Saving the Financial System

More clear headed analysis of the choices from Tom Palley

http://www.thomaspalley.com/

Saving the Financial System

Copyright Thomas I. Palley

A friend told me the economist Charles Kindelberger had two rules for a credit economy. Rule one was everybody should know that if they get over-extended they will not be bailed-out. Rule two was if everybody gets over-extended they must be bailed out. The U.S. economy has over-extended itself, triggering rule two. But that still leaves open how a bailout should be designed since designs are not all equal.

Currently, two models are on the table. One is the Paulson model (also supported by Bernanke) that proposes government buy the bad assets of financial institutions. The other is a Buffett-style recapitalization model that would have government invest in and recapitalize banks, just as Warren Buffett has done for Goldman Sachs.

The underlying problem is the financial system is short of capital owing to massive asset depreciation. This shortage is impeding provision of credit, which threatens to tank the economy by interrupting normal commerce.

Banks are caught in a pincer preventing them raising capital. On one hand, if they sell assets to cleanse their balance sheets and make themselves more attractive to investors, this could cause such large losses as to trigger bankruptcy. On the other hand, uncertainty about bank worth means the market is demanding such onerous terms for fresh capital that banks are unable to meet them.

Reading between the lines, the Paulson plan appears to propose government buy securities through a “reverse” auction whereby banks (and other firms) offer to sell assets to Treasury at a price of their naming, and Treasury accepts those offers meeting its acceptable price. Implicit in Treasury’s thinking is the assumption that the market will recapitalize banks on reasonable terms once they have been cleansed.

The essence of the Paulson plan is that financial markets have been hit by massive fear-based price disruption, requiring government to create a new market to break the logjam. If correct, by purchasing assets now at distressed prices and holding them to maturity, taxpayers could eventually make a profit, making the bailout costless.

The recapitalization model completely sidesteps cleansing banks and instead has government directly re-capitalize them. It can do this by buying compound cumulative preferred stock from banks, and also taking warrants that give an option to buy common stock in future at today’s low price. That way, if all works out, taxpayers are rewarded for the risks they take today.

Since preferred shares rank above common shares, existing shareholders would be hit before taxpayers should there be future unexpected losses. Meanwhile, taxpayers would get the benefit of the preferred stock dividend. Furthermore, if banks suspend dividend payments, the suspended dividend will cumulate and compound so that taxpayers ultimately recoup delayed payments.

Recapitalizations can also be accompanied by other useful provisions, including restriction of dividend payments on common stock. Additionally, banks could sign a memorandum of understanding with the Fed suspending capital standards and mark-to-market asset price accounting. Both of these practices have squeezed banks by causing further losses as asset prices fall. Since markets are not working well by the Treasury’s own admission, it makes no sense to keep using market price accounting.

The Paulson plan is subject to three fundamental criticisms. First, the Treasury may over-pay for assets, saddling taxpayers with large losses. If the Treasury sets its acceptable price too low, there is a risk it will buy insufficient assets and banks will not be cleansed. If it sets prices too high, the risk is Treasury overpays. Second, Treasury is taking a big risk as prices could fall further, yet it is not being properly rewarded for this risk-taking. That is tantamount to subsidizing banks which have created the mess. Third, markets may not provide finance even after Treasury’s purchases, in which case banks will remain undercapitalized.

The Paulson model defense is taxpayers are protected by the reverse auction design. Banks need money and will therefore offer assets for sale at true worth, knowing they may be undersold by other needy banks if they ask for too high a price.

Criticisms of the recapitalization model are twofold. First, what price should Treasury pay for preferred stock? Second, which banks should get funding? The danger is that zombie banks apply for funding, seeking to save themselves by gambling for redemption with taxpayer money.

The recapitalization model defense is accounting information exists, due diligence can be conducted, and judgment can be exercised when it comes to setting warrant prices and interest rate terms on preferred shares. Indeed, due diligence and judgment are also needed under the Paulson plan to establish the maximum price government will pay for different types of securities.

The reality is there are two fundamentally different models for addressing the financial crisis. Both have strengths and both have weaknesses. Time is needed to deliberate on them, and Congress should not be stampeded into a decision. Nor should Congress hand over a seven hundred billion dollar blank check, particularly to the Bush administration in its waning days.

Finally, both the Paulson and recapitalization models deal only with the supply of finance. Neither deals with the problems of re-regulating finance, jumpstarting the economy, and ensuring the economy delivers shared prosperity that escapes the trap of relying on debt and asset price inflation to drive growth.

It is no good fixing the supply of finance if there is no demand for finance or if the demand for finance is based on rotten foundations. That is why helping Main Street is as essential as bailing out the banks.

19 comments

  • Like Carney’s speech posted today at the BofC site, and Lipsky’s at the IMF site, this article spends most of its energy on one side of the equation, with a nod to ‘main street’.

    Where are the details on the needed regs and serious overhaul?

    We are leaving this to Sarkozy and the G7-plus-a-few?

  • Apologies for the tone, but, I will admit frustration. The Financial Stability Forum which Carney endorses in his speech is made up of the same old, and its recommendations include items such as a proposed ‘college of supervisors’ for the financial system. In an email to allies almost a year ago, when this undemocratic proposal made the light of day, I asked who, exactly, would sit on this ‘college’.

    Process is key, and if the G7-plus got us into this mess, and have been recommending these outcomes for some time already, it’s plain that all this is unfolding per plan.

    The world is correct to ask why in the name of all that is sensible, would we let decisions be made by the cohort which is so completely out of touch with reality on the ground?

    And ‘oversight’ !? I’ll bet that not 1% of campaigning politicians can even understand the descriptions of financial products listed as the BofC’s acceptable orphans.

    Carney talks about the ‘historic’ ‘restructuring’ of the global financial system, citing Lipsky, and commending Paulson’s approach for shortening the time it will take, only a few years vs. the decade it took Asian and other economies to restructure.

    Asia, ecologically speaking, is in chaos. A friend returned from there and said you could smell burning all the time, in India, Burma, Thailand, and China was shrouded in smog. The ‘development’ is out-of-control, forests are burned for new mines, and the land is eaten up by concrete. Yet the poor are poorer.

    Let us not hide in rants against capitalism, however warranted. We need specific recommendations, sans ideological buttressing.

    thanks again,
    Leigh

  • correction, half a year ago, on the G7/ FSF.
    Here was the April 11/08 of Paulson:
    http://www.ustreas.gov/press/releases/hp919.htm

    And here the June sandbox, inc. free trade with EU.
    http://www.conferencedemontreal.com/

  • “Let us not hide in rants against capitalism, however warranted. We need specific recommendations, sans ideological buttressing.”

    You chide people for not “seeing things clearly” when “seeing things clearly” is what created the problem.

    Non deus es.

  • sorry, guess i’m just asking for a nice concise list of specific alternatives, together for referencing in one place.

    perhaps it’s just a matter of compiling articles or points that can already be found elsewhere on this blog site, but i’ve not had the time to read everything here.

    my hope around backing off from self-proclaimed explicit positioning around ‘left’ or ‘conservative’ or what-have-you, is simply so that points or articles can be shared with the public, without triggering a ‘write off’ of content because of some language.

    a start for a useful list might look something like;
    – speculative and currency controls (eg…)
    – new firewalls (apparently bankers could get too easily around Glass-Steagall?)
    – mortgagee bailouts
    – wages
    – social programs
    – process
    -etc.
    with a few good references, maybe a mix from diverse sources…

  • sorry, guess i’m just asking for a nice concise list of specific alternatives, together for referencing in one place.

    perhaps it’s just a matter of compiling articles or points that can already be found elsewhere on this blog site, but i’ve not had the time to read everything here, nor pull it together.

    my hope around backing off from self-proclaimed explicit positioning around ‘left’ or ‘conservative’ or what-have-you, is simply so that points or articles can be shared with the public, without triggering a ‘write off’ of content because of some language.

    a start for a useful list might look something like;
    – speculative and currency controls (eg…)
    – new firewalls (apparently bankers could get too easily around Glass-Steagall?)
    – mortgagee bailouts
    – wages
    – social programs
    – process
    -etc.
    with a few good references, maybe a mix from diverse sources…

  • Below is a quote from one of the best informed “rants against capitalism” I’ve read, which is far more enlightening than much of the Keynesian pablum on offer.

    Paulson and the other creeps doing their time in government before going back to Wall Street will try their best to find a way out of the crisis for their friends. Our dilemma is how to make sure their way out isn’t made by walking all over workers and the poor.

    David McNally puts it much better than I can:

    “Too often, however, sections of the Left imagine that their role is to offer policies that will avert crises of capitalism. In so doing, they gravitate to a kind of Keynesian politics designed to boost demand and consumption.”

    “It is not the job of the Left to save capitalism from itself, however. To be sure, we have an obligation to advocate and agitate for policies to protect the victims of the crisis, policies that cut against the very market logic of neoliberalism. A case in point would be campaigns for publicly-funded social housing programs at a time when, in the US, millions face foreclosure. Equally important are campaigns to raise social assistance rates in order to protect the most vulnerable.”

    “But equally vital is a Left that names the actual contradictions of capitalism, one that addresses the disasters of the neoliberal model and publicizes the inherent conflict between capital accumulation and the satisfaction of human needs. And this requires a Left that speaks openly of socialism as the alternative.”

    His article also features an acute analysis of the international implications of the crisis.

    http://www.newsocialist.org/index.php?id=1636

  • This is hardly the forum to outline the entirety of, “what is to be done”. I do think ideological buttressing is a good thing, especially for those learning their way through the forest.

    Action is good but contrary to Habermas, it does take the numbers to act, so some discussion is but a helpful wellspring to get us to the high water mark.

    Good points Leigh. Somewhere there is a long list of what can be done, brewing up in a stew of progressive solutions.

    A little spice here and there is helpful.

    By the way I am just about to cook up supper, so pardon the metaphors.

    paul

  • thanks Paul.

    Nik, it would help when ‘the Left speaks openly about socialism as the alternative’ if some definitions are provided – there are almost as many definitions of socialism as there are socialists now, to the point where the stand-alone term is becoming meaningless.

    Put that together with a) history, wherein more than a few self-described ‘socialists’ have acted as badly as self-described ‘capitalists’, and b) the fact that we’re in an election where these terms carry the weight of vastly differing experience for many who are not in progressive circles, whom we might, even in future, want to have unhindered dialogue with,and we perhaps can consider why focus on specific measures, clear definitions, and unaligned, or multi-sourced, contexts could be useful for blogs.
    thanks,Leigh

  • Leigh, it sounds like you’re trying to find stuff that someone won’t just dismiss out of hand, implying that you don’t trust your audience’s ideological proclivities, intelligence, patience, etc. While it’s not a bad thing to craft ones words for the audience, that’s assuming you know your audience to begin with. If you don’t know your audience, you’ll have to spoon-feed them stuff at first (or be around to answer their immediate questions) but trying to ignore or hide the ideological direction that your info’s coming from isn’t the best thing to do. If your audience finds out you’re hiding/appearing to hide something, that’ll affect the info’s reception (and some will, as you fear, simply dismiss it out of hand for that); if they don’t find out, sooner or later they will.

    Ultimately, tell them the truth: this is one thing capitalism does, and, if you don’t want it to happen again, capitalism’s got to go. If you don’t believe it (and I’m not sure you do) despite any research of your own, then I’m not sure what you’re trying to find here.

    As for your point about history, there’s not much you can do about that except remind people that there are good and bad capitalists just as there are good and bad socialists, but it’s the _system_ of capitalism that’s exploitative with no getting around that. If some twerp cries, “Stalin!” or “Mao!” rebut gently with the even more prolific dictators (and elected officials) and murderers who kept capitalism going despite what was going on (and you don’t even have to mention Hitler or Franco).

  • Todd, it’s not a matter of hiding or ignoring ideological direction, it’s that I honestly find the old frameworks contradictory at some very basic levels.
    Many young people in our area have chosen to work from an ‘anti-oppression’ framework which critiques ‘capitalism’, ‘socialism’, and just about every other ‘ism’, including that of a ‘humanism’ which oppresses other species.

    Many young people are searching for spaces where there is openness in addressing assumptions, or at least not simple categorizing.

    hopefully these reflections help clarify my earlier comments,
    best wishes,
    Leigh

  • Leigh,

    The problem is we are not talking about a crisis in socialist finance, investment or globalization at the moment. We are talking about a crisis at the heart of international capitalism–American financial markets. As such it strikes that it is entirely appropriate to talk about, think about, and critique the type of system which has generated this crisis. Why would our object of analysis being anything else other than capitalism?

    In talking about alternatives we would then presumably need to have a conversation about oppression in its various forms and how a different system could help ameliorate or destroy the multifarious forms that oppression takes.

    Yet and I do not want to sound doctrinaire here, the LCD of oppression in capitalism is the capital –wage labour relation. The role finance plays in binding that relation and reproducing it through time is crucial and it does so in a manner that hyper-accentuates other structures of oppression like racism.

    For example, it is well known that much of the sub-prime was sold to those who had been historically locked out of the housing market. And it is well known that African Americans have historically had a a harder time obtaining loans when they in fact had equal or better credit “worthiness” than their white counterparts.

    Sub-prime aside from preying on the desire of the working poor to participate in the American dream –home ownership– it specifically targeted African Americans that –sans racist lending practices–would have qualified for regular vanilla mortgages. So African Americans paid a premium not just because they have historically been denied access to the same labour market institutions (including educational opportunities and thus higher skilled jobs) but also because they have been denied access to the same credit market institutions.

    Now let us turn our attention to the present bail-out package being proposed. Who is being bailed out? Finance and perhaps some aid to some home owners.

    Why? Because no finance = higher unemployment, lower pensions, fewer student loans etc etc. What could be a more naked expression of the capital wage labour expression? That is, why are they are not proposing to bail out individual mortgage holders first with some aid to financial markets? Perhaps it is because to do so would increase the power of subordinate classes and diminish the power of the dominant class.

    Bailing out the financial markets is being done to preserve the system –a capitalist system–not to change it. But without a critique of capitalism we are simply left with the fact that finance is of central importance to stability ipso facto Americans have to bail out the financial markets in a form which preserves the existing system.

    That is why all this talk about socialist intervention from the Republicans is such twaddle. They are simply victims of their own liberal zealotry. But none of this should be shocking because liberalism (in the Anglo sense) is the ideological expression of capitalism par excellence.

    When the respectful left (like the democratic party) simply has a critique of the extreme form of liberal ideology (laissez faire) they simply are left with a populist denunciation of greed but without any deep analysis of the role finance plays in specifically capitalist forms of oppression. Americans may resent having a gun put to their head by the financial community and told “your money or your jobs” but I can guarantee you they are not going to bail out finance in a way that takes the gun out of finance’s hands.

    And that would seem to suggest we need to have a further conversation about just how hegemonic capitalism and liberalism are. A general conversation about oppression and “isms” is not going to take us very far if it will not take-up the question of the dominant ideology and economic system in which we actually live.

  • Leigh said:

    “it’s that I honestly find the old frameworks contradictory at some very basic levels.”

    Is there a website I can read more about these contradictions? Contradictions inherent in capitalism I’m somewhat familiar with but not those in socialism or communism.

    “Many young people in our area have chosen to work from an ‘anti-oppression’ framework which critiques ‘capitalism’, ’socialism’, and just about every other ‘ism’, including that of a ‘humanism’ which oppresses other species.”

    Interesting. Sounds like some kind of vegan anarchism.

    “Many young people are searching for spaces where there is openness in addressing assumptions, or at least not simple categorizing.”

    Good. Sounds very radical.

    But I wouldn’t pooh-pooh the old farts yet . . . .

  • Hey Travis, very nice post, some quality points for sure.

    Mr. Archer, just walk down the street, breath in the air, drink some water, have a sandwich, open your eyes and have a real good look.

    Work for a living and ask yourself why your life is defined by somebody else’s profits, and you will start to feel those contradictions. They will rip through your body and redefine your essence so entirely and completely that you will not even see them as you chase your tail for more of the shiny and flashy odd bits of tinsel.

    If your these contradictions are lost on your being then focus on looking across the planet and tell me you see no contradictions in living standards and well being. Those are pretty loud and a lot to do with capitalism.

    With regards to the meltdown, I think the tipping point is how the bailout pours. In our capitalist world, the spout always points at the rich and capital. It is always the means of production that need to be taken care of first. This on the assumption that the means of production are instrumental of taking care of us all. Of cousre for those engaged within the system and happy chasing the shiny flashy, gravity makes sense and the pour of refreshment reaches its target- eventually. It is for the less engaged within the system, those without a house, or losing their house or where the American dream is most definitely just a dream, that gravity is not rational.

    It is the irrational of this rational that will eventually, will potentially redefine the physics of our economic universe.

    This is not just a small bump on the road forward. We will be living with the aftermath of this meltdown for many years and it will be the harbinger of much change. So all known laws of gravity should put on he table. We need a way forward for now and defining a better way could be within reach. With a new party to come to power in the US, it is a great time for change, the can of worms has been not only ripped open, but throroughly thrown about. Mr. Obama has been given a great gift for change.

    Even the discourse has been kindly opened up and handed out. It has unleashed a political education process that will not dimisnh any time soon. So for those on within the progressive movement. Moving bolder should not be as hard as it was, say just a mere 3-4 weeks ago.

    The political opening now just needs lots and lots of debate. We need to keep talking and pushing.

    Crisis really does produce exceptional behaviour. So many years of nothing and then boom!

    paul

  • Thanks Todd.
    The contradictions in socialism and communism have been pointed out by those who have lived through the 1917 transformations, and following, in the former USSR, eg. see Hrushevsky’s History of Ukraine-Rus, UofT Press.

    Certainly since there have been more than a few revisions of socialism, because of contradictions, including feminist critique, and more recent ‘green-left’ versions.

    Yes, there are many vegans and vegetarians out here, and those who have lived in various kinds of intentional communities, and a number have changed allegiance between various ‘isms’ including anarchism, but young people are increasingly in survival mode, eclectic by necessity. There is very little patience for pundits who invoke theory from a century ago without qualification, especially with exclusive claims about being ‘the’ alternative.

    Interpretation respectful of diversity, and the earth, is essential.

    I could go on, but you get the picture.
    Young people will dismiss ‘the old farts’ only to the extent that their core values are dismissed…

    hope this helps,
    Leigh

  • Leigh: On the question of socialism, if by “definition” you mean “blueprint”, then I will have none of it, on the exact same grounds as Marx. A blueprint for socialism worked out apart from a process of radical social change will inevitably be imposed from above, from without, and thus be undemocratic and unworthy of the name.

    If, on the other hand, you want some sort of description of what socialism means, I think a good place to start is democratic control of the means of production along with a dissolution of the state as we know it. Social life would no longer be subordinated to the need for a never-ending accumulation of capital, with all the violence, stress, and ecological damage implied by that, but instead production would serve people. Use values, not exchange values; People not profit. As fractious as the socialist left is, I think this basic idea is common to most people on the radical Left that have thought a bit about economics and class.

    The problem is that there has been far too little such thinking, thanks in part to “anti-oppression” frameworks that often serves as an excuse for a near total ignorance, or worse, indifference to economic questions. The economic barely figures in much of the thinking of many anti-o peeps I know in Mtl’s activist scene, and that is where they have a lot to learn from the *gasp* Old Left, for all its warts.

    What would take the place of the economic coordination function served by capital? (The sub-prime housing/financial crisis demonstrates how horrendously in terms of wasted human potential and human need this function is served.) I’m inclined to say democratic planning, people like Michael Albert would say participatory planning, other would call for “socialized markets” etc. These are items that urgently need to be discussed, but they will only truly be resolved by human practice in the building of socialism, with all the frailties that implies.

    That said, whether it’s called socialism, ecosocialism, communism, parecon, or whatever other label may emerge for what I’ve described is less important than the fact that we are consciously working towards this kind of radical social change. I prefer socialism because if we are honest we are going to be called socialists by our enemies, so why not reclaim that word, but there are obviously arguments against that kind of thinking.

    All this is, however, a moot point if we restrict ourselves to the time frame of the elections, as you unfortunately seem to want to. If we accept that frame, then we will be endlessly confined to imagining our role as one of offering policies that will avert the crises of capitalism, rather than overturning the system altogether.

  • Paul said:

    “Mr. Archer, just” etc.

    Um, Mr. Tulloch, I know you don’t know me very well, but, ah, might I suggest you read what I wrote again very carefully . . . ?

    Leigh said:

    “The contradictions in socialism and communism have been pointed out by those who have lived through the 1917 transformations, and following, in the former USSR, eg. see Hrushevsky’s History of Ukraine-Rus, UofT Press.”

    OK, so what you’re talking about is the contradictions in those former states as opposed to contradictions within socialism or communism (such as we know about it, which isn’t much) as-such.

    “Interpretation respectful of diversity”

    Yup. Open minds. Good.

    I just hope minds don’t get so opened up that brains end up falling out. Bullshitting aside, I’ve heard how it happens (“Third Way”, “Red-Brown alliances”, commies mindlessly cheering on the Ayatollah, etc.).

    While there certainly can be a whiff of arrogance from the Old Farts, there’s some justification.

    May I recommend this:

    http://www.leftbusinessobserver.com/Action.html

    “We’re not arguing for conformist ideologies. The impulse to resist hierarchy and mind-control is one of the more appealing and useful facets of the new activism. Consider the campus anti-sweatshop movement, which includes members of the International Socialist Organization, SDS-type radical democrats, anarchists and plain-vanilla liberals. This movement’s willingness to embrace radicals and non-radicals alike has been a strength, attracting both policy wonks and people who like to chain their throats to the dean’s desk. Such flexibility is usually commendable. What bothers us about activistism as an ideology is that is renders taboo any discussion of ideas or beliefs, and thus stymies both thought and action.”

    Both Henwood and Featherstone are great reads, entertaining as well as educational.

  • Hi again Todd, pls. note that contrary to rendering ‘taboo any discussion of ideas or beliefs’, I’ve asked elsewhere on this blog for a specific tag category to be set up to ‘disabuse ourselves and the general public of name-calling and long-standing misunderstandings’. Dialogue is paramount.

    Which brings me to your point here,
    “OK, so what you’re talking about is the contradictions in those former states as opposed to contradictions within socialism or communism (such as we know about it, which isn’t much) as-such.”

    The thing is that it’s very very difficult for people on the ground to separate an ‘ism’ from how self-proclaimed practitioners of that ‘ism’ have enacted that ‘ism’ within history. The effort can, and should, be made, to clarify.

    But in the case of Canada, this effort has been made about 70 years too late, and we cannot expect people to re-evaluate a couple generations of oppression overnight, especially when there is a substantial portion of proponents who still do not believe that reports of the brutal acting out of their ‘ism’ was not simply propaganda.

    I have been involved in activism for 25 years, and the fact remains that even today, there are Many ‘socialists’ and ‘communists’ who believe that the USSR was a good model. Reports of abuse, in their view, are simply fake, generated by the CIA.

    It’s quite astonishing, really.

    My own personal history includes a Ukrainian peasant family on one side, whose members were almost completely obliterated in the twenties and thirties by self-proclaimed ‘socialists’ and ‘communists’. The methods of the proponents of these ‘isms’ included the shooting of children in front of their siblings. One grandfather’s sister was run over by a Soviet tank when she and other mothers tried to protest soldiers taking their kids to a labour camp. She was killed, her son was taken and survived to tell the tale, but her teenage daughter has never been seen again. Her gravesite in the village holds her name but not her body.

    Millions died in the enforced famine, wherein the peasant’s grain was stolen and held by ‘bolsheviks’ at gunpoint.

    I could go on. And I am not alone, as mentioned earlier, the country here is filled with the diaspora of these abuses. Many live in my region of rural Ontario, and across the country in rural area. The point is that there are Strong Understandable Emotional reactions to the use of certain words, which many in the ‘left’, either through ignorance, lack of compassion, or lack of intellectual courage, fail to acknowledge.

    As long as ‘socialists’ continue to barricade themselves behind certain words, the unfortunate splits in our country’s political fabric will continue.

    The reality is that ‘socialism’ was a practiced reality in Ukraine long before ‘socialists’ emerged. For millenia, actually. If many of today’s ‘socialists’ had more humility, they would seek to a) actually read the history, and b) listen to the stories, of their neighbours. I realize that there are well-informed socialists who have done this work, but unfortunately it seems not to have filtered down yet to the majority of socialist activists, who remain fixated on starry-eyed idealization of Soviet Russia, and even Russia today.

    It’s quite wierd, actually. What it does reveal, more truly perhaps, is that there is a crisis of real community, that people are coalescing around words, and not around people, or the earth.

    Through increased dialogue, socialists will probably find they have more specific alternatives in common with those they consider ‘the enemy’.

    I hope these reflections help the dialogue.
    I also need to mention that I am an organic farmer, this is October, and now that the rain is over and frost has hit for the second time last night, the second harvest of vulnerables needs to be finished. Excuse me if I’m not able to respond back online in a timely schedule.
    best wishes all, and it looks like progressive economics have done a great job with their recent sign on letter.
    many thanks,
    Leigh

  • “The thing is that it’s very very difficult for people on the ground to separate an ‘ism’ from how self-proclaimed practitioners of that ‘ism’ have enacted that ‘ism’ within history. The effort can, and should, be made, to clarify.”

    Yup. Agree.

    “But in the case of Canada, this effort has been made about 70 years too late, and we cannot expect people to re-evaluate a couple generations of oppression overnight”

    Of course not.

    “especially when there is a substantial portion of proponents who still do not believe that reports of the brutal acting out of their ‘ism’ was not simply propaganda.”

    Yup. It’s really hard for the non-expert to tease out truth from falsehood (and I’m still pretty much ignorant about Soviet history in general, much less what’s lies and what’s not), especially when the opposition can paint itself as the Good Guys very easily.

    “I have been involved in activism for 25 years, and the fact remains that even today, there are Many ’socialists’ and ‘communists’ who believe that the USSR was a good model. Reports of abuse, in their view, are simply fake, generated by the CIA.”

    Yup. What I said above goes here, too.

    “It’s quite astonishing, really.”

    I wouldn’t think so. Communists and socialists don’t have a monopoly on good thinking skills. There’s no royal road to knowledge, like the Old Man said.

    “My own personal history includes a Ukrainian peasant family on one side, whose members were almost completely obliterated in the twenties and thirties by self-proclaimed ’socialists’ and ‘communists’.”

    I’d really like to be able to make some comment about this, but I can’t say anything beyond the obvious at this point.

    “I could go on. And I am not alone, as mentioned earlier, the country here is filled with the diaspora of these abuses.”

    Yup. So’s Florida.

    Again: it’s often hard for truth to be found, even for the expert.

    “As long as ’socialists’ continue to barricade themselves behind certain words, the unfortunate splits in our country’s political fabric will continue.”

    Given the fact that there really are few socialists in Canada to begin with, I suspect it’s a bit of an exaggeration to lay the splits at their feet.

    “The reality is that ’socialism’ was a practiced reality in Ukraine long before ’socialists’ emerged. For millenia, actually.”

    Yeah, but you can’t really run an advanced industrial nation like a village of free peasants.

    “It’s quite wierd, actually. What it does reveal, more truly perhaps, is that there is a crisis of real community, that people are coalescing around words, and not around people, or the earth.”

    See, I’ve learned to be really suspicious of people and orgs who _refuse_ to coalesce around words. We’re definitely all people to one another, but that’s not all we are to one another. And using touchstones to get people to forget really important differences is a tactic used all to often.

    “Through increased dialogue, socialists will probably find they have more specific alternatives in common with those they consider ‘the enemy’.”

    Well, like I said: we _are_ all human, but . . . .

    “Excuse me if I’m not able to respond back online in a timely schedule.”

    Whenever. Plenty of time.

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