business interests to design polices that give those interests a monopoly position, to the detriment of both competitors and consumers.

A careful examination of the policies pursued by the Obama administration and his allies in Congress shows that their agenda is corporatist. For example, the health care bill that recently passed does not establish a Canadian-style government-run single payer health care system. Instead, it relies on mandates forcing every American to purchase private health insurance or pay a fine. It also includes subsidies for low-income Americans and government-run health care “exchanges”. Contrary to the claims of the proponents of the health care bill, large insurance and pharmaceutical companies were enthusiastic supporters of many provisions of this legislation because they knew in the end their bottom lines would be enriched by Obamacare.

Similarly, Obama’s “cap-and-trade” legislation provides subsidies and specials privileges to large businesses that engage in “carbon trading.” This is why large corporations, such as General Electric support cap-and-trade.

To call the President a corporatist is not to soft-pedal criticism of his administration. It is merely a more accurate description of the President’s agenda.

When he is a called a socialist, the President and his defenders can easily deflect that charge by pointing out that the historical meaning of socialism is government ownership of industry; under the President’s policies, industry remains in nominally private hands. Using the more accurate term – corporatism – forces the President to defend his policies that increase government control of private industries and expand de facto subsidies to big businesses. This also promotes the understanding that though the current system may not be pure socialism, neither is it free-market since government controls the private sector through taxes, regulations, and subsidies, and has done so for decades.

Using precise terms can prevent future statists from successfully blaming the inevitable failure of their programs on the remnants of the free market that are still allowed to exist. We must not allow the disastrous results of corporatism to be ascribed incorrectly to free market capitalism or used as a justification for more government expansion. Most importantly, we must learn what freedom really is and educate others on how infringements on our economic liberties caused our economic woes in the first place. Government is the problem; it cannot be the solution.

by Doug Bandow

Last week might be the week when private health care was saved.

Obviously, the current system has problems. We spend more than we should because of perverse incentives created by government. But the American system possesses enormous strengths, including quality of care and choice by patients. We have to defend these from any government takeover.

What may have saved American health care was the Congressional Budget Office coming up with honest estimates of the enormous cost of the legislation now being proposed by leading Democrats. Reports the Wall Street Journal:

This was supposed to be a red-letter week for national health care, as Democrats started the process of hustling a quarter-baked bill through Congress to reorganize one-sixth of the economy on a partisan vote. Instead it was a fiasco.

Most of the devastation was wreaked by the Congressional Budget Office, which on Tuesday reported that draft legislation from the Senate Finance Committee would increase the federal deficit by more than $1.6 trillion over the next decade while only partly denting the population of the uninsured. The details haven’t been made public, but the short version seems to be that President Obama’s health boondoggle prescribes vast new spending without a coherent plan to pay for it even while failing to meet its own standards for social equity.

Finance Chairman Max Baucus postponed the health timeline, probably until after Congress’s July 4 vacation. His team will try to scale down the middle-class insurance subsidies and make other cuts to hold the sticker shock under $1 trillion. (Oh, is that all?) Mr. Baucus also claims he’s committed to a bipartisan consensus, yet most Republicans have been closed out of the negotiations, and industry lobbyists have been pre-emptively warned that even meeting with the GOP will invite retribution.

Useful to emphasize amid the mayhem is that CBO’s number-crunching is almost always off — predicting too much spending for market-based policies and far too little for new public programs, especially on health care. The CBO score for a new entitlement is only the teaser rate, given that the costs will inevitably balloon as the years pass and more people mob “free” or subsidized insurance.

At a time when the U.S. government is effectively bankrupt, it can ill afford to embark upon yet another complicated and expensive exercise in social engineering. Even some Democrats appear to recognize this reality. It is incumbent upon us to make sure the rest of them learn figure this out as well.