As some of you no doubt noticed, Deregulator and I had an extended back and forth on Twitter about Obama, Socialism, Toyota and bailouts over the weekend. Below I have reconstructed the feed in chronological order. Obviously these topics are too complicated to discuss on Twitter, so I’ve brought the discussion over here so I (and hopefully he) can expand on my (his) points.
Deregulator:Lowry RE NY poll: 52% think Obama policies leading us toward socialism http://bit.ly/deXABH // yeah, but they're all racists #tcot 9:54 AM Apr 15th
KhabaLox:RT @deregulator Lowry RE NY poll: 52% think Obama policies leading us toward socialism //"Think" being the operative word.
This is what got the ball rolling. Lowry’s post links to an article (which didn’t even mention the socialism question) about the poll and not the poll itself, but Deregulator was able to track it down (see below). The point I was trying to make here is similar to my earlier point about polls showing a majority of Americans being against the Health Care Bill. In actuality, they are against what they think is in the bill, and when asked about individual provisions, they are generally in favor of them. Here, we have a poll telling us that in people’s opinion, Obama is moving us toward socialism. My contention is that their opinion is not very much in line with the facts.
Deregulator:@khabalox What would you call it, then? 8:06 PM Apr 15th
KhabaLox:@deregulator I don't think you can sum up all of a President's policies in one word. 8:59 PM Apr 15th
Deregulator:@khabalox It's a poorly worded question, then? 5:27 AM Apr 16th
KhabaLox:@deregulator Yes, probably bad question too. Obv too complicated to discuss in tweets though. 7:26 AM Apr 16th
I thought maybe the question might have been poorly worded, or at least worded in such a way as to complicate interpretation of the answer. It turns out that wasn’t really the case; the question was pretty straight forward. But it comes back to this: The question is about how people interpret Obama’s policies. It is not a question posed to political scientists, journalists, economists, or a “panel of experts” if you will, as to what the policies actually are doing. They are asking the Average Joe what they think they policies are doing. I think most Americans understanding of public policy is (mis)informed mostly by sound bites heard in the MSM (including Fox).
KhabaLox:@deregulator Do you have a link to the complete poll? Lowry's sound bite is not discussed in the article he linked to. 8:21 AM Apr 16th
Deregulator:@khabalox Here's the whole thing. Will read it over the weekend. http://nyti.ms/cCk39z 9:12 AM Apr 16th
KhabaLox:@deregulator Thx! It's question is #49 on pg 24. It's not badly worded. I would answer it no; I think most don't get nuances of his policies 9:25 AM Apr 16th
KhabaLox:@deregulator For example; HCR actually empowers private insurance industry - there is little that is socialist about it. 9:26 AM Apr 16th
Most conservatives see HCR as a socialist government takeover. This is absurd. A government takeover would be a single payer system. One could make an argument that a public option would be moving us (in a socialist direction) toward a single payer system, but there isn’t even a public option. The government is not selling health insurance. In fact, this bill strengthens the private sector by mandating coverage. There is a reason why Health Insurance companies’ stocks went up when the bill was passed.
Deregulator:@khabalox I'll have more later, but if US takes over GM even temporariliy, why wouldn't it do so again? Precedents send signals. 9:50 AM Apr 16th
Deregulator:@khabalox Isn't it interesting that US is now seeking record fines against (mostly nonunion) Toyota? (which has bounced back well) 9:52 AM Apr 16th
KhabaLox:@deregulator GM takeover temporary, so not moving us to socialism; bank bailout Bush's/Paulson's idea originally & many *loans* paid back. 9:29 AM Apr 16th
First, re the bank bailouts: The bailout of the financial sector is exhibit B for Conservatives wanting to paint Obama as a Socialist. They conveniently forget that it was 1) started under Bush and Paulson, and 2) largely necessary due to the deregulation of the financial industry. Additionally, some of the banks in question were given loans (not bought out) which they repaid. Unfortunately, there were others (like AIG) who received our money and used it to pay off their bad bets with other banks like Goldman Sachs.
Deregulator seems to be arguing that by taking a controlling interest in GM, the government is setting a precedent that it can and will do this again, and thus, we are becoming more Socialist. And it is Obama who is doing this to us. I would argue that the GM situation is a Black Swan. It’s very unlikely that the government will take a 60% stake in such a large company again, as long as we as a country wake up to the risk of allowing companies to grow to be “too big to fail.” Here is the President discussing the takeover.
This is a difficult situation that involves fundamental questions about the proper role of government. On the one hand, government has a responsibility not to undermine the private enterprise system. On the other hand, government has a responsibility to safeguard the broader health and stability of our economy.
Addressing the challenges in the auto industry requires us to balance these two responsibilities. If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers. Under ordinary economic circumstances, I would say this is the price that failed companies must pay -- and I would not favor intervening to prevent the automakers from going out of business.
But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action. The question is how we can best give it a chance to succeed. Some argue the wisest path is to allow the auto companies to reorganize through Chapter 11 provisions of our bankruptcy laws -- and provide federal loans to keep them operating while they try to restructure under the supervision of a bankruptcy court. But given the current state of the auto industry and the economy, Chapter 11 is unlikely to work for American automakers at this time.
KhabaLox:@deregulator Don't get your point RE Toyota but i note: sales up bc of steep discounts; stock down 13+% since Jan; 10:43 AM Apr 16th
KhabaLox:@deregulator also, record fine of 16M is paltry vs. revenue of 220+B; Real Q is how many died b/c Toyota didnt disclose safety prob earlier 10:46 AM Apr 16th
Deregulator:@khabalox So the fine doesn't matter b/c Toyota could afford it? Tell that to the consumer who'll pay, employees who won't get raises, etc. 11:02 AM Apr 16th
KhabaLox:@deregulator Just putting fine in perspective; it's justified bc they sold many defective cars & didn't tell US; knew about problem 4 months 11:05 AM Apr 16th
KhabaLox:@deregulator See paragraph 8 of Reuters story. http://www.reuters.com/article/idUSTRE6343YE20100405 11:06 AM Apr 16th
I’m not sure what Deregulator was getting at with the Toyota reference. Perhaps he sees government fines as an undue infringement on free enterprise and further proof of Obama taking us toward socialism. Hogwash. My points: 1) the fine is miniscule compared to the amount of cars they sold in the US. 2) Toyota knew of the problems months in advance, yet failed to notify US consumers and safety regulators, contributing to the deaths of US citizens. 3) I’m not sure they’ve bounced back as much as Deregulator thinks they have. Sales are up because of record discounts; the stock price is still way down. If anything though, point (3) is an argument against fining companies for breaking the law and endangering consumer’s lives. The market is putting pressure on Toyota to do the right thing.
Deregulator:@khabalox Back to the NYT poll: Looks good to me. Asked people w/TParty sympathies solid questions. Also asked some Qs dating back 30+ yrs. 5:34 AM Apr 18th
Deregulator:@khabalox NYT Q#73: 49% said "socialism" to them means gov't ownership. That's textbook. 5:35 AM Apr 18th
Deregulator:@khabalox NYTQ74: 71% said it is 'never' justified to use violence vs. govt (all respondents: 79%). Somebody better tell Bill Clinton. 5:37 AM Apr 18th
KhabaLox:@deregulator Knowing what socialism is and thinking #Obama is taking us there two diff things. about 23 hours ago
KhabaLox:@deregulator Being right about one doesn't mean you are right about the other. about 23 hours ago
Deregulator:@khabalox If the choice is one of direction, there's no question where Obama's headed. Sure ain't toward freedom. about 20 hours ago
KhabaLox:@deregulator Politics and policy aren't two dimensional. Surely you don't see things so simply. about 19 hours ago
I would appear that only half of those polled know what socialism is. To me that says I should trust them less when they say they think Obama is taking us there. But, even if they all knew exactly what socialism was, that still leaves them knowing what Obama’s policies are. We’ve already shown that most Americans don’t know the details of the Health Care legislation. Given that that was the biggest of Obama’s policies, I think it’s fair to say that the general public doesn’t have a good, intimate understanding of his other policies. Therefore, their opinion of in what direction Obama is taking the country is largely uninformed and irrelevant.
Deregulator say's that Obama is not headed toward freedom. Presumably this opinion is derived from policies such as the health insurance mandate. (Can you give me some examples of other policies of his that restrict freedom?) I would agree that forcing people to buy health insurance is abridging freedom, but I don't see how that makes him a socialist. Are there other aspects of the Health Care bill (or his other policies) that are socialist? What are they?
Also, I’m missing the Clinton reference. Did he advocate violence against the government? How does that tie in to the current discussion?
Deregulator:@khabalox We have a mixed economy. Do policies support markets or government? Occam's Razor ... about 16 hours ago
Deregulator:@khabalox UHC using private insurers would make HC much like the power mkt dominated by strictly regulated utils. Not much freedom there. about 16 hours ago
Deregulator:@khabalox Certainly not much competition. about 16 hours ago
KhabaLox:@deregulator Universal Health Care provided by private insurance companies is hardly socialist. about 16 hours ago
KhabaLox:@deregulator Barriers to entry in HC market same with or wo mandated coverage. Maybe lower with mandate, since market is larger. about 15 hours ago
I’m not sure I get the Occam’s Razor reference in the context of that tweet. Given the source, I’m tempted to guess that Deregulator is simply saying simpler/less/no regulation or government involvement in private industry is best. But what is the question: “Do policies support markets or government?” getting at? Deregulator, can you expand on this a bit?
Deregulator is making a comparison between the health care market (with mandated coverage) and the power/electricity market. There are a few reasons why this analogy is not perfect, but I think most can be ignored because they don’t impact the discussion greatly (e.g. not everyone is mandated to purchase electricity, but in reality 99.9% do). However, once glaring difference between the two industries is in the barriers to entry for other firms. Power companies enjoy the status of natural monopoly. Even in a world with no government regulation of electricity, we would still find ourselves with a very small number of power companies. It simply isn’t feasible for hundreds of companies to run wires across town and to your house. We see this in the telephone/cable/internet markets. It is very expensive for a company to lay the wire (or launch the satellites or build the cell towers) so even with a more deregulated market, we still only see a handful of firms.
Insurance, on the other hand, does not have the huge physical capital start up costs. True, an insurance company does need capital to get their business going, but they don’t have to make as large an up front investment. It is much easier to start small and work your way up. Plus, there is the whole notion of re-insurance.
All of this is to say that mandating coverage is not taking us in the direction of socialism. If anything, it is strengthening the private insurance sector. More people may get into this business, since the market just grew by about 10%. There is not a lot of freedom or competition in the electricity market in large part because of the fundamental nature of the industry. Once they develop a way to distribute power wirelessly, or rooftop solar/wind/etc. becomes more cost effective, you will see much more competition.
So I open the floor to Deregulator and everyone else. Is Obama taking us toward socialism? Why or why not. This will be 30% of your final grade. Posts are due by Friday.