So today's Dow Jones Industrial Average closed up 936 points. Far be it for me to look a gift horse in the mouth (that's an 11 percent gain and a bit of a load off my 401(k)), but I'm forced to wonder why there is this sudden exuberance. Has the Dow Jones decided that national and international socializing of the banking business is an inherently good thing? Are they in fact saying, "Oh, goody! Our cheese has been saved! Uncle Sugar and his cousins are going to bail us out!"?
The news media is now reminding us that we are in a mixed economy, and that government action is helping to prevent another Great Depression. That doesn't mean it's right, just that it is so. What sorts of lessons is this situation teaching future big businesses, bankers, and other capitalists? It's teaching that if individuals and companies are part of a sufficiently large segment of the economy, and that segment suddenly faces unexpected or near-catastrophic losses, the government will bail them out. In which case, it will be okay to continue giving executives golden parachutes because, again, the tab will be picked up by Uncle Sam. If you have any doubt about why the non-executive voters are p.o.ed about the bailout, this would be why.
Here's the subtle temptation of socialism: if you're the one receiving the benefits--bailouts, direct cash payouts, or government subsidies--you have a vested interest in continuing to vote for public officials who will perpetuate the system of patronage--which is exactly the point. We make people at all levels of the citizenry dependent on government.
In the interests of full disclosure: I received a government loan to allow me to attend graduate school. Note, however, that I am paying off that loan and that I am doing so ahead of schedule. Odds are, if I were to default on said loan, I would not get a bailout of any kind. Mind you, I would have preferred to obtain my "credentials" as a technical writer without getting another degree, but the economy has become such that only the diploma will ensure employment. That requires a different fix from the current student loan program. And yet one must also ask how much government intervention in the educational system has caused students to start out their lives deeply in debt, and whether the price tag is worth it. Having attended a state school, I suppose I got off lucky. I'd be paying off my grad school debts well into my 40s if I'd attended some sort of Ivy League school.
Do I consider my federally funded loan to be socialism? Probably. Have I benefitted from it? Undoubtedly. Would I have preferred another method of funding my schooling? Yes. As Milton Friedman puts it,
[G]overnment has assumed the financial costs of providing the education. In doing so, it has paid not only for the minimum amount of education required of all but also for additional education at higher levels available to youngsters but not required of them--as for example in State and municipal colleges and universities. Both steps can be justified by the "neighborhood effect" discussed above--the payment of the costs as the only feasible means of enforcing the required minimum; and the financing of additional education, on the grounds that other people benefit from the education of those of greater ability and interest since this is a way of providing better social and political leadership. Government subsidy of only certain kinds of education can be justified on these grounds.
The late Mr. Friedman, being a good free-market guy, must provide some consolation for my conservative conscience. And still, I might hope that education--the process and the funding--might eventually become more privatized. Is a college education a "right?" That can be argued, though it's amazing how few people do. The whole thing would undoubtedly cost less if government weren't as involved (consider our health care system as a similar example) or if there wasn't an expectation of, or demand for, a college degree in order to obtain jobs in particular lines of work.
There are lots of problems out there; I just wonder if the two characters running for President are concentrating on the right ones.