From its eruption in our universities, socialism has spilled into the streets of America. It has become all the rage among the 2020 Democratic presidential candidates. They are crawling over each other to seize the socialist banner away from Sen. Bernie Sanders, the first presidential candidate of either major party to run as a socialist. And the American public is following suit. In a 2018 Gallup Poll, 37% of all American adults held a positive view of socialism. For Democrats, the figure is a whopping 57%, while Republicans trail at 16%.
Socialism, and its more sinister sister, communism, arose in the 19th century in response to some of the excesses of the Industrial Revolution fueled by modern capitalism. Socialism has the praiseworthy purpose of transferring the allegedly private, individual greed of capitalism to the social collective good of a community sharing of economic production. The Oxford Dictionary definition of socialism, more formally, is “a system of social (and economic) organization that vests the ownership of the means of production and distribution of capital, land, etc. in the community as a whole.” The community here is the government, which under socialism owns or controls all sectors of the economy, including the major manufacturing and mining enterprises, the entire financial sector, and even agriculture. To run all this, socialist governments substitute their own economic planning for all the economic decisions that under capitalism are made through the mechanisms of the marketplace. This substitution is the fatal flaw of socialism.
However lofty its moral intentions, in the words of fiscal policy specialist and economist Dan Mitchell, “the bottom line is that socialism has failed in every place it’s been tried.” The list is almost endless. For the 18 communist countries that constituted one-third of the world’s population, their socialist economies all collapsed at the end of the Cold War in 1989. There were many other countries that tried socialism, only to stagnate, until they switched to market-based economies. These included India, Egypt, Italy, Greece, Brazil, Nicaragua, Peru and Tanzania.
The case of India is instructive. From independence in 1947 to the mid-1980s, its economy under socialism grew at an annual rate of 1½%, far less than its annual population increase. From the mid-1980s, it moved to a capitalist economy, and India’s current growth rate of 7% exceeds China’s. Today — besides the spectacular disaster of socialist Venezuela — Ecuador, Bolivia, Cuba and South Africa all wallow in the quagmire of socialism.
So what in the world is the attraction for socialism in the United States? Put simply, those attracted to socialism view the immense wealth accumulated under capitalism with resentment, and want to redistribute it more equitably. Their model, trumpeted by Sanders, is the success of Scandinavian countries in both economic production and wealth redistribution. The simple truth is that Scandinavia and other successful European countries have vibrant capitalist economies. They are not socialist. Their programs of redistribution make them welfare states. Actually, the United States is also a welfare state. We just don’t do as much redistribution as our European allies.
The heart of the difference lies in defense spending. Riding piggyback on the American eagle for their defense, Europeans only spend an average of 1% of gross domestic product on defense, while the United States spends 4%. If one could ever corner our Democratic candidates on how they would pay for American socialism, not one so far has been willing to admit that it would require massive cuts in defense spending. When we face serious military threats from China, Russia, North Korea, the Middle East and terrorists, such cuts in defense spending would be irresponsible.
Beyond cuts in defense spending, even socializing part of the American economy would require huge tax increases so the government could take over the functions of private companies. This is most evident in Sanders’ single-payer health care proposal. This would result in socializing the entire health care sector, which accounts for 20% of GDP. Just this grab alone would double the share of government spending in our economy — with dislocations that are beyond calculation.
Lacking any demonstration of practical success, socialists have resorted to scare tactics. In the 1970s and 1980s it was the “Limits to Growth” movement with its dire forecasts of environmental overshoot due to rampant industrial capitalism that would precipitate the collapse of the world’s ecosystem. It never happened. Today it is the Holy Writ of climate change that has inspired the Green New Deal’s call, in effect, for dismantling industrial capitalism before the coming apocalypse in 2030. According to Sarkat Chakrabarti, U.S. Rep. Alexandria Ocasio-Cortez’s chief of staff, “the Green New Deal isn’t mainly about climate change — it’s about making America socialist.”
Whatever the truth of climate change, let us pray that we keep socialism far from our shores. It is a scam.