What's all this talk about Socialism?

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One of the most notable lines in this year’s State of the Union address was President Trump’s comments about Socialism. Call for unity in SOTU, don’t hold your breath, section D, 2/11/19.

The president [expressed] alarm about “new calls to adopt Socialism in our country.” He was presumably referring to the Green New Deal, Medicare for All, and other proposals that would massively increase the government role in the economy while undermining private enterprise. Socialism hasn’t worked anywhere else, as most recently shown in Venezuela, and Mr. Trump declared that “America will never be a socialist country.”

One might quibble about this. The accepted definition of Socialism - investopedia.com, accessed
8/28/19 - includes public ownership of the means of production (including machinery, tools, and factories) to satisfy human needs. And we don’t recall anyone proposing to turn this country socialist by nationalizing the US industrial base.

The distinction between mandating how the means of production are to be used and actually owning them, however, may have limited bearing on the economic results. Also, one of the leading candidates for the Democratic presidential nomination (Bernie Sanders) is a self-described “democratic socialist.” Who’s afraid of socialism, Wall Street Journal,
2/6/19.

Democrats and the media are already protesting that the socialist label doesn’t apply to them. But what are they afraid of—the label or their own ideas? The biggest political story of 2019 is that Democrats are embracing policies that include government control of ever-larger chunks of the private American economy.

Is it possible that the president won the rhetorical battle in this case, only to lose the war? Although polling shows that a majority of Americans still disapprove of Socialism as it has traditionally defined, attitudes are shifting – particularly among younger Americans – and there seems to be growing support for left-leaning social programs.

Why would Socialism be gaining effective (if not explicit) acceptance during good economic times (so far), under a president who made his mark as a builder and entrepreneur versus in government service, when other countries that embraced this doctrine have reaped disastrous results? And how can fans of private enterprise (aka Capitalism) effectively support it and combat the urge to try something different?

1. Background – In the years after World War I, several European countries underwent political upheaval and were taken over by totalitarian regimes. Russia and neighboring states fell under communist rule (Lenin and later Stalin) as the Union of Soviet Socialist Republics. Italy, Germany and Spain were taken over by fascist leaders (Mussolini, Hitler & Franco, respectively).

The Soviet Union was correctly perceived as a leftist regime, but the governments of Italy, Germany and Spain were often seen as conservative. A good case can be made, however, that fascism was simply a different (and equally repellent) flavor of Socialism. The Big Lie, Dinesh D’Souza,
2017.

Although all four regimes were founded and run based on principles that were profoundly inconsistent with the political traditions of the United States and other western democracies, there was a tendency among Americans to view the fascist regimes with toleration or even approval. See, e.g., The American papers that praised Hitler, Dr. Rafeal Medoff, thedailybeast.com,
6/26/17.

Why did many mainstream American newspapers portray the Hitler regime positively, especially in its early months? How could they publish warm human-interest stories about a brutal dictator? Why did they excuse or rationalize Nazi anti-Semitism? These are questions that should haunt the conscience of U.S. journalism to this day.

The media’s view of the Nazis was surprisingly consistent with guidance from the Roosevelt administration.
Ibid.

•During the 1930s, the position of the White House was not just to sidestep the plight of the Jews, but also to combat any domestic criticism or protests that might interfere with U.S.-German diplomatic and economic relations.

•[For example, Secretary of State Cordell] Hull apologized to the Nazi regime when a New York City judge acquitted protesters who tore a swastika flag off a German ship in New York Harbor in 1935. He apologized again in 1937 when Mayor Fiorello La Guardia called Hitler a “fanatic who is threatening the peace of the world.” Roosevelt even compelled Interior Secretary Harold Ickes to remove critical references to Hitler, Mussolini, and Nazism from a 1938 speech.


Additional perspective is provided by an anti-Nazi Socialist who succeeded in emigrating from Germany to the United States. His book provides a lucid explanation of the mindset of millions of Germans who supported the new German Reich that was supposed to endure for 1,000 years (but would last for only 12). Escape from Freedom, Eric Fromm,
1941.

The author argues that the German masses (especially the lower middle class) were not tricked into supporting Hitler and his cohorts; they willingly succumbed to gain powerful psychic benefits. In brief, by surrendering themselves to the great leader, they escaped the dilemma of surviving in a world that seemed threatening and beyond their control.

Given this background, one might think Americans would be unreceptive to the charms of Socialism. In the words of George Santayana, however, “those who cannot remember the past are doomed to repeat it.”

II. Motivation – Although the economic, social and political track record of the United States is hardly unblemished, it compares favorably to the track records of other major countries. So why should there be so much interest in current proposals to “fundamentally transform” (President Barack Obama, 2009) our economic and political system?

Some of the reasons for demanding change were ably identified in a column last week. Why Socialism, and why now? Victor David Hanson, townhall.com,
8/29/19.

#SUCCESS STORY: Socialist Bernie Sanders seemed like a lonely outlier when he began his first presidential run in 2015, but he caught on with the general public and nearly beat Hillary Clinton for the Democratic nomination. Four years later, Sanders has been joined by a host of other political figures who are supporting and furthering socialist ideas.

#FINANCIAL INEQUITY: Younger Americans have legitimate grievances about the student loan debt with which they have been saddled, often in the pursuit of college studies that provide them with little assurance of an economic payback. No wonder they are receptive to proposals for student loan relief and/or “free college.”

Also, although Hanson’s column doesn’t make this point, younger Americans are beginning to realize that (i) the cost of senior entitlement programs (Social Security, Medicare, etc.) is skyrocketing as the number of beneficiaries grows, and (ii) there is little chance that funds will be available to take care of them in a similar fashion when they reach retirement age.

#OTHER GRIEVANCES - Income inequality has grown, fueled in part by the influence of new technologies and in part by trade policies that have contributed to erosion of the US manufacturing base. Looks like capitalism has failed, why not see what government policies can do for us!

#DEFERRED DREAMS - Americans have traditionally started out with liberal sentiments and become more conservative as they got married, bought houses and moved up the economic ladder. These rites of passage have been delayed for many in recent years, which is fueling the trend to an increasingly “progressive” electorate.

#IDEAS - The American educational system has gone off the rails, according to Hanson, both at the secondary and collegiate level, effectively encouraging greater support for collectivist government versus limited government, free enterprise, and a realistic view of history.

The handmaiden of failed socialist regimes has always been ignorance of the past and present. And that is never truer than among today's American college-degreed (but otherwise economically and historically illiterate) youth.

OK, those are the trends, but how far have they progressed and will there be time to turn things around?

III. Polling – Several recent surveys indicate that the term Socialism still has negative connotations for many Americans. See, e.g., [Monmouth University] Poll: Majority view Socialism as incompatible with American values, Jonathan Easley, thehill.com, 5/6/19.

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Opinions about this matter are becoming increasingly politicized. Democrats more positive about Socialism than Capitalism, Frank Newport, gallup.com, 8/13/18.

For the first time in Gallup's measurement over the past decade, Democrats have a more positive image of socialism than they do of capitalism. Attitudes toward socialism among Democrats have not changed materially since 2010, with 57% today having a positive view. The major change among Democrats has been a less upbeat attitude toward capitalism, dropping to 47% positive this year -- lower than in any of the three previous measures. Republicans remain much more positive about capitalism than about socialism, with little sustained change in their views of either since 2010.

Younger Americans are more likely to have a favorable view of Socialism than their elders, and longer term will play a growing role in determining electoral results. Half of young Americans want to live in a socialist country, Rachel del Giudice, dailysignal.com,
3/11/19.

The Harris Poll found that 49.6 percent of millennials and Gen Xers would prefer living in a socialist country versus 37.2% for all poll respondents.

Support for policies/programs with a Socialist tendency, such as Medicare for All or the Green New Deal, runs considerably higher than support for Socialism per se. Plus which the large number of respondents who profess neutrality re Socialism vs. Capitalism suggests that they may be reacting to labels versus substantive differences. Monmouth University poll,
op. cit.

“We shouldn’t ignore the possibility that ‘neutral’ could be a way for some Americans, especially Democrats, to couch their policy preferences without using a term that has historically negative connotations,” said [Monmouth pollster Matt] Murray. “This is going to be a real challenge for left-leaning candidates in the 2020 presidential race. The party base seems to be saying, ‘We like your platform, just don’t use the word socialism to describe it.'”

IV. Winning the argument – Socialism is basically a model for ever-growing government, a far cry from SAFE’s “smaller, more focused, less costly government” agenda. We were therefore delighted by the president’s declaration that “America will never be a Socialist country” and would like to help make it come true.

Unfortunately, the proponents of left-leaning government policies & programs seem to be gaining ground. Query: what are their most effective arguments and how can these arguments be countered?

#UNMET WANTS – Isn’t healthcare a human right, for which the government should be willing to pay for people who are facing soaring medical bills? Ditto a college education, food for the hungry, decent housing, etc. One answer is that government programs to take care of everyone will be impracticable due to the tax increases and/or interest costs on borrowings that would be required to pay for them.

Maybe so, but that’s not a very inspiring argument – especially for many millions of Americans who have been effectively exempted from paying federal income tax and therefore have “no skin in the game.” By endlessly repeating the “we can’t afford it” mantra, conservatives risk setting themselves up as heartless and lacking in empathy.

It may be smart to add that free enterprise solutions work better than handouts, not just for affluent Americans but also for those in lower income brackets. The GOP duty: Explain the cost of “free,” Bobby Jindal, Wall Street Journal,
5/29/19.

Republicans can’t outbid Santa Claus. Americans are willing to work hard and sacrifice for a better life but need to know how pro-growth policies benefit them. Voters may be tempted by progressives’ crazy plans because they desperately want more affordable health care, reasonable tuition costs and a sustainable environment. They will embrace effective market-based solutions that promote freedom if Republicans offer them, but voters will only wait so long.

For example, a currently proposed 15% interest rate ceiling on payday loans would predictably dry up the availability of legal credit for marginal borrowers. And if these individuals complained, the USPS would be authorized to fill the void by launching a “postal banking” service. If you think that story is likely to end well, we’ve got a bridge to show you. Socialist mindset: Nationalize and infantilize, Washington Examiner,
5/13/19.

In terms of making a positive case for free enterprise, a Delaware state legislator recently hit it out of the park. Here’s a link, and the closing lines as a teaser. DE Sen. Bryant Richardson [R- SD 21],
8/23/19.

What is better: To have the means to provide for yourself or to depend on the government for your needs?

When you give the government more control, you lose your rights to self-determination. That’s a high price to pay for “free stuff.”


#EMPIRICAL EVIDENCE – Conservatives often argue that Socialism has had terrible results elsewhere, from the USSR and Communist China (under Mao) to Cuba and now Venezuela in the Western Hemisphere. Progressives dismiss these cases as historical aberrations, however, and suggest other socialist models for America to emulate.

Such a "look elsewhere" argument shortchanges extensive evidence, going back to the Roman Empire if not before, that government-run economies produce mediocre results. Consider, for example, the almost invariable results of government attempts to set market prices versus letting them be set by supply and demand. Price-control failures, then and now, Norman Singleton, mises.org,
8/29/19.

In his April 1950 address to the University Club of New York, [Ludwig von] Mises explained the folly of the government’s attempt to increase the availability of milk by fixing the product’s price. [Thus,] price controls on milk lead to price controls on the factors necessary for the production of milk. And when the factories increase their prices elsewhere to make up for the loss in revenue, more price controls are needed. This process will continue ad infinitum. Before long, the government is forced to fix the prices of all consumer goods and factors of production — just to control the cost of milk. “This is no longer capitalism; it is all-around planning by the government, it is socialism,” Mises stated. [Now in 2019,] the US government is attempting the very same tactic to control the costs of healthcare.

Also, progressives tend to rationalize the failings of regimes they admire by viewing the evidence selectively. See, e.g., Bernie Sanders seems to think Socialism has reduced Chinese poverty, Kaylee McGhee, Washington Examiner,
8/27/19.

[During a recent interview, Sen. Bernie Sanders claimed that the current regime in China] has made “more progress in addressing extreme poverty than any country in the history of the world.” Its government has “done a lot of things for their people,” the presidential candidate noted, adding it could do more if it moved “toward a more Democratic form of government.”

[True,] China’s economic growth in the last 40 years has been unprecedented. [But] China’s economic success is specifically the result of its government abandoning socialist principles in the late 1970s after Mao Zedong finally died. The keys to freeing a billion Chinese from poverty have been free enterprise and capital investment, not state-mandated economic programs.


Finally, successful countries may be pointed to whose governments aren’t truly socialist. Sweden has retreated from the socialist brink, for example, by privatizing many government-owned assets and fostering choice and competition. The truth about Sweden and Socialism, John Stossel, dailysignal.com,
1/4/19.

[Swedish historian Johan] Norberg acknowledges that Sweden, in some areas, has a big government: “We do have a bigger welfare state than the U.S., higher taxes than the U.S., but in other areas, when it comes to free markets, when it comes to competition, when it comes to free trade, Sweden is actually more free market.” Sweden’s free market is not burdened by the U.S.’s excessive regulations, special-interest subsidies, and crony bailouts. That allows it to fund Sweden’s big welfare programs.

Sweden and other “Nordic socialist” models fare pretty well in comparative surveys of economic freedom (based on rule of law, government size, regulatory efficiency and open markets), receiving overall scores that are roughly comparable to the United States. Index of economic freedom (for 180 countries), heritage.org.,
2019.

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#SELF-INTEREST – One might think the business sector would provide stalwart support for the free enterprise system, but in practice companies tend to favor government policies that will benefit their own bottom lines. Rhetoric about social responsibility, etc. is mainly for public relations purposes. Consider, for example, the reception of remarks that Rep. Edward Markey (D-MA) made at a rally held to further the interests of wind and solar energy companies. Corporate socialism is paving the road to the Green New Deal, Timothy Carney, Washington Examiner,
5/15/19.

•“Here’s what I say for wind and solar and all electric vehicles and clean energy, give us some of that socialism that the oil and gas industry has had for a century! Green New Deal.” The crowd went nuts.

• Give us some more of those production tax credits, the lobbyists for wind giants like GE, Vestas, and Siemens yell. Give us some more of those renewable mandates, the solar lobbyists say. Give us more of those tax credits to allow rich people to buy Teslas. Give us more handouts, bailouts, protective regulations, and mandates. In short, Mr. Markey, give us more of what you tried to give us with your 2009 climate bill.


Mr. Carney has been a long-time critic of “crony capitalism,” as was expressed in a book he wrote during the Bush 43 administration. The Big Ripoff: How Big Business and Big Government Steal Your Money,
2006. Perhaps he paints the picture a bit too darkly, but there is a great deal of lobbying activity in DC (much of it famously centered on K Street).

#MISDIRECTION – As previously noted, the US educational system has not been doing a good job of teaching young Americans to appreciate the merits of free enterprise or the lessons of history, and this greatly improves the chances for previous mistakes (such as in the 1930s) to be repeated. AOC: Millennials “most informed,” historically literate generation, Brad Polumbo, Washington Examiner,
8/30/19.

The millennial generation and Generation Z behind them, of which I am part, is uniquely disengaged from history and woefully uninformed *** [they] increasingly identify as socialist . . . an ideology of failure and oppression [with] a very dark past of which few are aware, and only 16% of millennials are able to define Socialism in the first place.

Backing up these generalizations, deficiencies in the quality of education re US/world history and civics have been documented by studies. [AOC] praises millennials as “more informed,” research shows the opposite, Warner Todd Huston, godfatherpolitics.com,
8/30/19.

As a group, millennial’s don’t have the first clue about American history, civics, and government. A recent study found, for example, that only the residents of one state were able to pass a simple American history test. “The Woodrow Wilson National Fellowship Foundation surveyed 41,000 Americans in all 50 states and Washington, DC, and found that [a 53% majority of] the citizens of Vermont passed.”

How can things be made better? Our answer would be that parents should demand better for their children, and government should foster more choice and competition in the educational system versus supporting a top-down model. Equality of opportunity is a worthy goal; equality of outcomes is a rationale for accepting mediocre results.

This message needs to be directed to state and local leaders, not promoted by another “march on Washington,” as they are the one who must ultimately make the indicated policy changes.



**********FEEDBACK**********

# Socialism is a very old plan, which has refused to die. Ugly as it may seem to many, [Joseph] McCarthy was mostly right. And for sure, freedom is not free. – SAFE member (DE)

#I’m not optimistic about winning the capitalism vs. socialism debate, it’s hard to compete with the promises of free goodies for those who can’t participate successfully in capitalism. And this is not a new story; the left has toppled other governments with promises of “land reform” and such. As for the US educational system, it’s dominated by left-wing progressives that hate this country’s founding principles.

The future depends on re-electing Trump and continuing to bolster the economy so that lower-income people can share in the prosperity based on their own efforts. But the other side could offer government jobs, which would be tough to compete with. – SAFE director

Comment: SAFE doesn’t endorse political candidates per se, and in any case it remains to be seen who the Democrats will nominate for president. In terms of offering thoughtful policy proposals, however, the current crop of candidates doesn’t seem to be doing very well.










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