David R. Henderson  

Obama Throws the F-Bomb

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No, not that one; I wish. President Obama has done something far more serious. He has already, in less than 100 days, moved the U.S. economy further towards fascism. Sean Hannity and other critics keep criticizing Obama for his socialist leanings. But the more accurate term for many of his measures, especially in the financial markets and the auto market, is fascism.

Here's what Sheldon Richman writes about "Fascism" in The Concise Encyclopedia of Economics:

Where socialism sought totalitarian control of a society's economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the "national interest"--that is, as the autocratic authority conceived it. (Nevertheless, a few industries were operated by the state.) Where socialism abolished all market relations outright, fascism left the appearance of market relations while planning all economic activities. Where socialism abolished money and prices, fascism controlled the monetary system and set all prices and wages politically. In doing all this, fascism denatured the marketplace. Entrepreneurship was abolished. State ministries, rather than consumers, determined what was produced and under what conditions.

President Obama shouldn't get all the blame. Former President Bush took us a big step in that direction with his bailout. But when a President actually fires the president of a major company and decides to change the terms of that company's warranty on its products, that President has taken a major step. (H/T on the warranty point to Tyler Cowen.)


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The author at Political Animal in a related article titled The other f-bomb writes:
    THE OTHER F-BOMB.... Just two months after the inauguration, so many conservatives throw around "fascism" and "fascist" to describe the White House, I already feel more or less desensitized. After seeing David Henderson join the club, Megan McArdle sug... [Tracked on March 31, 2009 1:39 PM]
COMMENTS (59 to date)
RL writes:

I believe Bush, through Paulson, fired the CEO of AIG last fall (and put in a friend of Paulson's). That's not to say I'm disagreeing with the problem you recognize, merely that it is less precedent-setting than precedent-following.

Grant writes:

Not to defend Obama or bash this blog (or the blogger), but I believe these associations with fascism are often done in poor taste. A label does change the nature of a thing, and labeling Obama's actions as fascism does not make them as bad as the horrific crimes committed by fascist nations in the past.

Guilt by association of label may be an effective tactic, but I don't believe it is becoming of a serious blog on economics.

hutch writes:

but wasn't it that he basically gave them the choice of federal money or fire wagoner? the bod apparently thought the better long-term interests of the company was with the money, no matter what kind of job he was doing. my complaint is 1) that obama forced me to invest in a company i don't necessarily want to invest in and 2) that he made any kind of managerially oriented demand before giving them the money, as opposed to a performance/ financial position/ paypack demand that might be seen in a typical bond covenant.

I agree with russ roberts that it's a lot of hubris. the front page on bloomberg.com mentioned that wagoner "failed obama scrutiny". scrutiny of the polling impact, i'm sure. this is a classic example of a political firing, in the truest sense of the term.

David R. Henderson writes:

RL,
Point taken. Thanks.

Grant,
It's not guilt by association. It's guilt by action. We can distinguish between fascism as an economic system, which is what I focused on, and other aspects of fascism. I agree with you that neither Obama nor Bush did a lot of the nasty things that fascist governments did.

Methinks writes:

Grant,

Give it time. You can't start with atrocities. You have to work up to them.

Pussyfooting around socialism and fascism is a mistake precisely because of what socialists and fascists managed to accomplish in the past. When we take a step toward them, we should be aware of the direction in which we're headed and where the road we're on leads.

Matt writes:

Just as a communist country can have leaders who institute many democratic or capitalist policies, a democratic country can have elected leaders who take fascist actions.
Fascism is what it is without any value-judgements.

The Sheep Nazi writes:

Fascinating stuff. Somebody really ought to write a book about this.

Kevin writes:

Give it time. You can't start with atrocities.

2 weeks ago the House identified a politically unpopular group to have its wealth confiscated and to be punished should they not have the desire or means to pay. The concept went over quite well as I recall.

Jacob Oost writes:

And those of us who warned about this last year were racist nutjobs, a bunch of back woods Bible belt hillbilly McCarthyist war-mongers, etc.

Must be so embarrassing for the Andrew Sullivans and Chris Buckleys that Rush Limbaugh and Glenn Beck were right about Obama all along.

Milton Recht writes:

Implicit in fascism controlling the means of production is a viable, continuing means of production. GM's viability is questionable and if not for previous government involvement, it currently would be in bankruptcy. Similarly, the troubled banks would be in FDIC conservatorship.

Fascists show no restraint. I read your concern about fascism as whether the President's behavior to date with failing companies, indicates anything about his future behavior towards the other sectors of the US economy.

The President wants to reshape health care, which is a larger share of GDP than autos and other consumer durables. He also wants to reshape the energy industry and our carbon based industries. Additionally, some of the stimulus money as it passes through local governments probably will result in local governments replacing some private businesses.

It is in these profitable industries with their larger share of GDP where we have the greatest to fear about the President's desire for change. Will GM be his model? Will he treat these profitable and economically important industries with restraint? Will he ignore market based decisions and consumer choice and impose his and the government's will to force the change he desires?

max writes:

It seems to me that he channels the ideas of Mussolini and Nazi-Germany in controlling the economy by not attacking the system directly, but rather playing with the boundary conditions and rule-sets. But hey, this is nothing new, they do it since states exist in one form or the other. But right now its pretty excessive.

Adam writes:

Yes, we're making the shift from last fall's croni-capitalism to the 'new' fascism. Also, note the President's shift from proposing new laws to simply declaring change by decree.

Hayek certainly foresaw these shifts along the road to serfdom. A centralizing power responds to failure not by loosening it's control, but asserting more aggressive controls. The new health care reforms extend the control over personal and family life. Cap and trade insert government interest into every nook and cranny of commercial life. This is exactly what Mussolini meant by totalitarianism--state control of every aspect of life and all for a single purpose, the public good.

Where are the latter day George Masons?

Victor P. writes:

Do you not understand that most basic point of public communication - that whatever the subject of your discourse, you are always making as much of a statement about yourself as about your subject?

In this case, you prove yourself to be utterly feckless, and willing to go for the cheap shot at the cost of your own credibility. Double cheap shot - the phony little f-bomb headline, then the "fascist" nonsense.

So yeah, this is my last time visiting. Was that your intention?

Randy writes:

I think that the more brutal aspects of the historical Fascist movements are best seen as an inevitable consequence of their hunger for control. It starts out as a quest to maximize the elements of power in the state, even with the best of intentions, and then it just gets out of hand. Either we actually believe in freedom or we get Fascism, and if we get Fascism, then we will inevitably get brutal Fascism.

bughunter writes:

While I don't deny the troubling link between corporate and government interests, I am disturbed by the sudden acceptability of using 'the F-word' among certain circles.

As if it wasn't fascism when Vice President Cheney met *in secret* with energy industry leaders to determine US energy policy and other matters not disclosed, and defied all congressional subpoenas regarding the meeting records. Or when dozens of no-bid contracts were handed out to companies connected to the Bush campaign. When comparisons to fascism were drawn then, labels like moonbat and socialist were brought out in vitriolic response.

I warned people then, and warn them now, not to confuse fascism with plutocracy. The distinction is important. I also warn their detractors that if it *is* fascism, then one important point of evidence is the civility of their response to the charge.


guthrie writes:

When I heard that the Administration was involving itself in the affairs of a private company and 'backing' their warranties, it chilled me. Great post David.

What do you think of Arnold's term of 'Progressive Corporatism'? Similar concept?

zhao w. writes:

If you only use the word fascism when you have solid *solid* evidence, it would be too late, by definition.

Boonton writes:

Am I the only one who notices how firing GM's CEO nicely turns the agency problem on its head?

The agency problem is the fact that a company is owned by its shareholders but run by management. Management, having access to the assets and information of the company, has an incentive to put their interests ahead of shareholders.

It is, of course, always in the shareholder's interest for their company to get a free $16B from the Fed gov't. Maybe if the precedent is that asking for a Fed. bailout can get you fired, management will try to avoid asking for one unless there truely is no other choice. It's even better if GM's CEO was really a 'good guy' just trying to do his best. That makes it all the less appealing for other CEO's to ask for bailouts. Agency problem then gets used on behalf of the taxpayer.

'backing' their warranties, it chilled me

Why is this any different than the FDIC backing the relatively 'innocent' depositors of a failed bank? Remember one of GM's main arguments is that they cannot use bankruptcy because no one would buy a car from a company in chapter 11. Well if you don't have to worry about your warrenty that problem is gone.

I have to say I think this post is pretty disgraceful. It tells us very little about Obama and a lot more about David's unhinged mentality when it comes to Obama. It also nicely demonstrates that many people have little knowledge of what real fascism looks like.

Michael O writes:

David- This seems likes a terrible case on face:

1. Your evidence of "fascism" doesn't even ring true--the link you provide says the government is guaranteeing the warranty, not changing the terms of it.

2. Your evidence doesn't fit the definition that you provide. To go line by line:

- "sought that control indirectly, through domination of nominally private owners." : The government is working to establish the currently failing GM as a successful, independent entity. Where is your evidence of designs on long-term control? And while selecting a new CEO is an extraordinary step, the government is, at the request of the company, the largest investor in GM. Hardly unwarranted or "domination."

- "requiring owners to use their property in the 'national interest'": Again, the goal is, unless you have counter evidence, to establishing a viable company. I guess that is in the national interest, but only because the national meets with the corporate interests. And I would assume the owners could probably walk away at anytime and go into bankruptcy if they wished.

- "fascism left the appearance of market relations while planning all economic activities." "Planning all economic activities" is very far removed from "forcing the president of a failing company to step down"

- controlled the monetary system and set all prices and wages politically.
"All prices and wages"... are there plans for this that you know about? As far as monetary policy... is your contention that the Fed has been a fascist organization for all these years?

- "State ministries, rather than consumers, determined what was produced and under what conditions."
Tell me which state ministry is doing this? I suppose you could say they're shutting down the failing brands, but isn't it the consumer who decides what brands are failing?

It seems like you were just wanting to throw out an inflammatory use of the term "fascist".

Boonton writes:

Indeed, I guess this is a case of 'Obama derangement syndrome'

What strikes me is that if GM tomorrow announced an unexpected rush of sales combined with an unexpected investment from private equity had put them back into decent shape and they would not be needing any bailouts, Obama would be very happy to have one less thing on his plate. Not unhappy that he couldn't implement his secret plan for socialism/fascism whateverism.

Methinks writes:

Michael O,

At best your detailed analysis is naive. Obama will now use GM to produce cars which nobody wants but fit his political need to quell rabid environmentalists. The government is already attempting wage controls and it's indirectly attempting price controls again. The government writes laws to favour certain assets (housing) over all other assets and subsidizes certain protected groups (sub-prime) while vilifying and punishing others (high earners and anyone working for a financial company). The government subsidizes certain industries (biofuels) at the expense of others. This didn't start with Obama but he's expanded it significantly. Some people will not call it fascism until Obama actually puts the word "fascism" - as in "I am a fascist" - in on of his speeches. As Zhao points out, by then it'll be too late.

Your argument that this is what the company wants is invalid. All companies will take subsidies if they can get them. Giving it to them at the taxpayers' expense is part of the process of denaturing the market. And in case you haven't noticed, the government is now attempting to run the daily operations of every company which it has subsidized.

Boonton writes:

The government writes laws to favour certain assets (housing) over all other assets

Methinks is right! Ohhh how I pine for those pre-Obama days where assets were all treated the same.

BTW, did everyone remember to take their home mortgage interest deduction on their 2008 taxes? Also remember capital gains from stocks held longer than a year are taxed at a lower bracket! Just want to be helpful here!

More seriously, the problem with Methink's market nazism is that it basically makes everyone who doesn't toe the line perfectly a fascist. That government sometimes shows favoritism to certain industries or companies is hardly anything new and if that's all fascism is then its developers would have been greeted with a huge ho-hum when they first arrived on the historical stage.

The Sheep Nazi writes:

the problem with Methink's market nazism

Boonton's latest comment gives the game up, of course. The f-bomb is strictly reserved for the use of the right sort of people, against the wrong sort of people.

Michael O writes:

Methinks--

You're saying, then, that any government intervention into the economy is, by definition, fascism? You may think that favoring housing or biofuels/the environment or a progressive tax structure is bad policy. Fine. But to label it "Fascism" saps the meaning of words and reasonable debate.

Make a point about the inefficiencies of bureaucracies and dangers of government. Back it up with evidence. But don't group it with the very worst thing in history while only talking about changing the CEO of one *failing* company and incorrectly characterizing a warranty plan. A WARRANTY PLAN is the road towards destruction of freedom?

It's just silly. Historically inaccurate. And inflammatory. Even when you try the dodge of saying "I'm talking about fascist economics, not politics".

Boonton writes:

Keep in mind corporations began as gov't granted monopolies in various goods or services (trade with the Far East, tea etc.)...if fascism is going to be deviation from ultra-orthodox Adam Smith / Ayn Rand economics then the first major fascist country in the Western hemisphere was the USA (see, for example, Hamilton's economic system). England was fascist hundreds of years before Winston Churchill was pooping in diapers. There's probably no place at any point in history that wasn't fascist.

ao writes:

David,

You write "We can distinguish between fascism as an economic system, which is what I focused on, and other aspects of fascism."

And the commenter immediately below you writes:

"Give it time. You can't start with atrocities. You have to work up to them."

Precisely disproving that "we" can distinguish between economic and the more atrocious aspects of fascism. But you know this already.

The word has power and causes a strong reaction because of it's association with atrocities like genocide. These are the games your friend Hannity plays when he insists on using a word like "terrorist" to describe 60s radicals. These words carry a punch because of their association with atrocities far far greater than anything relevant to what they are actually being used to describe. This is precisely why you and Hannity use words like this: because they conjure emotional reactions greater than any real criticisms could.

Boonton writes:

Unfortunately even just looking at fascism as an economic system, this post fails horribly to make its argument.

notrequired writes:

You know what's really fascist? Government enforcement of legal contracts and property rights. I think we should do away with those and let the free market decide who gets to keep their property.

El Presidente writes:

David,

I suggest you go too far. If you want examples of fascist tendencies, rewind the tape of the prior eight years. There are none-too-sublte hints of it there. Placating people with unsustainable tax cuts that do not benefit them while artificially inflating GDP, spending massive amounts of borrowed money off-budget for a war predicated upon lies (with knowledge and intent), and openly questioning the patriotism of anyone who would dare to oppose them seems a little closer to the mark. I guess you have a short and/or selective memory.

If you'll recall, it is the supposedly free market that has been massacring companies left and right. As has been stated, the examples you offer up are mind boggling in their complete failure to resemble fascism. Next time you want to make a political critique, consult an encyclopedia of political science, or at least have the decency to apply your own definition accurately. You conjur boogie-men like it's a favorite pastime. Where do you get your incredible disdain for government attempting to mitigate harm from the reckless actions of a greedy minority? Perhaps your iedology got the better of your reason. I suppose that happens to people from time to time.

Inciting a mob to calm reason is quite the oppsite of fascism. You should go back and look at some of the President's recent remarks regarding anger and constructive responses to it if your memory does not extend that far. It was the President who said we need to think again before enacting special taxes on bonuses, remember? Try really hard. Take an extra moment or two if you need it. Heck, look it up on YouTube if you need to.

needle writes:

WOW...the gloves come off and the claws come out when the wrong opinion is expressed...

Methinks writes:

Michael O,

Yes, I think all of those things are a bad idea. I back it up with empirical evidence we have from countries that engage in such intervention and my experience living in countries that did just that (just to keep it concise). However, let me also be clear that lack of indirect control over the means of production via regulation and subsidy should not be confused with lack of Rule of Law.

What I didn't like about your post was the over-focus on GM as if that is the only thing that happened. And yes, a warranty plan backed by government is a bad idea. You know that the government has intervened in the economy by far more than taking over GM via bailouts and growing regulation, so it makes no sense to isolate that case. Even if it were an isolated incident, we should view it with suspicion as government usurps liberty one step at a time. It's rare, in the absence of revolution, for governments to slap totalitarian control on everyone in one go. Although, a crisis is a good time to grow government to levels that are unattainable in relative calm.

But, I'm not talking just about fascist economics as David is. Fascist economics lead to fascist politics. The clearest example we have is the lynch mob that went after employees of AIG and then financial institutions in general. What do you call the attorney general of NY threatening to publish the names of people who refuse to return their pay after Cuomo himself signed off on said pay in October and then congress passing legislation that punishes the "impure" (read: most productive) employees of financial institutions by confiscating their pay ex post? I call it atrocious.

Which brings me to another point. I think people take issue with calling a spade a spade because it hurts their political team. As far as I can tell, both teams are guilty. I don't care if the word is inflammatory. There are things that should reasonably light a fire under people and this is one of them. To paraphrase Thomas Jefferson - A government strong enough give you everything you need is strong enough to take everything you have. We should all worry about that.

El Presidente writes:

David,

Do you read any of your source material?

Fascism is to be distinguished from interventionism, or the mixed economy. Interventionism seeks to guide the market process, not eliminate it, as fascism did. Minimum-wage and antitrust laws, though they regulate the free market, are a far cry from multiyear plans from the Ministry of Economics.

That sounds a lot closer to present reality. If I take one step to the West from the center of Los Angeles, you'd be an imbecile to say it suggests I am headed for China; it being so far off as to make the advance in proximity negligible to all but those fixated on China and completely ignorant of the fact that I cannot get to China by walking.

To maintain high employment and minimize popular discontent, fascist governments also undertook massive public-works projects financed by steep taxes, borrowing, and fiat money creation. While many of these projects were domestic—roads, buildings, stadiums—the largest project of all was militarism, with huge armies and arms production.

Who was that tall skinny fellow on my television talking about drastically reducing spending on obscenely expensive weapons systems that don't work and that we don't need?

El Presidente writes:

needle,

WOW...the gloves come off and the claws come out when the wrong opinion is expressed...

The gloves come off when econmists choose to indulge in political bigotry as though they understood what they were talking about.


Methinks,

The clearest example we have is the lynch mob that went after employees of AIG and then financial institutions in general.

. . . standing in stark contrast to the President who called them back. David's critique was of the President, was it not?

Which brings me to another point. I think people take issue with calling a spade a spade because it hurts their political team.

I think that's a poor choice of idioms, especially for a public forum, and you haven't understood _my_ comments if that's what you got out of them. I can't speak for the others here.

needle writes:

prez,prez,..take a breath..it was not only aimed at Obama, he took a shot at W too.And the idiom methinks used was quite proper in its context. Don't take real offense to an imagined slight.

Methinks writes:

. . . standing in stark contrast to the President who called them back. David's critique was of the President, was it not?

In what fantasy world did that happen? The president was looking for "all legal means to get that money back". Or are you deaf to such things when your team is at bat?

I think that's a poor choice of idioms, especially for a public forum,

too bad.

and you haven't understood _my_ comments if that's what you got out of them.

That could be because I neither read nor responded to your comments before I wrote the post to which you are now responding. If you read my post carefully, I was responding to Michael O. I understand your comments. I just don't feel like responding your politically driven commentary.

Snark writes:

I’m no fan of either administration, past or present. Both have been troublesome to me in certain respects. But I have to agree with others here that any reference to fascism is on the hairy edge of sleazy. We may be slouching towards Gomorrah, but we’re still far removed from anything even closely resembling Nazi Germany.

Nevertheless, this quote by Hermann Goring does bear repeating (you could fill in the blanks with “attacked” and “pacifists” if you prefer, but any qualifier will do):

“But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship. ...voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being _____, and denounce the _____ for lack of patriotism and exposing the country to danger. It works the same way in any country.”

I remain vigilant, but until something similar to The Reichstag Decree or Enabling Act of 1933 is passed, I won’t be packing my bags for Switzerland. And we should keep in mind that it was a dramatic shift to the far right of the political spectrum that ushered in the rise of the Nazi Party.

El Presidente writes:

needle,

prez,prez,..take a breath..it was not only aimed at Obama, he took a shot at W too.And the idiom methinks used was quite proper in its context. Don't take real offense to an imagined slight.

"Spade" is sometimes a card in a deck, a shovel in a shed, a weapon in an arsenal . . . and a racial epithet used to describe black people. Though I am certain is was not intended to be interpreted as such, it has a history of being used that way. It was a poor choice of idioms. I didn't call it anything more. I won't call it anything less. And yes, Methinks, it really is too bad.

Describing efforts at responsible public policy as steps toward fascism is either woefully ignorant or inexcusably self-indulgent in it's magnitude of unsubstantiated bias. Political bigotry, not unlike racial bigotry, relies upon predetermined and often subjective classifications used as frameworks for labeling events which frequently do not neatly correspond to them. It considers individuals in ways that allow them to be treated as groups and therefore derided by association without examination based on some imputed similarity. It is a convenient crutch for people who do not wish to know or be bound by details. It is beyond ironic that a libertarian would resort to such a posture given the preeminence of individuals in their own philosophy. But, perhaps I associate them with a characteristic that they do not actually intend to display. There are many reasons why the President's actions are not fascist, but David did not notice those, apparently, because he said nothing of them.


Methinks,

So, you have a problem with a President directing his staff to operate within the bounds of existing law? O.K. Interesting.

Bluecat writes:

I've been reading this blog site over the last few months with the kind of fascination that you have watching a headless chicken, or a cut snake.

What actual planet do you people live in?

The economics that you seem to have a religious commitment to is neither free, fair, or natural. It is a construction by incredibly rich people to ensure that they stay obscenely rich. Obscenely rich people always make the economic models, and they always fall by them, because they show their contradictions, usually by producing huge disparities of wealth. Look at feudalism for a good example, and for a current example look at American capitalism.

To get back to your worries about fascism - perhaps the corporates have no problem with that - they have been working towards it for years. Exchanging the black Shirts and explicit violence with Grey suits and the more subtle violence of sub-prime mortgages. Remember Benito Mussolini said "Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."

We've been seeing that in practice with the corporates now demanding the State support them when no-one is else is prepared to, and the State being so dependent on them that they are deemed "too big to fail".

Your good friend GW Bush sowed the seeds for american fascism, and now you are seeing the fruit. Good luck with your corporate state, you'll need it.

If you want a considered look at fascism, have a look at this site: http://www.themodernword.com/eco/eco_blackshirt.html

Methinks writes:

. . and a racial epithet used to describe black people.

OMG! LOL! Listen, el presidente of speech control, as an immigrant, I failed to focus on learning all of your racist garbage. Thus, I'm not current on the latest KKK lingo that you know by heart. I even married an African immigrant. Was that accidentally racist too? Any idiot could understand that I was referring to government intervention and not Obama's race. Well, obviously not any idiot.

The rest of your post is just an intellectually impoverished attempt at connecting racism and bigotry to a claim about an economic policy. And yes, when the President uses the legislative authority of congress to single out and punish a group of individuals, that's...um....really bad (can't say fascist, right?). And just so that you don't think that only black presidents do that, FDR also did that. Please refrain from suggesting that mentioning FDR was not a perfect president means that I'm anti cripple.

Methinks writes:

To get back to your worries about fascism - perhaps the corporates have no problem with that - they have been working towards it for years.

Your attempt to draw a parallel between feudalism and free markets falls short. The two have nothing to do with one another and one does not lead to the other. Only in countries where there is a relatively free market do poor people have the opportunity to rise from poverty. Yes, there are income inequalities. But looking at income is only looking at the output. There are also vast inequalities of inputs (risk, work, education, skill, etc.). No question corporate rent seeking has caused a cozy relationship between the state and corporations and Bush was not the only president to sow those seeds, although he sowed an awful lot for one president. If government creates rents, someone will seek them.

Mike Rulle writes:

Hmm

I made the exact same point using the exact same reference last week on my blog---it is in the air and that is not good---worse, it is reality.

Check out more if you like at my link

El Presidente writes:

Methinks,

OMG! LOL! Listen, el presidente of speech control, as an immigrant, I failed to focus on learning all of your racist garbage.

It isn't _my_ racist garbage. It's the heritage of the country in which you reside. This is precisely why I said you didn't intend for it to be received as such. Maybe you didn't read that.

Though I am certain it was not intended to be interpreted as such, it has a history of being used that way. It was a poor choice of idioms. I didn't call it anything more. I won't call it anything less. And yes, Methinks, it really is too bad.

I've spoken with you before and I remember our conversations. I know your background. It was a poor choice. That doesn't mean I think you meant anything by it.

The rest of your post is just an intellectually impoverished attempt at connecting racism and bigotry to a claim about an economic policy. And yes, when the President uses the legislative authority of congress to single out and punish a group of individuals, that's...um....really bad (can't say fascist, right?).

The rest of my post identifies the mechanism through which humans are prone to make errors in judgement by assigning negative connotation to labels then using arbitrary criteria for assigning these labels to things which neither warrant them nor benefit from them.

Here's something that American political scientists like me were required to learn about the government of the United States before we were allowed to graduate . . . from high school: the President cannot exercise the authority of Congress. Only Congress can exercise the authority of Congress. That's pretty straightforward, right? So, the President could not have used the legislative authority of Congress to single out anybody, no matter how badly some people might want to say he did. It is simply impossible.

If you think I disagree about the merits of the bonus tax, you are wrong. I said it wasn't a good idea here. That doesn't mean it's alright to invoke fascism to describe a person who isn't even responsible for the action you claim is fascist. Am I to blame for the things _you_ do and say? I am frequently criticised on this site for being "political", but what else could we call David's use of the term "fascism"? It's not even correct according to the rest of the cited definition. Political is too kind a word.

Kurbla writes:

Degree of the state interventionism is not relevant for fascism. Is there any evidence that Nazi Germany had significantly more of a state intervention in economy than Britain in WWII? I do not think. But, even more important - how is that you know that Germany was fascist, and Britain wasn't, although you do not know about state intervention in economy? Because the difference is in democracy and political freedoms. Not even racism, because USA was more racist than Italy.

The Cupboard Is Bare writes:

A number of people have mentioned that the use of the word "fascism" is inappropriate, because it stirs up memories of genocide.

Might I remind you that more people were killed under socialist regimes in the 20th Century than were killed by fascists.

The speaker in the following video makes a few interesting points re political correctness of socialism vs fascism. It's in the first few minutes of the video, so you don't have to watch the entire thing if you don't wish.

http://mises.org/multimedia/video/ss05/ss05-Block.wmv

Boonton writes:

Methinks

OMG! LOL! Listen, el presidente of speech control, as an immigrant, I failed to focus on learning all of your racist garbage. Thus, I'm not current on the latest KKK lingo that you know by heart. I even married an African immigrant. Was that accidentally racist too? Any idiot could understand that I was referring to government intervention and not Obama's race. Well, obviously not any idiot.

Are there still comment moderators on this blog? I got slapped on the hand for far less than calling someone an idiot.

As for methinks's point:

1. Congrats on being an immigrant. Learn the damm language! If someone points out to you that a phrase you are using may have a meaning in the local usage that you don't want to convey you should thank them for making you aware of that. Not whine that they are trying to control your speech.

2. Your personal life is not our concern. The program for getting frequent flier miles for politically correct personal associations was discontinued several years ago.

And yes, when the President uses the legislative authority of congress to single out and punish a group of individuals, that's...um....really bad (can't say fascist, right?).

How about a law that punishes child molestors? Ponzi scheme hustlers? Car jackers? If you're trying to make a point about the AIG bonus fiasco, the fact of the matter is such a law is an attempt to recover what many people suspect were an abuse of AIG's management's power. The AIG bonuses do smack of a management that suspected they were on a sinking ship and slipped the bonuses in under the wire. As such this would be a violation of management's duty to put the shareholder's interest first and the shareholder's trying to see if they could recover some of those bonuses is hardly unjust 'singling out'. There probably is not a legal or good way to recover all of the money but seeking one out is hardly fascism.

What right wingers like methinks seem unable to comprehend is that there is a very big difference between intervening in private companies and intervening in companies that are telling you "save us or the we'll take out the whole economy". You are free to argue that such claims are overblown or that even if they are true it is better to suffer the failure of a 'too big to fail' company than set off the moral hazzard problem of bailing them out. What is not right, though, is to pretend that intervention in companies that we either essentially own or are asking us for bailouts is the same thing as fascist economic policy which seeks to seize control of the functioning companies in an economy.

Snark writes:

@Boonton,

"If you're trying to make a point about the AIG bonus fiasco, the fact of the matter is such a law is an attempt to recover what many people suspect were an abuse of AIG's management's power."

These suspicions are unfounded. The bonuses were legally binding contracts made before any bailout money was received and, as such, cannot be abrogated by AIG or the government. What’s more, AIG CEO Ed Liddy (appointed by Geithner) has already explained that the people receiving retention bonuses were not the same people who launched AIG's unhedged housing bets that brought the company down.

What I find more distasteful is the unabashed hypocrisy of those in Congress who now act outraged over bonus money they KNEW was written into the terms of the bailout. And what we can certainly construe as "fascist" is Mr. Cuomo’s threat to publish the names of AIG employees who don't relinquish pay they were contractually entitled to, some of whom have received death threats.

guthrie writes:

@Boonton

Back to your point on the FDIC: Banks pay a lot for the privilege of being members of the FDIC, plus must accept all kinds of requirements to be in compliance. BTW I'm no fan of the FDIC either, but the difference here is you know what your getting into when you start a bank. Plus, FDIC doesn't allow the State to decide who can or can't be the boss.

What chills me is the carte-blanche the Executive Office seems to think they have when it comes to hiring and firing employees of a non-government (read, NOT owned by 'us') business, and yes, simply deciding to 'guarantee' warranties - no debate, no 'hearing of dissent', none of that. Weather or not the private business is 'functioning', when the State makes these kind of decisions, it is functioning as a fascist state.

No single company can 'take out the whole economy'. That's ridiculous. There's no such thing as 'too big to fail'. A company fails, and other companies come in and take over the assets. Any company that says such things is out of their minds or is lying. To agree with this delusion or the lie makes you either completely stupid, or allows you to engage in some other agenda. These companies can threaten, cajole, plead or whatever, the Administration and Congress have the right (obligation?) to say 'NO'. Weather they ask for it or not, this kind of involvement denotes fascist activity on the part of the State. And it's right to call a duck a duck.

So is it the suggestion that this Admin is behaving in a fascist manner what makes us 'right wing'? Does it matter to you that most of us here thought the same of Bush's bailout (read RL's comment up top)? Does dissenting with the Bush Admin for their bailout make me 'left wing'? Does it matter to you that many here believe that State Control, weather it's over Schools, Welfare, Property, Borders, Marriage, Reproduction, Drugs, or what have you is still State Control, thus terms such as 'left wing' and 'right wing' basically have no meaning, because y'all just arguing on the same side?

The Sheep Nazi writes:

Snark nails it. I have always liked Sinclair Lewis's formulation: fascism is capitalism plus murder. Just so, but just in the same way that cholera is drinking water plus sewage. It's the sewage that's the problem, not the drinking water, and big outbreaks come from small ones, so any amount of sewage is too much. My utopian fantasy is that someday we will come to understand politics as well as we understand plumbing. When we do, we won't tolerate involvement with the likes of Andrew Cuomo, and certainly nobody will grace such shenanigans with the label responsible public policy.

The Sheep Nazi writes:

Upton Sinclair. Sorry.

El Presidente writes:

The Sheep Nazi,

I like another quote from Upton Sinclair:

It is difficult to get a man to understand something when his job depends on not understanding it.

The Sheep Nazi writes:

A truth applicable to most everyone, Prez, but these days it is much safer to tell some people this truth than others. That's likely why Ron Gettelfinger still has a job, and Rick Wagoner doesn't.

Boonton writes:

The bonuses were legally binding contracts made before any bailout money was received and, as such, cannot be abrogated by AIG or the government.

This does not refute my statement that many, fairly, perceived the AIG bonuses to be an abuse of management power. Note just of bailout funds but also of AIG's shareholders. As for being abrogated, tell me what would a bankruptcy judge have to say about those unabrogateable bonuses if AIG was allowed to fail?

I'm no fan of the FDIC either, but the difference here is you know what your getting into when you start a bank. Plus, FDIC doesn't allow the State to decide who can or can't be the boss.

Currently GM is floating a plan to stiff their bondholders for something like 90 cents on the dollar. In exchange bondholders get something like 90% ownership of GM's stock. If you make this deal with your debtors you don't think they can insist upon your termination?

What chills me is the carte-blanche the Executive Office seems to think they have when it comes to hiring and firing employees of a non-government (read, NOT owned by 'us') business,

Is Obama trying to fire the head of Apple? Microsoft? Even Ford? Why not? Because those are functioning companies that are not asking for billions of dollars. A fascist would see those as the most important companies to control since they are actually productive. The alternatives are:

1. Bankruptcy - In which case a gov't employee (aka judge) will be able to fire.

2. Bailout but with no penalty of any sort - which generates the moral hazard problem.

and yes, simply deciding to 'guarantee' warranties - no debate, no 'hearing of dissent', none of that.

Did I miss the debate when the Fed expanded the FDIC gurantee on bank deposits? Yea the banks 'pay' to be a member but since the FDIC is borrowing billions they are hardly paying actuarial rates.

I also note that you seemed to miss the guarantee of warranties is less about taking control of GM and more about a 'controlled bankruptcy'. While it may help GM's sales slightly in the short term (consumers thinking of buying a GM car won't have to worry that no one will be around to honor their warranties), it was not greeted as positive news for those hoping for a bailout.

These companies can threaten, cajole, plead or whatever, the Administration and Congress have the right (obligation?) to say 'NO'. Weather they ask for it or not, this kind of involvement denotes fascist activity on the part of the State. And it's right to call a duck a duck.

Wow, you're probably the first person to depict fascism as a wimpy gov't that is being pushed around by companies! This reinforces my point about this thread being a disgrace and its supporters being unhinged.

Yes you have a valid argument that 'too big to fail' might be a myth and even if it isn't trying to bailout the 'too big' companies creates more problems than the damage it prevents. Where you and others go off the respectable end is redefining fascism to basically mean anyone who disagrees with your conclusions for either good or bad reasons. If this is fascism then there has never been a government in human history that is non-fascist.

So is it the suggestion that this Admin is behaving in a fascist manner what makes us 'right wing'? Does it matter to you that most of us here thought the same of Bush's bailout

No it doesn't matter. Calling Bush a fascist because you didn't like TARP, didn't like the AIG bailout etc. is just as immature and historically inaccurate.

Methinks writes:

El Presidente,

but what else could we call David's use of the term "fascism"?,

Accurate. The president has veto power and the president influences the congress and the president expresses his ideas. The ideas this president expresses are no less fascist than the ideas the previous president expressed. Same goes for congress.

Of course, you realize that we can skip the entire legislative process altogether on the road to fascism (indirect control of the means of production, if you like that better. I like fascism because it takes less space to write). The favourite tool of politicians to that end is regulation - which is just government fiat.

[Comment edited.--Econlib Ed.]

Snark writes:

@Boonton

This does not refute my statement that many, fairly, perceived the AIG bonuses to be an abuse of management power. Note just of bailout funds but also of AIG's shareholders.

Please help me understand how the AIG bonus contracts constitute a “fairly” perceived abuse of management power? Most of those who remained on board with the troubled Financial Products Division in the aftermath of the CDS swindle (and who were in no way connected to it) did so at the behest of AIG to help preserve any remaining assets with which to pay back taxpayers. Through the efforts of Jake DeSantis and approximately 400 other employees (knowing full well they were being used as temporary ballast whose jobs would be lost within a year), a much worse situation was probably averted. These people agreed to stay on with repeated assurances by Liddy and AIG that the company would honor its bonus commitments and stand behind them.

As for being abrogated, tell me what would a bankruptcy judge have to say about those unabrogateable bonuses if AIG was allowed to fail?

A bankruptcy judge would probably nullify the bonus contracts, which I would have had no problems with had AIG requested Chapter 11 reorganization. However, I do not wish to confer judicial powers to the executive or legislative branches of our government, because that would most assuredly come under the definition of fascism.

Boonton writes:

Let me sum up what I think are the main problems with this post:

1. Misunderstanding means and ends:

Fascists do indeed favor gov't intervention in the economy. So do/did a host of other economic and political ideas. Mercantilists, protectionists, 'planned economies', Keynesians, Monetarists and so on favor gov't intervention as well.


Let's look, though, at what fascists seek to accomplish. From wikipedia:

Fascist movements promote violence between nations, political factions, and races as part of a social Darwinist and militarist stance that views violence between these groups as a natural and positive part of evolution.[9] In the view of these groups being in perpetual conflict, fascists believe only the strong can survive by being healthy, vital, and have an aggressive warrior mentality by conquering, dominating, and eventually eliminating people deemed weak and degenerate.[10][11][12][13]

Does Obama seek to displace GM's head because he considers GM to be strong? Considers command of GM to be seizing the 'commanding heights' of the economy? GM of 2009 is not quite Volkswagon of 1935. If anything a fascist would probably want GM to die rather than consume resources that could be going into 'strong' sectors. Rather than fascism, the bailouts seem to be better described as a particular type of protectionism.

2. Fascism does not have a coherent economic agenda

Per wikipedia:

Fascists considered the economy to be of little importance, and did not have clear economic views. One significant fascist economic belief was that prosperity would naturally follow once the nation has achieved a cultural and spiritual re-awakening.[16] Often, different members of a fascist party would make completely opposite statements about the economic policies they supported.[17] Once in power, fascists usually adopted whatever economic program they believed to be most suitable for their political goals. Long-lasting fascist regimes (such as that of Benito Mussolini in Italy) made drastic changes to their economic policy from time to time. Stanley Payne argues that common aim of all fascist movements was elimination of the autonomy or, in some cases, the existence of large-scale capitalism.[18]

If fascism does not have a coherent economic ideology then it is a political one. The 'elimination of the autonomy' is essentially a political goal that has implications for economic policy rather than the reverse.

David writes:

It's not guilt by association. It's guilt by action. We can distinguish between fascism as an economic system, which is what I focused on, and other aspects of fascism

Well NO we cannot distinguish between fascism as an economic system because there is no such thing. You have a collection of economic policies (many contradictory) that fascists employed when they had political power. That says nothing since there will always be economic policies when a group takes power.

If you cannot distinguish between economic fascism and political fascism then you're reduced to trying to argue that Obama is a fascist like Hitler, Mouslinni and others. This has not been supported and is rightly dismissed is unhinged, hysterical and downright disrespectful.

3. Childishly confusing "stuff I don't like" with fascism.

This has already been well documented here. Policies you don't like, that seem unfair or are foolish from a free market perspective may in fact be policies that you should argue against but they are not fascism. Claiming that they are becomes a sign of immaturity as well as demonstrates historical ignorance (I'm waiting for someone to say it's fascist that Burger King won't let you refill your sode at the self-service dispenser)...

Randy writes:

Again, applying the term Fascist to Progressive Corporatists may not be technically accurate, but its good counter-propaganda, so I'm going with it. If it causes them to take more aggressive measures to silence us, great, we will be proven correct. And if it causes them to back off, even better.

Zack H. writes:

I don't believe I've ever heard this comparison made, but its definitely done well and in an informative manner.
Thanks for the definition.

El Presidente writes:

Methinks,

The president has veto power . . .

Only over bills that actually make it through both houses of Congress. The bonus tax hasn't made it through the Senate, yet. How can the President veto it, and why does he deserve blame for not having done the impossible?

. . . the president influences the congress . . .

Perhaps. Do you have some evidence that the President influenced the House of Representatives to pass the bonus tax?

. . . the president expresses his ideas . . .

Like saying we shouldn't govern out of anger and that the bonus tax was not well thought through?

The ideas this president expresses are no less fascist than the ideas the previous president expressed.

I don't know how you conclude that, but I am less and less interested each time you express it without substantiation.

Boonton writes:

El Presidente

The problem with Methinks's statements is that it has nothing to do with fascism. Her charge was that Obama is fascist because he indicated for support for a law that punished an 'unpopular group'. Next time you read about an adult bookstore trying to fight a zoning law or sex offendors having to register with Megan's law think about this definition of fascism.

The AIG bonus brouhaha was about trying to get back money people honestly believe was unjustly taken. Now you can make an argument that the bonuses were not so unjust....although I thought it was interesting their defender here admitted a bankruptcy judge would have voided them. But this is really a distraction, a big 'so what?'. In essence Methinks and others here view fascism as anything that deviates from their ideology. If this is the case then every gov't in human history was and is fascist since no gov't has ever totally adopted any ideology.

Needless to say I hope the people crying fascism on this list never actually experience a real fascist gov't. I think it is disrespectful to the real victims of fascism (and communism) to so lightly toss around these labels. Perhaps methinks believes that the plight of an AIG executive is equilivant to Anne Franks, but I don't.

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