Are Americans too ideological for their own good?

I must confess to some amount of amusement as I watched CNN’s and BBC’s coverage of the US election campaigns. The big issue last week was how the McCain campaign made much about Obama was being socialist because he wants to spread the wealth around. More amusing than this campaign line is how the rednecks interviewed by BBC seem to be buying it.

The week before, it was Treasury Secretary Henry Paulson who expressed regrets as he announced a shift in the government’s rescue plan. The government was going to pour in fresh capital in banks in order to free up the credit market which Paulson said was too socialist for his taste. Paulson said he didn’t want to do this because it goes against his grain… against his philosophy of how government relates with private capital….

Paulson was in fact, forced to put aside his original plan of buying toxic papers because the situation was becoming more serious. His original plan was taking too long to implement and even then, economists say its effectiveness is in doubt. It was the British Prime Minister Gordon Brown who proved more decisive and pounded on Paulson one weekend to put aside his aversion to any government equity in banks just so they can have a concerted response to the worsening crisis that has metastasized to Europe and Japan.

I thought I knew the Americans well enough but I never realized this headstrong aversion to “socialism” as if it was some shameful social disease. Yet, some amount of socialism is precisely what they need to get their lives straightened out. I expected the Americans to be more pragmatic, specially in business matters. After all, globalization was an American idea and to shine in this kind of flat world environment, you have to be quick to react, you have to be pragmatic.

Who would have thought that the Chinese, with their indoctrination to Maoist thought and yes, brainwashed with communist ideology from childhood, are proving to be less strictly ideological. Deng Xiaoping said it in his immortal words: It doesn’t matter if a cat is black or white, so long as it catches mice. That explains why they have some two trillion mice in their forex reserves… albeit called dollars. It was also Deng Xiaoping who said “Poverty is not socialism. To be rich is glorious.”

And with those words to guide the leaders of today’s Communist Party in China, a new economic and political superpower is emerging to rival the US. Pragmatism trumps ideology in today’s world and no one knows this better than Beijing’s “communists” who don’t seem to mind being called capitalists.

I can understand why Paulson, a prince of Wall Street, finds socialism repulsive. But it was pathetic to see Joe the Plumber and his kind reject a solution to their problem offered by Obama’s platform because it smelled socialist. The surveys notwithstanding, it is unfortunate that it is entirely possible that this socialist tag on Obama could still lead many of Joe the Plumber’s kind to vote against their self interest. They are ready to suffer more of the same injustices and maladies afflicting American society and economy today just so they can keep their hands clean of socialist taint.

Interestingly, the Paris-based Organization for Economic Cooperation and Development (OECD) recently released a study showing clearly that the gap between rich and poor is widening in Europe and North America. The report, which covers developments spanning 20 years in 30 countries, points out that the US has the greatest inequality in the OECD after Mexico and Turkey — and the gap has grown rapidly since 2000.

This is exactly what the Obama campaign has been pointing out. The gap between rich and poor Americans has grown markedly in recent years as middle-class wages remained largely stagnant while corporate profits and high-earners’ salaries soared. And because Obama proposed to raise taxes on those making more than $250,000 and lower taxes, or keep them level, for the middle class or 95 percent of the population, Sen. McCain likened his Democratic rival’s tax plan to socialism.

Federal Reserve Chairman Ben Bernanke last year said a widening US income gap threatens economic progress. National Public Radio observed that even the staunchest free-market advocates agree that a widening income gap can be harmful to a society.

But, as the Detroit Free Press observed, critics cite Democratic presidential nominee Barack Obama’s plan to raise the top two tax rates on the wealthy as clear evidence of his socialist bent. However, Len Burman, of the nonpartisan Tax Policy Center, said that while Obama “would make the tax system more progressive overall, it would not be a radical shift.” Take the emotional tags and the political rhetoric out of the conversation and Obama’s tax reform wouldn’t qualify as socialism at all.

“The answer is clearly no, Sen. Obama is not a socialist,” Paul Beck, a professor of political science at Ohio State University told the Detroit Free Press. “We’ve had a progressive tax system for some time, and both Republicans and Democrats have bought into it.” It may be news to Sen. McCain but America’s progressive tax system introduced 95 years ago is designed to spread the wealth around.

Socialism is more than that. Socialism involves government ownership of the means of economic production and state-directed sharing of the wealth. This is clearly not happening nor is Obama proposing it. As it is, America’s democratic capitalist system is neither socialist nor pure free market; rather, it mixes the two. Obama intends to keep it that way.

In any case, the Detroit Free Press pointed out, government intervenes in US “free markets” all the time. The deduction that homeowners get for mortgage interest is one form, for it subsidizes housing. The government contracts that sustain the great US weapons makers, such as Lockheed Martin and General Dynamics, are another. America’s social security system, Medicare and even all the money being given to public education are all programs based on socialist ideas.

Europeans are more comfortable with some socialism probably because they attach no negative baggage to it. Britain, France and Italy have many programs that may be called socialist. Unfortunately in the United States, the term has been closely associated with communism, and thus being called a socialist can make unsophisticated rednecks think national security risk.

If the Americans can only look at socialism in a new light, they may perhaps be able to finally solve some of their more pressing problems, notably health care. Free market has allowed the insurance companies and the drug companies to call the shots in America’s health care system, making it the most expensive and least responsive to the needs of the 95 percent of Americans whose lives Obama says he wants to improve. The Canadians across the border are happier with their health system which is more similar to the Europeans but ugh… emits a socialist odor.

As for the charge that Obama’s tax plan is socialist, I buy the view that instead of concentrating the benefits of tax reductions among the very affluent, Obama’s plan seeks to reduce growing income disparities and help the middle-class with some tax relief. My hard working children in California can use some tax relief, specially my daughter who holds a relatively better paying but emotionally draining job of teaching problematic six graders in a Charter school in Long Beach.

From what I have read of it, Obama’s plan also seeks to eliminate loopholes and schemes by which the super rich and many companies avoid taxes. He would help restore an economically sound progressive tax system, reversing the regressive nature of Dubya’s tax changes. Senator Obama recognizes that globalization presents many benefits and new opportunities — including unfortunately, opportunities to evade legally due taxes in tax havens.   

In sum, today’s economic turmoil has unmasked the free market system as being far from perfect. In the interest of making prevailing systems responsive to the needs of people everywhere, we will need black cats, white cats, free market, socialism or whatever it takes to get the job done. Blind faith to free market fundamentalism like blind faith to religious (Christian or Muslim) fundamentalism spells trouble. No one today can afford to be too ideological. Not anymore.

  San Miguel

 There is no truth to the rumor that with San Miguel’s purchase of a big block of Meralco shares, the name of the power company will be changed to San Mig Light.

Boo Chanco’s e-mail address is [email protected]