So Bernie Sanders finally gave his long-promised speech explaining what “democratic socialism” means and making the case for it.
From what I can tell, it means wanting free stuff and hating billionaires.
It’s particularly heavy on hating billionaires, which seems to be at the center of Bernie’s political program. For a speech supposedly laying out the tenets of an entire political philosophy, there was very little intellectual content—but a lot of vilifying of the captains of industry.
Whole sections of the speech are devoted to decrying the excessive prosperity of the “one percent” and even worse, the “one-tenth of one percent” and blaming everything bad on “Wall Street, billionaires, and large corporations,” who “buy elections.” The “billionaire class,” Bernie tells us, is a “ruling class whose greed is destroying our nation” and who must be “defeated.”
All of this vilification is necessary because the other big idea in the speech was promising us free stuff—which we’re supposedly going to pay for by raiding the money pits of all those billionaires.
Specifically, Bernie promised us more of the same kind of free stuff politicians have been promising us for a century—and therein lies the curious contradiction of his case for socialism.
Bernie wants to follow the example of Franklin Roosevelt: “Against the ferocious opposition of the ruling class of his day, people he called economic royalists”—yep, those nasty billionaires again—”Roosevelt implemented a series of programs that put millions of people back to work, took them out of poverty and restored their faith in government.” He then says he wants to extend and expand the welfare state created by FDR and LBJ. Except that something awkward happens along the way. Bernie makes a pretty convincing case against the very programs he hails as great successes for “democratic socialism.”
He opens the speech by hailing FDR’s creation of Social Security, but then complains: “Today, in America, the wealthiest country in the history of the world, more than half of older workers have no retirement savings—zero—while millions of elderly and people with disabilities are trying to survive on $12,000 or $13,000 a year. From Vermont to California, older workers are scared to death. ‘How will I retire with dignity?’ they ask.”
He praises LBJ’s War on Poverty, but then complains: “Today, in America, nearly 47 million Americans are living in poverty and over 20 percent of our children, including 36 percent of African-American children, are living in poverty—the highest rate of childhood poverty of nearly any major country on earth.”
We just passed ObamaCare a few years ago, yet Bernie complains: “Today, in America, 29 million Americans have no health insurance and even more are underinsured with outrageously high co-payments and deductibles. Further, with the United States paying the highest prices in the world for prescription drugs, 1 out of 5 patients cannot afford to fill the prescriptions their doctors write.”
The contradiction is summed up in the way he hails the welfare state as “the foundation of the middle class,” yet concludes that, “The reality is that for the last 40 years the great middle class of this country has been in decline.” So from 1935 to 1965, Bernie’s democratic socialist heroes established the modern welfare state. And then within a decade, the middle class went into a long-term decline.
That’s funny. It’s almost as if all of these “democratic socialist” programs deliver the opposite of what they promise.
But Bernie wants to plow forward on the theory that the only reason the welfare state hasn’t worked is that it hasn’t gone far enough: “That is why I believe in a Medicare-for-all single payer health care system. Yes. The Affordable Care Act, which I helped write and voted for, is a step forward for this country. But we must build on it and go further.”
Bernie is basically admitting that the welfare state has failed, so why try more of it? And if you keep trying and it doesn’t actually produce results, at some point we’re entitled to suspect that lifting up the middle class isn’t your real goal. Perhaps that explains why hating billionaires is so central to Bernie’s “democratic socialist” agenda. It seems like that’s the real point after all—not prosperity for the masses, but envy and resentment of the rich.
If Sanders paused to notice that his whole argument is based on the failure of the welfare state to deliver on its promises, he might have stopped to ask why the current level of welfare-state spending isn’t producing “economic security.” And if he did that, he might have had to acknowledge that all of the free stuff promised to us by government isn’t really free. It has to be paid for by taxpayers, which means that it has to be paid for by taxing the very same middle class people it is supposed to benefit.
Take Social Security. Perhaps part of the reason so many older workers have nothing saved for retirement is that they’ve spent so many decades forking over about 13% of their income in Social Security payroll taxes. Originally, Social Security was going to be paid for by a mere 2% payroll tax, but it has followed the iron law in which any welfare program, once introduced, will become progressively more expensive and ends up being paid for by fleecing the middle class.
Or Bernie might have noticed that, while he keeps scolding us that no other “major country”—a curiously condescending phrase—fails to offer this or that welfare-state benefit, those other nations typically pay for it by imposing massive tax burdens. European welfare states are financed not just with high and progressive income taxes, but with massive payroll taxes and value added taxes, a kind of hidden levy that taxes the public by jacking up the price they pay for everything.
For all of Bernie’s anti-billionaire rhetoric, the taxes actually required to pay for the welfare state are mostly regressive. Payroll taxes start taking money out of the very first dollar of earnings, and value added taxes are taxes on consumption, which hit the poor and middle class harder. Or consider the keystone of Bernie Sanders agenda, free college. As Diana Furchtgott-Roth points out, subsidies for higher education are the ultimate regressive tax. Everybody pays for them, but only middle-class college graduates reap the benefits in higher lifetime earnings.
Sanders declares, “I believe that most Americans can pay lower taxes—if hedge fund managers who make billions manipulating the marketplace finally pay the taxes they should.” But he has inadvertently picked the right word: “belief.” It’s the sort of thing you can only maintain as an article of faith, because the evidence just doesn’t support it.
Then there is the price socialist economies pay in stifled long-term economic growth, as high taxes drain capital from the private economy and regulations make the market slow-moving and inflexible. In the only really ideological passage of the speech, Sanders quotes a line from FDR’s 1944 State of the Union speech: “We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. Necessitous men are not free men.” He says this to keep us from realizing that <i>taxed and regulated men aren’t free</i>. Bernie sums up Roosevelt’s point as “real freedom must include economic security.” What we’ve actually discovered, through trial and a whole lot of error, is that FDR got it exactly backwards: real prosperity depends on economic freedom.
Those are the lessons we can learn if, unlike Bernie, we stop clinging to faith in the welfare state and seek out the real lessons of his odd case against socialism.
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