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German Government Bails Out Owners of German Corporations

How Fascism Works

Eric Zuesse

Just as the corrupt U.S. Government is bailing out owners of U.S. corporations while the American public experiences a recession that is heading into a depression, the corrupt German Government likewise is bailing out investors. It’s not illegal for the Government to do that — not even when the corporation that they might bail out next is the nation’s flag-carrying airline, which already receives unfair advantages in competing against other airlines in that country.

The German Government has offered to bail out even the wealthy investors who control the already governmentally favored but privately investor-owned airline Lufthansa, but those super-rich investors demand that it be an unconditional bailout, and negotiations are continuing. On May 5th, the “Flight Global” site bannered “Lufthansa reluctant to accept state aid with conditions attached”, and reported that “Lufthansa Group is holding ‘intensive talks’ with governments in Germany, Austria and Belgium about the provision of state aid.”

The very idea that the general public, the nation’s taxpayers, should ever absorb any losses of any private stock-investors, constitutes the very essence of “socialism for the rich, and capitalism for everybody else.” That is the essential core of fascism, or as Benito Mussolini sometimes called his economic and political system, “corporationism” (control of the government by the owners of corporations), but it is antithetical to any democracy, which is ruled only by its public, not by only the richest of them, who, in any country, own almost all of the corporate stock.

Any corporation that (like Lufthansa is now doing) threatens the government with going out of business or otherwise laying off employees en-masse during what has become a general financial collapse, should instead be promptly and automatically nationalized — taken over completely, at its then-prevailing stock-value — and the stock in it subsequently become sold by the government after the crisis is over, but, at first, then, made available only to its employees (and with low-interest loans being made available to them by the government, in order to enable any and all of them to participate in owning the corporation that employs them), and only subsequently made available to the general public, as a mere investment-gamble.

The only justification for anyone’s owning corporate stock, ever, is that the stockholders agree to take on all of the financial risk that the corporation’s bondholders have not taken on. (Bondholders get paid interest before stockholders get paid dividends.) If, instead, the general public, including all of the taxpayers, are taking on this financial risk, then it is only fair that the public (as represented by the government) will also be appointing, during the economic crisis, all of the corporation’s directors: the corporation will be promptly nationalized. After the economic emergency is over, the corporation will then be re-privatized, first to its employees, and then to the public. No corporation ever should be bailed-out by the government, on any other terms than to nationalize it, on this temporary basis. Either a corporation’s stockholders will fulfill the function that stockholders are supposed to fulfill (as being a sump for the corporation’s financial losses), or else their corporation will be promptly but temporarily nationalized, on this basis. Then, the stockholders will get paid fair market value for their stock, which is far more than they will receive if the corporation simply goes bankrupt — declares itself unable to fulfill its contractual obligations to its bondholders.

That is the way things would function in any democracy.

On April 9th, the Zero Hedge financial site explained in detail why even bailing out the airlines would hurt the economy more than help the economy. It quoted an extraordinarily honest investor, Chalmath Palihaptiya,

“This is a lie that’s been propagated by Wall Street. When a company fails, it does not fire its employees…it goes through a packaged bankruptcy…if anything, what happens is the employees end up owning more of the company. The people who get wiped out are the people who own the unsecured debt and the equity…but the employees don’t get wiped out and the pensions don’t get wiped out.”

[…]

“And if a bunch of hedge funds get wiped out — what’s the big deal? Let them fail. So they don’t get the summer in the Hamptons — who cares.”

But do we have a democracy?

Bailing out the public (workers and consumers) so that they can afford to continue living — and buying, and working — is the right thing to do in an economic crash, but not bailing out investors. What do investors get their incomes from? It’s not from their work, it’s only from the investment risks that they take on, the financial risks that they have agreed to accept. If the government transfers any of those risks onto the public, then the government must nationalize the corporation, because the ONLY value that investors provide in the economy is as a sump for financial risks. That’s it, and that’s all.

Any nation which transfers any of those risks onto the public is criminal — it is taking from the poor and middle class in order to keep the rich rich. It is retroactively dictating to the public: Here is now the deal: heads the investors win, tails you the public lose. That wasn’t supposed to have been the deal. If it retroactively becomes the deal when investors overall are losing money instead of making money, then the government is simply crooked; it is just a bunch of con-artists.

Apparently, the German Government (like many others) is corrupt — it’s transferring risks off of investors and onto consumers and workers. That’s Robin Hood in reverse — exactly the type of situation that governments are supposed to outlaw, and to label as being “theft.” Is it not “theft” when the richest do it? It is transferring onto workers and consumers the ONLY value-added, the only real service, that investors are supposed to be supplying, which is their serving as a sump for risks. If any of that risk-burden is removed from investors and transferred onto the public, then all of their property should automatically become property of the state. No decent government bails out investors — ever. Only criminal ones do, such as the U.S. Government.

If a government legalizes what is authentically (one might even say “in natural law”) criminal to do — such as to take from workers and consumers and give that to investors (and this is what is now commonly but deceptively called ‘democracy’) — then the ultimate criminal has become the state itself, and a revolution is needed. That’s practically the definition of what a revolution is for. Things are that bad in the United States, but in how many other countries is it likewise the case?

Perhaps we are about to find out.

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.

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Clarity
Clarity
May 6, 2020

Few German investors summer in the Hamptons. You are conflating issues. US bailouts is one thing, German bailouts another. Yet you are using the German issue to peddle your point for the US issues. In the case of Lufthansa it is akin to a public transportation company being preserved. Investor demands will only go so far. Lufthansa used to be state owned until the late 90s and will be again if it struggles to much due to corona. A point of contention for some, even in Germany. However, a network of too many high paying jobs [140k jobs just for… Read more »

Black Picard
May 6, 2020

In other words, socialize the losses and privatize the profits.

From looking at that hideous pic of Merkel, here’s my guess what she’s thinking:

I have royally fcuked my people by making Germany & the EU a vassal state to American interests, and by letting in all of these rapefugees who will never assimilate into German society. I have destroyed my country and now I don’t know what to do.”

BobValdez
BobValdez
Reply to  Black Picard
May 7, 2020

AND the moronic German sheeple WILL re-elect the fat cow for a FIFTH term so they can be screwed over AGAIN for another 4 years.

Clarity
Clarity
May 6, 2020

One more clarification. Germany has a concept called Kurzarbeit – reduced working hours. The gov then covers part of the salary, although emloyees will often still see a paycut by about 25% or so. At least it preserves the jobs until full hours can be resumed. 87thousand Lufthansa employees are now working at reduced hours. So the government is already bailing out the company that way. Germany is currently doing that to the tune of 10 million employees. Italy is already considering to nationalize Alitalia. The call to nationalize important companies is already echoing throughout Europe which is a lot… Read more »

Clarity
Clarity
Reply to  Eric Zuesse
May 6, 2020

How exactly do you define fascist economy? Isn’t economy already democratic since customers can vote with their wallet? Investors can chose where to invest? Should gov not support the workers in key industries when times get tough? Who will experience more pain: a handful of investors or the many losing their jobs? And their pensions. In a democratic economy you do not get to decide what your salary is. Everyone would decide that for you. Would you welcome that too? Yes, I am talking about you directly. How exactly are you suffering directly from someone else’s concentration of wealth? Please… Read more »

Clarity
Clarity
Reply to  Clarity
May 6, 2020

Maybe use these questions for another article….

Clarity
Clarity
Reply to  Eric Zuesse
May 7, 2020

A lot of opinion, very little proof. Government and economy are certainly connected. You overestimate the role of both and who does what. Government cannot exist without economy and economy cannot exist without government. Neither can exist without people. That does not determine who rules what, where and when. And we have seen often enough that people’s wallets do change the course of governments. Wallets comfortably full change nothing. Wallets too lean, people react. What rules people are their whims. Government and economy are made up of people. Your explanation of fascist government is weak. If it is corporationist, then… Read more »

BobValdez
BobValdez
Reply to  Clarity
May 7, 2020

A\

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