Subsidize Not Nationalize

On Friday, April 10, 2020 U.S. President Donald Trump said that airlines in American must be saved.  Yes, at the moment, major airlines are seeking government funded operating subsidies to help them stay solvent.  This will not be the first time or the only time the U.S. federal government has been in the position of making a decision about how to keep the nation’s economy from tanking, but it is a unique one.

On previous occasions, when the private sector economy got itself into trouble, the federal government spent huge sums of money in attempts to bail them out, usually with less than desirable results.

FDR taxed, spent and regulated a recession into the Great Depression that lasted until building arms to fight Nazi Germany and Imperialist Japan became more important than holding fast to knee jerk “progressive” leftist tax, spend and regulate the private sector to death policies.

George W. Bush asked for $700 billion so the Secretary of the Treasure could buy up the junk mortgages that had infected the mortgage backed securities sector.  It turns out the sheer volume of mortgages involved in such a process was far too daunting and time consuming for the original plan to work, so Bush and company ended up throwing big money at big banks in hopes of keeping them solvent.

Bush’s successor signed a bill into law that spent $880 billion on “shovel ready projects” that he later admitted were “not so shovel ready.”  A lot of the money was given to donors and bundlers who helped fund his 2008 presidential campaign.  Coincidently, they were people who just happened to have formed “green energy” companies.  Luckily for them “green energy” was one of his pet issues.  His friends took the money, paid themselves large salaries, and when the federal funding money dried up, the companies filed for bankruptcy.  Some of it went to States that shared the “progressive” leftist “democrat” philosophy with the one occupying the Oval Office so they could use the cash infusion to save their bankrupt government employee pension plans.  The result of all this was the worst economic recovery since WWII.

This time is unique because the economy wasn’t in trouble.  The economy was humming along quite nicely.  For years, the stock market had repeatedly set record highs.  Companies were investing capital and building factories in America.  They were hiring American workers and paying them decent money.  Record low unemployment numbers were recorded in demographic after demographic.  The American economy in early 2020 was the best performing economy on the planet.

Then the Communist Chinese Party let the COVID-19 virus spread throughout it’s country.  They downplayed the danger.  They enlisted the aid of their bought and paid for lackey in the World Health Organization to help them foster lies about the threat the new virus posed to the rest of the world.

To his credit, President Trump halted travel from China in late January, mitigating the infection.

When forced with a very difficult choice, President Trump erred on the side of human life and shut down the American economy.  Acting on the advice of medical experts, it was a coordinated effort to slow the spread of the virus throughout America.

Suddenly, instead of record low unemployment, American unemployment numbers reached double digits.  Companies find themselves in trouble financially and a necessary fix looms in the very near future.

What to do?

So far, the plan has hinged on subsidizing existing private sector businesses by using federal aid to fund their payroll costs.  This is a strain on the budget and is inflating the national debt in a very undesirable way.  But the other option is worse.

The other option is to act like the Bolsheviks, the Communist Chinese, Communist Cuba or Communist Venezuela.  These countries nationalized their companies.  The USSR collapsed.  Communist Cuba has limped along and decayed since the 1960s.  Communist Venezuela went from being the richest nation in South America into Venezuelans killing zoo animals, digging in trash trucks and begging in the streets for food.

The only reason Communist China has survived is because in the 1980s they incorporated capitalist zones into their economic system.  These zones are where the Communist Chinese Party allows their people to work for slave wages.  They build products for foreign companies that agree to give the Communist Chinese Party control over the companies activities in China, while also being forced to share their design and manufacturing methods (their intellectual, proprietary property) to the Communist Party.

Given the track record of countries that have nationalized their companies, subsidizing America’s companies doesn’t sound like a bad idea.  If anyone can figure out how to make these subsidies work in a way that truly jumpstarts the American economy in short order, it’s likely to be the first businessman to occupy the White House in a very long time.