A new kind of socialism

Capitalism is an economic system wherein the government does not intervene into or manipulate the market. A system which allows the government to do that immediately loses the right to be addressed as such. Based on their present economic system, all countries in the world, including the United States of America, are socialist countries – too bad because socialism is the cheese trail that leads to the communist mousetrap. Since some countries, particularly the US, even as they practiced socialism, called themselves capitalist thereby devaluing the term, it becomes very necessary that people realize that when we talk about “true” capitalism, we talk of laissez faire capitalism.

Socialism for the rich – that is what Jim Rogers called the US Federal Reserve funded bailout of investment banks. And he is right – tax payers funded the stupid risks taken by some investment bankers – Robin Hood robbed from the poor and gave it to the rich. The government didn’t stop at that. It went ahead and basically guaranteed the debts of mortgage giants Fannie Mae and Freddie Mac. And IIM Ahmedabad professor TT Ram Mohan uses this criminal act of the US government to hit out at the private sector – “the crisis Fannie Mae and Freddie Mac face today can be directly ascribed to the original sin of privatisation,” he says in his ET column – Private profits, public losses. Creating these behemoths, and guaranteeing their debts even when they are private entities – these are the sins. Privatization was a step in the right direction. Now, things are beyond repair.

“The argument against public ownership has been that it is inefficient,” Ram Mohan says. Wrong. The argument against public ownership is very simple – the government has no business being in business. He is right though, when he says “Fannie Mae and Freddie Mac illustrate the perils that go with ‘public-private partnership’: profits are private, losses are public.” What lessons do we learn from this – that private sector is evil and that governments should get into business? Absolutely not. In fact, they should stay away and let the private sector reap what they sow – gold if they do it right, and shit if they muck things up.

Public sector is not the solution. It is part of the problem. Governments should stay away from markets and economics. If they don’t heed this warning, its their funeral.

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