Wednesday, June 13, 2012

Who Needs Socialism?

If one calls Obama a socialist in mixed political company, there is always the progressive who (with a haughty sniff) insists you don't know what socialism is, and you should look it up in the dictionary. America, they sneer, isn't anywhere close to socialism, since we still have individual and corporate ownership of the means of production.

Within the strict definition of the word socialism, they are correct. However, the policies of the Obama administration accomplish the same end - removing control of commerce from individuals, and in doing so, reduce if not eliminate the value of investment in private enterprise.

Healthcare "reform" is a prime example. With the passage of Obamacare, the Federal government literally dictates what insurance products may and may not be sold, what customers they must sell to, and how much profit they are allowed to keep from these sales. Who needs socialism when the government can simply micromanage an industry legislatively?

Take the auto industry. What good is owning an automobile factory if you want to produce gas-eating fire-breathing muscle cars but government says you must build econoboxes? With further increases in CAFE standards from a target of 35.5 mpg in 2016 to 54.5 mpg by 2025, it's getting there. For every Corvette and Cadillac sold, they'll need more and more Cruze Ecos and Volts built to meet the average. Profit margins are greater on Cadillacs and Corvettes, but GM will be allowed to sell fewer and fewer of them. By regulation, the Federal government negatively impacts the earning capacity of a major industry. Who needs socialism when government can instruct industry to ignore consumer demands and instead supply the product the government thinks citizens should buy?

There is also the manner in which Obama took the GM bankruptcy out of the courts and into his own hands to turn over a large part of the ownership of GM to the UAW at the expense of bondholders. Who needs socialism when the government can ignore the rule of law in order to turn over industry to workers?

The Obama administration has made significant changes to the regulation of the financial industry. Banks made huge investments in the programming and infrastructure that allows greater numbers of merchants to accept debit and credit cards. These investments were made on the premise that the costs would be recouped by fees collected from merchants at the point of sale. Merchants across the country agreed to pay these fees. That is, until major retailers were successful in lobbying Congress to cap the merchant fees as part of financial system "reform". The end result? Retailers save billions, banks stuck with the bill. Add to that the continual efforts to dictate mortgage terms and retroactive revision of loans already entered into. The inviolability of a contract is a cornerstone of a capitalism system. Who needs socialism when the government can reach in to change contract terms at will?

Through regulation, legislation, and executive fiat, this administration is engaging in a form of virtual eminent domain. There is no physical, legal "taking" of property, but rather the encumbrance of private enterprise with expensive and counterproductive mandates. The impact of this insidious process erodes the value of business ownership. With the overreach of the government into the private sector, businesses can't rely on contracts entered into by parties of their own free will, but must deal with the risk that government may arbitrarily change these terms, possibly to the detriment of both parties. Neither can businesses operate in the most sensible and cost-effective manner, sensitive to consumer demands. Instead, they are stuck with costly and inefficient mandates and restrictions on what consumer demanded products they are allowed to manufacture. Without the freedom to control the means of production, legal title becomes increasingly meaningless.

This process did not start with the Obama administration, but it has escalated, and it seems to have become increasingly accepted by voters and legislators. This trend cannot continue. This election is critical. We must elect a President and legislators who respect the rule of law, respect free market capitalism, and respect the rights of business to manage themselves responsibly for the benefit of their owners, their employees, and their consumers. If we let Big Government continue to make slaves of business enterprises, it will make slaves of us all.

1 comment:

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