Nationalization: It's Not Scary, It's All Around You

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Amidst the punditocracy's handwringing about the supposedly unprecedented possibility of nationalization in America, Paul Krugman this week reminded his New York Times readers that nationalization is "as American as apple pie." He noted that the Federal Deposit Insurance Corporation has been nationalizing about two banks per week, and that the best way to save our financial system is to temporarily nationalize it. But before we get scared about the prospect of nationalization (ie. public/government ownership of major parts of the economy), let's remember: nationalization already pervades far more than the banking industry - it's all around us.

For instance, about 45 million Americans rely on public power utilities for their electricity. Those utilities are nationalized - that is, they are owned and operated by government (in this case, municipal governments).

Have you ever taken a subway, a commuter train like New Jersey Transit, a public bus or Amtrak? Have you ever sent a letter through the U.S. Postal Service? Then you've benefited from nationalized services - in those cases, mass transit and mail.

Then there's the health care system, with Medicare creating a quasi-nationalization model, and the Veterans Administration providing a fully nationalized system. And what do you know? Medicare is wildly popular, and the VA system has improved itself to the point of receiving national accolades for its quality.

These are just a few examples of nationalization in our midst. And as Harvard's Richard Parker notes in Newsweek, our country has a solid record of responsible nationalization during major crises. In his essay entitled, "Not a Dirty Word," he reports:

In World War I, the nations' railroads were successfully nationalized to sustain the war effort. In the 1930s, the Reconstruction Finance Corp. bought millions of shares in over 6,000 banks in order to rescue them. During World War II, government took control of the economy's entire pricing system for consumer goods--a more complex job than taking over several big banks--and did quite well at it, most economists agree. In the 1980s, the Resolution Trust Corp. seized hundreds of failed savings and loans in order to save the system. After 9/11, the government effectively nationalized the private-security firms at airports, and replaced them with the federal TSA.

So the next time you hear Rush Limbaugh or some teevee pundit blathering on about the economic crisis and claiming nationalization is dangerous and un-American, remember: nationalization is everywhere in America, and has been for a long time - and it has worked quite well when done responsibly.

Comments

[Absolutetruth]

Your comments, sir, are simply skirting the issue: Big Government v. Small Government. Noone disagrees with having a fire department, etc. etc. What Rush is pushing for (and Glenn Beck, Hannity, etc. etc.) is not opposed to certain government backed entities, but rather big government's stifling control and theft. Somehow I know there is a difference between supporting a local fire / police department and the absolute generation bondage that we just strapped on our future generations.

[BGNC]

Thank you, Mr. Sirota. We already own the big banks and AIG. They just haven't changed the name on the outside of the building or printed new stationery.

[FakeVirginian]

the examples - USPS and Amtrak. I guess USPS is pretty good, but it can be quite a mess at times. Amtrak though? Horribly run. Needs to be completely overhauled.

While nationalization of banks may be what we end up with, what I think we need to do is simple: strongly regulate the banks/other corporations. Our first bailouts barely had any strings attached to the money we were sending these banks Sure, capitalism has its benefits, but we have to make sure we are watching these companies, so things like the housing bubble doesn't occur. Again, there are certainly advantages to the free market, but we gotta regulate these companies, force them to actually look up someone's credit before they hand people a loan, give the car companies tax incentives to make fuel efficient cars and invest in new technologies.

[bannorhill]

When was the last time Amtrak or the USPS made money? If they are the poster boy success stories then why do we have to keep pumping money into them?

Amtrak was established in 1971 and now almost 38 years later it STILL loosing money and has to have government support keep running. Great example a nationalization success.

The USPS is even worse. It was established in 1775 and still needs government support to keep running 234 years later. Even better example of a nationalization success.

Does this mean the government will still be bailing our the banks in the year 2243?
Will the government still be building cars at a loss when the country is 400 years old?

THAT IS SCARRY!!!

[army193]

Government is only as good as the people we send to represent us...The only time the Republicans seem to be right is when there running the government and yes there are right government is your biggest night mare. HONK IF I RIGHT

[powder chowder]

no wonder repubs are so scared of nationalization. They know what a horrible job they would do.

[lilian101]

nationalization is "as American as apple pie."
So, why stop with the banks? We do have difficulties with education, so natrionalize the pubilc school system. And, the local police have difficulties communicating with the multiple federal agencies, so why not nationalize the local police?
And why stop there, to end all this endless political meandering, and to make sure everyone does the right thing, we could naionalize all these endless, political meanderings of the states--lets nationalize the state governments!
It's as American as apple pie, and don't forget, apples are european.

[bannorhill]

Sure... Why not. It worked so well in Russia, Poland, Romania....

[MikeLicht]

It is nauseating to hear Republicans react to recovery plans with the same tired rhetoric they used to justify their rape of our economy.

See

http://notionscapital.wordpress.com/2009/02/27/economic-recovery-simplifed/

[Pyrum]

It's all around me, and it's scary!

[RonPaulFan]

I realize many of you have a certain political prism you see things through. But please think logically about where you want your money to go. And remember this: One day, President Obama will be out of office. One day, Republicans will be in control. Yet the plans he puts in place will not be reversible. Will you all be happy then when the other party has control?

[RonPaulFan]

ohioan73,

You have it backwards. The reason the handrail example you gave about Jamaica is in such bad shape, is that no one is allowed to compete with that company. You never have to worry about a "greedy" business man building bad handrails, because in a FREE economy, a competitor will pop up with better handrails. In a socialized state, as you apparently want, competition is impossible because the government controls it. By law, it is illegal to compete with the Post Office. Do you even realize how many billions are wasted in these bloated programs? Do all of you know how much money goes toward public schools? And yet the grades keep falling. President Obama is now going to give more money, and in turn, you will see grades falling even more. You could give each school one trillion dollars, and it wouldn't matter. It's not about money, it's about corruption, waste and political correctness. Thirty years ago, schools received much less money, yet did better in school. Think about it.

[Lellie]

But now he's going to put in place a system that demands excellence and results from teachers, not simply time served!

[meyek]

in regard to the schools comment, you are probably right that more money isn't needed as badly as more efficient practices, but the biggest problem is encountered at home. kids are often too busy with non-scholastic activities to put proper effort into learning. osmosis only works for a very few, and only in certain subjects. i promise you that if parents were concerned with the quality of education their child receives and made sure that they were ready and prepared to learn, they would learn, even with somewhat incompetent teachers. the learning is done by the student, teachers merely present resources and deliver facts to be learned. good teachers provide context that can lead students to improve their knowledge, but once again, ...

my dad was not a paragon of fatherhood, in fact he was mostly a trainwreck, but he taught me to read fluently before i ever stepped into kindergarten, and i owe him big on that one. i concede that i haven't made the most of my skills, but i opted for a more relaxed life, so perhaps i'm a case in point, but i have helped raise four kids more or less successfully (no prison, consistent employment, continued education, etc).

[jcdf]

You have it backwards, Remember the the Republicans and Ron Paul are the party of no control. That is why we are in the the mess we are in. The banking and financial industry are perfect examples of " bad handrails". You have a lot "greedy businessman" building faulty financial instruments because they were "free" to sell this crap and their response was "because everyone else is doing it". No control, no oversight. It is up to the government to be impartial, to oversee what is a "good handrail". Example crash testing with cars & mileage standards, it's made cars much safer and efficient. People know what to buy because they know what is "good or bad"

Pres. Bush's prescription drug plan for seniors (part D) could not compete with Medicare's low cost, so the government subsidies the insurance companies to offer it to seniors. Bottom line seniors and we the people get ripped off.

Look it all the privatization that Bush did during his administration, the vast majority are more costly than before.

Somethings the private sector is better at, sometimes the government is a better provider.

Pres. Reagan quote of " government is the problem" was misguided. The correct statement should have been " bad government is the problem" that's what we had for the last 8 years.

[Schvenzlerman]

You have it exactly wrong. The crux of the problem is that the federal government created a faulty business model in Fannie Mae and Freddy Mac who prospered temporarily only via massive subsidy of access to cheap funds that reduced their need to underwrite. Sure, Wall Street lied through its teeth in their (marketing of) monetization and rating agencies were whores as well, but the bottom-line is that none of this would have happened had the federal government not gotten into the mortgage business. Lay the blame where it belongs points out that it was a bi-partisan disaster.

[NetProphet]

Thank you Mr. Sirota ! . . .

I thought, however, the U.S. Postal Service was a "partially­-privatize­d" entity since the '70s. That's why we have had American sales ingenuity responsible for the colorful stamps _ _ _ AND an annual price-hike ever since they came out! I believe it was Nixon who allowed the Post Office Department to be a separate entity from the Executive. Once called U.S. Post Office Department­.......now the U.S. Postal Service.

[NetProphet]

Tell it like it is, Mr. Sirota! . . .

I thought, however, the U.S. Postal Service was a "partially­-privatize­d" entity since the '70s. That's why we have had American sales ingenuity responsible for the colorful stamps _ _ _ AND an annual price-hike ever since they came out!

[ohioan73]

As an American, I go to other countries for vacation; Jamaica, for example. If you depend on a handrail to be on the stairs, you will possibly fall to your death just going up to your hotel room. (non-resort areas--the REAL Jamaica) I appreciate our regulations. I don't want privatization of everything. I don't care to ride Joe Blow Transit System because I don't know Joe, I know my country and it has safety regulations on food, drugs, infrastructure etc. I wouldn't trade it for the world.

If banks can't get their junk together and be responsible, its their own fault for being nationalized. I don't like the fact that there were "loose handrails" on our mortgage lending system. I don't trust "Joe Blow the Banker". He could be a crook. I trust RULES to watch over the cash. How can they cry "socialism!" with their hands out to the government for help? Pulease.

[biskitdaddy]

I for one don't have a problem with MY tax dollars being returned to me in the form of universal health care.

[LindaWarnke]

Rush Limbaugh and his ilk have a bit of schizophrenia in their positions. They don't mind government control when it benefits large corporations, but they have a hissy fit when we start talking about helping out individuals.

[Wake-up]

Interesting... give an example of Gov. control benefiting large corporations... ah... the Rush or a Conservative would agree with please?

[LindaWarnke]

I have never heard Rush or any of the others rant about corporations as they do about individuals they deem 'irresponsible'. When these corporations benefit from taxpayer dollars, how are they any different from the "welfare queen"?
I wasn't referring to a particular quote, but a general tone in Limbaugh and other's positions.

[lagumbo]

These wingnuts don't have a clue what they are talking about. The bass in lies. They don't seem to research anything, just say what ever they think will sway the public to their agenda. Of course their are some who beleives everything they say, bt they are the MINORITY, so if they can't get with the OBAMA PLAN they can stay at the wayside. Who needs them?

[bighat]

You do for one. The republicans work and pay taxes. The dems have lots of time to do protests and march on Washington. Course quite a few are trust fund babies who still have granddady's lawyer an do not pay taxes.

It is absurd when Obama raised the taxes. It will affect me. But, John Kerry and Warren Buffett will still pay 15% of their income. They could care less if the top tax rate is 40% or 90% because they have tax lawyers to get around the tax code