Even though the $700 billion bailout is on the ropes, some version of is most likely to go through. At the start of the week, capitalists were fighting strong against it. The Congressional Republicans fought hard against the attempts to railroad the proposal through the House and Senate. Op-eds and commentaries have been published in every major news source condemning the bailout. Even Democrats have raised some issues with the Bush plan. But in the midst of all this, only the solution has been seriously debated, not the outcome. This has created a disconnect in messages. Free market solutions will not result in socialist outcomes, which, given the trend of America, means capitalists are in a losing battle at this point. There have been a plethora of free market solutions to the financial crisis we’re facing today. Several have been listed, including some on this blog and Reason Online: reducing capital gains taxes (which should be done anyway), cutting taxes for small business, repealing hurtful rules such as mark-to-market and Sarbanes-Oxley (Sarbox), and unloading Fannie Mae and Freddie Mac now to the private sector. However, these ideas have been met with substantial criticism. Tax cuts are seen as too slow or a reward for Wall Street. Mark-to-market is seen as essential to keep prices fair. Sarbanes-Oxley is viewed as necessary to stem corporate fraud. And Fannie and Freddie are now viewed as critical assets the government can use to make money. Of course, a free market believer balks at all of this. Tax cuts may be slow, and capital gains taxes might not provide enough liquidity to save every firmââ?¬â??but that is half the point. Capitalists not trying to save every firm (if some fail, that is the market holding them accountable for their actions). Capitalists don’t believe there should be a rule setting the “fair price” for, considering the subjective theory of value. Capitalists see the Sarbox $3 million per firm barrier to entry for private firms to go public as an anti-free market clause, and clearly the fraud rules of Sarbox haven’t worked. And capitalists don’t believe the government should fix Fannie & Freddie, the private sector should, even if the firms take longer to get back on their feet in big, separate chunks. And therein lies the dichotomy. Free marketers are seeking a free market solution that has a free market result. And a free market result at this point means some economic pain and the acceptance of a possible recession. It means more firms will fail and more money will be lost. Our market has become so regulated and inundated with damaging economic philosophies, such as “too big to fail,” that it needs to be reset. That will require a transitional gains loss. The free market solutions do not create the socialized outcome Congress and the Bush administration wants. As a caveat, don’t see socialism as a dirty word thrown out by capitalists to demean the “other side,” simply view it as the alternative outcome to capitalism: it is taking money from the social collective to provide for the needs of the greater good of all society regardless of the responsibility of any one individual in that collective to meet the needs of the problem or whether those in the society requiring help deserve it. Socialism. Free market capitalists are losing the fight for hearts and minds today because America wants everyone to be ok. America wants the system fixed now. America is willing to put up with socialism because the health of the greater good seems appropriate. It is short-term thinking. It is also rationalââ?¬â??somewhat. It is understandable that America would want to do everything it can to avoid a recession. The outcome for the socialist thinking today, led by Republicans Hank Paulson, Bernanke, and Georg W. Bush, is short-term health for the market so that everyone can get back on their feet and American’s economic engine restarted. Politically is a boon for Democrats too because their political philosophy is much more socialist than Republicansââ?¬â??in the House and Senate anyway. Again, “socialist” is not levied as an insult towards Democrats, simply the proper definition of their policies to use society’s money for provide for the poor and unemployed (welfare), the sick (Medicare), the elderly (social security), the uninsured (Universal Healthcare), etc. So Republicans in Congress, capitalists, free market believers, Libertarians, and economic conservatives alike have a choice to make: either reshape the message that free mark solutions are the best, even with a free market outcome not looking like the most favorable in the short-term; or accept that the bailout will go through and push for a compromise that lets the private sector being involved as much as possible. The government has no track record of handling or managing business measures properly, this should be an easy rhetorical point to win. Making that point while pushing for a compromise would be much more viable then trying to show how the short-term gain will skew us long-term by reshaping how the role of government is perceived, by increasing our debt, by putting taxpayer dollars at risk, and by increasing the powers of governmentââ?¬â??which they are unlikely to give back.