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Commentary
Barack Obama, Fabian Socialist
Jerry Bowyer, 11.03.08, 12:32 AM EST
Who needs Molotov when we've 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 (nyse: IR -
news - people ) 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. Arnold's 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 Cusack's character in Woody Allen's "Bullets Over Broadway" captures
the movement rather well.

BuzzArnold taught me to question everyone--my president, my priest and my
parents. Well, almost everyone. I wasn't supposed to question the Fabian
intellectuals themselves. That's the Fabian MO, relentless cultural and
journalistic attacks on everything that is, and then a hard pitch for the
hope of what might be.

That's Obama's world.

He's telling the truth when he says that he doesn't agree with Bill Ayers'
violent bombing tactics, but it's a tactical disagreement. Why use
dynamite when mass media and community organizing work so much better? Who
needs Molotov when you've 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 organizers' 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 Chavez's of the world take power. Investors
anticipate the policy shift in advance; that's their job.

It's 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 we've 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, we're told, are greedy and miserly, holding
onto capital that should be deployed into the marketplace.

Well, which is it, miserly or greedy? They're 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 don't 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,
there's 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 Obama's be the strong-man socialism of a Chavez, or the soft
socialism that Clement Atlee used to defeat Churchill after WWII? I don't
know, but I suspect something kind of in between. Despite right-wing
predictions that we won't see Rush shut down by Fairness Doctrine
fascists. We won't 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 don't want to come together and
heal the planet.

You've heard of the bully pulpit, right? Well, then get ready, because
you're about to see the bully part.

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