It was with incredible shock that I heard Senator Dodd casually mention the n-word while appearing as a guest on “Political Capital with Al Hunt,” a Bloomberg Television talk show that airs on Friday afternoon and Sunday morning. That a man could so audaciously use such a powerful, aggressive word in seemingly polite discourse was, to say the least, a surprising fact. Whether or not Senator Dodd intended his use of the n-word to have drastic consequences, the result was the same: markets tumbled Friday on the news that influential sitting politicians, such as Chris Dodd, were even considering the implementation of the n-word. When Alan Greenspan had used that n-word earlier this week, the market generally pooh-poohed his remarks without giving them much credence, as the aging former Chairman for the Federal Reserve, while still influential, now has almost no control over the mechanisms of this government, economic or otherwise. Dodd?s use of the word this Friday sent shockwaves through Wall Street as investors questioned their very reason for being.

This insidious word, one that is rarely mentioned in successful capitalistic societies, is certainly not what is needed now. The word I have been alluding to is, of course, ?nationalization.? Simply defined, nationalization is the process of a government seizing the interests of a company or even an entire industry. The history of the use of nationalization aside (Wikipedia and InfoPlease.com and good places to start for those wishing to brush up on the history of nationalization), the reason why this word has caused so much fear on Wall Street as of late is due to, among other things, a specific aspect of nationalization; namely, how investors are compensated once a government takes control of a business or industry. If a government were to nationalize an industry without compensating investors, the result would be known as expropriation. Depending on the industry, investors could lose millions to billions of dollars worth of assets simply because the government exercises its power (legally given or otherwise) to take control of a freely-operating business.

A nice benefit to living in a (mostly) free-market, capitalistic society is that businesses are allowed to fail and, by extension, allowed to succeed. As failure is generally an unpleasant option for entrepreneurs and business owners, the quest for success is generally what a business and its owners endeavor. That the government may swoop in at any moment and take over a successful (or failing) business is not a thought that business owners and operators wish to address. The idea that the government may, at any time, take over a business and jeopardize the assets of those who own stake in the company, is one that is simply abhorrent! Barring a major societal and economic shift, I can only hope that Senator Dodd and other law makers avoid the use of the n-word so that businesses and the people in their employ can continue trying to make a profit without the (hopefully needless) fear of government confiscation.

Copyright 2009 Daniel Downs

Tags: Bloomberg, business, Dodd, Economic, economy, investors, nationalization, politics, stimulus, TARP