The GM 'Precedent'

"Any idiot can nationalize a company," the great American socialist
Michael Harrington used to say, disparagingly. For socialists of
Harrington's generation and thereafter -- the socialists and social
democrats who have governed most of Western Europe off and on for the
past 30 years -- nationalizing companies hasn't really been part of
their playbook. To be sure, they long since nationalized a range of
services -- most prominently, health insurance -- that remain in
private hands in the United States. But taking over major companies?
Ever since Francois Mitterrand pulled back from nationalizing major
French concerns in the early '80s, it simply hasn't been done. Except
for those instances when governments have been compelled to rescue
failing banks, you can count the number of corporate nationalizations
by socialist governments on the fingers of one hand.

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.