Nationalization, the U.S., and Latin America

Several weeks ago I posted about how the United States government was talking about nationalization, but refusing to call it that, and how it had criticized nationalization for any other government. Now the New York Times picks up the theme, at least with regard to the former (unfortunately not for the latter) and it is past due. It discusses how the U.S. has a long history of nationalization in times of crisis, including Montgomery Ward, of all things.

Elsewhere, government bank-investment programs are routinely called nationalization programs. But that is not likely in America, where nationalization is a word to avoid, given the aversion to anything that hints of socialism.

“Putting this plan on the table makes a lot of sense, but you can’t call it nationalization here,” said Simon Johnson, an economist at the Sloan School of Management at the Massachusetts Institute of Technology. “In France, it is fine, but not in the United States.

This is true. But this lie we tell ourselves about how we are not the slightest bit socialist is destructive. It makes us criticize others who are not as different from us as we like to think. After all the lectures to Latin American leaders about free market principles, tightening your belts, living within your means, reducing spending, etc., etc. we cannot even admit that we are nationalizing. The problem is that in the future, we will continue to criticize others for doing so because we will never accept that we actually did it ourselves.

We hear all the time about how the U.S. image in Latin America is badly damaged and that it exerts no leadership. One concrete measure to reverse these trends would be simply to admit, in a major speech to a Latin American audience, that the state plays an important and necessary role in the economy. That we can disagree about the extent of the state's role, but that even the most powerful economies cannot rely on markets alone. That there can be, and must be, a balance between the entrepreneurial impulses of capitalism and its destructive tendencies.