"Conservatives" nationalize Fannie Mae and Freddie Mac, mocking their own market mantra
Anthropologists and evolutionary psychologists are fascinated by two poles of human behavior: cooperation and competition. You've got to get your own in terms of reproductive success, but you're in a relentlessly social species, so you often have to do well by doing good.
Nepotism is a part of it, and we see plenty of that in all societies. But the hunter-gatherer adaptation we all came from institutionalizes cooperation and reciprocity, as do virtually all non-industrialized societies. Even foragers allow for personal ambition and drive, as more skilled and efficient hunters and gatherers gain status.
But there is a low limit to status differentials in those societies, as leveling redistribution blunts inequality. We do that too, of course, but to a much lesser extent. No Republican likely to be elected would abolish all government aid to the poor, and no Democrat would seek perfect equality.
Still, we do hear a constant drumbeat of free-market mantras from the Republicans, especially in an election year. So it's a particularly delicious irony to see them make yet another massive socialist move.
The government did it under Nixon with Lockheed Aircraft. They did it with Chrysler in the late ‘70s (under a supposedly conservative Democrat), when that great capitalist Lee Iacocca begged for a government bailout and got it. They did it with the savings-and-loan bailout of the ‘80s, when the taxpayer got handed a $124 billion bill–in a time when a billion was real money. They did it in March with Bear Stearns, which could also cost us little folks tens of billions.
And now they're doing it with two of the largest financial entities in the world system, which together back up half the mortgages in America. Estimates of cost to you and me run into hundreds of billions, but it's probably worth it. In effect, they are giving homes to hundreds of thousands of people who would otherwise lose them.
But no, they are not doing it out of the goodness of their hearts. They are preventing holders of debt in those two companies from losing their investment. Those are mainly not little folks. And although the Feds are not undergirding common stock holders, they are trying to prevent runaway selling that could crash the ailing U.S. economy.
This de facto nationalization–Hugo Chavez couldn't have wished for much more–is being almost universally praised by politicians in both parties, Wall Street big-shots, and even Warren Buffett. The Paris stock market was up five percent on the news. Everyone thinks it was necessary.
I do too, as far as I understand it. But I insist on calling it what it is: Socialism, in the service of protecting the money and reputations of big people first, and little people incidentally. The two CEOs of Freddie and Fannie were fired yesterday, but they get their full $30-40 million compensation over the past year, and golden parachutes worth millions more. Want to get really rich? Run a big company into the ground, destroy the wealth of thousands of small shareholders, and get the government in to rescue you, along with your yacht and limos. That's American capitalism for you.
John Bogle, the great founding CEO of Vanguard, said it all last week on Bloomberg television: They want to privatize profits and socialize losses.
So now we know what the Republicans mean by "free markets": risk-free–for the rich, that is. They take the profits, make the blunders, run the company and the economy down, and hand the mess over to us, the taxpayers and little shareholders who have no control over anything. We didn't know it at the time, but only we were taking the risk.
Could this have anything to do with the upcoming election? Duh. Stealing the media thunder from the Boeing machinists, who just went on strike, is a bonus; even the GOP could not have planned that. But I have no doubt the timing is designed to address our economic woes just long enough to perhaps make the difference in November.
Don't get me wrong, I see little choice at the moment. But the Republicans are still blabbering through their facial blubber about free markets and will continue to do so as if nothing had happened. The hypocrisy is so thick you can stand up a silver spoon in it.
If you don't have one handy, reach for the nearest fat-cat Republican mouth that isn't foaming and running on about liberal irresponsibility–assuming you can find one. And start by wiping it off the spoon–hypocrisy can be contagious.