PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Baltimore.
There was an interesting moment during the 2008 presidential elections. The last couple
of weeks, President Obama was ahead, and summoning up all the demons of the Cold War, John McCain
fired what he thought might be a decisive shot. He called President Obama socialist.
Obama's reaction was rather interesting. He kind of stared it down. He said, I read my
Bible; it says I should be my brother's keeper. Well, I don't think we've seen much of that
President Obama since that moment. At the same time, he did go on to win the election,
in spite of all of that rhetoric.
But the issue of public ownership keeps reasserting itself. During the crisis there was a lot
of discussion about the importance or need for nationalizing banks and such. But now,
two years after the crisis--supposedly after the crisis--the issue of public ownership
seems to be back off into the margins of the discussion. Well, we think it should be back
up front and center.
And now joining us is someone who's done some work on this issue of public ownership, Gar
Alperovitz. He's a professor of political economy at the University of Maryland, College
Park. He's the founder of the Democracy Collaborative at the University of Maryland, and a member
of the board of directors for the New Economics Institute. And he served as a legislative
director in the U.S. House of Representatives and the U.S. Senate. He's the author of the
book America Beyond Capitalism. Thanks for joining us, Gar.
GAR ALPEROVITZ: Glad to be with you. Thanks, Paul.
JAY: So what prompted you to write this piece? This was an article recently about public
ownership you wrote in The Nation.
ALPEROVITZ: Well, several things. One, the new poll data on all this is kind of very
interesting. You know, the Cold War is over, and younger people, the people in the age
18 to 29, a recent pew study said, say they are 49 percent more favorable to the word
socialism and 43 percent for capitalism. Isn't that interesting? There is a change going
on. In fact, there's been a trend: a couple of polls earlier had been even, and now it's
moving in this direction. The numbers for capitalism in general have been falling down.
And this is a generation that's going to make the new politics. Also saw a poll just recently,
just the other day: 36 percent of all Americans, not just young people, believe that capitalism
is incompatible with Christianity--"my brother's keeper" line. So what that really means we
don't know.
And, finally, the other reason was--and I, frankly, get tired of this, the word is thrown
around so much--anything at all that is progressive is now being labeled with the word socialism.
And it's just ridiculous, because the right-wing language and rhetoric has gotten out of hand.
It has no meaning whatsover [inaud.]
JAY: Yeah, I guess it's a little--. I guess "greed is good" is not to be found in the
New Testament. Now, in your piece you talk about the--.
ALPEROVITZ: In fact, I think the line is that a rich man has more chance of going to heaven
then a camel getting through the eye of a needle.
JAY: Right. That's actually more Jesus's message, which today certainly would be branded socialism.
More than that, I think it would probably be branded class warfare to talk like that.
ALPEROVITZ: And if you go a little further, Acts 2 has everyone laying down their private
ownership to join collectively in the common Christian effort. So there's a lot of love
thy brother that is much more prevalent, and the preference for the poor is much more prevalent
in the Old and New Testament than the notion about socialism that we're talking about.
JAY: So the basic thesis of your article is that public ownership, at least in certain
critical sectors of the economy, is actually the only way to solve some of these problems
facing the country. What's your point?
ALPEROVITZ: [incompr.] the only way, and it's much more efficient. Now, that's--that goes
right directly contrary to the argument of many conservatives. And so take number one,
you cannot anymore regulate the large banks. Theoretically you could regulate them, but
they are far more powerful than any regulator. And the swarms of lobbyists on Capitol Hill--this
is now conventional wisdom. Right wing, left wing, academics, everyone really knows this.
They just don't say up the implications out loud. The lobbyists are writing the regulations
and rewriting them. And the possibility and the likelihood we'll have another financial
crisis, every expert that I read, left, right, and center, expects a crisis to happen again
because the regulations just can't be done, there's too much power on the other side.
So I suspect what's going to happen in the real world--we may have another crisis. And
maybe the first reaction will be, okay, if people get angry enough, they'll break up
the big banks. And then, obviously, the big fish will eat the little fish and we'll be
back with the big banks trying to run the game again. And at some point I think it is
all but inevitable that, someplace, we're going to turn some of these big banks into
public utilities. And I think that's the only way to actually manage it. It's the only practical
way to deal with the problem. I think it'll take us a decade, two, and a lot of pain to
get there, but I suspect it's going to--it's obvious, because there aren't any other real-world
alternatives that are workable. The head economist of Citicorp, no less, Citicorp, biggest bank,
said before he became head economist that if the public's paying the bills, we really
ought to be public utilities. And I agree with him.
JAY: One of the points you make in your article: if you do make the main emphasis on breaking
up the big banks, that even if you're successful, like the phone companies, once you break them
up, over a matter of so many years, depending, they wind up reemerging as the big Goliaths
again.
ALPEROVITZ: Yeah, that's just the process, because the advantage is to them controlling
more and more markets, more and more capital, more and more deposits, and as soon as they
get rolling, they get more momentum, and, as I said, the big fish eat little fish, and
we're back where we started.
You know, another point about this, and I mentioned it earlier: efficiency. You know,
right-wing economists or kind of what I call old-school conventional economists say that
these big public enterprises are not efficient. Well, compared with what is always the question.
These banks have cost us trillions of dollars in lost output, massive economic collapse,
people thrown out of work, thrown out of their homes, the economy slipping to 10, 12, and
in the real world, if you count everybody, 20 to 25 percent unemployment as a result
of their so-called efficiency. It is ridiculous to look at whether or not, internal to some
bank, the way in which they do accounting is more or less efficient than whether or
not a public utility does accounting, more or less efficiency within the bank, and the
outcome of the big efficiency--massive unemployment, loss of economic output, loss of--is neglected.
We don't look over there. They are massively inefficient because they cause so much cost
and so much waste by any standard at all.
JAY: Right. The generalized cost of, for example, the fossil fuel industry is not taken into
account when you look at the efficiency internally of the fossil fuel industry.
ALPEROVITZ: Exactly. If you look narrowly, then--and this is the argument that's always
put up on the other side--look inside. These guys are much more efficient than some government
bureaucrat. Maybe so. But if you can maintain stability in the economy rather than crash
the whole airplane, which has massive costs, that's the place to look. And we've got to
balance those two. And the balance always comes out: obviously we've got to get some
way to control these guys. And if you can't regulate them, and if you can't break them
up so they stay broken up, there's only one logical--.
You know, the people who made this argument are not liberals and they're not socialists.
It was the founders of the Chicago school, the most conservative school of economics,
that pointed out, if you can't regulate them, in the end the only way you get a free market
is to socialize or nationalize some of the big ones in order to have the market to function.
That was H. C. Simons, the founder of the Chicago school of economics, Milton Friedman's
teacher and a very conservative economist who understood that these guys capture the
regulatory organizations if they're that big, so you've got to deal with it.
JAY: Well, President Obama has said many times, you know, in his last State of the Union and
out on the campaign trail, that there is effective regulation now. He talks about Dodd-Frank,
he talks about the Volcker rule. I mean, isn't--doesn't that show some evidence that regulation is
possible?
ALPEROVITZ: In theory, regulation certainly is possible. And, indeed, when we had a stronger
progressive liberal movement, maybe in fact it was possible for a while. But the movement
that supported that really at its heart had organized labor as the muscle, the economic
muscle behind the movement. And labor has dropped from 35 percent of the labor force
to 11 percent, and only less percent less than 7 percent in the private sector. And
the muscle in the movement that really could make effective regulation, unfortunately,
it's gone, which means that, you know, we either have to deal with the fact that regulation
doesn't work or we're going to have another recession, which I think we will have. We'll
have more crises. And at some point we'll wake up to say, look, the only answer is to
make them into utilities, some of the really big ones, and that's the only way to make
the system work efficiently at all, or just work.
JAY: Well, now, there were some moments in the last couple of years, last four years,
that presented themselves that one would've thought was the time when you could have had
some assertion of public ownership. I mean, let's start in the financial institutions
with AIG. And, I mean, we've essentially nationalized. But what happened?
ALPEROVITZ: Well, AIG, which is the largest insurance company in the world, is in fact
owned substantially--a majority of the stock is owned by the U.S. government today. But
instead of using it as a way to really control it, we set up proxy votes and set up trustees
who are kind of beholden to Wall Street, who are the people who, arm's length away from
the public, are managing this operation, even though the public still owns it. Same thing
could have happened with some of the big banks. We bailed them out. We could have bailed them
and taken stock, and voting stock, and made them into public utilities instead of, you
know, massively subsidizing them from the federal treasury and the Federal Reserve board,
and then giving them back to the people who made all the trouble. So this is a possibility
once you have to bail them out. That's the time to actually assert control and do what,
as I say, the chief economist of Citicorp said: if the public pays the bills, you know,
it's time to just turn them into utilities and make them run--kind of hold the line and
be a stable system.
JAY: Well, unfortunately, most of the leadership of Wall Street is saying the public should
bail us out and we should keep our bonuses and great payments and keep things as they
are--and, in fact, as we can see from JPMorgan, go right back into the risky derivatives trading
again, never mind any kind of change at all.
ALPEROVITZ: Yeah, it's much larger now than it was before the crisis, and I think we're
going to see the results of that.
But I'm an--in one sense, I think we're going to have the pain lessened. At some point,
I think, this is not an issue just of liberals and left and right. As I say, the real ideas
that I'm talking about came out of the Chicago school of economics, the most conservative
economists, who were at least sophisticated enough to face the problem directly that you
couldn't regulate them. And I think, as people are angry--even the Tea Party people get really
angry at these big banks--at some point, the only obvious logical answer that's going to
be left is, you know, make them into utilities. That's the only, you know, practical way to
do it.
JAY: Okay. Well, we're going to carry on our discussion in the next segment of this interview.
So please join us for part two of our interviews with Gar Alperovitz on The Real News Network.