Formally it was the Fed. That's because they have a responsibility for the stable operation of capital markets and payment systems (I'm assuming the Dutch central Bank and Fed share the same responsibilities). Nevertheless, we also know the big banks were continually in talks with the Fed. That's how they forced the acquisition of Merrill Lynch on Bank of America. And we can be certain the lobby machine was whispering in senators' ears to get the Troubled Asset Relief Program passed. Not that those 700 billion were the real bail out.

Even so, you're both right and wrong. The Fed and banks didn't do anything else than what they informally agreed on. Who asked for the bail out was a formality.

Who asked for the bail out was a formality. — Benkei

There is no formal procedure for violating the principle of moral hazard. The Chairman of the Fed and the Secrerary of the Treasury were attempting to avoid a massive economic collapse following the failure of financial services companies.

The banking system was nationalized to thaw a credit freeze.

None of that was socialism for the rich.

I've said numerous times, I'd love to see Sanders win but that I just don't think it's on the cards. — Wayfarer

The 2020 US presidential election is not a foregone conclusion. To quite the contrary, I know many folk have a strong yet inexplicable disdain for the US government. Every poor and every less fortunate person in the US knows that US governmental policies have caused demonstrable and quantifiable harm to themselves and/or their loved ones. Very few know how it happened and who is responsible for it.

It's been both parties over the last fifty or so years.

The revolution is one of how we - as American citizens - ought think about things like our government and what it's doing. It's a frame of mind focused upon what's important to the overwhelming majority of Americans, and as such it's one that needs cultivated over a long enough time period. It's one based upon shedding some much need light upon systemic monetary political corruption at the highest levels of American government.

It's been long enough. There's more than enough evidence for Sanders to make the common sense case to those who are willing to listen. There are some people you just can't reach. Those are not the focus.

Sanders speaks to a very broad range of people across the board of ethnic diversity. Americans come that way, you see. Sanders speaks to all poor people, all those who have struggled, all those who have been taken advantage of by predatory lending practices, which are now legal as a result of the sheer demolition of antitrust laws in America. Sanders knows how these things came to happen.

The Chairman of the Fed and the Secrerary of the Treasury were attempting to avoid a massive economic collapse following the failure of financial services companies. — frank

True and by all accounts they succeeded but at what cost in the long run? And I'm not talking about the immediate financial burden carried by tax payers for this specific bailout but because we know this will happen again and again. The moral hazard, e.g. the risks banks are willing to take because they will be bailed out, remains the same or has even increased. A typical "first as tragedy then as farce" and the farcical nature of these bailouts will only increase over time.

We've already seen (just in the US):

1. Franklin National Bank failing in 1964;
2. First Pennsulvania Bank failing in 1980;
3. Contintental Illinois Bank failing in 1984 (too big to fail mentioned for the first time);
4. Bank of New England failing in 1991;
5. the national banking crsis of the 80s (1600 banks failed and 1300 savings and loan banks);

The thing is Bear Stearns and Lehman Brothers followed the same patterns where assets grew at incredible rates funded by short-term borrowing (with ridiculous maturity mismatch as a result).

Same pattern but different market circumstances exacerbated the failures in 2008. Money market funds provided better returns from the 80s onwards than those available on savings accounts, because those were set by the Fed at the time, so the set rate was rescinded. The growth of those funds fueled demand for short-term corporate commercial paper, which lowered the long term revolving lines of credits existing between banks and corporates.

Junk bonds started to finance M&A and longterm borrowing needs for corporates, further lowering income for the traditional banking model.

Add to that the various asset-backed securitisation and the role of banks changed from ultimate lender to an intermediary making money from loan origination fees, underwriting fees (for securitasation) and lona-servicing fees. Banks thought they had no risk on poor quality loans except, of ourse, that the riskier loans generated higher fees and were more profitable.

The increased competition of capital markets to provide funding as opposed to banks resulted in the slow but steady repeal or easing of various aspects of the Glass-Steagall act. During the 80s, banks were allowed to enter the following more riskier businesses:

- to own retail brokerage subsidiaries;
- to own and trade in a holding company proprietary account any form of equity, debt, or derivative security;
- to underwrite municipal securities; and to underwrite corporate securities.

The result: only a small percentage of income originates from loans to US corporates and instead investment banking, prop trading, morgtage and loan origination and processsing fees drive profits for banks. The banking model changed.

Then there's the derivatives business they entered into and in particular the Credit Default Swap (CDS), that were sold as "insurance". But it isn't insurance. If you buy insurance, you can only insure the event once and the insurance will only pay out actual loss and give insurance only to a person who has an insurable interest. The insurance has an obligation to only insure amounts for which it has sufficient reserves to cover estimated probabilities of loss. Anybody can buy a CDS (no insurable interest needed), the person writing the CDS has no limit on how much it can write (no reserves to cover estimated losses) and it can be more than the underlying value of expected loss. So at it's peak the CDS market was 60 trillion USD; 10 times the size of the value of default.

Add to the above the extraordinary consolidation of the past three decades and the incredibly increase in banking assets. In 1995 the combined assets of the six largest banks equaled 20% of US GDP, in 2009 that was more than 60%.

It is a fantastical notion to expect that having once pulled poorly run, systemically threatened firms out of the fire, government won’t do it again, no matter how many times and how loudly it says it won’t. — Richard Fisher, President, Federal Reserve Bank of Dallas

And the reason for these consolidations was not because bigger banks make better banks but because of the greater profitability for too-big-to-fail banks due to the implicit government guarantee. This reduces borrowing rates by 78 bps on average, which saved the 18 largest banks about 34 billion USD a year. (See: The Value of the “Too Big to Fail” Big Bank Subsidy)

It doesn't benefit consumers. It doesn't benefit tax payers. It does benefit stockholders and bank executives. So yeah, "socialism for the rich" seems a pretty good shorthand for the above. But no matter, that is probably just semantics. I think we can agree, leaving aside the term socialism, that some did the deciding (politicians, lobby groups & executives) but others did the risking (tax payers).

Yep, there was a massive transfer of wealth from the public to the private sector for mistakes made by the private sector, the mistakes of which, incidentally, was preying on the insolvent to take out massive loans they knew quite well they could not afford. Fuck the bank bailouts and fuck Obama.

What other things would you have expected from the government? I think to some extent they couldn't have acted differently, in part because the US is ideologically constrained not to nationalise or use the power of eminent domain.

That at least would've wiped out stock and bond holder value. Although they'd probably have court cases for years to establish the "just compensation" in such an event.

Yes.

What I would have expected - for the American government to fuck over its most vulnerable people in favour of the rich, i.e. exactly what they did - is different from what I would have hoped. I imagine they could have done a raft of things differently - used that money to save borrowers, rather than mortgagees; impose massive conditionality upon the loans in order to curtail further predatory behaviour; let the banks fail while finding other mechanisms to moderate the credit crunch; use the opportunity to try to reform the obviously broken credit ratings system that shone the green light on the industry-wide mortgage scam right up until the point they didn't. It might have been better had the US simply sunk under water and effaced itself from the face of the earth. In any case what did happen was the rewarding of financial criminals by means of the public purse and the worst possible outcome for those whom they screwed. If they couldn't have acted differently then so much the worse for the steaming pile of shit that is current-day America.

Alright before we begin this discussion I'll just let you know that I would really never vote for Bernie. I'm just interested in the actual contents of his beliefs. From what I know - off the top of my head - he's said favorable things about Castro and the USSR, and he favored nationalizing.... some industry in the 1980s and doing so in a manner without even compensating the leaders of those industries.

Again, not looking for a debate here just an honest picture of what Bernie believes. — BitconnectCarlos

In that case, there's plenty of information available to you. If you're genuinely interested. Saying "favorable things" abut Cuba and the USSR is untrue. He's said favorable things about programs that help the working class and poor -- literacy programs, etc. That's not saying favorable things about the standard American ideas about the governments and leaders of either country.

Bernie essentially wants to nationalize healthcare, yes. That's no secret. There's plenty of debate to be had there.

Sanders speaks to a very broad range of people across the board of ethnic diversity. Americans come that way, you see. Sanders speaks to all poor people, all those who have struggled, all those who have been taken advantage of by predatory lending practices, which are now legal as a result of the sheer demolition of antitrust laws in America. Sanders knows how these things came to happen.

One cause... anti-trust laws being eviscerated and certain other consumer protection measures being reversed in the guise of de-regulation, an idea long since being argued for. As if all regulation is to be avoided, or is bad. It's often argued that too much regulation harms American businesses by virtue of increasing the financial burden that must be shouldered by a small business owner in America. It purportedly makes it impossible to afford to own and operate a smal business in America.

Another cause... the brainwashing of Americans into believing that regulations are a bad thing stemming from too big a government. Small government is an idea that the American electorate has bought hook, line, and sinker. It's an empty slogan used as a disguise. Not all regulation is bad or harmful to American small business owners. Some regulations are consumer protection measures. Others are necessary in order to maintain as free a society as is humanly possible given the differences in American world-views.

It should be illegal for someone to act as though they are offering a service to a consumer despite the fact that that service was designed in a way that that person would be placed in immediate financial danger and/or duress. Sometimes they're designed in such a way as to keep borrowers in debt - under legal financial obligation - to the lender for the majority of or even the entire rest of their natural born lives.

Antitrust laws are and aways were designed to stop that sort of thing from happening.

They worked. They were repealed and/or replaced with laws that did not. They stopped working either by intentional revocation or inferior replacement. Those were specifically designed out of the need to protect consumers from unethical, immoral business practices! That's a part of the government's job... to protect the citizens from living in such circumstances. We ought be able to trust the people we depend upon for our livelihood, for the necessities of American life, especially if we do not get to choose. If that choice is made for us, the chosen individual(s) must be trustworthy.

The 2008 financial crash is an exemplar of many many people being quantifiably harmed - being ruined in an actual visceral sense - as a direct consequence of how others had previously paved the road. The road crew consisted of real estate agents, lenders, and underwriters; at least at the ground level(the actual beginning of the implementation). The legislative roads were paved by the repeal of Glass Steagall and other atritrust laws and consumer protection measures that had already been taken as a result of the aforementioned malpractices. The repeal and removal of these consumer protection measures the increased number of financial instruments designed by those looking to make themselves rich by disguising high risk loans that were knowingly going to suffer the fate of borrower default. These financial instruments were carefully designed to meet the new less stringent legal standards. Those who knew the loans were very likely to be defaulted on cleverly disguised them as safe investment opportunities and sold them to yet another group of unsuspecting consumers. These junk loans reaped handsome immediate financial rewards for the designers as well as all those implementing the design.

Why and how can this happen?

After knowingly convincing the otherwise trusting would be home-owners that they were getting a good deal; one that they can afford; one that they meet the regulatory guidelines for, the mortgage companies(brokers) sold the mortgages based upon profits that were projected to be 'earned' by the compound interest rates of the mortgages. Traditionally, these types of instruments(mortgage backed securities) are low risk as a result of consisting of conforming mortgages. Those in question were not, but sold as if they were. These were sold to a variety of people from those investing in a 401k or an IRA through anyone else who depended upon the projected profit of loan as a result of the compound interest rates.

One problem, of course, is that many if not most of the problem mortgages were at a low fixed interest rate for a temporary time period. That rate was subject to change after a timeframe had passed. This change was a substantial financial increase in consumer costs in all cases. The borrowers debt level would raise substantially at the very moment that the higher rate took effect. The increase in the debt to income ratio would then be feasibly impossible for the borrower to maintain satisfying the financial obligation/agreement. All else being equal, these people could not afford the payment if and when it increased to the rate clearly stated in the truth in lending document.

So, why did such mortgages meet the new legal and consumer protection standards implemented in lieu of Glass Steagall?

The initial rate.

Why were they doomed to fail? Two reasons. One...

The adjustable arm rate was simply unaffordable for the borrower when and if it ever took effect; if it were ever executed. The buyers were often assured that that rate would not take effect if the payments were made on time regularly, because prior to the rate increase the borrower could easily re-finance to a lower rate. The house would be worth more as well, etc.

That promise was broken more often than it was kept.

Two...

Not one of these so-called service providers involved had a personal vested interest in the satisfaction of the loans themselves. Rather, some had a vested interest in their failure! Others were paid upfront. Elizabeth Warren shed some astounding light upon the matter underwriting the worldwide market crash of '08. She's been long since working on the issue of stagnant wages and a steep decline in the happiness of American homes dues to jobs losses and other socio-economically based problems.

Many of these people were also being negatively impacted by the exponential loss in good paying jobs available for them in their hometown area. Some of the borrowers were not only about to suffer great loss at work, they were also about to be quite unpleasantly surprised by the cascade of unfortunate events about to unfold as a result of suddenly losing their home as well as their financial livelihood/well-being.

Life changed in negative ways that were not expected for many through no real fault of their own aside from trusting the wrong people.

The actual quantity and the sheer scope of less fortunate communities increased exponentially when good paying manufacturing jobs left American shores as a means to lessen labor costs and increase profit margin(s). This sequence of events was a means to finacially reward the business owners at the direct and indirect expense of all Americans, not just those who earned their livelihood and were happy doing so in the building trades and/or manufacturing sectors.

I want remind people of that all too common narrative about taxes and big government being bad...

Small community oriented family operated and owned storefronts and businesses all across America have taken direct hits, knock-out blows, and other insurmountable problems as a direct result of allowing huge businesses to sell in the American marketplace despite the fact that they treat their workers in ways that are illegal in the States.

The actual cost of cheap goods and services cannot be properly determined by the purchase price alone.

The average ratio of Americans who are naturally inclined to be good at making things with their hands and do or would enjoy doing so has not decreased at all. The legislation that has been passed which fostered the conditions for American companies to move nearly all operations off American shores needs corrected because the sheer number of good paying American jobs with good benefits available for the average everyday worker is in sharp decline as a direct result.

Huge corporations, including both American and foreign owned ones, are allowed to implement business practices that make it impossible for small business owners to compete. They are also allowed to keep the average workweek at a part time level so they do not have to share the healthcare costs of the workers.

Ahem... and Walmart is not alone here.

The price of cheap goods is much higher than terms of retail cost can account for.

Every American can relate to a marketplace that is chock full 'o low quality inferior products. Things that break far sooner than they ought. Inferior grade low quality products result in more garbage in the world, less good paying jobs, and less successful small businesses. In the end, less available high quality products.

Walmart and other companies do not offer workers enough pay or insurance for part time. The workers are paid so low that they qualify for government assistance.

That's corporate welfare... socialism for the wealthiest corporations on earth.

If there is no socialism in Bernie then why does he call himself a democratic socialist? It boggles the mind. He's either wrong or he's a socialist. So which is it? — NOS4A2

And I would ask : why are you so hung up on labels? Look at the policies and debate those -- the rest is meaningless, including whether he's a socialist. That said, he's a self-proclaimed democratic socialist. That's not socialism in your sense. It's to differentiate from exactly that sense, of "the state owning the means of production." Because the word "socialist" is in there does not make it socialism in your sense. There were "National Socialists" too, remember. Who cares?

Does medicare for all, free college and universities, etc., make sense or not? Let's assume we can pay for them and that it gets through congress and survives challenges at the Supreme Court -- do they make sense? I would argue yes, they do. I think they'd be very good for working and middle class people like myself, like you, and like everyone we know. We've seen the results of the neoliberal period, and it's simply not working or sustainable anymore.

If there is no socialism in Bernie then why does he call himself a democratic socialist? It boggles the mind. He's either wrong or he's a socialist. So which is it? — NOS4A2

It's a bit like being an American football player now involves wearing different equipment than 80 years ago. Still football players, just not the same equipment.

The problem is not the name or what Bernie stands for. It's the idea you have in your head regarding what counts as being a football player and what Bernie stands for.

The fix?

Fucking shut up and listen to the man.

But call Bernie what you want. I’ve already stated his policies reek of the big government, high-tax reforms we’ve been getting for the better part of a century. — NOS4A2

What high tax reforms of the last 50 years, exactly? Since 1970 the trend has been exactly the opposite. The neoliberal era has not favored high taxes, ESPECIALLY not on corporations. So your sense history is strange indeed.

Why would we need another New Deal if the first one was so great? The government’s power was greatly increased and that has not subsided. — NOS4A2

It has. Since the 1970s, as a matter of fact. Remember that the 1960s was a very threatening time for those in favor of maintaining the status quo, and there was a reaction. That reaction -- neoliberalism -- is the era we've been living in since. It's only now starting to crumble. To argue neoliberal policies are anything like the New Deal is absurd. Since Reagan, the mantra has been "getting big government out of our lives," which is a popular thing to say. But the state has remained a large corporate welfare one. That's certainly big government, but not for the people -- it's rigged for big business and the wealthiest Americans, in every sense.

And while it's true we still have social security, look at the proposals of the Republicans like McConnell and even the latest Trump spending budget proposals. They want to cut social security (and medicare). They're coming for "entitlements" to pay for their big tax cuts to the wealthy.

They're giving it all to themselves, right before our eyes, and yet you argue in favor of them. I can't honestly go on talking with you without acknowledging this feeling of perplexity. Do you not count yourself among the working and middle class? You're part of the wealthiest 1%? Do you not believe in classes or the huge gap between the richest people and the vast majority of Americans (including yourself)?

Do you acknowledge the possibility that misinformation and years of propaganda has maybe had an influence on why you believe and say the things you do? What are your news sources? From where do you get your facts and figures -- if any? Who are you listening to? I'm genuinely curious. You don't seem like a crazy person ranting things online.

Has Cold War era thinking had an effect on you? I suspect you're probably in your 50s or 60s, am I wrong?

Not to digress into psychological or personal factors (which is especially difficult online), but it's relevant in this case. Let me remind you, too: I'm not a liberal and not a democrat and not a socialist. That'll be hard for you to believe, I think, but it's true. So things I say are not from a "blue team always right" point of view at all, as you may be used to. Try to look passed that and really listen. Make the attempt to understand my position at least, and at that point we can have a meaningful discussion about whether my position is correct or not. If you can't at mininum get that right, we're just talking different languages.

Taxes are better understood, much better understood...

...as user fees.

Sanders speaks to a very broad range of people across the board of ethnic diversity. Americans come that way, you see. Sanders speaks to all poor people, all those who have struggled, all those who have been taken advantage of by predatory lending practices, which are now legal as a result of the sheer demolition of antitrust laws in America. Sanders knows how these things came to happen. — creativesoul

(... and the whole rest of your post, edited for space). :up: :up: :up:

Thoughtful, insightful, well-written, and intelligent post. Thank you for taking the time to write that. It is much appreciated. Nice blend of a critique of recent (and extremely relevant) history, law, politics, etc. Exactly the level-headed approach that is helpful, imho.

I’m onboard the Sanders “freedom flotilla”, lol. And if like Spartacus, he is forced to turn on Rome itself in an attempt to free himself and his fellow outcasts and slaves, then he has my support. Emperor Nero is quietly quaking in his toga, despite his bluster and bravado and a torrent of arrogant “tweet-aganda”. (Please excuse the melodramatics).

Is it a risk? Definitely! Getting out of bed is risky. Driving a car is risky. Is it worth the risk? Even the risk of Trump 2.0? Yes. To me it is. Even as a protest, however feeble and ignored. Maybe the young shepherd David was given better odds versus Goliath. Not sure, exactly. However, there is a chance (a fighting chance) that the populist ocean tide that Trump has risen on has turned, and will swamp his fleet. (Don’t cry for him, though. He can retire in January to his mansion with Evita and the rest of his royal family, while the rest of us eat cake. Then we can all chuckle at his increasingly bizarre ranting tweets, as he relishes his role as political pundit and gadfly).

Certainly, I am still learning about the intricacies of the present situation, and many events leading up to it. The 2008 financial crash is most definitely NOT ancient and academic history, as you pointed out. The general conditions and symptoms that allowed it were medicated, but not changed or remedied in any significant way. Maybe it’s too late to swerve the Titanic away from the iceberg. The first step is to realize that we can’t plow through this one like before. And then get the foot off the accelerator... so to speak.

Imagine getting upset because Sanders acknowledged some objectively good things Cuba has done. Very American to condemn other states as authoritarian while the US has one of the highest incarceration rates in the world.

Very American to condemn other states as authoritarian while the US has one of the highest incarceration rates in the world. — Maw

Oh yes, exactly! There are so many issues like this that have reached meltdown level, that it is near impossible to get a visual on the situation. Even for those sympathetic to “the cause”. The mind boggles at the immensity of it all... Maybe that is why some cannot bear to open their heart to the suffering...

We've already seen (just in the US):

1. Franklin National Bank failing in 1964;
2. First Pennsulvania Bank failing in 1980;
3. Contintental Illinois Bank failing in 1984 (too big to fail mentioned for the first time);
4. Bank of New England failing in 1991;
5. the national banking crsis of the 80s (1600 banks failed and 1300 savings and loan banks);

The thing is Bear Stearns and Lehman Brothers followed the same patterns where assets grew at incredible rates funded by short-term borrowing (with ridiculous maturity mismatch as a result). (... ) — Benkei

:up: Thanks for this post. Keep it coming...

Imagine getting upset because Sanders acknowledged some objectively good things Cuba has done. Very American to condemn other states as authoritarian while the US has one of the highest incarceration rates in the world.

It’s like pointing out Hitler made good roads, and therefor “it’s unfair to simply say everything is bad“. It’s just a stupid comment.

Then again, I’m not sure why everyone is upset about it.

And this is of course a huge problem which, even without global warming to worry about, will saddle the next generations of citizens with problems.

Running winning candidates isn't enough (though that is necessary). Several basic reforms are needed:

One, the members of the Supreme Court need to be rotated more often -- which means ending life-time appointments. Fixed terms would solve part of the problem. The court IS POLITICAL. It has to be knocked off its pseudo-august pedestal.

Two, eliminate the Electoral College. I realize it has a point, but direct election by the citizenry works for all the other elected positions.

Three, we need a genuine working class party -- not slightly more and slightly less conservative parties serving the interest of the ruling class.

Four, campaign financing must be socialized. Having someone with $30-40 billion dollars financing his own campaign (Bloomberg) and others scrounging for pocket change is obviously a crooked game. The conservative court laid down Citizens United for a ruling class reason. Citizens United needs to be undone.

We need to repair the gross economic inequalities which prevail in the United States. (Other countries will have to deal with their inequalities.). This means taxing wealth at a high rate. Maybe it should be enshrined in the constitution, so it can't be changed easily. The wealthy stayed wealthy even during periods of high taxation. — Bitter Crank

:up: This sounds most reasonable. It has my vote, for whatever it may be worth...

That's not an argument.

There is no formal procedure for violating the principle of moral hazard. The Chairman of the Fed and the Secrerary of the Treasury were attempting to avoid a massive economic collapse following the failure of financial services companies.

The banking system was nationalized to thaw a credit freeze.

None of that was socialism for the rich. — frank

There were many conservatives -- including Ann Coulter -- speaking out AGAINST a bailout, who believe exactly that: that it was indeed "socialism" (from their perspective this means essentially "giving taxpayer dollars to") for the financial industry, which triggered the collapse.

So if you don't like that definition of socialism, fine. Then in that case using a comparable amount of taxpayer money to give people healthcare, or wipe out student debt, isn't "socialism"?

The bail-outs were as much "socialism" as anything else. Why a person like you defends taxpayer money (yours and mine) going to tax cuts that mainly favor corporate America and bailouts for Goldman Sachs, white at the same time coming down hard on Bernie Sanders for wanting to spend money on programs that empirically help the working and middle class, is perplexing to me. Do you not count yourself as working or middle class? If you do, you must see what's going on in this country. You're living it.

I'd like to see Bernie dig up the old line Reagan used against Carter, about whether you're better off now compared to 4 years ago.

I think for those of us not completely deluded by party identity, we recognize that indeed nothing significant has changed for us, that the rich keep getting richer, and that we're still saddled with a ton of debt because we chose (and were encouraged to choose) an education, or a career in a non-profit industry, or simply have a dwelling and raise a family -- none of which was very difficult in prior generations.

This Sanders campaign really is beginning to feel like an important part of history, as a kind of non-violent revolution (or at least referendum and warning) to the worst aspects of un-checked capitalism -- a reaction against neoliberal political philosophy.

The next step will be running an anarchist, if Bernie doesn't get it. Because this economy isn't working and can't be sustained even if it were. It's going to crash, we're already overdo. Maybe it'll be a big one like 2008. And this will mean, after not electing Bernie, that people won't just want FDR style fixes. They'll want to overthrow the entire system.

On the first issue of whether Bernie's use of the term socialism is politically expedient, I'm ambivalent about it. Republicans would call him "socialist" anyway, they would call any policies like his "socialist", and because they control the propaganda machine, that's what increasingly many Americans think "socialism" is, and increasingly think is actually a good thing not a bad thing. So it seems like just pragmatic identification with the label people use to mean what he is for, to me. It does come with a bunch of pejorative baggage, but since the label would be applied to him anyway, I don't really see the harm (and maybe even some benefit) in owning the word. Reclaiming it if you will. "We're here, we're 'socialist', get used to it." — Pfhorrest

Sure. A part of me is with you (and Wolff) in de-stigmatizing the word and not being so afraid of giving the "other side" ammunition. On the other hand, I wonder if it truly is "socialism" at all. Bernie doesn't talk about completely eradicating the basis of our state-capitalist system, i.e., private ownership and profit. It's true he rails against neoliberalism and its policies, but if he's truly just a New Dealer like FDR was, then he's advocating a return to policies which only tweaked the system to work a little better for the middle and working classes. It didn't abolish it altogether, as socialist philosophy -- in many variations -- actually argues for, in favor of a community and worker-run economy. I think both the State and Capitalism in many ways remains intact with Bernie.

I personally consider even that further-left viewpoint "centrist", in a good way -- there is still further left than that that one could go, but that would be too far left -- but even from that far-widened-to-the-left Overton window I think in, I kinda dislike this attacking of establishment Democrats and "centrists" from the left. I'm a big-tent kind of guy, — Pfhorrest

I see what you mean. Placing people on a continuum is useful for ease of discussion, but it's hard to pin down exactly what it means.

We're discussing, essentially, political philosophy. When it comes down to it, all of this talk is conducted in the context of a philosophy -- by which I mean a system of beliefs and assumptions about basic issues and fundamental questions. This system of beliefs and values shapes how we interpret and interact with the world. It manifests in our opinions in various domains; in the political domain it's especially on display in a striking way: there is now clear fracturing and transformation going on in both parties which has been driven by the support of millions of people who are no longer constricted by the standard dogma and ideology. They all want something different. They're pushing beyond certain artificial limits. So before we determine what the "middle" or "center" is, we have to have an idea of where the boundaries of left and right are.

What is the "left"-most ideology, in other words? Is it captured by whatever it is that defines "socialism"? What about the tenets of anarchism? Communism? Marxism? It's true that most of these labels are scary ones for many Americans but, as you mentioned, this is mostly an emotional response and not based on any real understanding of the history or philosophy of these political systems of beliefs and ideas. Those demographics are changing, as you know, as more Cold War era people are getting older. (I myself wasn't quite old enough to be fully indoctrinated by Cold War propaganda, but even I am reluctant to use the words or label myself that way.)

It's good that this is all changing, but my point is that with this change should come a paradigm shift in a way, which includes re-calibrating the whole "left-center-right" picture with its implied limits.

These limits have been manufactured in the media for years, so it won't be easy. Bernie has crossed and continues to cross these artificial lines, scaring people on the establishment "right" and perplexing those on the establishment "left" precisely because both are in agreement with this underlying picture of things. So they say: How can a socialist be this popular and doing this well? We said the same thing about Trump, too, only replacing "socialist" with "populist" (if you believe his rhetoric) and, more accurately, "narcissist."

So you can answer that question for yourself, but for me I would like to define the "left" as any ideology with the goal of creating a truly democratic society where the government and business are run by communities and workers. In the socialist-anarchist tradition.

On the other hand, I wonder if it truly is "socialism" at all. [..] I think both the State and Capitalism in many ways remains intact with Bernie. — Xtrix

Oh absolutely, in any sense of "socialism" used by academics or self-identified socialists, which calls for the elimination of capitalism at least (there's debate about the relation to state), Bernie's not really a socialist. Wolff's point seems to be that there isn't unanimous agreement about what "socialist" means, and to most Americans, it means what Bernie is for, so him using that label in that context isn't so atrocious.

I do wonder if Bernie himself is knowingly using it only in such a context, and is aware of the differences between actual socialism and his what-Americans-call socialism.

What is the "left"-most ideology, in other words? [...] I would like to define the "left" as any ideology with the goal of creating a truly democratic society where the government and business are run by communities and workers. In the socialist-anarchist tradition. — Xtrix

I mostly agree. I mean you saw my own political spectrum I posted before. To me, left is in the direction toward greater equality and liberty, and right is the direction toward greater hierarchy and authority. I do think there is such a thing as too far in each of those ways, though; it's just much much farther than anyone would ever consider, because it's obviously unworkable.

Absolute maximal liberty would mean nobody had any claims against anyone... including, say, punching you in the face. Slightly to the right of that would allow for self-enforced claims against some limited things like that. The truly centrist position on that would allow for some kind of institutional enforcement of such reasonable claims, a government, without granting it any monopoly on powers that are denied to other people, so no state. More to the right of that would be a state of some kind, but limited in some ways. The farthest to the right would be an unlimited state.

Absolute maximal equality, at least in an economic sense, would mean not even personal possessions of the kinds that most socialists support; even your toothbrush isn't yours, everything is public property and nobody can be excluded from using anything as they please. Slightly to the right of that would be the kinds of possessions, but not private property, that most socialists support. The truly centrist position on that, I think, would be a system that allows for private property, but prevents capitalism; that stops owning more property from being a way of acquiring more and more property from those who started out owning less. More the right of that would be capitalism of some kind, but limited in some ways. The farthest to the right would be unlimited capitalism.

Bernie is like... 15-20% right of true center, on that scale. But that in turn is almost 25% left of center in the limited-state-and-capitalism framework that has moderate Democrats at its center. And that in turn is almost 50% further left than far left on the parochial scale American media pundits seem to think in, by which those moderate Democrats are "far left".

I do think there is such a thing as too far in each of those ways, though; it's just much much farther than anyone would ever consider, because it's obviously unworkable. — Pfhorrest

Well that depends. Maybe it would work in the future, and so as an ideal is not silly -- but practically speaking, wouldn't fly right now-- given our current political, moral, religious, and philosophical state. (And by "our" I mean the United States, complete with its Puritanical and Protestant influences and strong indoctrination system).

On your figure, for example, the "No property or possessions" and "no self-defense" does indeed seem pretty extreme even to me. But perhaps it's not unworkable in the future. I don't think such a system should be considered the ultimate form of liberty and equality, however. An argument can be made in this case, of course.

Absolute maximal liberty would mean nobody had any claims against anyone... including, say, punching you in the face. Slightly to the right of that would allow for self-enforced claims against some limited things like that. The truly centrist position on that would allow for some kind of institutional enforcement of such reasonable claims, a government, without granting it any monopoly on powers that are denies other people, so no state. More to the right of that would be a state of some kind, but limited in some ways. The farthest to the right would be an unlimited state. — Pfhorrest

Here it's useful to define some terms. What's the difference between "government" and "state"? I see them as essentially the same thing, although reserving "state" (or even government) for the Federal government isn't unreasonable.

I don't mind violence and hierarchy, provided the use of violence can be justified and the structure of authority legitimated.

Bernie is like... 12.5% right of true center, on that scale. But that in turn is about 25% left of center in the limited-state-and-capitalism that has moderate Democrats at its center. And that in turn is like 50% further left of far left on the parochial scale American media pundits seem to think in, by which those moderate Democrats are "far left". — Pfhorrest

Exactly, and I think it's especially important that people like you and I don't get sucked into the belief that Sanders is even all that "left" or all that radical, especially if you're a student of history and knowledgeable of countries outside the US. Rather, it's worth keeping in mind that although it's exciting that Bernie is breaking through and transforming the party and the national dialogue, he's still not all that radical or even all that "socialist" -- so it's good to talk about it in the midst of media bombardment, general naysaying, and general ignorance.

Here it's useful to define some terms. What's the difference between "government" and "state"? I see them as essentially the same thing, although reserving "state" (or even government) for the Federal government isn't unreasonable. — Xtrix

The usual political science definition of a state is a monopoly on the "legitimate" use of force. I put "legitimate" in scare quotes, even though it usually isn't, because I think that begs some questions about what use of force is legitimate or not. I'm fine with that definition if we take "legitimate" as meaning "seen as rightful by the people in general", so a state is a social entity that society thinks deserves a monopoly on the use of force. But I much prefer to say a state is just a monopoly on the use of force, and leave legitimacy aside.

In contrast, a government is just a social institute that... well, does the things you expect a government to do, to facilitate a functioning society, most especially defending people from each other and the society from outside attackers (as if the latter isn't just a subset of the former; the society and the outside attackers are all just people), but other things too possibly... and doesn't have or claim a monopoly on that.

I think of it like the difference between a church and a school. Both of them are, very broadly speaking, there to "tell you what's true", but their approach to that is very different. I elaborate on this analogy extensively in my essay On Politics, Governance, and the Institutes of Justice if you're interested in seeing my whole ideal government and political philosophy.

Very much worth quoting (almost) in full:

The moral hazard, e.g. the risks banks are willing to take because they will be bailed out, remains the same or has even increased. A typical "first as tragedy then as farce" and the farcical nature of these bailouts will only increase over time.

We've already seen (just in the US):

1. Franklin National Bank failing in 1964;
2. First Pennsulvania Bank failing in 1980;
3. Contintental Illinois Bank failing in 1984 (too big to fail mentioned for the first time);
4. Bank of New England failing in 1991;
5. the national banking crsis of the 80s (1600 banks failed and 1300 savings and loan banks);

The thing is Bear Stearns and Lehman Brothers followed the same patterns where assets grew at incredible rates funded by short-term borrowing (with ridiculous maturity mismatch as a result).

Same pattern but different market circumstances exacerbated the failures in 2008. Money market funds provided better returns from the 80s onwards than those available on savings accounts, because those were set by the Fed at the time, so the set rate was rescinded. The growth of those funds fueled demand for short-term corporate commercial paper, which lowered the long term revolving lines of credits existing between banks and corporates.

Junk bonds started to finance M&A and longterm borrowing needs for corporates, further lowering income for the traditional banking model.

Add to that the various asset-backed securitisation and the role of banks changed from ultimate lender to an intermediary making money from loan origination fees, underwriting fees (for securitasation) and lona-servicing fees. Banks thought they had no risk on poor quality loans except, of ourse, that the riskier loans generated higher fees and were more profitable.

The increased competition of capital markets to provide funding as opposed to banks resulted in the slow but steady repeal or easing of various aspects of the Glass-Steagall act. During the 80s, banks were allowed to enter the following more riskier businesses:

- to own retail brokerage subsidiaries;
- to own and trade in a holding company proprietary account any form of equity, debt, or derivative security;
- to underwrite municipal securities; and to underwrite corporate securities.

The result: only a small percentage of income originates from loans to US corporates and instead investment banking, prop trading, morgtage and loan origination and processsing fees drive profits for banks. The banking model changed.

Then there's the derivatives business they entered into and in particular the Credit Default Swap (CDS), that were sold as "insurance". But it isn't insurance. If you buy insurance, you can only insure the event once and the insurance will only pay out actual loss and give insurance only to a person who has an insurable interest. The insurance has an obligation to only insure amounts for which it has sufficient reserves to cover estimated probabilities of loss. Anybody can buy a CDS (no insurable interest needed), the person writing the CDS has no limit on how much it can write (no reserves to cover estimated losses) and it can be more than the underlying value of expected loss. So at it's peak the CDS market was 60 trillion USD; 10 times the size of the value of default.

Add to the above the extraordinary consolidation of the past three decades and the incredibly increase in banking assets. In 1995 the combined assets of the six largest banks equaled 20% of US GDP, in 2009 that was more than 60%.

It is a fantastical notion to expect that having once pulled poorly run, systemically threatened firms out of the fire, government won’t do it again, no matter how many times and how loudly it says it won’t.
— Richard Fisher, President, Federal Reserve Bank of Dallas

And the reason for these consolidations was not because bigger banks make better banks but because of the greater profitability for too-big-to-fail banks due to the implicit government guarantee. This reduces borrowing rates by 78 bps on average, which saved the 18 largest banks about 34 billion USD a year. (See: The Value of the “Too Big to Fail” Big Bank Subsidy)

It doesn't benefit consumers. It doesn't benefit tax payers. It does benefit stockholders and bank executives. So yeah, "socialism for the rich" seems a pretty good shorthand for the above. — Benkei

Nails it :100: :clap:

Personally, I'm not to fond of the "socialism for the rich" phrase, since it positions socialism as something government does, good or bad, which dilutes the term. Socialism should be seen as a positive.

Also that 'socialism for the rich' is just standard capitalism.