Socialism: Are We There Already?

Listening to the Republicans and the Democrats debate socialism versus capitalism is borderline funny.  These are not the days of debates between John Kenneth Galbraith and Milton Friedman, the spokesmen for democratic economic theory versus the brainchild of Republican economic management.  Galbraith believed in pump priming.  Pour money into the economy, and the economy will do better.  Friedman counseled against debt which flowed from higher taxes and caused disgruntled voters.

We already have socialism in America.  It arrived with the Administration of Franklin Delano Roosevelt and has been supported and expanded by every President of the United States, including Ronald Reagan.

Michael Herrington popularized the phrase, “Socialism for the rich and capitalism for the poor.”  We generously subsidize hospital and healthcare for the elderly, children, and we have a Social Security system that now must be partially funded by the federal treasury.  The United States is awash in economic subsidies for all kinds of businesses and industry. Every state has a robust welfare benefit system at least partially funded by the federal government.

Almost all of my clients receive hospital and medical healthcare through government largess, whether state, federal, or some combination of both.  Healthcare plans receive subsidies and tax benefits.  Employers obtain tax deductions for all of their expenses, including benefits to their workforce.  The entire tax scheme is based on tax relief and subsidies.

Our defense spending is designed to keep our allies strong and our enemies far away.  The entire purpose of the military industrial complex, as Dwight Eisenhower called it, is to make commerce safer and to build the United States infrastructure.

State and federal government subsidize roads, construction projects, and employes a large army of workers.  Unions are in effect subsidized by the number of federal and state employees.  Those workers pay money to the unions which in turn exercise their considerable political clout.

In the first Obama Administration, a consortium of Republicans and Democrats warned the President about the growing debt and its potential to destroy the country from within. Both Republicans and Democrats shelved the study just as fast as they could.  It barely saw the light of day.

The government even invests in industry, even if it does not own the industry outright.  We have government involved in everything from chip production to the manufacturing of rocket systems for the National Aeronautics and Space Administration. That does not count our considerable investment in education at virtually every level.  We have tax deductions that enable people to give billions of dollars to their favorite non-profit.

The modern socialists claim that they can provide more benefits to people by taxing the ultra-rich and by eliminating the Department of Defense and policing generally.  Socialist countries in Europe and Scandinavia did just that.  What happened?  The value of their national bonds dropped to dumper levels, economic activity was on life support, and unemployment became uncontrollable.

The United States has been the most successful country on the planet because it has “sort of” kept the balance between capitalist incentive and a socialist safety net.

What the United States needs to do to survive is boring.  No politician will talk about it.  We need to make sure the Social Security system and Medicare are solvent by cutting benefits and by increasing taxation on those who are able to pay.  These changes do not have to be dramatic, but they do have to make accounting and business sense.

It is true that we need to look at our defense budget, and kudos to President Trump for trying to get our allies more to their own national defense.

The Democratic Socialists today are off the chart to the extent that they believe that they can balance the budget (which they never promise to do), attack the deficit (which they barely mumble about), and reduce taxes for everyone except trillionaires.  Fortunately or un, there simply are not enough billionaires and trillionaires to satisfy the voracious appetite of the tax and spend politicians.

Republicans, for their part, have been afraid to talk about the deficit because the people who vote want government handouts.  It is that plain and simple.

The shortage of American workers which both left and right complain about all the time, has very little to do with a diminishing population.  Workers are not available because we have sent them all to college so that they can take low paying jobs and complain about the state of our culture and the negativity of our historical motif.

In answering the question as to whether we already have socialism, the answer is that unmistakably the United States is a mixed socialist/capitalist society.  The battle today is about those who want more socialism as opposed to those who want to at least preserve the capitalism which currently exists.

The Wall Street Journal is correct on its statistics that the rich pay most of the taxes which are collected by the government.  None of this means that there can be no improvements.

The tax system in the United States is so byzantine that even the smartest accountant must rely upon sophisticated computer programs.  A tax system with three separate rates and no deductions has been proposed but is always dead on arrival.  Currently, for example, income earned from municipal bonds is not taxable at all.  People who buy municipal bonds do not want to give up that considerable advantage.  Just as importantly, the municipalities do not want to do away with the deduction on municipal bonds.  Local government depends upon borrowing for everything from fire trucks to reservoirs and schools.  Local borrowing is the engine which drives everyday livability conditions in America.

What the United States needs is a more workable, user-friendly safety net for those who genuinely need it.  Subsidies and tax breaks should be eliminated for those who do not need it.

The real problem is us, the electorate.  We tend to be swayed by rhetoric, anger, and simplistic baseless solutions.

          The politicians will do what we demand of them.  If we begin to vote for reasonable, thoughtful, patriotic officeholders, the nation will have a future.