Forum Post: Why the Socialism Boogeyman is Just That-A Boogeyman

I think most of us here can agree that we don't want to get rid of the political and economic systems we have now, just to modify them. The thing is that the size of the modifications people want to make to the system are often grossly exaggerated in an attempt to spread fear and prevent actual consideration of real change. Case in point: the New Deal. The New Deal was essentially a narrow technical fix to the existing capitalist economic model, a relatively minor "patch" if you will, to deal with existing unrest before things got out of hand and people decided to junk the system altogether and start over.

Today, however, as much of the New Deal as possible has been repealed (i.e. Glass-Steagall and other Depression-era industry and bank reforms) or gutted (what PRWORA did for welfare in 1996) and any attempts to reinstitute modern analogues to the New Deal is slandered as communism, thievery, etc. Honestly, I feel like a modernized New Deal would be able to effectively pick up the pieces of the 2008 crisis while preventing the onset of future crises if it's left alone once it's instituted. Why? If you regulate the banks then stunts like BoA's $53 trillion derivative transfer would no longer be allowed. Forcing banks to assume risk upfront in exotic markets and limiting both how big they can get and how much risk they can take makes them more wary about fueling asset bubbles like the ones that popped in 1929 and 2008. Writing down (NOT universal forgiveness) of debts allows people to have a fresh start paying what they can and brings real, income-fueled demand back to the economy. Unemployment relief programs ranging from the CCC to small business hiring subsidies take thousands off the street, off the welfare and unemployment rolls, and give them real jobs, either on government-sponsored projects or by making it less risky for small businesses to hire them, and also go a long way to producing real demand.

One of the main complaints I've heard against such a reform is "I worked my ass off for a given number of years to get where I was, and got kicked in the teeth time and again before finally succeeding. I got nothing from the government during this time and now you want a bailout?" I'd argue that the question is not why they should get the assistance they need, but why working people and small business owners shouldn't have recognition of the work they do and safety nets for the risks they take. My answer is that they should: federal subsidies should be provided to actual small businesses (especially in industries like alternative energy that the country is going to need later) and means-testing for welfare/food stamps/etc. should be revised to cover the working guy in the donut hole. Essentially, if you had all your assets invested in a small business and that business flops due to an external economic condition such as the recession we're in now, there should be a safety net that allows you to get back enough of what you put in that you can try again, much like the purpose of welfare and unemployment is to keep people from starving before they have a chance to turn their lives around.

One of the other major objections people will tend to raise about a program of that nature is that they don't want to be taxed, and they figure all taxes not directly and immediately raised and spent in the community are going down into a bottomless pit. Not only is that incorrect, it also fails to highlight the fact that proper progressive tax structures actually cost people less in the end. See http://www.themultitude.org/forum/viewtopic.php?f=4&t=23 for why.

The last major common objection to a second New Deal I keep hearing is that the federal government is so inefficient and so corrupt that allowing them to administer something of that magnitude would lead to terrific amounts of theft and waste and little or no new demand. I don't believe that has to be the case; if you enact campaign finance and lobbying reform to take special interest money out of politics then politicians at the federal level gets very clean and very transparent. Pocket-lining, kickbacks, nepotism, etc. are hard to get away with if everyone's watching, and watch they will if this goes through. Besides, who else is big enough to administer a relief program of that size. If you leave it to the states, then most if not all of the red states will continue to suffer because they wouldn't be willing to make the necessary changes to increase their revenue stream enough to do it. Hell, even now red states are refusing federal money intended to get them up and moving again because they don't like where it's coming from.