Nationalizing an industry, Part II
It's not 'ownership stakes.' It's nationalizing an industry. I'll repeat what I said last month: Don't like big government? Then regulate early, lightly and intelligently. Otherwise, you get nationalization. ... Until conservatives grasp this point, they're going to get socialism both as a remedy and as a permanent preventative measure in the future. They blew it by embracing utopian laissez-faire policies. They'll blow it again if they argue for utopian laissez-faire policies in the coming debate over regulations. ... Reader Barry, one of Hub Blog's original readers, sends in the following insightful note about the quandary facing McCain, though I dislike his description of Obama's policies as 'anti-American':

McCain loses these debates in the opening minutes because he doesn’t understand how to clarify the economic and political terrain (battlefield, really) for voters, and then work his way across it in a manner that convert undecided voters to his candidacy.

The broad outline is simple: McCain has to defend principled, democratic capitalism against the “buccaneer capitalism” that has been practiced by/spiraled out of control on Wall Street, with a heaping dose of coercion from Democratic legislators and Washington lobbyists, AND, at the same time, defend principled capitalism against the anti-American socialism that is embedded in the economic proposals (and, for that matter, the foreign policy proposals, also) and way too many of the political associations of Senator Obama.

The McCain campaign can’t seem to dance (express) this dialectic: that they're fighting this two front war to regain voters confidence in capitalism, and to protect capitalism from the redistributionist socialism embedded in Obama's economic policies in order to win voters' votes on the economy.

Reform, alone, isn't enough, and they're in danger of relying on it so much that it comes across as merely a campaign catchphrase--neither a theme nor a strategy.

Update -- Obama hasn't 'closed the deal yet.' No kidding. Despite McCain's quandaries. ...

Update II -- From Reader No. 1: "On the topic of government decisionmaking in today's crisis environment, I think this Barron's piece said it best." ...

Update III -- Bob writes in: "...I agree completely with your comment (see main post). ... Except that it's premature to call this 'nationalization,' which to me means at least majority control by the government. There are a lot of other ways this might go. But, we will see." ...

My response: Bob's technically right and I'm technically wrong. Nationalization implies majority ownership. But I think the government will have virtual control even with minority ownership, due to the way the bailout bill is written, the weakness of investment banks and public sentiment (see reaction to AIG's $400,000 spa-trip expenditure). BTW: I think nationalization, partial or full, is probably necessary and inevitable at this point. Paul Krugman was initially correct: capital infusions, not necessarily getting bad assets off of books, is what investment banks need in the short run. Buying up assets will take time.

Update IV -- Hitchens on our Banana Republic. It's depressing because it's true.  ¶ 6:41 AM