IF we needed an impetus to understand the importance of reviving our tourist industry as a vibrant aspect of Bermuda's economy, then last week's economic upheavals which involved one of Bermuda's longstanding, if not the oldest exempt company, American International Group (AIG) - which has had a presence on our shores for more than 35 years - should have given us pause for thought.

As I understand it from the news reports, this company was on the verge of declaring bankruptcy with dire consequences, and not only for America. Because of this company's economic footprint, the world would have suffered and that includes Bermuda.

Who would have thought that AIG would have found itself near economic extinction with only the American government being in a position to mount a financial rescue by using government money - which really means the American taxpayers' money.

This comes in the wake of the failed lending institutions - Fanny Mae and Freddie Mac which the US government reluctantly bailed out to the tune of billions of dollars.

I say "reluctantly" because the central tenet of the free enterprise system or capitalism is that if you invest in a business then you live by the fortunes of that investment whether that brings you wealth or economic misfortune.

Robert Stewart, in his book A Guide to the Economy of Bermuda, states: "The free market economy works wonders economic planning has been a disaster wherever it has been tried. Most people are not idiots, they know what is good for them - more money - and they act accordingly. Inflation is caused by governments expanding the money supply, not by trade unions, greedy entrepreneurs or wicked Arabs."

Mr. Stewart is what I call an orthodox believer in the capitalist system, or, in is own words, "an unabashed admirer of the free market economy".

But recent US Government financial policies amount to the nationalisation of key areas of its banking system and financial centre. I wonder what Mr. Stewart's opinion is now regarding this massive government intervention in the economy.

The capitalist system is supposed to be a step above the former feudal system which existed in most of Europe, including the United Kingdom, up to the 17th century and even longer in Russia. But how far developed is this modern free enterprise system? It's a question that begs to be asked when, in the wake of so many of these top-notch financial institutions failing, we see their CEOs, board members and other top management walking away with monetary packages and other financial awards worth millions of dollars. At the same time, the workers of these failed institutions can be seen walking away from their former job positions holding nothing more than cardboard boxes containing their personal job possessions. No jobs in most cases, no severance pay and definitely no prospect of a pension. For me, the modern free enterprise system is really just another form of the feudal system.

My daughter's brother-in-law works for Lehman Brothers, one of the economic concerns that has gone under during the current economic dislocation going on in America. Because the British bank Barclays has taken over Lehman's core business interests, my daughter's brother-in-law still has his job and has been going around reciting 'God save the Queen', and asking what time should he take his tea break. He is an American who is pragmatic. He is happy that he still has a job one of the few lucky workers out of many who had the misfortune - through no fault of their own - to be caught in the middle of this economic maelstrom.

Who would have thought that we would be living in a time when orthodox capitalist America would feel the need to take over major economic interests to keep them from failing. The father of the free enterprise system, Adam Smith must be spinning in his grave.

Perhaps it is an irony that when China, one of the last communist countries still in existence, was challenged on the fact that it operates a communist/socialist political system alongside a free enterprise economic system, it replied that, 'yes it does have a free enterprise economic system, but it has Chinese characteristics'. China executes managers who get up to fraudulent business practices which result in the collapse of their economic entities.

In the wake of the current economic crisis and the decisions America has undertaken as a result, I expect to hear a similar analysis of the US. Yes, it has now adopted at least part of what looks like a socialist system through the nationalisation of important economic concerns, but it is socialist system with American characteristics.