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

by: David Sirota

Wed Feb 25, 2009 at 19:30

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.
David Sirota :: Nationalization: It's Not Scary, It's All Around You
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 is renowned 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.

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to be honest david (4.00 / 3)
its somewhat disconcerting to see bernanke and obama lockstep behind the notion of maintaining private banks.

i suppose they are proceeding with stress tests as we speak, and bernanke assured the market that the banks would remain private and solvent (with the addition of more bailout monies.)

i would hate to see and fully expect to see more money go to the banks only to have them become nationalized by early next year at the latest.

as great as the speech was last night it doesnt negate these stark facts.

I agree. (4.00 / 1)
Politics prevents new money unless we nationalize, but we won't so, they just stay on life support.  Ideology trumping pragmatism in the Obama administration.  Here's more Krugman:


Indeed. As long as capital injections are seen as a way to bail out the people who got us into this mess (which they are as long as the banks haven't been put into receivership), the political system won't, repeat, won't be willing to come up with enough money to make the system healthy again. At most we'll get a slow intravenous drip that's enough to keep the banks shambling along.

More and more, it looks as if we're headed for the decade of the living dead.

Hey David, sorry to go off topic (0.00 / 0)
but could someone write about what is going on with UNITE and HERE.

I keep seeing little things showing up in places like Politico where they resort to the typical "the liberals are fighting again" frame, but there is no context of where this all came from or what it is about(example: and I haven't seen anything about it here or at Kos (though I may have missed something).

With us just finally getting Solis confirmed, EFCA coming up, and the ongoing economic problems, we need a strong and united union voice.

"Never separate the life you live from the words you speak" -Paul Wellstone

Thanks (0.00 / 0)

"Never separate the life you live from the words you speak" -Paul Wellstone

[ Parent ]
Bernanke's definition today -- "is when the government seizes the bank and zeros out its shareholders" (0.00 / 0)
Bernanke Again Rejects Bank Takeovers --

... The Federal Reserve chairman, Ben S. Bernanke, spurned speculation again on Wednesday that the government might nationalize Citigroup or other big banks.

When asked about Citigroup during a House Financial Services Committee hearing, Mr. Bernanke said nationalization "is when the government seizes the bank and zeros out its shareholders," but that the administration does not plan on doing anything like that. ...

Rhetoric and impaled bankers (0.00 / 0)
Rhetoric and impaled bankers: a revolutionary new trolley-car paradigm, together with an introduction to problematology. 600 words.


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