I’m going to start today’s column by admitting that I lied. That might be expected since much of my work takes place in the sleazy environment of Washington, DC.
But then I saw this tweet, highlighting how gullible idiots are being charged as much as $95 to attend Bernie’s lecture about the supposed evils of capitalism. And it included this amusing meme.
And since we’re kicking around Bernie one more time (or is this truly the last time?), here are a few other items.
Mao probably killed more people than anybody else in world history, so he’s definitely evil, whereas we can laugh our you-know-whats-off about Bernie.
(By the way, if we’re measuring evil by the percentage of the population that was butchered, than the communist dictator of Cambodia was worse than Mao.)
For our third item, the Babylon Beeput together an entirely plausible Bernie Sanders anti-poverty plan.
I am once again asking for your support in eradicating systemic poverty from the face of the earth. America can do it, but we won’t because America is immoral and Elon Musk has all the money. Horrible! I have a simple ten-step plan that is foolproof — and I should know because I’ve been to the Soviet Union and it’s a paradise over there, let me tell you!
The article lists 10 reasons, but 2-6 were the best in my opinion.
2. Tax rich people until they’re poor: If everyone is poor then no one will be. 3. Give everyone money until they become middle class: We cannot rest until Tom Hanks and John Doe are shopping at the same grocery store. Then maybe I can get an autograph. 4. Drop Elon Musk off the Empire State Building: This is how we win, America! 5. Print more money: Unexpected expenses can be paid for with a giant savings account everyone can access. The beauty of it is that if it’s overdrawn we can just print more money! Why haven’t we done this yet. 6. Offload our health care to Cuba: Sailing to Cuba for treatment will also build muscle, making you healthier overall! Is there anything Cuba can’t do?
This next one is basically a different version of a meme I shared in 2019.
As usual, I save the best for last. Here we have Bernie showing the socialist philosophy at a pot-luck dinner.
I’ll close by noting we mock Crazy Bernie for his overt hurry-up socialism. Well, the incremental version isn’t much better since you eventually wind up in the same bad place.
Back in 2009, there was strong and passionate opposition to Bush’s corrupt TARP scheme and Obama’s fake stimulus boondoggle – both of which had price tags of less than $1 trillion.
Today, Biden has already squandered $1.9 trillion on his version of “stimulus” and has asked Congress to expand the federal government’s budgetary burden by another $3.5 trillion (plus about $600 billion for so-called infrastructure).
Yet there doesn’t seem to be the same intensity of opposition, even though Biden is proposing policies that are far more costly.
Is this simply because Republicans were corrupted by Trump’s profligacy and are now comfortable with big government?
Or are they distracted by cultural battles over issues such as critical race theory?
I don’t know, but I’m very worried that insufficient opposition may result in Biden’s dependency agenda getting enacted.
And I’m even more worried because we now know that the left intends to increase the spending burden by a lot more than $3.5 trillion. Especially since Bernie Sanders is Chairman of the Senate Budget Committee.
The Wall Street Journalopined on this topic a couple of days ago.
Democrats have provided few details of what they plan to include in Sen. Bernie Sanders’s $3.5 trillion budget proposal, and now we know why. The real cost is $5 trillion or more… Their plan is to include every program but start small and pretend they’re temporary. This will let them skirt the budget-reconciliation rule that spending can’t add to the deficit outside a 10-year budget window without triggering a 60-vote threshold to pass. The nonprofit Committee for a Responsible Federal Budget examined the budget outline… Assuming the major provisions will be made permanent and continue through the 10-year budget window, the group says, the “policies under consideration could cost between $5 trillion and $5.5 trillion over a decade.” …All of this false accounting will let Democrats pretend the overall cost of their budget spending is lower than it really is… Any way you add it up, Democrats are attempting to pass the biggest expansion of government since the 1960s with narrow majorities and no electoral mandate. No wonder they want to disguise its real cost.
By the way, it’s not just Democrats who play this game. Some provisions of the Trump tax cut expire in 2025 because Republicans also finagled to get around restrictions that govern the 10-year budget process.
That being said, I don’t think there’s moral equivalency between proposals to let people keep their own money and the Biden-Bernie scheme to buy votes with other people’s money.
Anyhow, here’s the relevant table from the Committee for a Responsible Federal Budget’s report.
P.S. This battle is not just an issue of dollars and cents. Some of the Biden-Bernie proposals, such as per-child handouts, would increase dependency by undoing Bill Clinton’s welfare reform.
P.P.S. Don’t forget all the debilitating taxes that will accompany all the new spending.
P.P.P.S. But at least we’ll “catch up” with Europe if Biden-Bernie agenda is enacted.
Nine days ago, I wrote about Dana Milbank scoring an “own goal” because he claimed we needed bigger government to deal with coronavirus, yet all the nations he cited for their effective responses actually have a much smaller fiscal burden than the United States.
Today, we have the Twitter equivalent of an “own goal.”
As far as I’m concerned, that’s a good idea. I certainly wouldn’t be upset if hard-core leftists decided to leave the United States (there’s even a satirical version of this idea).
But Tom Harwood, as you can see, had a response that was far more clever.
Ouch! I don’t know if “own goal” does this justice. This is a brutal dunk by Harwood on Hale.
Especially since both Sanders and Corbyn actually have offered praise for Castro and Cuba.
Say goodbye to “Crazy Bernie.” The socialist senator from Vermont has ended his bid for the Democratic nomination.
I have mixed feelings. Given his genuinely awful views about socialism, I’m glad there’s no risk Bernie Sanders will be in the White House next January.
On the other hand, he deserves credit for being honest about his agenda. And he was a wonderful source for satire and humor.
And that’s today’s topic.
We’ll start with some material about Bernie’s agenda and his campaign and then we’ll close with some jokes about his departure from the presidential race.
This one will only make sense if you’ve seen the 1989 comedy, Weekend at Bernie’s.
But Bernie was never just about free stuff.
He also had a soft spot for totalitarianism. Here’s a story published by the comedic geniuses at Babylon Bee before Bernie exited the race.
At a special campaign appearance abroad in Berlin, Bernie made waves with an ambitious new campaign promise to rebuild the Berlin Wall. …At the announcement, the crowd threw their soy lattes in the air and erupted in a rapturous chant of “Построить эту стену!” which is roughly translated as “build that wall!” Sanders looked out on a sea of hope-filled faces, giddy over the prospect of restoring the majestic landmark built by the German Democratic Republic. The cheering intensified as Bernie promised that not only will he build the wall, but that he will make Trump voters pay for it. …Current estimates say that construction of the wall will provide 2 million shovel-ready jobs and cost approximately 382 billion dollars per mile.
But who would fill those “2 million shovel-ready jobs”?
Not his supporters if this bit of satire is accurate.
As you can see from this image, his economic policies never made much sense.
The coronavirus crisis presumably didn’t help Crazy Bernie’s campaign.
The Babylon Beereported that Bernie had a hard time maintaining social distancing.
Those suffering the most are American politicians, who have been having quite a bit of trouble staying six feet away from citizens’ wallets. Bernie Sanders was hardest hit by CDC guidelines, as he struggled to stay away from Americans’ wallets, purses, and checkbooks. “These guidelines are ridiculous!” he shouted while feeding pigeons at the park… “How am I supposed to steal money to buy another hou — err, I mean, to give some of it to the 99% — when I can’t even get within six feet of anyone? It’s impossible!” Sanders tried using a makeshift fishing rod, casting it out toward purses left on park benches and reeling it back in.
And the disease may have helped to end his campaign by reminding people what life would like like in a socialist paradise.
Needless to say, it was a poignant moment when the Vermont socialist broke the news to his most avid supporters.
Speaking of his many houses, the Babylon Bee has the scoop on Bernie’s real motive for leaving the race.
Democratic presidential primary candidate Bernie Sanders has dropped out, announcing he wants to spend time with his many, many houses. “It just seemed silly to spend all this time campaigning when I’m neglecting my many houses,” Sanders explained to his supporters. “I’ve made a huge profit pushing socialism and amassed much real estate, and it’s time I enjoy it.” …Now that Bernie Sanders has dropped out, he’s endorsed Donald Trump, whom he refers to as an “idol,” and says he hopes to buy many more houses so he can have a real estate empire just like Trump.
Though maybe the real reason he dropped out is that he’s actually achieved his goals.
As the coronavirus panic has already accomplished the aims of his socialistic policies, Sanders realized the country didn’t need his public service anymore. Unemployment has skyrocketed, grocery stores have empty shelves, and everyone is confined to their homes on penalty of arrest. This “idyllic paradise” is exactly what Sanders wanted in the first place, so he says he can leave the race satisfied that his vision has been achieved. “This once-in-a-lifetime deadly pandemic has already accomplished what socialism aims to do,” Sanders said in his concession speech. “Since my services are no longer required, I will be suspending my campaign and heading to my house. Well, one of my houses. I haven’t decided which yet. …Sanders also pointed out that his other main goals of hyperinflation and total dependence on the government are already on their way.
Which is also the message of this final addition to our collection of Bernie humor.
P.S. If you haven’t overdosed on Bernie humor, here are some prior columns focusing exclusively on that topic.
For all his faults, Crazy Bernie at least was open and honest about his desire for socialism (unlike certain other candidates, who have hard-left platforms, but nonetheless are characterized as moderates).
But openness and honesty are not the same as common sense.
Consider, for instance, Crazy Bernie’s oft-stated assertion that we can afford big government because the United States is the richest nation in the history of the world.
There are two problems with what Bernie is saying.
Countries such as Monaco, Luxembourg, Liechtenstein, Singapore, and Switzerland rank above us, whether we’re measuring per-capita annual income or per-capita net wealth.
But that brings us to main point of today’s column.
Second, America is very prosperous because we haven’t followed Bernie’s recipe for bigger government.
That’s true today and it’s been true in the past. Compared to other nations, the U.S. historically has enjoyed very high scores for economic liberty.
Crazy Bernie and his supporters will argue that none of this matters. They’ll simply assert that the United States is a rich nation and therefore politicians should impose higher tax rates and fund bigger government.
But this ignores the fact that rich nations that adopt big government slowly but surely cease to be rich nations.
In other words, there’s a very challenging paradox for people like Bernie Sanders. They want a wealthy society so there’s lots of loot to redistribute, but their policies make it harder for societies to create wealth.
The bottom line is that there’s no such thing as a free lunch. Even the nations that try to minimize the damage of big government, such as Denmark and Sweden, suffer gradual decline.
Which helps to explain why none of my friends on the left have ever been able to successfully answer my two-question challenge.
I would like to think that the election results from Super Tuesday signify a rejection of the evil and destructive ideology of socialism. After all, despite promising the most handouts, Bernie Sanders was defeated in most states and quickly went from being the front-runner to a long-shot candidate.
This chart shows how political betting markets have dramatically changed in the past couple of days. Crazy Bernie (in green) has collapsed with Biden (in blue) has skyrocketed.
Moreover, the other explicitly hard-left major candidate, Elizabeth Warren, saw her support collapse even earlier.
Daniel Henninger of the Wall Street Journal opined today on the implications of this week’s political earthquake.
Before the voting began Tuesday it was conventional wisdom…that something called progressivism was on the march in the U.S., sweeping aside decades if not centuries of belief, history and tradition with a new agenda of wokeness, identity politics and socialism. …Guess what? The voters still get the last word. …Progressives, however much they dominate the culture, keep losing big, competitive elections. …Joe Biden, hardly a commanding presence, is a proxy for Democratic voters’ pragmatism and their doubts about Mr. Sanders, socialism and the American left.
By the way, it’s not just that Crazy Bernie got trounced.
As reported by the New York Times, many hard-left congressional candidates also are being rejected.
Ms. Ocasio-Cortez previously suggested that Democrats who were not sufficiently loyal to an emergent brand of progressive politics should have others like her run against them in a primary. She is now suggesting that, exit polling be damned, Mr. Biden’s latest string of successes is because of the strong-arming of corporate lobbyists, something Mr. Sanders has underscored by repeatedly calling Mr. Biden the establishment candidate. But the results speak for themselves. Ms. Ocasio-Cortez threw her weight behind Cristina Tzintzún Ramirez in her Senate primary campaign in Texas to defeat the Democratic Senatorial Campaign Committee’s chosen candidate, M.J. Hegar. Ms. Hegar ended up easily outpacing a crowded Democratic field.
All of this is very encouraging, but I’m still worried.
There are three reasons why I’m not brimming with optimism.
First, as explained by Annie Lowrey for the Atlantic, a non-trivial number of young people are enamored with the evil ideology of socialism.
A striking generational divide has emerged. Older people still see socialism and communism as dangerous, authoritarian political systems, whereas younger people are more likely to see them as economic systems, and to care far less one way or another. For millions of potential voters, the Red Scare is no longer so scary. …The simple passage of time explains a lot. Millions of Millennials and Gen Zers were never exposed to the threats of the Soviet Union; they did not live through the fall of the Berlin Wall… A recent poll conducted by the Victims of Communism Memorial Foundation showed that 36 percent of Millennials have a favorable opinion of communism, as do a quarter of Gen Zers. Roughly half of the members of those two generations have a favorable view of socialism and thinks the government should act as an employer of last resort. One in five Millennials thinks the Communist Manifesto better “guarantees freedom and equality” than the Declaration of Independence and thinks society would be better off if the government abolished private property.
Second, older Democrats may not embrace the socialist label, but they have shifted in that direction.
I previously wrote about how even prominent folks on the left agree that Joe Biden is far to the left of both Barack Obama and Hillary Clinton.
This graphic from the New York Timesillustrates how the rest of the Democratic establishment (as measured by party platforms) has also veered toward statism.
For what it’s worth, the “Median party” line shows the average position of the world’s other political parties, so the takeaway is that America’s Democrats (and the U.K.’s Labour Party) are now further to the left than some of the world’s socialist parties.
Third, while the Republican Party hasn’t moved to the left based on its platforms, I fear that the GOP isn’t motivated today by a Reagan-style belief in limited government and individual liberty.
Regardless, his views are wrong and easy to debunk.
Writing in the Washington Post, Francisco Toro opines about Bernie Sanders and Cuba.
…you can begin to glimpse the enormous concern Venezuelans and Cubans feel when we hear Bernie Sanders praise Fidel Castro’s education system. …Cuba’s overall educational performance is middling for the region: roughly similar to that of many other Latin American countries… There was never any need to build a police state to bring people to school — an insight so obvious, it’s ludicrous to even have to write it. …To Cubans and Venezuelans — who have witnessed much the same kind of propaganda — talk of Cuban educational prowess grates not because it’s wrong, exactly, but because it serves as a simple way to identify who’s ready to be duped by regime apologists. …When Sanders parrots Fidel’s propaganda, he fails the test.
What’s especially grating is that the propaganda is either false or misleading.
Marian Tupy and Chelsea Follett summarize just a few of the problems with fawning claims about Cuba’s performance.
…in a recent 60 Minutes interview on CBS. Senator Sanders applauded Cuba’s education and healthcare system. Potential Sanders supporters should know that Cuba’s literacy rate and healthcare system are nothing to lionize. First, consider literacy. …Cuba’s literacy rate rose by 26 percent between 1950/53 and 2000. But literacy rose even more, by 37 percent, in Paraguay. Food consumption in Cuba actually declined by 12 percent between 1954/57 and 1995/97. It rose by 19 percent in Chile and by 28 percent in Mexico over the same time period. …Next, consider healthcare. Sanders has repeatedly extolled Cuba’s healthcare system… Life expectancy is the best proxy measure of health. According to Cuba’s official data, it rose by 25 percent between 1960 and 2017. Yet life expectancy increased even faster in comparable countries: in Mexico it improved by 35 percent, in the Dominican Republic by 43 percent, and in impoverished Haiti by 51 percent.
The bottom line is that Cuba performs poorly when looking at education, health, nutrition, and other variables.
But none of that should be a surprise since poor countries generally can’t afford good things or deliver good outcomes.
And the lesson we should learn is that Cuba is poor because government is far too big. Simply stated, the absence of capitalism has been a recipe for misery.
The most shocking statistic is that living standards in Cuba and Hong Kong were very similar when Castro first imposed his version of Marxist socialism.
Yet now there’s a giant gap, with people in Hong Kong enjoying unimaginable prosperity compared to the impoverished residents of Cuba.
Let’s close with two additional items. First, here’s a video from four guys who traveled to Cuba for an up-close view of socialism.
And if you liked that video, here’s another first-hand account of the (nonexistent) glories of Cuban socialism.
Our final item is this look at a street, both as it looked before communism and how it looks today.
The lesson, of course, is similar to the one that we get when examining North Korea from outer space. Communism simply doesn’t work.
You can argue I’m being unfair. After all, I pointed out during the last campaign that his voting record in the Senate was almost identical to the voting records of Hillary Clinton and Barack Obama (his vote rating also was similar to supposed moderate Joe Biden when he was a Senator).
But that doesn’t necessarily mean they think the same or have the same agenda. As the cartoon illustrates, Bernie wants to travel at a faster rate in the wrong direction.
And it’s quite likely that he wants to travel farther in the wrong direction. And he may even want to get to a very unpleasant destination.
You don’t have to believe me. You can simply listen to what Bernie Sanders has said, in this video narrated by Maxim Lott.
And if that’s not enough, here’s a video from Reason that has more of Crazy Bernie’s extremist statements.
So what should we think when we examine Bernie’s past statements, review his voting record in Congress, and also analyze his current platform?
Is he a radical? Crazy? A Marxist? A democratic socialist? A socialist democrat? Some combination of all those options?
We obviously have no way of knowing what his real motives and thoughts are, but James Pethokoukis of the America Enterprise Institute speculates whether Sanders has learned anything.
What lessons have the events of the last half century taught Bernie Sanders? …He’s certainly seen a lot that would seem to have direct bearing on his ideology, especially the collapse of the Soviet Union… Was he “very distressed” at the failure of the centrally planned Soviet economy? He certainly should have been, but only offers a condemnation of the authoritarian political system. …No wonder he’d rather talk about Scandinavia as his socialist success story. Those tiny economies score well on just about every economic metric. But there’s more to them than universal healthcare and generous paid leave. The Nordic model, according to a recent JPMorgan report, “entails a lot of capitalism and pro-business policies…” That’s stuff antithetical to the Sanders democratic socialist agenda. Indeed, the report concludes, “A real-life proof of concept for a successful democratic socialist society, like the Lost City of Atlantis, has yet to be found.”
For what it’s worth, Ryan Bourne points out that his agenda is more extreme than Jeremy Corbyn’s (which is not an easy task).
…some commentators are downplaying his socialist credentials, painting the veteran Senator as no more than a moderate social democrat. …To simply label him a socialist, without any caveats, is misleading. But it’s even more grossly misleading to suggest his “democratic socialist” ambitions stop at a Scandinavian-style welfare state. More redistribution is central to his agenda, sure, but he also proposes massive new market interventions, including the Green New Deal, a federal jobs guarantee, expansive price and wage controls… Sanders’ platform goes far beyond any modern social democracy in terms of government size and scope. Indeed, his policies can only be considered moderate if some three-way lovechild of the economics of 1970s Sweden, Argentina, and Yugoslavia’s market socialism is the baseline. …compare Labour’s 2019 manifesto against the Sanders’ economic platform. Doing so makes clear that Bernie is more radical than Corbyn on economics, both in absolute terms and relative to their countries’ respective politics. …Combined with national insurance, Labour’s top marginal income tax rate would have been 52%. Sanders’ top federal income taxrate alone would be 52%, bringing a top combined top rate of around 80% once state and payroll taxes are considered. Sanders wants a new wealth tax too, another option Labour shirked. …where there are differences, it’s because Sanders is offering the more radical leftwing policies. He and Labour both proposed big minimum wage rises, national rent control, mandated employee ownership, and workers on boards, for example. But where Labour proposed 10% worker ownership stakes in large companies, Sanders would mandate 20%… on the role of government, the declared economic platforms are instructive. Call it “democratic socialism,” or just plain old “interventionism,” Bernie Sanders is, in many respects, putting a more radical interventionist offer to the electorate than Jeremy Corbyn did.
Interestingly, social democrats from Nordic nations think Bernie Sanders is too far to the left.
Johan Hassel, the international secretary for Sweden’s ruling Social Democrats, visited Iowa before the caucuses, and he wasn’t impressed with America’s standard bearer for democratic socialism, Sen. Bernie Sanders (I-Vt.). “We were at a Sanders event, and it was like being at a Left Party meeting,” he told Sweden’s Svenska Dagbladet newspaper… “It was a mixture of very young people and old Marxists, who think they were right all along. There were no ordinary people there, simply.” …Lars Løkke Rasmussen, then the prime minister of Denmark, made a similar point in a speech at Harvard in 2015, when Sanders was gaining national attention. “I know that some people in the U.S. associate the Nordic model with some sort of socialism,” he said. “Denmark is far from a socialist planned economy. Denmark is a market economy”.
Giancarlo Sopo, opining for the Washington Examiner, worries that Sanders actually is an unrepentant Marxist.
Sanders is not the nice, Nordic-style “democratic socialist” he claims to be. At his core, Sanders is almost certainly an all-out Marxist. …The man has no business being anywhere near the Oval Office — not even on a guided tour. …Sanders has been an unabashed apologist for communism, an evil ideology with a body count of 100 million people dead in its wake. …While people such as my grandfather were languishing as political prisoners in Cuba, Sanders said that he was so “excited” about the island’s communist revolution that watching JFK get tough on Fidel Castro made him want to “puke.” …The 78-year-old presidential candidate even honeymooned in the Soviet Union and came back full of praise for it. Some may not grasp how bizarre this was during the Cold War… Sanders’s platform, which openly calls for nationalizing major industries such as higher education, healthcare, and even the internet, falls well outside the mainstream of U.S. politics and more closely resembles the central planning committees in Cuba and Venezuela.
Last but not least, in a column for the Wall Street Journal, Elliot Kaufman compares Sanders’ radical past with his modern rhetoric.
Campaigning for U.S. Senate in 1971, he demanded the nationalization of utilities. In 1973 he proposed a federal takeover of “the entire energy industry,” and in 1974 he wanted a 100% tax on all income above $1 million. In 1976 he asserted that workers needed to “take immediate control of the economy if we are to survive” and called for “public ownership of utilities, banks and major industries.” He had a plan for “public control over capital.” As late as 1987 he asserted that “democracy means public ownership of the major means of production.” …He had also begun a dalliance with the Socialist Workers Party, a communist group that had followed Leon Trotsky. Mr. Sanders endorsed the SWP’s presidential nominee in 1980 and 1984, spoke at SWP campaign rallies during that period, and in 1980 was part of its slate of would-be presidential electors. …After three decades in Congress, he has settled on a populist vision that fits in on the Democratic left. In a major speech last June elaborating his idea of socialism, he cast himself in the tradition of Franklin D. Roosevelt… He enumerated a series of positive rights—to “quality health care,” “as much education as one needs,” “a good job that pays a living wage,” “affordable housing,”… But he said nothing about state control over the means of production or Fidel Castro’s revolution.
So who’s the real Bernie Sanders?
I have no idea whether he still wants government ownership and control of the means of production (i.e., pure socialism with state-run factories, collective farms, etc). I also don’t know whether his past support for awful Marxist dictatorships meant he actually was a Marxist.
A few years ago, I created a three-pronged spectrum in an attempt to illustrate the various strains of leftism.
I’ve decided to create a more up-to-date version. It shows that the Nordic nations are part of the rational left. A bit further to the left are conventional leftists such Joe Biden, Hillary Clinton, and then Barack Obama.
At that point, there’s a divergence, with Hitler and Stalin representing totalitarian socialism at the top and pure socialists (such as the U.K.’s Clement Attlee, who nationalized industries and sectors after World War II) at the bottom.
Without knowing what he truly thinks, I’ve put Bernie Sanders in a middle category for “Crazies.”
I suspect he has sympathies for the two other strains of leftism, but the real-world impact of his policies is that America would become an even-worse version of Greece (though hopefully not as bad as Venezuela).
P.S. Given that he’s now the leading candidate to win the Democratic Party’s nomination, and given that he’s ahead in some national polls, I’m very thankful that America’s Founders bequeathed to us a system based on separation of powers. If Sanders somehow makes it to the White House, he’ll have a very difficult time pushing through the radical parts of his agenda. Yes, it’s true that recent presidents (both Obama and Trump) have sought to expand a president’s power to unilaterally change policy, but I feel confident that even John Roberts and the rest of the Supreme Court would intervene to prevent unilateral tax increases and nationalizations.
P.P.S. More than 10 years ago, I speculated that America’s separation-of-powers system would save the country from Obamacare and cap-and-trade. I was half right.
Next, we have a depiction of what “sharing” really means in Bernie’s world.
Some may argue that this is unfair because he’s never embraced a 100 percent tax rate.
That’s true if you’re just focusing on the personal income tax. But when you add the wealth tax to the equation, there will be people paying more than 100 percent of their income to the IRS.
Our next example mocks Bernie for becoming a millionaire (owner of three homes!) while campaigning against the rich.
I’m rather amused by this next image. Bernie got the most votes in Iowa, but appears to be getting fewer delegates. Presumably that’s one form of redistribution he doesn’t favor.
P.P.S. Barring a big surprise, Elizabeth Warren almost surely will be out of the race after New Hampshire, so we probably won’t have any opportunity to add to our Looney-Liz collection (here, here, here, and here).
In an amazing display of incompetence, we still don’t know whether Bernie Sanders or Pete Buttigieg won the Iowa caucus.
This has created some opportunities for satire, with people asking how a political party that can’t properly count 200,000 votes somehow can effectively run a healthcare system for 340 million people.
That’s a very good point, but today let’s focus on a contest that does have a clear winner.
As explained in this video, John Stossel and his team crunched the numbers and they have concluded that “Crazy Bernie” wins the free-stuff primary.
Senator Sanders doubtlessly will be very happy with this victory, especially since he trailed Kamala Harris when Stossel did the same calculations last summer.
America’s taxpayers, however, might not be pleased with this outcome. Especially if Bernie Sanders somehow gets to the White House.
Last week, I shared new numbers from the Congressional Budget Office, which showed that the federal budget is now consuming $4.6 trillion.
Bernie Sanders is proposing a staggering $4.9 trillion of new spending – more than doubling the burden of government spending!
The Vermont Senator and his supporters say that’s wrong and that the real goal is to make America into a Nordic-style welfare state.
Since those nations mitigate the damage of their large public sectors with very pro-market policies on regulation, trade, and property rights, that wouldn’t be the worst outcome.
The answer is yes, according to Ishaan Tharoor’s WorldView column in the Washington Post.
Sanders and some of his Democratic competitors are clear about what they want to change in the United States. They call for the building of a robust social democratic state, including programs such as universal healthcare, funded in large part by new taxation on the ultrarich and Wall Street. …Sanders is particularly fond of the “Nordic model” — the social plans that exist in countries such as Denmark, Sweden, Norway and Finland, which deploy higher taxation to provide quality public services and keep inequality at rates lower than the United States. …Across the Atlantic, at least one leading proponent of the Nordic model welcomed its embrace by U.S. politicians. “We feel that the Nordic Model is a success story,” said Finnish Prime Minister Sanna Marin… “I feel that the American Dream can be achieved best in the Nordic countries, where every child no matter their background or the background of their families can become anything, because we have a very good education system,” she said.
But is Bernie Sanders really talking about turning America into Finland?
Tharoor correctly notes that the Nordic nation tell a very mixed story.
Sanders’s ascent in the past five years has spurred considerable debate over what lessons should be learned from the Nordic countries he celebrates. A cast of centrist and conservative critics note, first, that these Nordic countries are more capitalist than Sanders concedes, with generous pro-business policies and their own crop of billionaires; and, second, that the welfare states in Nordic countries are largely financed by extensive taxes on middle-class wages and consumption.
The last excerpt is key.
The big welfare states in Europe – and specifically in Nordic nations such as Finland – are financed with big burdens on lower-income and middle-class taxpayers.
According to data from the Tax Foundation and OECD, middle-income Finnish taxpayers are forced to surrender about 15 percent more of their income to government.
Why such a big difference?
Because Finland has an onerous value-added tax, punitive payroll taxes, and their income tax imposes high rates on people with modest incomes.
In other words, it’s not the rich who are financing the welfare state. Yet Bernie Sanders never mentions that point.
I’ll close by simply noting that Finland (like other Nordic nations) is not a statist hellhole. As I wrote just two months ago, the nation has some very attractive policies.
Indeed, the country is almost as market-oriented as the United States according to Economic Freedom of the World (and actually ranked above America as recently as 2011).
Bernie Sanders, though, wants to copy the bad features of Finland.
He wants America to have a big welfare state, but doesn’t want Finland’s very strong rule of law or robust property rights for people in the private sector. Nor does he want Finland’s 20 percent corporate tax rate.
And I suspect he doesn’t realize that Finland just learned an important lesson about the downsides of giving people money for nothing.
Most important of all, I’m very confident he doesn’t understand why Americans of Finnish descent generate 47 percent more national income than Finns who stayed home.
P.S.S. Researchers at Finland’s central bank seem to agree with my concern about excessive government spending.
(Though I’m very relieved the misguided views of young people didn’t prevent a victory for Boris Johnson last month.)
For today’s column, let’s keep our focus on the United States.
What’s the underlying cause of bad polling numbers in America?
In a column for the Washington Times, Robert Knight explains that many young people have been spoon-fed a leftist version of American history.
Why do so many young people hate America and think we’d be better off as a socialist country? …reading and believing Howard Zinn’s best-selling ‘A People’s History of the United States’… First published in 1980, “A People’s History” has sold more than 2.5 million copies and is in virtually every school district, university and local library. …Everything Zinn wrote was couched in the language of Marxist class warfare. Key events were omitted. The mass slaughter that followed the Communist takeover of Cambodia? Good luck finding it in “A People’s History.” …Zinn was a member of numerous Soviet front groups, and he helped found the socialist New Party… Before the fall of the Berlin Wall, Zinn warned that concern over communism was due to “hysteria,”… In a chapter titled “The Coming Revolt of the Guards,” …Zinn states flatly that “capitalism has always been a failure for the lower classes. It is now beginning to fail for the middle class.” …Zinn envisions a utopian future in which “certain basic things” would be “…available — free — to everyone: food, housing, health care, education, transportation.” …The reason this insane, economically illiterate, un-American scheme appeals to so many is that they’ve been miseducated via Howard Zinn into thinking that they live in a bad country that must be rebuilt as a socialist paradise.
Jarrett Stepman opined on the adverse consequences of historical illiteracy in a piece for the Daily Signal.
As young Americans are losing an understanding of civics and American history, they increasingly embrace socialism. …younger generations have a far sunnier view of socialism and communism than their elders. …Perhaps worse than nostalgia for the Soviet Union, “57% of millennials (compared to 94% of the Silent Generation) believe the Declaration of Independence better guarantees freedom and equality over the Communist Manifesto.” That’s appalling. …there’s not only been a worrisome decline in inculcating informed patriotism in young Americans, but a willful attempt to re-educate them to turn them against the foundations of America itself. …So far, we have escaped the curse of socialism… But a troubling collapse in a basic understanding of our history, along with the malignant attempt to reframe our country’s origins to make us more susceptible to doctrines outside our tradition, means that the specter of socialism now hangs over us.
But it’s not just bad history in government schools.
It’s also bad policy in government.
In a column for the Wall Street Journal, Mene Ukueberuwa shares some insights from Edward Glaeser, a professor at Harvard who warns that statist policies are leading young people to support bigger government.
Bernie Sanders…has become an unlikely voice of the young generation. …this axis of today’s struggle could change politics for generations to come, as millennials reject the country’s capitalist consensus and embrace socialism in record numbers. …Critics often blame today’s socialist surge on millennials’ laziness. …One free-market economist has a different explanation. Edward Glaeser, a Harvard professor…, argues that young people have radicalized politically because “there are a number of ways in which the modern American economy isn’t working all that well for them.” Many public policies make it harder to get a job, save money or find an affordable home, leaving young idealists thinking, “Why not try socialism?” But that cure would merely worsen the disease. Mr. Glaeser decries policies that constrain the job market and increase the cost of living compared with what the economy would produce if left alone. …Consider the housing market. “In the 1960s and earlier,” Mr. Glaeser says, “America basically had a property-rights regime that meant that anyone who had a plot of land could pretty much put up anything reasonable on that plot of land.” …The shift of income toward those Mr. Glaeser calls the “entrenched” is most explicit in entitlement programs. …They’re funded by payroll taxes, which snag a disproportionate share of low-earners’ paychecks. Taxpayers also pony up ever more to fund the retirements of government employees.
“They say, ‘Well, there are a whole bunch of projects—a whole bunch of government spending that helps old people. I want mine. If we’re going to spend a huge amount on Medicare, why aren’t we spending a whole lot on education for me?’” …To give newcomers a chance, Mr. Glaeser would curtail the influence of entrenched groups and restore incentives for “a capitalism that is inclusive, and that provides a place of opportunity for more people.” …Mr. Glaeser insists that this message would be likelier to catch on if it were backed by policy reforms that make work more fruitful. A program of plentiful job opportunities, cheaper housing, and tax cuts financed by curtailed entitlements could be a significant step toward replacing socialism in the hearts of Mr. Sanders’s young supporters.
For what it’s worth, bad history and bad policy are both good explanations, but they don’t fully explain why young people are misguided.
I suspect many young people also think support for socialism is a way of signalling that you’re a nice person. That you care about others.
I’m not sure how we solve this problem, but this clever video from Kristian Niemietz suggests that part of the answer may be satire.
Though I may be biased since I have an entire collection of humor that targets socialism and communism.
I’ve written about some of Elizabeth Warren’s statist proposals, but watching last night’s Democratic debate convinced me that I need to pay more attention to Bernie Sanders’ agenda.
When he ran for president last time, I warned that his platform of $18 trillion of new spending over 10 years would be “very expensive to your wallet.”
This time, “Crazy Bernie” has decided that his 2016 agenda was just a down payment. He now wants nearly $100 trillion of new spending!
Even CNN acknowledges that his platform has a staggering price tag.
…the new spending programs Sen. Bernie Sanders has proposed in his presidential campaign would at least double federal spending over the next decade… The Vermont independent’s agenda represents an expansion of government’s cost and size unprecedented since World War II… Sanders’ plan, though all of its costs cannot be precisely quantified, would increase government spending as a share of the economy far more than the New Deal under President Franklin Roosevelt, the Great Society under Lyndon Johnson or the agenda proposed by any recent Democratic presidential nominee, including liberal George McGovern in 1972, according to a historical analysis shared with CNN by Larry Summers, the former chief White House economic adviser for Barack Obama… Summers said in an interview. “The Sanders spending increase is roughly 2.5 times the size of the New Deal and the estimated fiscal impact of George McGovern’s campaign proposals.
My former colleague Brian Riedl has the most detailed estimates of the new fiscal burdens that Sanders is proposing.
All told, Sanders’s current plans would cost as much as $97.5 trillion over the next decade, and total government spending at all levels would surge to as high as 70 percent of gross domestic product. Approximately half of the American workforce would be employed by the government. …his Medicare For All plan would increase federal spending by “somewhere between $30 and $40 trillion over a 10-year period.” He pledges to spend $16.3 trillion on his climate plan. And his proposal to guarantee all Americans a full-time government job paying $15 an hour, with full benefits, is estimated to cost $30.1 trillion. …$3 trillion to forgive all student loans and guarantee free public-college tuition—plus $1.8 trillion to expand Social Security, $2.5 trillion on housing, $1.6 trillion on paid family leave, $1 trillion on infrastructure, $800 billion on general K-12 education spending, and an additional $400 billion on higher public school teacher salaries. …Such spending would far exceed even that of European social democracies. …Sanders’s tax proposals would raise at most $23 trillion over the decade. …Tax rates would soar. Sanders would raise the current 15.3 percent payroll tax to 27.2 percent… Sanders proposes a top federal income-tax rate of 52 percent…plus a 10 percent net investment-income surtax for the wealthy.
Not even close, as you can see from this chart Brian put together.
By the way, the above chart is a static snapshot. In the real world, there’s no way to collect 4.7 percent of GDP (red bar on the left) with confiscatory taxes on the rich.
if Sanders ever had a chance to impose all his class-warfare tax ideas, the economy would tank, so revenues as a share of GDP would decline.
And here’s another one of his visuals, looking at the spending proposals that Democratic candidates are supporting.
Senator Sanders, needless to say, favors all of these proposals.
As Brian noted in his article, the Sanders fiscal agenda is so radical that America would have a bigger burden of government spending than decrepit European welfare states such as Greece, France, and Italy.
To his credit, Bernie acknowledges that all his new spending can’t be financed by class-warfare levies (unlike the serially dishonest Elizabeth Warren).
But the new taxes he proposes would finance only a tiny fraction of his spending agenda. If Washington ever tried to adopt even part of his platform, it inevitably would mean a European-stylevalue-added tax.
P.S. Even if tens of trillions of dollars of revenue magically floated down from Heaven, bigger government would still be bad for the economy since politicians and bureaucrats would be in charge of (mis)allocating a much greater share of labor and capital.
But what would happen if either “Crazy Bernie” or “Looney Liz” actually had the opportunity to impose such levies?
At the risk of gross understatement, the effect won’t be pretty.
Based on what’s happened elsewhere in Europe, the Wall Street Journalopined that America’s economy would suffer.
Bernie Sanders often points to Europe as his economic model, but there’s one lesson from the Continent that he and Elizabeth Warren want to ignore. Europe has tried and mostly rejected the wealth taxes that the two presidential candidates are now promising for America. …Sweden…had a wealth tax for most of the 20th century, though its revenue never accounted for more than 0.4% of gross domestic product in the postwar era. …The relatively small Swedish tax still was enough of a burden to drive out some of the country’s brightest citizens. …In 2007 the government repealed its 1.5% tax on personal wealth over $200,000. …Germany…imposed levies of 0.5% and 0.7% on personal and corporate wealth in 1978. The rate rose to 1% in 1995, but the Federal Constitutional Court struck down the wealth tax that year, and it was effectively abolished by 1997. …The German left occasionally proposes resurrecting the old system, and in 2018 the Ifo Institute for Economic Research analyzed how that would affect the German economy. The authors’ baseline scenario suggests that long-run GDP would be 5% lower with a wealth tax, while employment would shrink 2%. …The best argument against a wealth tax is moral. It is a confiscatory tax on the assets from work, thrift and investment that have already been taxed at least once as individual or corporate income, and perhaps again as a capital gain or death tax. The European experience shows that it also fails in practice.
Karl Smith’s Bloombergcolumn warns that wealth taxes would undermine the entrepreneurial capitalism that has made the United States so successful.
…a wealth tax…would allow the federal government to undermine a central animating idea of American capitalism. …The U.S. probably could design a wealth tax that works. …If a country was harboring runaway billionaires, the U.S. could effectively lock it out of the international financial system. That would make it practically impossible for high-net-worth people to have control over their wealth, even if it they could keep the U.S. government from collecting it. The necessity of this type of harsh enforcement points to a much larger flaw in the wealth tax… Billionaires…accumulate wealth…it allows them to control the destiny of the enterprises they founded. A wealth tax stands in the way of this by requiring billionaires to sell off stakes in their companies to pay the tax. …One of the things that makes capitalism work is the way it makes economic resources available to those who have demonstrated an ability to deploy them effectively. It’s the upside of billionaires. …A wealth tax designed to democratize control over companies would strike directly at this strength. …a wealth tax would penalize the founders with the most dedication to their businesses. Entrepreneurs would be less likely to start businesses, in Silicon Valley or elsewhere, if they think their success will result in the loss of their ability to guide their company.
The bottom line, given the importance of “super entrepreneurs” to a nation’s economy, is that wealth taxes would do considerable long-run damage.
Andy Kessler, in a column for the Wall Street Journal, explains that wealth taxes directly harm growth by penalizing income that is saved and invested.
Even setting comical revenue projections aside, the wealth-tax idea doesn’t stand up to scrutiny. Never mind that it’s likely unconstitutional. Or that a wealth tax is triple taxation… The most preposterous part of the wealth-tax plans is their supporters’ insistence that they would be good for the economy. …a wealth tax would suck money away from productive investments. …liberals in favor of taxation always trot out the tired trope that the poor drive growth by spending their money while the rich hoard it, tossing gold coins in the air in their basement vaults. …So just tax the rich and government spending will create great jobs for the poor and middle class. This couldn’t be more wrong. As anyone with $1 billion—or $1,000—knows, people don’t stuff their mattresses with Benjamins. They invest them. …most likely…in stocks or invested directly in job-creating companies… A wealth tax takes money out of the hands of some of the most productive members of society and directs it toward the least productive uses. …existing taxes on interest, dividends and capital gains discourage the healthy savings that create jobs in the economy. These are effectively taxes on wealth—and we don’t need another one.
Professor Noah Smith leans to the left. But that doesn’t stop him, in a column for Bloomberg, from looking at what happened in France and then warning that wealth taxes have some big downsides.
Studies on the effects of taxation when rates are moderate might not be a good guide to what happens when rates are very high. Economic theories tend to make a host of simplifying assumptions that might break down under a very high-tax regime. …One way to predict the possible effects of the taxes is to look at a country that tried something similar: France, where Piketty, Saez and Zucman all hail from. …France…shows that inequality, at least to some degree, is a choice. Taxes and spending really can make a big difference. But there’s probably a limit to how much even France can do in this regard. The country has experimented with…wealth taxes…with disappointing results. France had a wealth tax from 1982 to 1986 and again from 1988 to 2017. …The wealth tax might have generated social solidarity, but as a practical matter it was a disappointment. The revenue it raised was rather paltry; only a few billion euros at its peak, or about 1% of France’s total revenue from all taxes. At least 10,000 wealthy people left the country to avoid paying the tax; most moved to neighboring Belgium… France lost not only their wealth tax revenue but their income taxes and other taxes as well. French economist Eric Pichet estimates that this ended up costing the French government almost twice as much revenue as the total yielded by the wealth tax.
In other words, the much-maligned Laffer Curve is very real. When looking at total tax collections from the rich, the wealth tax resulted in less money for France’s greedy politicians.
And this chart from the column shows that French lawmakers are experts at extracting money from the private sector.
The dirty little secret, of course, is that lower-income and middle-class taxpayers are the ones being mistreated.
By the way, Professor Smith’s column also notes that President Hollande’s 75 percent tax rate on the rich also backfired.
Let’s close with a report from the Wall Street Journal about one of the grim implications of Senator Warren’s proposed tax.
Elizabeth Warren has unveiled sweeping tax proposals that would push federal tax rates on some billionaires and multimillionaires above 100%. That prospect raises questions for taxpayers and the broader economy… How might that change their behavior? And would investment and economic growth suffer? …The rate would vary according to the investor’s circumstances, any state taxes, the profitability of his investments and as-yet-unspecified policy details, but tax rates of over 100% on investment income would be typical, especially for billionaires. …After Ms. Warren’s one-two punch, some billionaires who generate pretax returns could pay annual taxes that would leave them with less money than they started with.
Here’s a chart from the story (which I’ve modified in red for emphasis) showing that investors would face effective tax rates of more than 100 percent unless they somehow managed to earn very high returns.
For what it’s worth, I’ve been making this same point for many years, starting in 2012.
Nonetheless, I’m glad to see it’s finally getting traction. Hopefully this will deter lawmakers from ever imposing such a catastrophically bad policy.
Remember, a tax that discourages saving and investment is a tax that results in lower wages for workers.
In addition to being a contest over expanding the burden of government spending, the Democratic primary also is a contest to see who wants the biggest tax increases.
Bernie Sanders and Elizabeth Warren have made class-warfare taxation an integral part of their campaigns, but even some of the supposedly reasonable Democrats are pushing big increases in tax rates.
James Pethokoukis of the American Enterprise Institute opines about the anti-growth effect of these proposed tax hikes, particularly with regard to entrepreneurship and successful new firms.
The Democratic presidential candidates have plenty of ideas about taxes. Wealth taxes. Wall Street taxes. Inequality taxes. And probably more to come. So lots of creative thinking about wealth redistribution. Wealth creation? Not so much. …one way to look at boosting GDP growth is thinking about specific policies to boost labor force and productivity growth. But there’s another way of approaching the issue: How many fast-growing growing new firms would need to be generated each year to lift the economy-wide growth rate each year by one percent? …a rough calculation by analyst Robert Litan figures there about 15 billion-dollar (in sales) companies formed every year. But what if the American entrepreneurial ecosystem were so vibrant that it produced 60 such companies annually? …The big point here is that the American private sector is key to growth. No other large economy is as proficient as the US in creating high-impact startups. But it doesn’t appear that the Democratic enthusiasm for big and bold tax plans is matched by concern about unwanted trade-offs.
If you want a substantive economic critique of class-warfare tax policy, Alan Reynolds has a must-read article on the topic.
He starts by explaining why it’s important to measure how sensitive taxpayers are (the “elasticity of taxable income”) to changes in tax rates.
Elasticity of taxable income estimates are simply a relatively new summary statistic used to illustrate observed behavioral responses to past variations in marginal tax rates. They do so by examining what happened to the amount of income reported on individual tax returns, in total and at different levels of income, before and after major tax changes. …For example, if a reduced marginal tax rate produces a substantial increase in the amount of taxable income reported to the IRS, the elasticity of taxable income is high. If not, the elasticity is low. ETI incorporates effects of tax avoidance as well as effects on incentives for productive activity such as work effort, research, new business start-ups, and investment in physical and human capital.
Alan then looks at some of the ETI estimates and what they imply for tax rates, though he notes that the revenue-maximizing rate is not the optimal rate.
Diamond and Saez claim that, if the relevant ETI is 0.25, then the revenue-maximizing top tax rate is 73 percent. Such estimates, however, do not refer to the top federal income tax rate, …but to the combined marginal rate on income, payrolls, and sales at the federal, state, and local level. …with empirically credible changes in parameters, the Diamond-Saez formula can more easily be used to show that top U.S. federal, state, and local tax rates are already too high rather than too low. By also incorporating dynamic effects — such as incentives to invest in human capital and new ideas — more recent models estimate that the long-term revenue-maximizing top tax rate is between 22 and 49 percent… Elasticity of taxable, or perhaps gross income…can be “a sufficient statistic to approximate the deadweight loss” from tax disincentives and distortions. Although recent studies define revenue-maximization as “optimal,” Goolsbee…rightly emphasizes, “The fact that efficiency costs rise with the square of the tax rate are likely to make the optimal rate well below the revenue-maximizing rate.”
These excerpts only scratch the surface.
Alan’s article extensively discusses how high-income taxpayers are especially sensitive to high tax rates, in part because they have considerable control over the timing, level, and composition of their income.
He also reviews the empirical evidence from major shifts in tax rates last century.
That being said, I wonder whether his article will have any impact. As Kevin Williamson points out is a column for National Review, the left isn’t primarily motivated by a desire for more tax money.
Perhaps the strangest utterance of Barack Obama’s career in public office…was his 2008 claim that raising taxes on the wealthy is a moral imperative, even if the tax increase in question ended up reducing overall federal revenue. Which is to say, Obama argued that it did not matter whether a tax increase hurt the Treasury, so long as it also hurt, at least in theory and on paper, certain wealthy people. …ideally, you want a tax system with low transaction costs (meaning a low cost of compliance) and one that doesn’t distort a lot of economic activity. You want to get enough money to fund your government programs with as little disruption to life as possible. …Punitive taxes aren’t about the taxes — they’re about the punishment. That taxation should have been converted from a technical question into a moral crusade speaks to the basic failure of the progressive enterprise in the United States…the progressive demand for a Scandinavian welfare state at no cost to anybody they care about…ends up being a very difficult equation to balance, probably an impossible one. And when the numbers don’t work, there’s always cheap moralistic histrionics.
So what leads our friends on the left to pursue such misguided policies? What drives their support for punitive taxation?
Is is that they’re overflowing with compassion and concern for the poor?
Hardly.
Writing for the Federalist, Emily Ekins shares some in-depth polling data that discovers that envy is the real motive.
Supporters often contend their motivation is compassion for the dispossessed… In a new study, I examine…competing explanations and ask whether envy and resentment of the successful or compassion for the needy better explain support for socialism, raising taxes on the rich, redistribution, and the like. …Statistical tests reveal resentment of the successful has about twice the effect of compassion in predicting support for increasing top marginal tax rates, wealth redistribution, hostility to capitalism, and believing billionaires should not exist. …people who agree that “very successful people sometimes need to be brought down a peg or two even if they’ve done nothing wrong” were more likely to want to raise taxes on the rich than people who agree that “I suffer from others’ sorrows.” …I ran another series of statistical tests to investigate the motivations behind the following beliefs: 1) It’s immoral for our system to allow the creation of billionaires, 2) billionaires threaten democracy, and 3) the distribution of wealth in the United States is “unjust.” Again, the statistical tests find that resentment against successful people is more influential than compassion in predicting each of these three beliefs. In fact, not only is resentment more impactful, but compassionate people are significantly less likely to agree that it’s immoral for our system to allow people to become billionaires.
Here’s one of her charts, showing that resentment is far and away the biggest driver of support for class-warfare proposals.
These numbers are quite depressing.
They suggest that no amount of factual analysis or hard data will have any effect on the debate.
And there is polling data to back up Emily’s statistical analysis. Heck, some folks on the left openly assert that envy should be the basis for tax policy.
I sometimes mock the New York Times for dodgy and inaccurate writing about economics.
Though, to be fair, the paper has many sound journalists who do a good job, so I should be more careful about explaining that the mistakes are the result of specific reporters and columnists.
And we should add David Leonhardt to the list. He actually claims that imposing a wealth tax and confiscating private capital can lead to more growth.
There are two problems with the arguments from these opponents. First, they’re based on a premise that the American economy is doing just fine and we shouldn’t mess with success. …Second, …it’s also plausible that a wealth tax would accelerate economic growth. …A large portion of society’s resources are held by a tiny slice of people, who aren’t using the resources very efficiently. …Sure, it’s theoretically possible that some entrepreneurs and investors might work less hard… But it’s more likely that any such effect would be small — and more than outweighed by the return that the economy would get on the programs that a wealth tax would finance, like education, scientific research, infrastructure and more.
Wow. It’s rare to see so much inaccuracy in so few words.
Let’s review his arguments.
His first claim is utter nonsense. I’ve been following the debate over the wealth tax for years, and I’ve never run across a critic who argued that the wealth tax is a bad idea because the economy is “doing just fine.”
And those arguments are true and relevant whether the economy is booming, in a recession, or somewhere in between.
His second claim is equally absurd. He wants readers to believe that government spending is good for growth and that those benefits will more than offset the economic harm from the punitive tax.
To be fair, at least this is not a make-believe argument. Left-leaning bureaucracies such as the International Monetary Fund and Organization for Economic Cooperation and Development have been pushing this idea in recent years. They use phrases such as “resource mobilization” and “financing for development” to argue that higher taxes will lead to more growth because governments somehow will use money wisely.
Interestingly, a news report in the New York Times had a much more rational assessment, largely focusing on the degree of damage such a tax would cause.
Progressive Democrats are advocating the most drastic shift in tax policy in over a century as they look to redistribute wealth…with new taxes that could fundamentally reshape the United States economy. …Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have proposed wealth taxes that would shrink the fortunes of the richest Americans. Their plans envision an enormous transfer of money from the wealthy… the idea of redistributing wealth by targeting billionaires is stirring fierce debates at the highest ranks of academia and business, with opponents arguing it would cripple economic growth, sap the motivation of entrepreneurs who aspire to be multimillionaires and set off a search for loopholes. …At a conference sponsored by the Brookings Institution in September, N. Gregory Mankiw, a Harvard economist, …offered a searing critique, arguing that a wealth tax would skew incentives that could alter when the superrich make investments, how they give to charity and even potentially spur a wave of divorces for tax purposes. He also noted that billionaires, with their legions of lawyers and accountants, have proven to be experts at gaming the system to avoid even the most onerous taxes. …“On the one hand it’s a bad policy, and then the other thing is it’s a feckless policy,” Mr. Mankiw said. Left-leaning economists have expressed their own doubts about a wealth tax. Earlier this year, Lawrence Summers, who was President Bill Clinton’s Treasury secretary, warned…that wealth taxes would sap innovation by putting new burdens on entrepreneurial businesses while they are starting up. In their view, a country with more millionaires is a sign of economic vibrancy.
This is an example of good reporting. It cited supporters and opponents and fairly represented their arguments.
Readers learn that the real debate is over the magnitude of economic harm.
Speaking of which, a Bloomberg column explains how much money might get siphoned from the private economy if a wealth tax is imposed.
Billionaires such as Jeff Bezos, Bill Gates and Warren Buffett could have collectively lost hundreds of billions of dollars in net worth over decades if presidential candidate Elizabeth Warren’s wealth tax plan had been in effect — and they had done nothing to avoid it. That’s according to calculations in a new paper by two French economists, who helped her devise the proposed tax on the wealthiest Americans. The top 15 richest Americans would have seen their net worth decline by more than half to $433.9 billion had Warren’s plan been in place since 1982, according to the paper by University of California, Berkeley professors Emmanuel Saez and Gabriel Zucman. …The calculations underscore how a wealth tax of just a few percentage points might erode fortunes over time.
Here’s the chart that accompanied the article.
What matters to the economy, though, is not the amount of wealth owned by individual entrepreneurs.
Instead, it’s the amount of saving and investment (i.e., the stock of capital) in the economy.
A wealth tax is bad news because it diverts capital from the private sector and transfers it to Washington where politicians will squander the funds (notwithstanding David Leonhardt’s fanciful hopes).
So I decided to edit the Bloomberg chart so that is gives us an idea of how the economy will be impacted.
P.S. Several years ago, bureaucrats at the IMF tried to argue that a wealth tax wouldn’t damage growth if two impossible conditions were satisfied: 1) It was a total surprise, and 2) It was only imposed one time.
Three years ago, I shared a cartoon that succinctly summarized the problem with socialism and the welfare state.
It’s the same lesson that we also get from Thomas Sowell, which is that redistribution over time creates an ever-larger number of dependents financed by ever-higher taxes on workers.
— Young Americans Against Socialism (@YAAS_America) August 27, 2019
Very clever and amusing.
I will add this short video to my collection of socialism humor, but it actually makes a very serious point.
Socialists and other redistributionists want equality of outcomes, but they don’t think about the unintended consequences of such an approach.
Some people will be lured into sloth and dependency, for instance, while others – particularly those with greater ability and/or greater work ethic – will choose to be less productive (especially because they also get hit with higher tax burdens to finance all the handouts).
Bastiat wrote that the failure to consider the “unseen” was the defining quality of a bad economist.
And since we’re on that topic, here’s an example of Crazy Bernie failing to appreciate that actions have unintended consequences.
I’m getting worried that Senator Bernie Sanders is fading in the polls.
That doesn’t make me happy. I want Crazy Bernie to stay relevant.
Why? Because he’s an endless source of clever satire.
Previous editions of Bernie humor can be found here and here.
For today’s edition, let’s start with the fact that Bernie has used political office to become a millionaire, yet he doesn’t put his money where his mouth is (the federal government actually has a website for people who are foolish enough to pay extra tax).
Bernie also has an opinion on the protests in Hong Kong. At least according to the satirists at the Babylon Bee.
As soon as Bernie Sanders heard about the democratic protesters in Hong Kong, he knew something had to be done. The U.S. senator quickly chartered a flight to Hong Kong… Sanders bravely stood in the middle of the conflict between police and protesters, shouting at the “ungrateful little dissenters”… “Remember, you could have it a lot worse—you could be in America!” Sanders bellowed as police officers for the totalitarian regime beat protesters in the background. …Sanders continued his long-winded rant about the need for the government to own the means of production, how great breadlines are, and how bad things are in capitalist America as protesters got dragged away by police to be disappeared. “Just think—in America, we have to pick between 14 different types of deodorant!” he said, his fingers flopping around like limp sausages.
While this story is amusing, the folks at Babylon Bee screwed up. The people of Hong Kong aren’t protesting because they live in a communist system.
They’re protesting because they’re worried that China will sooner or later absorb them into a communist system.
But since so much real media is “fake but accurate” (or is it “accurate but fake”?), I’m not going to worry about details.
Showing himself to be a compassionate man of the people who cares deeply about the plight of the downtrodden, Senator Bernie Sanders selflessly offered a stack of bills to a homeless man on the street Monday after fishing the money out of a purse sitting next to a woman on a park bench. Sanders had been…on the prowl for people who looked like they had too much money when he leaped out to steal the wallet from the purse… The Vermont senator..saw a homeless man sitting nearby, begging for money. Moved by the pathetic sight of the man’s disheveled appearance, Sanders found it in his heart to commit a random act of kindness, digging through the wallet until he was able to find several $20 bills and slipping them into the man’s hand. “It’s not theft—it’s redistribution,” he told reporters later. “I was simply…doing what any old citizen couldn’t do without committing a crime. But it’s different because I’m the government, see?” At publishing time, the Senator was seen pocketing the rest of the money.
How very generous he is with other people’s money!
Last but not least, here’s a game from Imgur that allows anyone to prepare a Bernie speech. For some reason, it reminds me of State-of-the-Union bingo during the Obama years.
When I wrote about about the “dangerous seduction of free” a month ago, I apparently underestimated the problem. We have politicians completely divorced from fiscal reality (the “Green New Deal” being a frightening example).
But the key question is whether the American people are actually getting seduced.
It’s not looking good on the Democratic side. Joe Biden is presumably part of the Democratic Party’s anti-socialist wing, which is encouraging. But all the other leading candidates are hard-core big spenders.
And it’s not looking good on the Republican side, either. Trump may not have crazy proposals for new spending, but in practice he’s been profligate. Indeed, I’m guessing he will wind up with a worse record on spending than Obama.
The bottom line is that the public sector already is too large in the United States. Yet we have politicians who want it to become an even bigger burden. In some cases, much bigger.
That has very serious economic consequences. Especially if it coincides with an erosion of societal capital.
I’ll close with a final observation about the candidates – Sanders, Warren, and Harris – who were identified in the video as advocating trillions of dollars of new spending.
How do they plan to finance this orgy?
Sanders has a plethora of new taxes, including class-warfare tax increase and middle-class tax increases, so he definitely wants to put our money where his mouth is. In terms of fiscal policy, think of him as Sweden.
Warren supports a bunch of new taxes, mostly on the rich, most notably a huge wealth tax, which surely would backfire but theoretically is a big source of money. In terms of fiscal policy, think of her as France.
Harris has some class-warfare tax hikes but is mostly promising a free lunch since there’s a huge mismatch between what she wants to spend and the new taxes she has embraced. In terms of fiscal policy, think of her as Greece.
For what it’s worth, I’m waiting for the Hong Kong candidate.
Two months ago, I pointed out that San Francisco’s housing crisis was a “learnable moment” because some folks on the left actually now understand the negative consequences of government intervention.
Now I’m wondering if we might actually have a learnable moment on the issue of minimum wages for Crazy Bernie.
The Vermont socialist is experiencing something akin to what it’s like to be an entrepreneur or business owner. He’s having to generate revenue for his campaign and figure out the best way to allocate the funds.
And – surprise, surprise – he doesn’t want to pay above-market wages. Which makes him a giant hypocrite since he wants to use government coercion to impose higher minimum wages on the private sector.
Professor Art Carden highlights three things that Bernie should learn from this experience.
Bernie Sanders is having trouble with his unionized–and apparently underpaid–labor force. …the Sanders campaign “will limit the amount of time his organizers can work to guarantee that no one is making less than $15 per hour.” …I see three takeaways. First, …this is pretty much exactly what that story predicts. Firms don’t wish to hire as much labor as workers wish to supply at what is apparently an above-market wage. …Second, a $15 per hour national minimum wage will not be a free lunch, even for the people we claim we want to help. …there are a lot of hidden costs to higher minimum wages, like less-generous fringe benefits and stricter scheduling. A higher minimum wage will…also create a lot of losers: according to the Congressional Budget Office’s median estimate, “…1.3 million other workers would become jobless.” Third, this whole episode should make you more skeptical of socialism, even watered-down “democratic socialism.” …Sanders and his staff are struggling to manage an ideologically homogeneous group of people with similar worldviews…and a very well-defined end goal of “elect Bernie Sanders to the presidency.” Suffice it to say this does not make me confident that they can be trusted to organize something as complex and mind-bogglingly diverse as the US economy
So will this episode teach Crazy Bernie a lesson about the downside of minimum-wage laws?
Will his clueless volunteers now understand there are tradeoffs in the real world and that government can’t make people richer by waving a magic wand?
I won’t hold my breath, but it would be nice.
In the meantime, here’s a great video on the topic by John Stossel.
This confirms all the other research (see here, here, here, and here) we’ve seen on the negative impact of Seattle’s destructive new law.
Let’s close with an amusing Branco cartoon
P.S. Another Democratic presidential candidate also is a big hypocrite.
P.P.S. Actually, there are at least three hypocrites running for the Democratic nomination.
P.P.P.S. Here’s another video reviewing the evidence about Seattle’s job-killing increase in the minimum wage.
As reported by the Washington Examiner, Crazy Bernie thinks the American people will be happy to pay more taxes in exchange for more goodies from Washington.
Presidential candidate Bernie Sanders said more taxes would be necessary in order to pay for things like universal healthcare and tuition-free college. …”a lot of people in the country would be delighted to pay more in taxes if they had comprehensive healthcare as a human right,” Sanders said. …Sanders, an independent senator from Vermont, said there is a “tradeoff” but he believes “most people will believe they will be better off…when they have healthcare as a human right and they have affordable housing, decent retirement security, and most Americans will understand that that is a good deal.”
Supporters of Bernie Sanders might claim that I’m being unfair. After all, he’s claiming that people would be happy to pay additional tax for additional spending, not additional tax for the current level of spending.
That’s a fair point.
So I’m willing to meet Crazy Bernie at the halfway point.
He says people would be happy to pay more tax and I think that’s wrong. How can we figure out which one of us is correct?
Simple. Let people choose. There are two ways to make this happen.
Make socialism voluntary. If Crazy Bernie is correct about people wanting to pay more to get more, why not create a system where people can opt in or opt out? That shouldn’t be too difficult. Just create two tax systems, one for people who want to pay more to get more goodies, and another for people who don’t want that option. Heck, we could even create a third system for people (like me) who would like to opt out of existing redistribution and social insurance programs.
Comprehensive federalism. Let’s basically repeal the Washington-centric welfare state and let states decide whether to impose such programs. If people like paying high taxes in exchange for big government, I’m sure politicians in New Jersey, California, and Illinois will be happy to oblige. But if Crazy Bernie is wrong, maybe people will vote with their feet and migrate to states that presumably would forego the opportunity to replicate the programs currently imposed from D.C.
Needless to say, I very much doubt whether Crazy Bernie or any of his supporters will go for either choice.
Which is why, notwithstanding Crazy Bernie’s claim, I described this tweet as perfectly capturing “the essential difference between libertarians and statists.”
Amen.
Statists don’t support choice. They don’t like federalism. The bottom line is that they know their intended victims will opt out.
Crazy Bernie is bluffing. He knows people don’t favor higher taxes. This cartoon explains everything.
I’m not the only one to notice that not all leftists have the same approach.
Writing for the Washington Post about the battle between Bernie Sanders and Elizabeth Warren for the Democratic nomination, Elizabeth Bruenig opines on the difference between two strains of statism.
What is the difference between Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.)? …much of it comes down to the matter of regulation vs. revolution. For Warren, the solution to our economic ills already exists in well-regulated capitalism. “I believe in markets,”… Warren believes today’s socioeconomic ills are the result of high concentrations of power and wealth that can be resolved with certain regulatory tools and interventions. …for Sanders, those solutions come up short. ,,,Instead, he aims to transfer power over several key segments of life to the people — by creating a set of universal economic rights that not only entitle citizens to particular benefits (such as medical care, education and child care) but also give those citizens a say in how those sectors are governed: in short, democratic socialism.
They both sound like “stationary bandits” to me, but there are some nuances.
Elizabeth Warren basically favors private ownership but she explicitly wants politicians and bureaucrats to have the power to dictate business decisions.
Thomas Sowell points out this economic philosophy is fascism. But I’ll be more polite and refer to it as corporatism.
By contrast, as a self-declared socialist, Bernie Sanders should be in favor of nationalizing companies.
But, as reported by the New York Times, he actually sees himself as another Franklin Roosevelt.
Senator Bernie Sanders of Vermont offered a vigorous defense of the democratic socialism that has defined his five decades in political life on Wednesday… Mr. Sanders cast himself at times in direct competition with President Trump, contrasting his own collectivist views against what he called the “corporate socialism” practiced by the president and the Republican Party. And Mr. Sanders, 77, declared that his version of socialism was a political winner, having lifted Mr. Roosevelt to victory four times… Mr. Sanders…presented his vision of democratic socialism not as a set of extreme principles but as a pathway to “economic rights,”… He argued that his ideology is embodied by longstanding popular programs, including Social Security, Medicare and Medicaid, that Republicans have labeled socialist. …Mr. Sanders called for a “21st-century economic Bill of Rights,” which he said would address health care, wages, education, affordable housing, the environment and retirement.
I’ll make two points.
First, FDR may have won four times, but he was an awful President. His policies deepened and lengthened the Great Depression.
And his proposed “economic bill of rights” would have made a bad situation even worse. He basically said everyone has a right to lots of freebies without ever stopping to think about the impact such policies would have on incentives to lead productive lives.
For all intents and purposes, we wanted to turn this cartoon into reality.
Second, I don’t actually think there’s a significant difference between Sanders and Warren. Yes, their rhetoric is different, but they both want higher taxes, more regulation, additional spending, and more intervention.
At the risk of making a radical understatement, neither of them is a friend to taxpayers.
But thinking about this issue has motivated me to modify my statism flowchart. Here’s the new version.
As you can see, I created a much-needed distinction between totalitarian statism and democratic statism.
And while Warren is on the corporatist side and Sanders is on the socialist side, I also put both of them relatively close to the Venezuela-style track of “incoherent statism.” In other words, I think they’re guided by vote buying rather than a cohesive set of principles.
P.S. I wrote last week about the emerging “anti-socialist” wing of the Democratic Party. Presumably they would be the “rational leftists” on the flowchart.
Simply stated, they think he’s authentic rather than a finger-in-the-wind politician.
But I’m not so sure that’s true.
I pointed out in 2015 that he’s not even true to his socialist ideology. Rather than promoting government ownership, central planning, and price controls, he has behaved like a conventional left-wing politician. Indeed, there was almost no difference between his voting record and those of Barack Obama and Hillary Clinton.
Whether that’s good or bad is a matter of judgement, of course.
Today, though, I want to highlight something that’s unambiguously bad. He’s decided that currying favor with union bosses at the National Education Association is so important that it’s okay to trap kids from poor families in failing schools. And that, to me, makes him a political hack rather than an honest leftist.
Check out these excerpts from a story in the New York Times.
Senator Bernie Sanders took aim at charter schools on Saturday… In a 10-point plan, Mr. Sanders…said that, if elected, he would…forbid…federal spending on new charter schools as well as…ban…for-profit charter schools — which account for a small proportion of existing charters. “The proliferation of charter schools has disproportionately affected communities of color,” Mr. Sanders wrote… Mr. Sanders of Vermont would also require that charter schools be subject to the same oversight as public schools… Parts of the plan focused on educators, declaring Mr. Sanders’s support for a $60,000 baseline for teachers’ starting salaries as well as unionization efforts by charter schoolteachers.
By the way, I’m not a big fan of charter schools. It would be far better to have true school choice and allow parents to pick high-performing private schools.
But charter schools are definitely a better option if the only other choice is a failing government school. Especially since pouring more money into a broken system doesn’t work. Regardless of whether it’s a Democrat plan to waste money or a Republican plan to waste money.
This assumes, however, that the goal is to help children get a good education so they have a better chance for a good life.
That’s not what motivates Bernie Sanders. Like many Democrats, his main goal is to appease the teacher unions. And that means protecting and preserving the privileges and perks of union members and the government’s education monopoly.
P.P.S. Just like it’s disgusting that Obama’s Secretary of Education chose private schools for his kids (as did Obama) while fighting against school choice for poor families.
P.P.S. On an uplifting note, Fran Tarkenton, the former Georgia Bulldog (he also played a bit in the NFL) used a sports analogy to explain the benefits of school choice.
P.P.P.S. It’s also uplifting to see very successful school choice systems operate in nations such as Canada, Sweden, Chile, and the Netherlands. And India doesn’t have school choice, but it’s a remarkable example of how private schools are the only good option for poor families that want upward mobility.
P.P.P.P.S. The Washington Post provides an example of honest and decent leftism, having editorialized in favor of poor children over teacher unions.
Which presumably means that he should surrender more of his income, since he is part of the gilded class. The New York Times has a report on the Vermont Senator’s lavish income.
Senator Bernie Sanders of Vermont, a leading candidate for the Democratic presidential nomination, disclosed 10 years of tax returns on Monday… He and his wife, Jane O’Meara Sanders, reported income that topped $1 million in 2016 and 2017… Mr. Sanders’s higher income in recent years has created some political awkwardness for the senator, who in his 2016 presidential campaign frequently railed against “millionaires and billionaires” and their influence over the political process. …His income now puts him within the top 1 percent of taxpayers, according to data from the Internal Revenue Service.
Yet when asked why he didn’t pay a big chunk of his income to the IRS, Sanders showed typical statist hypocrisy by giving the same reason used by every rich person (including Trump) and every big corporation.
Early in the program, Sanders was asked about the 10 years worth of tax returns he had released just before the program, which showed that he had an adjusted gross income of $561,293 in 2018, on which he paid a 26 percent effective tax rate. Baier asked Sanders why he’s holding onto his wealth rather than refusing deductions or writing a check to the Treasury Department — since Sanders had said he voted against Trump’s tax bill that he himself benefitted from. “Pfft, come on. I paid the taxes that I owe,” Sanders replied.
If he actually followed the law and paid his taxes, that puts him ahead of some of his fellow leftists, such as Tim Geithner and Tom Daschle.
But that’s still not good enough, at least if Sanders is serious in wanting to resurrect FDR’s infamous second Bill of Rights.
FDR stated the Bill of Rights wasn't enough and we needed to guarantee economic rights as well: the right to a decent job, the right to health care, housing, education, retirement security, etc. I agree with FDR. Economic rights are human rights.
For what it’s worth, the notion that people have a right to free stuff is the core principle behind the so-called Green New Deal.
Yet if Sanders wants to minimize his own tax bill, why should he complain when the rest of us try to protect ourselves from being victimized by his redistribution agenda?
Though I will admit that Sanders is probably a sincere hypocrite.
After all, would anyone other than a committed leftist support Venezuela’s leftist dictatorship?
And let’s not overlook the fact that Crazy Bernie has some crazy advisers with the same crazy viewpoint, as revealed by the Wall Street Journal. Like their boss, they have a perverse admiration for the despotic hellhole of Venezuela.
Socialism is cool again, and Bernie Sanders wants to reassure voters that there’s nothing to worry about. “I think what we have to do, and I will be doing it, is to do a better job maybe in explaining what we mean by socialism—democratic socialism,” Mr. Sanders said last month. …But we’ve been reading the work of Bernie’s senior political advisers… Take speechwriter David Sirota, who joined the Sanders campaign in March… Mr. Sirota wrote an op-ed for Salon in 2013 titled “Hugo Chávez’s Economic Miracle.” …Sirota wrote… “in a United States that has become more unequal than many Latin American nations, are there any constructive lessons to be learned from Chávez’s grand experiment with more aggressive redistribution?” …Mr. Sanders’ political director, Analilia Mejia, spent part of her childhood in Venezuela and told the Atlantic in 2016 that “it was better to live on poverty-level wages in a shantytown in Venezuela than on a garment-worker’s salary in Elizabeth, New Jersey.” …senior policy adviser Heather Gautney visited Caracas in 2006…wrote about how Chávez had “implemented a serious [sic] of programs to redistribute the wealth of the country and bolster social welfare.” …She also wrote that “today’s neoliberal capitalist system has become utterly incompatible with the requisites of democratic freedom.” …Mr. Sanders is…a leading candidate…and these are the people who would staff his White House. Voters need to understand that they don’t merely admire Venezuela. By their own words, they want America to emulate it.
Yet Bernie’s people think we should mimic Venezuela’s horrid socialism.
I’m not sure whether to laugh or cry.
But since I prefer laughter, let’s close with same Bernie-themed humor, starting with this gem from the satirists at Babylon Bee.
Needing to cool off from the high-stress life of a U.S. senator who has to work three days a week, Bernie Sanders was spotted Tuesday ranting at the wide selection of deodorants at a D.C.-area Target. “There are people who don’t have enough food to eat in this world, and yet there are 29 different brands of deodorant here!” Sanders bellowed, citing the two completely unrelated facts for some reason. … Several shoppers attempted to go around Sanders but he blocked the aisle, ranting to them about the 1% and the failures of capitalism before they ran away, frightened. …At publishing time, Sanders was seen in the snacks aisle ranting about how no country needs three different varieties of Flamin’ Hot Cheetos.
By the way, this isn’t random humor.
Sanders is such a crazy crank that he actually has condemned capitalism for providing too many underarm choices.
This Branco cartoon also hits the nail on the head.
But the silver lining of that dark cloud is that he is the unwitting source of some great humor. And that’s our topic today.
We’ll start with a brutal tweet. I don’t know @djPaulMarco, but – as the youngsters say – he dunked on the Vermont Senator.
Next we have some politically oriented humor.
I like to think this isn’t what really motivates Bernie’s young supporters, but you have to wonder what’s rattling around in their heads.
Sticking with the political theme, Ms. Ocasio-Cortez (who also is a great target for mockery) technically will still be too young to be on the ticket in 2020, but this bit of humor aptly describes the direction America will be heading if the so-called Green New Deal gets imposed on the country.
And since Senator Sanders wants government-coerced equality, I’m sure he’ll support this idea.
With the surprising success of Senator Bernie Sanders in the last presidential race and the more-recent instant-celebrity status of Representative Alexandria Ocasio-Cortez, some are wondering if the United States is about to enter a “socialist era”.
I’ve criticized some of the proposals that are part of this movement, such as confiscatory tax rates and the so-called Green New Deal, so it goes with saying that I’m not a fan.
To learn more about the implications of socialism, let’s look around the world.
We’ll start with Venezuela, which is the focus of a very interesting article in the Washington Post. Here are some excerpts.
Did socialism kill Venezuela? Blessed with the world’s largest oil reserves, this South American nation was once the region’s richest per capita. Twenty years after the launch of the late Hugo Chávez’s Bolivarian Revolution, it is now one of the poorest. …In Washington…Republicans are seizing on Venezuela to score points against those Democrats who have newly embraced the term… But socialism’s role in Venezuela’s collapse, observers say, is not as clear as either side likes to think. At least fleetingly, socialist policies propped up by state petrodollars helped bolster the country’s status as one of the Western Hemisphere’s most equitable societies. But state-heavy policies that distorted prices and exchange rates, coupled with corruption, mismanagement and official repression, turned Venezuela’s economic landscape into scorched earth. …But it is also not communist Cuba or North Korea, where foreign investment and private ownership are strictly limited. …wealthy Venezuelans still own private companies and high-walled mansions in elite neighborhoods. They play golf at country clubs and are taxed at a relatively manageable 34 percent.
This is very fair reporting.
All the main points are accurate: Living standards have plummeted in Venezuela, oil money complicates the analysis, and the economy isn’t quite as statist as Cuba and North Korea.
The article goes on to cite the views of several Venezuelans.
“All the wrongs were created under Chávez,” said Henkel Garcia, head of Econometrica, a Caracas-based financial analysis firm. “The economy only survived as long as it did because of high oil prices.” …Today, roughly a third of the nation, pollsters say, still appears to back socialism — although only half that many remain loyal to Maduro. …With hyperinflation causing acute shortages of food and medicine, more and more former Chavistas, or adherents of Chávez’s ideals, are saying mea culpas and increasingly turning out against Maduro. “Before I die, I want socialism gone from Venezuela,” said Yessid Merlano, a 50-year-old waiter. …Scarcities of food and medicine first surfaced years ago but are now so chronic that he and millions of other Venezuelans have shed pounds and sought work abroad. Before returning to Caracas last year, he spent 10 months working as a laborer in neighboring Colombia, “where all I saw were Venezuelans begging in the streets,” he said. “I feel guilty that I was a Chavista,” he said. “It’s all my fault, all the suffering.”
The article concludes with some damning data on the country’s economic decay.
State health care, once a pride of the socialists, collapsed as hyperinflation and shrinking resources left hospitals with shortages of syringes and antibiotics, as well as broken equipment too expensive to repair. …Chávez purged skilled managers, engineers and technicians from the state-owned oil giant PDVSA, stocking it with government loyalists. That set it up for a catastrophic failure as global prices fell from record highs. Venezuelan oil output is now at its lowest levels since the 1950s. Industries nationalized by Chávez, who expropriated 1,500 companies, collapsed as regulated prices distorted markets. In two decades, the government seized nearly 5 million acres of productive farmland that has now been largely abandoned. In 1999, there were 490,000 private companies in Venezuela. By last June — the most recent count available — that number had fallen to 280,000.
None of this is a surprise. Venezuela is a basket case.
But that’s not our topic today. We’re focusing instead on whether there are any lessons that the United States can learn from the Venezuelan debacle.
Or, to be more accurate, I think the key question is whether advocates of democratic socialism in America have learned anything from Venezuela’s miserable performance.
Indeed, that’s a big reason why I favor better tax policy. I want low rates and less double taxation so we get more entrepreneurship and investment, which then will lead to higher productivity and more compensation for workers.
With this in mind, let’s look at some good news from a story in the New York Times.
Amazon said on Tuesday that it would raise the minimum wage to $15 an hour for its United States employees, a rare acknowledgment that it was feeling squeezed by…a tight labor market. The raises apply for part-time workers and those hired through temporary agencies. …The new wages will apply to more than 250,000 Amazon employees, including those at the grocery chain Whole Foods, as well as the more than 100,000 seasonal employees it plans to hire for the holiday season.
It’s too soon to say for sure, but perhaps we’re seeing evidence that last year’s tax reform is paying dividends. Of course, it’s also possible that we’re in a bubble that’s about to pop, but let’s hope that’s not the case.
In any event, there’s also some bad news in the story. Amazon’s decision may not simply be a business decision. It also might be a way of appeasing the crowd in Washington.
The company now employs about 575,000 people worldwide, up more than 50 percent in the past year…the pay of those workers has become a growing issue for activists… “I think they saw the writing on the wall…,” Senator Bernie Sanders of Vermont said in an interview after the announcement. …Mr. Sanders and labor organizers have criticized the wages and conditions of Amazon’s work force. …As recently as last month Amazon was resisting the pressure.
The most nauseating aspect of this is that Amazon’s boss issued a groveling tweet to Crazy Bernie.
Since I’ve shared the good news and bad news, now let’s look at the ugly news.
Having decided to boost wages for his workers, Bezos now want to impose higher costs on smaller companies that compete against Amazon.
The company said it would also lobby Washington to raise the federal minimum wage, which has been set at $7.25 for almost a decade.
This is a classic example of cronyism. A big company is using the coercive power of government to unfairly tilt the playing field.
The Wall Street Journalopined about this oleaginous development.
Jeff Bezos…the Amazon CEO showed he also has impeccable political timing. His decision to raise Amazon’s minimum wage to $15 an hour will buy the tech company some political insurance… Mr. Bezos also announced that Amazon will now lobby Congress to raise the national minimum wage from $7.25 an hour. If Amazon is already paying $15, it’s no competitive sweat for Mr. Bezos to look virtuous for the media and politicians.
The WSJ also commented on the implicit extortion.
Speaking of government, Amazon’s wage increase may also buy some insurance against a looming assault from Congress. Bernie Sanders, the Vermont socialist and likely presidential candidate in 2020, has introduced the Stop Bezos Act that would tax Amazon to finance government transfer payments like food stamps. …Mr. Bezos also wants to hold off the federal antitrust cops, but that may cost more than $15 an hour. Politics aside, Amazon’s wage increase wouldn’t be possible if the U.S. economy hadn’t risen out of its eight-year Obama doldrums. As always, the best way to raise living standards is faster growth, not political coercion.
Amen.
Sadly, this is not the first time Amazon has climbed into bed with politicians. It is currently seeking special handouts from state and local governments for a new headquarters complex.
P.S. If you want to understand why government-imposed mandates for higher minimum wages are misguided, there’s very powerful evidence from Seattle. Simply stated, workers lose jobs and income.
As I remarked in this brief interview with Melissa Francis, the technical definition of socialism involves government ownership and control over the “means of production.” In other words, policies such as collective farms and government factories.
It’s possible that Bernie Sanders secretly supports those policies, but his public positions are conventional statism – i.e., lots of redistribution, cronyism, and intervention.
Those policies are destructive and harmful, to be sure. Just think about basket-case economies such as Greece and Venezuela.
But not all left-wing economic policies are socialism. Which was the point I made two years ago when I put together this diagram.
I”ll close by acknowledging that language does evolve. So perhaps I’m being pedantic by drawing a distinction between ordinary Bernie-style leftism and socialism. After all, I doubt 57 percent of Democrats and 16 percent of Republicans actually favor collective farms and government-run companies (at least I hope not).
P.S. Modern leftists don’t want to end private ownership, but they do want the government to control the economy. That approach was given a test last century.
When I wrote about “crazy Bernie Sanders” in 2016, I wasn’t just engaging in literary hyperbole. The Vermont Senator is basically an unreconstructed leftist with a disturbing affinity for crackpot ideas and totalitarian regimes.
Though it’s worth noting that he’s at least crafty enough to steer clear of pure socialism. He wants massive increases in taxes, spending, and regulation, but even he doesn’t openly advocate government ownership of factories.
Then again, there probably wouldn’t be any factories to nationalize if Sanders was ever successful in saddling the nation with a Greek-sized public sector.
He’s already advocated a “Medicare-for-All” scheme with a 10-year price tag of $15 trillion, for instance. And now he has a new multi-trillion dollar proposal for guaranteed jobs.
In a column for the Washington Post, Robert Samuelson dissects Bernie’s latest vote-buying scheme. Here’s a description of what Senator Sanders apparently wants.
Sen. Bernie Sanders (I-Vt.) wants the federal government to guarantee a job for every American willing and able to work. The proposal sounds compassionate and enlightened, but in practice, it would almost certainly be a disaster. …Just precisely how Sanders’s scheme would work is unclear, because he hasn’t yet submitted detailed legislation. However, …a job-guarantee plan devised by economists at Bard College’s Levy Economics Institute…suggests how a job guarantee might function. …anyone needing a job could get one at a uniform wage of $15 an hour, plus health insurance (probably Medicare) and other benefits (importantly: child care). When fully deployed, the program would create 15 million public-service jobs, estimate the economists. …the federal government would pay the costs, the program would be administered by states, localities and nonprofit organizations.
As you might expect, the fiscal costs would be staggering (and, like most government programs, would wind up being even more expensive than advertised).
This would be huge: about five times the number of existing federal jobs (2.8 million) and triple the number of state government jobs (5 million). …The proposal would add to already swollen federal budget deficits. The Bard economists put the annual cost at about $400 billion. …overall spending is likely underestimated.
But the budgetary costs would just be the beginning.
Bernie’s scheme would basically destroy a big chunk of the job market since people in low-wage and entry-level jobs would seek to take advantage of the new government giveaway.
…uncovered workers might stage a political rebellion or switch from today’s low-paying private-sector jobs to the better-paid public-service jobs… The same logic applies to child-care subsidies.
And there are many other unanswered questions about how the plan would work.
Does the federal government have the managerial competence to oversee the creation of so many jobs? …Can the new workers be disciplined? …Finally, would state and local governments substitute federally funded jobs for existing jobs that are supported by local taxes?
If the plan ever got adopted, the only silver lining to the dark cloud is that it would provide additional evidence that government programs don’t work.
The irony is that, by assigning government tasks likely to fail, the advocates of activist government bring government into disrepute.
But that silver lining won’t matter much since a bigger chunk of the population will be hooked on the heroin of government dependency.
I speculated a couple of years ago that there were four types of statists and put them on a spectrum. I put “rational leftists” at one end. If you wanted to pick a nation that represents this mindset, think Sweden. Nice, civilized, market-oriented, but plenty of redistribution.
On the other end of the spectrum were three less-palatable types.
The “totalitarians,” which means a dictatorial state-run economy, as represented by the Soviet Union and China.
The “socialists,” a democratically elected form of a state-run economy, as represented by post-WWII United Kingdom.
The “crazies,” which I confess is a catch-all category to capture visceral, unthinking, and punitive intervention.
And for that final category, I listed Bernie Sanders and Greece as representatives.
And if you want to know why I listed Sanders, here’s some of Jeffrey Tucker’s FEE column from 2015.
Bernie Sanders, that sweet old socialist who we would have to invent if he didn’t exist in real life, elicited guffaws all over the Internet with his now famous comment about deodorant choice. “You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers,” he said, “when children are hungry in this country.” …The underlying theory here is that the proliferation of deodorant and tennis shoes come at the expense of food for the poor. There is only a certain amount of wealth in the world, this thinking goes.
In practical terms, Sanders must think the world is zero-sum. I can’t be rich unless you are poor, and vice-versa.
Tucker explains that this isn’t true. Or, to be more accurate, it’s not true when markets are allowed to function.
That’s what was so captivating about the Industrial Revolution. All kinds of people were suddenly getting richer, and not by grabbing other people’s stuff. Wealth seemed to be actually expanding. ..Adam Smith…patiently observed how expansion of the division of labor, innovation, and trade — all based on secure ownership titles and free association — were working together to make everyone better off. This was not a zero-sum world. We escaped that fate long ago. …This was the single most marvelous discovery that economics made.
But because of his visceral disdain for markets, Sanders doesn’t trust free people to make decisions.
People who talk like Sanders imagine themselves in the position of dictators, deciding what social priorities ought to be. …What if they got their way? They would have to override billions of decentralized decisions. They would have to reject the judgements of millions of balance sheets. They would have to use massive force to prevent people from inventing, making bargains, striking deals, and buying and selling. It really does mean the end of freedom… It is for this reason that socialist central planning has brought reduced standards of living, poverty, and economic stagnation and chaos everywhere it has been tried.
And Sanders isn’t the only crazy.
Jeremy Corbyn’s economic views are also astoundingly bad, as explained by Andrew McKie for CapX.
…no matter how clueless and unrealistic the Labour leader is when it comes to Europe, that’s nothing compared with his failure to come to grips with the real world. Corbyn said: “I do not agree with or accept the idea there has to be competition in mail delivery. After all, we all have one letterbox, and it is much more efficient to have one postal delivery person coming down the street rather than three or four from different or competing companies.” …Corbyn isn’t just saying that Labour plans to renationalise the Royal Mail. …wave goodbye to Amazon Prime and next-day delivery from Asos, and say so long to FedEx, DHL or UPS and their guarantees. As for innovations that have just arrived or are in the works, such as universal same-day delivery and the use of drones, forget it.
McKie delves into the many reasons why Corbyn is so misguided.
The extraordinary point is that Corbyn really seems to think that, if there’s one of something, it’s neither realistic nor desirable that there should be any alternative on offer. Heaven forbid that you might think that you could make a choice, or that anyone else might provide a better, a cheaper or – in any way at all – a different service. …Corbyn’s “one-size fits all” approach ought to seem ridiculous, even if no one would laugh if they had to live in a country that operated that way. But he’s not joking; he really seems to think that all the reforms, the improvements in living standards, the economic growth and consumer choice of the last 40 years were a mistake, and that the state-run companies of Britain (then known as ‘the sick man of Europe”) were better. He doesn’t seem to realise that it is exactly the market – the existence of choice and competition – which led to those improvements, which drove innovation, drove up living standards, and drove down prices.
Everything Tucker and McKie says is spot on.
My two cents on this issue is that Sanders and Corbyn are guilty of two huge mistakes.
First, they think the economy is a fixed pie, which is laughably false. Just watch these videos by Don Boudreaux and Deirdre McCloskey. The simple lesson is that everyone can become richer at the same time. At least if they have decent policy.
Second, they have no idea of the valuable role of “creative destruction” in encouraging ever-more efficient and less costly ways of generating ever-more valuable goods and services. Watch this video and this video for more details.
You don’t need to be an economist to understand why Sanders and Corbyn are wrong. Normal people can look at how fast various nations grow (or don’t grow) and draw the appropriate conclusions.
America can do it, but we won’t because America is immoral and Elon Musk has all the money. Horrible! I have a simple ten-step plan that is foolproof — and I should know because I’ve been to the Soviet Union and it’s a paradise over there, let me tell you!
International Liberty 