Winston Churchill once entered a men’s room where his Labour Party rival Clement Attlee was standing at a urinal. As Churchill moved to the far end of the room, Attlee asked: “Feeling standoffish today, are we, Winston?”
Churchill’s reply went down in history: “That’s right. Every time you see something big, you want to nationalize it.”
Attlee’s mid-20th-century Labourites advocated (and implemented) the nationalization of industries including railroads, coal, electricity, gas and steel. That was what made them socialists. It was also why Churchill’s riposte was funny.
But it’s not a joke that would make sense if applied to U.S. politics today. The Obama administration just announced its plans to sell off the government’s majority stake in the bailed-out insurance company AIG. The government also has been unwinding its positions in Citigroup and other banks, and is preparing to sell off its shares in GM as well.
The AIG rescue and the other TARP bailouts, initiated by the Bush administration with support from then-candidate Obama, were never popular in general and are anathema among Tea Party voters. But these bailouts seem to have worked out pretty well. The cost to taxpayers looks likely to be modest (it’s possible the Treasury will profit on AIG overall). A reasonable concern — that the government had no clear exit strategy from its crisis-driven role — has turned out to not be a lasting problem.
We’ll also never know what would have happened if TARP had not been implemented. AIG In particular had an enormous web of entanglements with other financial institutions through its ill-considered transactions in credit default swaps and other instruments. Would there have been a domino effect of one financial institution after another collapsing if AIG had failed? It seems plausible, and if so we might have ended up with a real government nationalization of the financial sector.
Republicans should draw a clear distinction between temporary crisis measures, such as TARP, and long-term expansions of government’s role and liabilities, such as Obamacare. Much as Obama once said he’s not opposed to all wars, just dumb ones, Republicans should focus their opposition to government programs on those that are harmful or unaffordable. And rhetoric about Obama’s “socialism” should go down the drain.