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The GM 'Precedent'
To label the Obama administration's nationalization of General Motors as socialist, then, is to affix a label that no longer describes a practice. Plainly, no one in the Obama administration believes the government should seize the means of production; its investment in GM was simply the one course available to avert an economic holocaust in the Midwest (not just in Michigan, but in Ohio, Indiana and other states as well) that would plunge the nation deeper into recession.
Conservatives -- and not only conservatives -- voice concern that the GM and Chrysler quasi-semi-takeovers set a pattern for other floundering companies. It's hard to imagine, however, just which companies' failures would pose the same kinds of threats to the economy that GM's and Chrysler's failures posed. Few companies have such large supply chains dependent on them; no other companies have so many retirees dependent on pensions and health benefits. Few companies of that magnitude are so concentrated in one region of the country. Few companies have so few domestic competitors. (If one airline fails, there are plenty of others, and new ones continue to pop up. Not so in auto.) Few companies are so emblematic of American enterprise (no matter how tarnished those emblems may have become in recent decades).
Nor are there that many major American manufacturers left standing outside auto. The end of the cold war downsized the aerospace manufacturers; the most major, emblematic American manufacturer outside auto is probably Boeing (the exception to my rule -- I could envision the government bailing out Boeing, in part for strategic reasons). Preserving and expanding manufacturing is an emerging priority for the administration, and rightly so: At its current 11 percent of GDP, our manufacturing sector has shrunk to the point that it can't engender the number of decent-paying jobs that it used to, and can't turn out enough product to reduce our trade deficit with the rest of the world. But outside the auto sector and Boeing, I can't think of a manufacturing firm whose demise would compel the government's intervention. The real challenge before the administration is to promote policies that foster whole new industries, not that save individual firms. Obama is planning a speech on manufacturing next week; that could provide him the opportunity to commit the nation to the kind of industrial strategy we've lacked over the past three decades -- to our detriment and China's advantage.
As for the allegations that the nationalization of General Motors sets a dangerous precedent for American capitalism, they are simply scare tactics from the administration's critics. So, too, the allegations that Obama is a socialist. But the curious thing about linking Obama, however speciously, to socialism is that, far from bringing down Obama's poll ratings, it has actually brought socialism's up. A recent Gallup Poll showed that close to a quarter of Americans would choose a socialist system over a capitalist one -- a level of support far higher than any I can recall. In a nation where effectively no one is advocating socialism, and in a time when socialists themselves have trouble defining what socialism actually is, this sudden swing toward socialist sentiment reflects both the discrediting of Wall Street and, I suspect, the right's association of the ideology with one very popular president. In this sense, and this sense only, Obama, with the complicity of the right, may be bringing back "socialism." But is a wave of nationalizations about to hit our shores? Not hardly.