Pull up a chair, gentle reader, and tuck into another 1,100 words from someone who really doesn't know what she is talking about, but is making an effort to sound like she has some expertise. This week's column is about socialism. Here's what I do know about it: It's the opposite of free market capitalism, and it is apparently a bad word. I know this because the retort "That's nothing but socialism!" seems to be enough of a reply for people on the right when they decry social systems, without any explanation as to what that might mean. In my limited knowledge, it seems that both socialism and the free market economies are extreme ends of a spectrum; I suspect the truth lies somewhere in the middle.
So why am I thinking about this crap? Last week the government bailed out Fannie Mae and Freddie Mac, which needed to be done or we would be in even deeper doo-doo. I think. I was surprised to see that people on the right were hemming and hawing about the bailout. Why would Big Money people be angry that a Big Money agency was helped out? Doesn't Big Business make this country work, according to them? Big Business ain't no welfare queen; it works hard and occasionally needs a leg up, right? I had to get to the bottom of it, so I headed to America's second-largest stock market, the Financial District in San Francisco.
There are so many bars down there that it is hard to choose one. I went with the place that seemed tailor-made for suits: the Royal Exchange on Sacramento. It has the same layout as S.F. mainstays like the Tadich Grill and Cha Cha Cha, with a large circular bar in the middle and tables and booths around the perimeter. The place was simply loaded with traders and finance types ('specially since I made a point to show up at 3 p.m., right after the stock market had closed). I sat at one end of the bar and slowly realized that they were playing Neil Young's "Needle and the Damage Done."
"Jeez," I said to the bartender. "I didn't expect to hear this song."
"Yeah," he replied with a big ol' pained sigh, "me either." I guess he hates Neil Young. It wasn't until I heard about seven other Boneyard B-sides of classic rock that I realized the bartender probably has to hear that same tape every day.
I ordered what turned out to be an unremarkable and expensive club sandwich and took in the room. Everyone was wearing suits. There were a few women scattered here and there in power pantsuits. To my right, three men had strewn their jackets around and rolled up their shirtsleeves. They were giggling like schoolgirls.
One of the guys was in the middle of a story: "So there's Josh, right, and he's on the dancefloor, and, like, this incredibly large woman is, like, freakin' him, right?" [breaks for laughter] "But, like, he's so loaded he can't tell, so he's like grindin' into her with his ass" [breaks for laughter] "and she's, like, freakin' him, hardcore ..."
Wow, what kismet! The perfect people to ask about whether the traditional Arrow-Debreu economic model should be challenged by the new Greenwald-Stiglitz paradigm of free trade! Sadly, I couldn't make eye contact.
I decided instead to focus on two men to my left. So far they had been discussing their wives and families, a topic I would usually home in on like GPS, were I not looking for stimulating economic talk. One of the guys was complaining that his 5-year-old was having a birthday party and that his house was going to turn into "fucking Romper Room." But then they started talking about (hurrah!) the bailing-out of the housing industry. I couldn't quite tell what they were saying, so I flatly broke into the conversation and asked them what they thought of the bailout.
"It's not a good thing, but it had to be done, there was no choice," said the one with short brown hair. I asked him why it wasn't a good thing. "It's socialism," he replied flatly.
I asked how so. "We can't let government carry the slack when industries go south."
"If people know that the government will always be there for them," said the other guy, a blond, "then it just encourages errant behavior." This made sense to me, but on the other hand, having no regulation also seems to encourage errant behavior. I said as much. "Can't we have a lil' of both?" I offered.
The brown-haired guy went on to say that a free market means that some things will fail and die out, but other things will take their place. He used the horse and buggy as an example. I suppose he was thinking that if we let the entire mortgage industry collapse, something else will rise from its ashes. Then he explained that Europe was socialized, and that is why it isn't a superpower like us. But I pointed out that Margaret Thatcher deregulated the shit out of everything. They had nothing to say to that. Actually, at this point, I believe they were wondering why some strange woman was engaging them on this level of discussion without disclosing that she was either a spy from the Securities Exchange Commission or a reporter. They looked at their watches and then at each other, then said they had to go and meet a guy about a thing, but nice talking with me ...
I don't think I'll ever understand this stuff, but I came away from the discussion with the idea that I should give the benefit of the doubt to those people who make a career of knowing a lot about a specific subject. For example, haven't you always wondered why so many people in academia are liberal? Well, maybe it's because they are smart, they have studied history and politics, and they know what they are talking about. I must also then assume that people who make their living in finance and know economics also know what they are talking about, even if they fall on the right.
You know who really understands economics? The folks who run the Royal Exchange. My sandwich was $15 with tax, and it was something I could've gotten at the Safeway deli. I suppose that is market forces at work; the clientele can afford it, they don't want to walk far when they get off the job, and they want to hang out in a cozy publike atmosphere. Why create a better sandwich when you don't have to? It's the American way. Ka-ching.