Socilialized Captitalism

Read this very interesting post by Robert Reich, one of the only few modern political figures I really admire, who defines the notion of "socialized capitalism" and proposes to end it as follows:

Socialized capitalism of the sort the Fed and the Treasury are now practicing, consisting of private gains and public losses, is untenable. On the other hand, it's also true that giant Wall Street investments banks as well as Fannie Mae and Freddie Mac are too big to fail. How to reconcile these conflicting principles?

Here's a modest proposal: When taxpayers insure a giant entity against loss -- as we now are with Freddie, Fannie, and Wall Street investment banks -- those entities must agree that:

(1) for the duration of the bailout, their top executives cannot receive total annual compensation higher than that received by the President of the United States, and

(2) the government gets five percent of their current valuation as shares of stock (roughly representing the benefit to their shareholders of the federal insurance) -- so that if and when the entities become profitable again, taxpayers are compensated for the risk they've taken on.

Most striking to me is that while we like to think of ourselves as living under a free-market economy, when the government intervenes like it does above, we are in reality a quasi hybrid socialist-capitalist country. And history indicates that we gravitate towards the socialist when the economy is bad like it is now, and capitalist when times are good.

I guess on a positive note, it shows America's ability to be dynamic and elastic with its monetary and economic policies as the climate dictates, but as it stands now, I do like Mr. Reich's proposals, especially the second one!