Barack Obama, Fabian Socialist
2011-09-28 0:00

By Jerry Bowyer |

Who needs Molotov when weíve got Alinski?

Barack Obama is a Fabian socialist. I should know; I was raised by one. My Grandfather worked as a union machinist for Ingersoll Rand during the day. In the evenings he tended bar and read books. After his funeral, I went back home and started working my way through his library, starting with T.W. Arnoldís The Folklore of Capitalism. This was my introduction to the Fabian socialists.

Fabians believed in gradual nationalization of the economy through manipulation of the democratic process. Breaking away from the violent revolutionary socialists of their day, they thought that the only real way to effect "fundamental change" and "social justice" was through a mass movement of the working classes presided over by intellectual and cultural elites. Before TV it was stage plays, written by George Bernard Shaw and thousands of inferior "realist" playwrights dedicated to social change. John Cusackís character in Woody Allenís "Bullets Over Broadway" captures the movement rather well.

Arnold taught me to question everyone--my president, my priest and my parents. Well, almost everyone. I wasnít supposed to question the Fabian intellectuals themselves. Thatís the Fabian MO, relentless cultural and journalistic attacks on everything that is, and then a hard pitch for the hope of what might be.

Thatís Obamaís world.

Heís telling the truth when he says that he doesnít agree with Bill Ayersí violent bombing tactics, but itís a tactical disagreement. Why use dynamite when mass media and community organizing work so much better? Who needs Molotov when youíve got Saul Alinski?

So here is the playbook: The left will identify, freeze, personalize and polarize an industry, probably health care. It will attempt to nationalize one-fifth of the U.S. economy through legislative action. They will focus, as Lenin did, on the "commanding heights" of the economy, not the little guy.

As Obama said, "the smallest" businesses will be exempt from fines for not "doing the right thing" in offering employer-based health care coverage. Health will not be nationalized in one fell swoop; they have been studying the failures of Hillary Care. Instead, a parallel system will be created, funded by surcharges on business payroll, which will be superior to many private plans.

The old system will be forced to subsidize the new system and there will be a gradual shift from the former to the latter. The only coercion will be the fines, not the participation. A middle-class entitlement will have been created.

It may not be health care first; it might be energy, though I suspect that energy will be nationalized much more gradually. The offshore drilling ban that was allowed to lapse legislatively will be reinstated through executive means. It may be an executive order, but might just as well be a permit reviewing system that theoretically allows drilling but with endless levels of objection and appeal from anti-growth groups. Wind and solar, on the other hand, will have no permitting problems at all, and a heavy taxpayer subsidy at their backs.

The banking system has already been partially nationalized. Bush and Paulson intend for their share purchases to be only non-voting preferred shares, but the law does not specify that. How hard will it be for Obama, new holder of $700 billion in bank equity, to demand "accountability" and a "voice" for the taxpayers?

The capital markets are not freezing up now, mostly because of what has happened, although community organizersí multidecade push for affirmative-action mortgages has done enormous harm to the credit system. Markets are forward looking.

A quick review of the socialist takeovers in Venezuela in 1999, Spain in 2004 and Italy in 2006 show the same pattern--equity markets do most of their plummeting before the Chavezís of the world take power. Investors anticipate the policy shift in advance; thatís their job.

Itís not just equity markets, though; debt markets do the same thing. Everywhere I turn I hear complaints about bankers "hoarding" capital. "Hoarding" is a word weíve heard often from violent socialists like Lenin and Mao. We also hear it from the democratic left as we did during the 1930s in America. The banks, weíre told, are greedy and miserly, holding onto capital that should be deployed into the marketplace.

Well, which is it, miserly or greedy? Theyíre not the same thing. Banks make money borrowing low and lending high. In fact, they can borrow very, very low right now, as they could during the Great Depression.

So why donít they lend? Because socialism is a very unkind environment for lenders. Some of the most powerful members of Congress are speaking openly about repudiating mortgage covenants. Local officials have already done so by simply refusing to foreclose on highly delinquent borrowers. Then, thereís the oldest form of debt repudiation, inflation. Even if you get your money back, it will not be worth anything. Who would want to lend in an environment like this?

Will Obamaís be the strong-man socialism of a Chavez, or the soft socialism that Clement Atlee used to defeat Churchill after WWII? I donít know, but I suspect something kind of in between. Despite right-wing predictions that we wonít see Rush shut down by Fairness Doctrine fascists. We wonít see Baptist ministers hauled off in handcuffs for anti-sodomy sermons. It will more likely be a matter of paperwork. Strong worded letters from powerful lawyers in and out of government to program directors and general mangers of radio stations. Ominous references to license renewal.

The psychic propaganda assault will be powerful. The cyber-brown-shirts will spew hate, the union guys will flood talk shows with switchboard-collapsing swarms of complaint calls aimed at those hosts who "go beyond the pale" in their criticisms of Obama. In concert with pop culture outlets like The Daily Show and SNL, Obama will use his podium to humiliate and demonize those of us who donít want to come together and heal the planet.

Youíve heard of the bully pulpit, right? Well, then get ready, because youíre about to see the bully part.

Jerry Bowyer is chief economist of Benchmark Financial Network and a CNBC contributor.


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