by James Henry

Created on: March 13, 2009

I am not one of these people who just bristles every time some neo-conservative jumps up and down saying that because the United States Federal Government is taking ownership stakes in banks and other businesses the government is assisting that we, as a society are becoming socialist. The reason I do not think so is because when the government is buying stock in these companies, they are buying preferred stock, as opposed to common stock.

What, you may ask, is the difference? The difference is everything in a debate like this. People who hold common stock in a corporation have the power in the corporation. They get to vote and choose who runs the company. If they own enough stock, they get to sit on the Board of Directors and have direct influence over the day-to-day running of the corporations.

People who own preferred stock have no such powers. They are pure investors who are merely in the business to make money. Now, you could argue that the United States Federal Government should not be trying to cash in on the economic crisis. If you say that, you would be so wrong that no one may remember the last time you were right. It is fiscally responsible that the government should be trying to guarantee that eventually we the people will get our money back, instead of shelling out billions and billions of dollars to prevent a complete Economic Armageddon not just in the United States but in the entire world, without any hope of ever getting the money back. Such would be the case if the government simply gave the money to these banks and other troubled corporations.

The bottom line for me is that in extraordinary times, extraordinary actions are required to prevent extraordinary consequences of inaction. I expect the government to protect my interests, and that means physical security, by means of the military, and economic security. It would be patently irresponsible for the government to sit by watching the economy slide further and further into the abyss and not do anything. It is their job, in my estimation.

Free market purists would say there should be no government regulations, whatsoever, and that the government has no business interfering with the natural cycle of life in corporate America. They would speak of economic Darwinism, survival of the fittest. I would suggest that there is no pure free market anywhere on this planet, just like there is not a pure democracy anywhere. Even here in the United States, we have a watered down form of democracy, because

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