In Response To: “Is America Becoming Socialized?”

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In the article “Is America Becoming Socialized?” published in the last edition of the Foghorn, columnist Lindsay Ziegler warns USF students that, “Socialism is creeping into our historically capitalistic nation… the government already has its large hands in the financial industry…and now President Obama wants to extends its control in the healthcare industry.”

Last year our financial system collapsed. We had one of the largest bank failures in our nation’s history. Over 130 banks such as Washington Mutual and Lehmann Brothers went under and nearly another 100 banks including Bank of America, Wells Fargo, Citigroup, Merril Lynch, and Goldman Sachs would have collapsed had it not been for government bailouts. Lending was screeched to a dead halt. Therefore, the government had to intervene in our financial markets, and because of that intervention lending activity has slowly begun to increase. Can one imagine what would happen had the government stood by and let over 250 banks collapse? Our financial system could have disappeared along with thousands of more businesses, as they would be unable to secure the lines of credit they would need. A depression would have not only been a possibility but a stark inevitability. Sure, there is room for debate on how the bailouts were implemented, the size of the bailouts, and who should have and should not have received a bailout, but to do nothing and let our economy collapse while our unemployment rate remains at 9.7% was out of the question.

Zeigler seems to assert that these actions by the government are part of the Democrats’ plans to push socialism in America, but let us remember that the bailouts began under George W. Bush, a Republican. Furthermore, the Obama administration’s plans are hardly socialist; the administration has resisted calls from left wing politicians to nationalize the banks and Obama does not plan to do so. Instead the administration’s goal is to provide much needed capital to stabilize the financial system and get banks lending again.

As for socialized healthcare, the United States is the only country in the developed world that does not guarantee health insurance for its citizens. We have 47 million people without health insurance and critics have not been able to address this.

Meanwhile, the democratic proposal is a far cry from socialism.  President Obama has resisted calls from some Congressional Democrats for a Canadian-style government run healthcare system. Obama is also willing to abandon the public option and under his plan, one is allowed to keep one’s own health insurance if one wishes to. Businesses are still the ones providing insurance. Ziegler believes that the free markets are the silver bullet to our healthcare crisis, but nothing could be further from the truth. No country in the world has a pure free market system in their healthcare market and rightly so. The works of Nobel Prize economists Kenneth Arrow, Joseph Stigliz, George Akerloff, and A. Michael Spence have all shown that for reasons such as imperfect information, uncertainty, and externalities, the free market is horribly inefficient in allocating the optimal level of health insurance.

President Obama’s plan is to reform the way health insurance companies allocate insurance, not take it over. Both Republicans and President Obama agree that insurance companies must not discriminate against people based on pre-existing conditions, or drop people’s coverage when they get ill and actually need their health insurance. The President’s plan also includes a mandate for health insurance. Yes, this is government intervention. Just like the government mandates that children must go to school, or that car owners and homeowners buy insurance.

Like any other policy or proposal, President Obama’s plans have their shortcomings, which should be discussed. But coming up with alternatives to resolve some of the most pressing issues of our time would be more beneficial than arguments based on slogans and name-calling.

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