Not long ago, you and I knew what the word "nationalization" meant.
Perhaps, someday again, we will know.
In the last year, the word "nationalization" has been used as a lever against some bank rescue plans, although now an effort is being made to simply bypass the tricks of this changed meaning of "nationalization" by just using the word anyway even for sensible market-style (getting stock in return for money) plans.
While this new usage of the term as a label even for the good rescue plans may work out, let's step back and examine this loaded word.
This post isn't about whether this "nationalization" is the right course -- it is -- but instead I want to remember our normal meaning and look at what is happening to this important word.
In real use in everyday language, for decades now, until the last few months, nationalization had a clear meaning.
It meant the government seized a company or group of companies -- sometimes by outright theft -- from the previous owners.
There were only three possibilities of nationalization in regard to the value of the company (or industry) -- appropriation (theft), purchase, or taking on responsibility and ownership of failing companies that were insolvent or heading into insolvency.
Nationalization as theft we read of at times in backward countries in Latin America or Africa. Nationalization as purchase was unusual.
Nationalization as rescue of a failing company was European.
But what distinguished nationalization from other measures to handle a failing company was whether the government intended to keep and operate what it had seized.
After all, we did not refer to FDIC seizure as "nationalization" (perhaps this will change too; who knows).
A taking into intended permanent national ownership -- that was "nationalization".
It meant owning a company or industry and running it, as a national industry, for the benefit and national purposes of the government and the nation.
In contrast "investment" -- an all-American thing -- was buying a stake in a company, through stock or bonds or similar methods.
So...how did we arrive at a place where bailouts combined with investment (getting preferred stock in exchange for capital, like TARP 2008), becomes "nationalization" if we even temporarily end up with more than 50% of the stock, for instance?
Are bailouts with investment now to be called "nationalization" all the time?
Is "up" now "down", and "left" "right"?
This is quite a moment for ideologues, and every other American too.
The irony of it. The only plans for rescuing our banks that actually make good old market sense like getting something in return for our money (investing) are now "nationalization" -- while actually just giving taxpayer money away for free (in part or whole) is only an innocent "bailout".
But there is indeed a normal common usage for this alternative to "nationalization" -- a bailout where we simply give away taxpayer money for free to a favored group.
In America, we usually call most variations of this kind of transfer...
And when the favored group is a wealthy elite, this is similar to the practice of "corrupt communism" in the Soviet Union for instance.
Another phrase for these non-"nationalization" bailouts is "crony capitalism."
But in favor of general public clarity, we'll need to stick with something more concrete and transparent for the alternative to "nationalization". I suggest:
Insolvent bank stockholder bailout.