Disciple of Science on the AIG Bonuses

This was originally posted as a comment on Artanan's post "AIG Bonuses," though it refer's specifically to WashDCDemocrat's take on that comment.

I'm troubled by how loosely the word 'socialism' is used these days. Socialism is only a system in which the government controls all basic industries (healthcare, the military, the police force, etc.) and rationally regulates the private sector (outlawing the use of credit default swaps, not allowing corporations to lie in order to grant loans to people with faulty credit, etc.) The reason why "America would never tolerate true socialism" is not that true socialism is a bad thing (in my opinion, it is a good thing.) Rather, it is that Americans are all too often taught the McCarthyist stereotypes of "socialism is the same as communism" and "communism, no matter what interpretation of the system is in question, is always evil." The fact is that, in socialism, the government would be unable to "decide that a car-maker should make as much as a neurosurgeon," for the neurosurgeon works in a basic industry and, therefore, has a wage dictated by complex processes worked out in legislation that are based on experience, amount of patients, etc., whereas the automaker works in a non-basic industry and has a wage based only on the minimum wage and whatever its employer sees fit.

The fact that something was worked out in a contract does not mean that it should be upheld in all circumstances. Credit default swaps are insurance contracts that caused both the Great Depression and the current financial crisis. Does that mean that they should be upheld? No. The government should void ALL credit default swaps NOW for the integrity of the private sector. The same goes for bonuses: for the sake of the private sector, the government must usurp them so the money can be used to heal the private sector, not buy luxury yachts that were built by workers who make minimum wage. I do see, though, that the sum of money being taxed is small, a mere cell on the face of the $700 billion bailout plan, but it still can go somewhere and be useful. Moreover, the government effectively owns AIG now, though it has made little use of its ownership. If the government learned how to regulate the market and operate the banks that it now owns, I believe that much more money would be usurped and the deficit would not be of concern.