Framing nationalization

by John Quiggin on February 19, 2009

With even Alan Greenspan and Lindsey Graham now in support, and the alternatives canvassed in the Geithner “plan” thoroughly discredited (even Wall Street hated it), large-scale nationalization of US banks now looks inevitable. But, as Obama has observed, this kind of thing seems alien to US culture.

This looks like a classic Lakoff framing problem. How can the obviously necessary, also be made to seem natural? There have been a couple of approaches so far.

The first is to emphasise that the Federal Deposit Insurance Corporation routinely takes over failed banks. So, as Paul Krugman puts it “nationalization is as American as apple pie“.

The second is to focus on the ultimate goal which is to return the banks to solvency and private ownership. Hence the lovely euphemism coined (I think) by Calculated Risk “preprivatisation

While we are on the topic, the sudden emergence of “socialism” as a term of political debate in the US, raises the question of whether “social democrat” might come in to use as an alternative to the rather unsatisfactory “liberal” and “progressive” terms currently in use. Maybe it’s too European for the US, but it’s certainly come into much more common use in Australia over the last decade or so.

And still on the same general topic, I meant to write about Sheri Berman’s piece in Dissent but Henry beat me to it. My take on the situation is a bit more optimistic. It’s pretty clear that the collapse of so much of the established order has taken social democrats unawares, even if the shock is not as great as for others. After decades in which the primary focus was to defend and adapt as much as possible of the social-democratic settlement in a world dominated by global finance, everyone is struggling to deal with the immediate emergency, and there has been little time to think about the opportunities for more positive action that have opened up. But the full-scale crisis is only a few months old, and the responses look a lot more constructive than in the wake of the 1929 crash.

Update In a convergence of views that would have been surprising a few months ago, Alex Tabarrok agrees that this is a framing problem. He suggests framing nationalization as a kind of bankruptcy.

{ 56 comments }

1

salient 02.20.09 at 1:24 am

Hence the lovely euphemism coined (I think) by Calculated Risk “preprivatisation”

Meet the post hoc, same as the propter hoc?

2

P O'Neill 02.20.09 at 2:35 am

Sports framing could help. Americans have no problem with socialism when it’s framed as “National Football League”.

3

MH 02.20.09 at 2:38 am

I think you’re probably too optimistic. I may be an outlier, but I have a ingrained recoil against anything with ‘social’ in the name, probably from growing-up during the end of the Cold War.

I also think you are too optimistic when you say the responses to the current crisis look more constructive than those in the wake of the 1929 crash (leaving aside Germany). I hope I’m wrong on this. But, I’m still pretty convinced that the bailout/stimulus is just an attempt to give my tax dollars to the people on Wall Street that pole-axed me on my IRA, Californians, the guys who designed the Ford Taurus, people with nicer houses than my own, and the politically connected firms that usually get pork anyway.

That said, I’m fine with nationalizing the banks, more as revenge against the bankers than a belief that it will work.

4

Ross Smith 02.20.09 at 3:22 am

MH: I’m fine with nationalizing the banks, more as revenge against the bankers than a belief that it will work.

Likely to be quite a popular sentiment, and another potentially useful way of framing the debate.

5

Oskar Shapley 02.20.09 at 3:39 am

punitive nationalization of the means of financial redistribution

6

John Emerson 02.20.09 at 3:56 am

On topic for a change, though I’m still a troll:

“I guess we should nationalize the banks after all”, said Greenspan. “Recent events have been very interesting and unexpected. They’ve certainly surprised me, but of course, if you know what the answers are going to be, you don’t need to do the experiment.”

“I’m reminded of a story about Thomas Edison’s early attempts to come up with the lightbulb”, he went on. “Edison had tried a thousand different elements, and all had failed. A colleague asked him if he felt his time had been wasted, since he had discovered nothing. ‘Hardly,’ Edison answered. ‘I have discovered a thousand things that don’t work.’ “

“So Jeffrey Sachs does one experiment in Russia and finds one thing that doesn’t work, and Domingo Cavallo does another experiment in Argentina and finds another thing that doesn’t work, and the Mont Pelerin Society does another experiment in Iceland and finds yet another thing that doesn’t work, and it’s all good! We’re all contributing to the same research program. It’s just part of the march of science.”

“If we’re allowed to continue our work, without interference from Luddites and know-nothings, sooner or later we’ll certainly find something that works. There’s never been a better time to be an economist than right now!

7

John Emerson 02.20.09 at 3:58 am

Also on-topic trollery, and the above should all be itaicized after the first sentence:

Instead of a Finance Czar, who’d inevitably be bamboozled by his evil court, I propose a roving band of unruly Finance Cossacks to wreak havoc on the sorry ass of Finance. This could have a sort of Roman Circus effect, reducing the possibility of social disorder by distracting the newly unemployed and homeless, who instead of grumbling about their own problems would be rejoicing about other people’s problems.

These would have to be semi-professional New Reform Cossacks trained to make no ethnic distinctions whatsoever during their rampages. (If they were completely professionalized, however, they’d lose much of their effectiveness. Rampaging and havoc are more art than science and can’t really be routinized or adequately described by written protocols.)

One of the hard things about modern finance, from a Cossack’s point of view, is that it’s so abstract that it’s almost impossible to plunder. Beyond the fact that a lot of finance is bankrupt anyway, it’s not like the Cossacks could carry off billions of dollars worth of tranches or commercial paper and monetize it. They’d have to be salaried, and incented with a system of bounties and bonuses.

Sure, we can expect these Finance Cossacks to take over the executive power sooner or later, the way the mostly-Turkish Mamluk soldier-slaves took over in Egypt. Hopefully they’ll be a little better than our present rulers, but who knows? I say go for it.

8

MH 02.20.09 at 4:42 am

Just to be clear, my goal is a more circumspect bunch of bankers (working for many more banks that are small enough to fail), not re-making society in any significant way. I have as little desire to pay the salary of somebody who can make me fill-out paperwork as I do to pay for B of A bonuses.

But, the Cossack idea has merit. I’m guessing PA’s ludicrous alcohol laws wouldn’t last long with Cossacks.

9

Watson Aname 02.20.09 at 5:25 am

I may be an outlier, but I have a ingrained recoil against anything with ‘social’ in the name

Doesn’t it bother you to have been played so well?

10

MH 02.20.09 at 5:27 am

Because of all the ice cream socials I’ve missed?

11

Watson Aname 02.20.09 at 5:28 am

At the very least!

12

grackle 02.20.09 at 5:37 am

Actually, the Mamluks were Circassian for the most part.

13

MH 02.20.09 at 5:38 am

My teachers did try to convince me that Reagan was going to start a nuclear war. That didn’t work so well as they also tried to convince me that cursive writing was a useful skill.

14

grackle 02.20.09 at 5:41 am

That is to say, from the caucasus, probably Christian, but decidedly non-Turkish, i.e. not Muslim at birth, otherwise they could not have been enslaved.

15

M.G. in Progress 02.20.09 at 6:42 am

No nationalization for LEMON BROTHERS is either necessary or sufficient, let alone inevitable. The debate is misleading. More on my blog.

16

Stuart 02.20.09 at 9:22 am

Reagan did indeed try very hard to provoke a nuclear war. You were probably right about the cursive writing stuff though.

17

John Emerson 02.20.09 at 1:29 pm

12: So the Circassians would have you believe. They also claim precedence on holocausts.

There were still pagan Turks on the steppe until fairly late. “Mamluk” is a generic term and traces back pretty far. Probably by the end of the Mamluk period in 1650 they weren’t Turkish any more, but I believe that Mamluks still spoke Turkish among themselves.

The Early Mamluk Sultanate 1250-1382

18

John Emerson 02.20.09 at 1:49 pm

16: Wow.

“Three years had taught me something surprising about the Russians: Many people at the top of the Soviet hierarchy were genuinely afraid of America and Americans. Perhaps this shouldn’t have surprised me, but it did … During my first years in Washington, I think many of us in the administration took it for granted that the Russians, like ourselves, considered it unthinkable that the United States would launch a first strike against them. But the more experience I had with Soviet leaders and other heads of state who knew them, the more I began to realize that many Soviet officials feared us not only as adversaries but as potential aggressors who might hurl nuclear weapons at them in a first strike … Well, if that was the case, I was even more anxious to get a top Soviet leader in a room alone and try to convince him we had no designs on the Soviet Union and Russians had nothing to fear from us.”

This strikes me as a case in which Reagan’s Hollywood bozo nature made him really dangerous. He had pumped out hostile rhetoric for decades and won partly on that basis, and he controlled the nuclear trigger. A lot of Westerners feared a first strike too, and my guess is that Reagan’s military advisers knew that they were playing a very dangerous game. (Elsewhere in the Wiki piece, someone blames Russian paranoia for the danger, since they weren’t able to tell that Reagan was just kidding from the twinkle in his eye. )

God bless Nancy Reagan, and her astrologer. They’re the ones who turned Reagan around.

19

Paul 02.20.09 at 2:32 pm

The government has a noted talent for gumming up the works – be it banks or anything else. Reagan tried to provoke a nuclear war ? I doubt it-no one wins a nuclear war. One wonders if America is ready for creeping socialism. Perhaps the academics are, but not the average American working man and woman. And Circassians – don’t make me go there !

20

JoB 02.20.09 at 2:50 pm

“God bless the astrologer”, that sounds like Bush nationalizing the banks ;-)

21

Slocum 02.20.09 at 2:51 pm

While we are on the topic, the sudden emergence of “socialism” as a term of political debate in the US, raises the question of whether “social democrat” might come in to use as an alternative to the rather unsatisfactory “liberal” and “progressive” terms currently in use.

I think the chances of that happening are approximately the same as ‘whig’ coming into use as an alternative for ‘libertarian’.

22

belle le triste 02.20.09 at 2:53 pm

it was the astrologer in handy combo with would-be tyrannicide john hinckley jr!

so god bless jodie foster

23

MH 02.20.09 at 3:00 pm

Belle, you stay classy.

24

belle le triste 02.20.09 at 3:03 pm

ok!

25

John Emerson 02.20.09 at 3:14 pm

I’ve always wanted to thank Jodie, but it seems from interviews that she would not appreciate a communication of that type.

26

socialrepublican 02.20.09 at 6:38 pm

I heard when the Grande Armee marched through Madrid in 1808, some of the locals laughed at the head of the Mamluks of the Guard, in particular Captain Ibrahim’s very large and majestic moustache. He shot them both whilst riding past. Don’t mess with the tashe

27

John Emerson 02.20.09 at 7:38 pm

And by 1814 the Kalmyks were marching through Paris. Fun times.

28

MH 02.20.09 at 8:38 pm

Why is the Champs-Elysées line with trees? Because Kalmyks like to march in the shade.

29

notsneaky 02.20.09 at 11:42 pm

I think both “Circassian” and “Kalmuk” at various times has been used as a stand in for people from the Caucasus or Caspian Sea region (though one group is Turkic and the other Mongols, and they’re on the opposite sides of the Caspian sea)

30

notsneaky 02.20.09 at 11:47 pm

Here’s some Circassians:
http://www.4lomza.pl/fotogaleria.php?id=29616
http://www.4lomza.pl/fotogaleria.php?id=29615

(those are huge paintings btw, one of them used to be in Chicago, the online version above doesn’t quite do them justice)

31

MH 02.21.09 at 1:23 am

Why is the Champs-Elysées lined with trees? Because soldiers of various ethnicities from the regions surrounding the Caspian Sea like to walk in the shade.

32

notsneaky 02.21.09 at 1:37 am

Dude, Circassians and Kalmyks, don’t walk, they charge. Or here, trot.

33

MH 02.21.09 at 1:39 am

Yea, well the joke is like building cars. It works better with Germans.

34

John Emerson 02.21.09 at 2:39 am

Circassians are Caucasian in language but seem to have spread out quite a ways onto the flats. There are a lot of Circassians in Anatolia, descended from refugees from the Russians. All joking aside, the Russian onslaught approached genocide, but it was before the era when genocide was thought to be worth noting. The ethnic makeup of that area was complex, with Mordvins, Chuvash, Circassians, Mongols, Tatars and a few other kinds of Turks.

35

John Emerson 02.21.09 at 2:42 am

Also, I hope that the next time around, the word “Caucasian” doesn’t simultaneously mean a language group, a race, and a geographical area.

36

notsneaky 02.21.09 at 3:22 am

Ugh, you were so close.

37

MH 02.21.09 at 3:45 am

I’ve been trying to think of a word to replace Caucasian in discussion race. Right now, I’m seeing if “near-Irish” will catch on.

38

MH 02.21.09 at 3:46 am

‘discussing’ not ‘discussion’

39

greensmile 02.21.09 at 1:31 pm

Josh Marshall promoted a reader comment to his front page yesterday for its presentation of a solution to precisely this “framing problem”: it has been a disservice and confusion to call this nationalization. “Receivership” status (a) is standard operating procedure within the realm of commonly recognized capitalist workings and (b) implies more accurately the limited degree and time span of government involvement in the banking industry’s rehabilitation.

40

Hidari 02.21.09 at 1:38 pm

The idea that the Russians would be afraid of the US/UK is so self-evident that you would have to be a clever boy American intellectual not to realise it. Has everyone forgotten the Great Game?

Or the fact that British, French and, yes, American troops had actually invaded Russia?

The idea that the USSR was inherently imperialistic (post Stalin) was alway a fantasy, as was demonstrated by the Russian pull out from Austria. But somehow that basic fact could never penetrate Western ‘intellectual’s’ thick skulls.

41

MH 02.21.09 at 2:20 pm

“The idea that the USSR was inherently imperialistic (post Stalin) was alway a fantasy, as was demonstrated by the Russian pull out from Austria.”

Seriously? What about not pulling out of Poland, Hungary, Latvia, Lithuania, Estonia, Czechoslovakia, Bulgaria, Romania …. Those were just to meet the vital defensive needs of Soviet Union. They got burned by the Nazis (while actually allied with them), so let’s use the Politburo definition of imperialistic.

42

Barry 02.21.09 at 2:33 pm

“They got burned by the Nazis (while actually allied with them), so let’s use the Politburo definition of imperialistic.”

Note – when your country is invaded and devastated as the USSR was in WWII, your definition of ‘defensive’ changes.

43

MH 02.21.09 at 2:37 pm

Note: When you were actually allied with the country that later devastated you to invade several other countries, I don’t see why everybody else can’t put a big old grain of salt on top of your definition of defensive. Especially since you got to keep the countries that you tried to get while allied with the guy who eventually devastated you.

44

MH 02.21.09 at 2:40 pm

Don’t forget Captive Nations Week this summer. I don’t know if it is still official or not, but that doesn’t mean you can’t at least have cake and punch.

45

Cryptic ned 02.21.09 at 5:06 pm

Interesting…when I think cultural depictions of “Circassian”, I think of this, not warriors.

46

James Wimberley 02.22.09 at 6:41 pm

Call it wardship. The feudal connotation of incompetent juveniles is just right. The guardians expected to profit handsomely from the service, too.

47

nnyhav 02.23.09 at 1:08 am

JW, yer on to something. Wards of the state. Something for everybody, even widders & orfans, ntm that institutional tinge of the wings of a sanitorium …

48

derrida derider 02.23.09 at 2:52 am

MH is missing the point. Yes of course the Soviet subjugation of eastern Europe was vile. But it was vileness done from quite different motives than those of old-fashioned imperialism. It was therefore wrong to ascribe old-fashioned imperialist motives to the USSR, at least as a guide to their future behaviour.

49

MH 02.23.09 at 3:29 am

I’m not missing the point, I’m making a different, and I believe more accurate, point. Barry’s argument makes perfect sense only if you ignore everything that happened before June 1941. If you start in 1939, you would note that the Soviets invaded the Baltics, Poland, and Finland well before they were invaded and devastated. Then they kept them, plus more, after 1945. My point is, why should we believe that occupying Eastern Europe was a defensive reaction to the Great Patriotic War when they were trying to do the same thing before that war? What the Soviets did in Eastern Europe was imperialism unless you define imperialism in such a way that, by definition, it can’t be done by a communist state.

50

ajay 02.23.09 at 12:36 pm

Yes of course the Soviet subjugation of eastern Europe was vile. But it was vileness done from quite different motives than those of old-fashioned imperialism.

Which presumably means “done through fear of another invasion from the west rather than for economic gain” – this rather ignores things like the dismantling of large amounts of German industry and its shipping east into Russia, and the degree to which the USSR exerted influence over the economies of the rest of COMECON.

51

ejh 02.23.09 at 12:55 pm

As I recall from the movie Peter O’Toole claimed to be a Circassian when arrested on a spying mission.

52

Hidari 02.23.09 at 6:15 pm

‘Which presumably means “done through fear of another invasion from the west rather than for economic gain” – this rather ignores things like the dismantling of large amounts of German industry and its shipping east into Russia, and the degree to which the USSR exerted influence over the economies of the rest of COMECON.’

I was relatively clear to stress the discontinuities between Soviet foreign policy pre and post Stalin. There’s no doubt that Stalin was a Very Bad Man, and probably did have imperialist designs on Eastern Europe. Whether this was continued after his death is very much more doubtful, and, as I said, the withdrawal from Austria would seem to indicate the contrary. Russian actions in ’56 and ’68 were horrendous, but were all about holding onto territory that the USSR already held, which is rather different from openly going out to try and conquer new territory. Afghanistan would seem to be the exception that proves the rule.*

*pedants corner: I’m using that phrase in the way it’s actually used nowadays, not in the way that derives from the original use of the word ‘proves’.

53

MH 02.23.09 at 6:47 pm

Except that containment was firmly in place before Stalin died. Was it NATO or the inherent good naturedness of the post-Stalin leadership that kept the Soviets from expanding? Given that the post-Stalin leadership consisted of people who rose under Stalin, I’ll stick with NATO.

54

Hidari 02.23.09 at 8:19 pm

‘Given that the post-Stalin leadership consisted of people who rose under Stalin, I’ll stick with NATO.’

Er….yeah. It would be more accurate to state that the post-Stalin leadership consisted mainly of people who had narrowly avoided being killed by Stalin.

55

MH 02.23.09 at 8:38 pm

Er…. so. Tens of millions of people narrowly avoided being killed by Stalin. The relevant characteristic of Khrushchev, Beria, Molotov, et al, was that they not only survived, but got promoted. Quite frequently for doing things that lead to the deaths of the millions of people Stalin actually did kill.

56

Hidari 02.24.09 at 10:47 am

We aren’t talking about a moral calculus here, but about whether or not the Soviet Union was imperialist post-Stalin. My argument is that it wasn’t, and my evidence was Austria.

Deciding whether or not to be imperialist isn’t a question of ‘good naturedness’, but of cold economic calculation. To the best of my knowledge no one has ever argued that it would have been in Russia’s economic interests to invade France, Spain or the UK, and, to the best of my knowledge, no serious plans to do so have been unveiled post ’91.

Remember that the invasion of Afganistan (which should probably be seen as an ‘outlier’ rather than evidence for some grand imperial plan) did in fact cause the USSR to topple into economic bankruptcy.

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