The Continual Conflation of Socialism and Social Programs

October 4, 2019

With the craziness on Capitol Hill occupying our daily intake of media, I thought we could take a break from the barrage of political malfeasance currently dominating the news cycle and examine some election talking points that will be central to swaying independent voters in 2020.  


If we look past the primaries and turn our focus towards the general election, it seems that the wedge issue nearly every candidate is capitalizing on is the role government should play in the economy. On the left, we have politicians encouraging more government intervention, specifically in student debt markets, health care, and higher education. On the right, we have the president putting socialism front and center, tagging any challenger who holds a favorable view of expanding government as a threat to the republic.

Because there are so many strong opinions of socialism on both sides of the aisle, rendering unnecessary divisiveness among the electorate, I think it’s important to take some time to think through the notable differences between socialism and what democrats are actually pushing for in 2020.

We should start by establishing a basic understanding of a socialist society. As defined by Marx, and I use Marx as the starting point since he is typically referred to as The Godfather of Socialism, socialism is “a political and economic theory of social organization which advocates that the means of production [resources for producing goods], distribution, and exchange should be owned or regulated by the community as a whole.” Now by this standard, not one of the candidates running in the democratic primary think that the “community” (i.e. the federal government) should own the US economy’s means of production.

What the Democrats are calling for is a more progressive tax system with government taking a greater role in ensuring a more equal distribution of wealth among its citizens—none believe government should be responsible for creating wealth. This is key; there is little support among the candidates, outside a few who support universal health care, for government taking an active role in markets and establishing price clearing transactions. History has done a pretty good job of showing us that when the federal government dictates prices, for instance during the 1970s hyperinflation, it only leads to an inefficient allocation of resources and creates far more problems than it solves. 

 

Democrats just want to let the market to do what it does well: create wealth. Once that is achieved, then the government can step in and use its vast social programs to provide more favorable outcomes for the individual. 

 

Is that socialism?

 

If it is, then most of the countries around the world—especially the developed ones—are socialist. Because nearly all economies today operate a policy mixture that combines capitalist and socialist tendencies, and the reason for this is because history has shown that when left to their own devices, free markets fail to address many of problems that comes with wealth accretion. For instance, before Medicare, most elderly died in poverty, unable to afford necessary medications; before Social Security, many had little to nothing saved for retirement; before unemployment insurance, when workers lost their jobs, many were forced to drastically reduce consumption. Policy makers eventually realized that aforementioned programs not only helped the individual, but also made the country stronger and the economy less susceptible to economic depressions. Yes, these program were controversial in their early days and many claimed they were the very definition of socialism, but today nearly every politician on Capitol Hill supports these programs. There are disagreements on how these programs should be structured, but nobody would propose eliminating or reducing the purchasing power of these invaluable pieces of our society.


So why does the idea of socialism continue to dominate the debate, angering so many Americans as a result? If social policies have made our lives better, then why can’t there be a debate over policy specifics rather than chasing this mythical socialist boogeyman? (I won’t even mention the multitude of rural economies in the US that depend on government assistance to survive.)

The answer is because it’s effective politics. The Republican Party believes the country can’t afford expanding health coverage, forgiving student debt, and paying off past due medical debt without posing serious risk to the financial well-being of the country. And frankly, there is some truth to that. Given our current tax base—assuming no rate increases—none of the aforementioned policies can be achieved without exploding the federal deficit. Such programs are only feasible if the public is willing to accept a much larger tax burden, and while some data suggest a plurality of Americans support higher taxes to fund universal health coverage, the jury is still out on whether that will be the case come tax time. 

Bottom line: there has never been a country that gained ownership of the means of production and improved their economic standing as a result. Even today’s developed “socialist” countries such as Finland, Denmark, and Canada operate market economies knowing that markets are the most efficient way of producing wealth. Yes, these countries transfer great sums to their electorate through social programs, but they remain steadfast in holding no desire to own their country’s means of production. So while some countries are labeled socialist, none, in fact, really are socialist; they just provide more government services and have stronger safety nets as a result of bringing in more tax revenue relative to economic output. We can debate over whether Congress should expand or reduce government's presence in our lives—and that debate is one we should continue to have—but those who fear real socialism is possible can rest assured that in no scenario will it ever reach the US.

 

 

 

 

 

 

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