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Point # 1, DISINCENTIVATION: As you read on, keep in mind this one word, disincentivization
Point # 2, WEALTH REDISTRIBUTION: Late in his 2008 presidential campaign, Obama was caught unawares on an open-mike and during a discussion with “Joe the Plumber”, Obama said his overall intention, if elected President, is wealth redistribution.
Point #3, IT WON’T PENCIL: Senator Bernie Sanders and his protégé, Representative Alexandria Ocasio-Cortez are passionate about their version of socialism for the US, but the real question is, did they fail 4th grade math? It would appear so.
Part 4, BOTTOM LINE: we cannot afford socialism.
One thing many Republicans have wrong about Bernie/Alexandria, is that the United States may end up looking like Venezuela. Venezuela’s President Maduro is a combination of socialism and extreme ignorance. Probably not where the US is headed.
What Bernie/Alexandria are advocating for is actually the European model of socialism. For the past few decades most of the European nations and their Social Democratic political parties (or Democratic Socialists, a slight distinction between the two) have adopted many socialist underpinnings.
This is France today: tax the rich, big centralized government, stifling regulation, weak military capability, nationalized programs with health care as the centerpiece, welfare state, extreme labor unions, a 35-hour work week and policies that discourage incentive/initiative. Thank you, Barak Obama. We hear you Bernie. Welcome aboard Alexandria. Not Venezuela, not Cuba, not the defunct Soviet Union, Obama/Bernie/Alexandria, although unstated, advocate for this French model.
France optimizes the results of years of European political movement to the far left. France has arrived; they are the poster child. And they are in BIG trouble on all fronts because that socialist chicken has finally come home to roost.
Conversely, capitalism works. It works amazingly well especially when combined with a democratic form of government. That’s where we are today. Leader of the world. Envoy of the world. Hundreds of millions want to immigrate here. Why? To work hard and strive for the American dream.
My description of French socialism, three paragraphs up, and its failure, can be summarized by one word. Disincentive. There is no part of socialism that makes you jump out of bed in the morning, wanting to get to work as quickly as possible and make things happen. Innovate—willingly work hard—produce—prosper—achieve—become a model, a mentor and live the dream. That is exactly what is happening all over America today and we should change all that to a one-word description of our future; Point # 1, DISINCENTIVIZED? Yes, according to Bernie and Alexandria, we should.
The Wall Street Journal recently had a graph showing nations’ tax burden as a percent of its Gross Domestic Product, GDP. This is a valid way to illustrate the comparative tax burden among nations. France is # 1 on that list because 48% of the goods and services the individuals produce goes back to the government as taxes. By comparison the US tax burden relative to GDP is only 27%. The top twelve nations in terms of the extreme tax burden are Social Democratic European nations.
There are, unfortunately, tens of millions of American Democrats/Liberals/Socialists/Progressives (take your pick) who are willing to take that risk and shift to socialism. Why not, they argue, maybe it is a good idea. We will get a “free” college education, “free health care”, some nice government bureaucrat to oversee our largest corporations, some government committee will select the Boards of Directors for our large, successful, profitable corporations. The list is long. The government will “run” things so we don’t have to worry about doing it. We can just sit back and enjoy the fruits, not of our labor, but the fruit the government chooses to give us.
Capitalism works. We didn’t just invent the idea a few decades ago. It is what this county IS and always has been. Is it a nice comfortable straight line slightly tilted upward forever? No, capitalism can be a bumpy ride but in the end initiative, ingenuity, grit and confidence ALWAYS wins out. Not sometimes, ALWAYS. Post-Obama confidence in the economy and in the country are high, there is a surge in new small businesses, wages are up, new jobs are up and former welfare junkies are back in the marketplace competing for good-paying jobs.
Let’s take a look at those rich folks, who Democrats/Liberals/Socialists/Progressives are asking to pick up the socialist tab. Generally speaking, other than a few trust-fund kids, the rich folks work very hard. They are risk-takers because no one tells them they can’t. They don’t always win but they learn and move on and move up. And up. And up. And then they have more money than they can spend. They have become part of the “top one percent.” What to do, put their excess money under the mattress? No, they invest it.
Capitalism doesn’t just “happen”. It has to be continuously fed and nurtured. the fuel for capitalism is, quite naturally, capital; principally money.
Let’s say you are the proud owner of a growing, so far successful, company because you can be. No one, including the government, is telling you that you cannot or that you should not or that you must get permission; “Mother, may I?” It’s just you with a good idea, initiative, ingenuity, know-how and good energized employees. This is the antithesis of disincentivized.
You have your company in position to expand, be bigger, be better; you have everything except capital. What a bummer. You could go to the bank but they are generally pretty conservative with their money and your plan has some risk involved. Also, there are those darned interest payments always coming due. So, instead of borrowing from a bank, you print some paper stock certificates and sell them. On the certificate is a serial number and a “value” which is really the “price”. This piece of paper comes with no guarantees of success. Also, no interest due and no due date for redemption.
Who, in God’s name, would ever buy such a thing? Aha, someone who has more money than they need. Those rich guys and gals; those “one per centers.” They take a look at you and your company and, in reality, bet on the come. They buy your pieces of paper with absolutely no guarantee of a dime in return. You say thanks and tell them you promise to work hard, be smart, and do everything you can to make a lot of money. And when you do, out of gratitude, you will pay dividends and, oh by the way that $100 piece of paper might someday be worth $1000 or $10,000 and you didn’t have to lift a finger.
Ain’t that a great story? Bernie and Alexandria would call it a fairytale. We call it capitalism at its best. We call it the American way. We call it success, we call it our future.
That brings us back to the beginning and Point # 2, WEALTH REDISTRIBUTION. There are two vastly different ways to go about wealth redistribution. People and corporations produce goods and services which equals a nation’s gross domestic product, GDP. People and corporations are then heavily taxed by the government and the money is redistributed back into the welfare state; socialism.
An alternative is to keep corporate and individual taxes as low as possible and let the rich folks “redistribute” their wealth in order to “feed” corporate growth. When corporations grow, the economy grows which promotes higher employment, more high-paying jobs and higher wages (exactly what is happening today). Ultimately, this formula can generate even greater tax revenue for the government. But instead of using the revenue to support welfare, it can be used for positive purposes.
Back to the Bernie/Alexandria model of government, paying for everything, free tuition, health care, etc. etc. etc.
Let’s begin with Bernie/Alexandria idea to tax the rich at or above 70% like the French do and see how that might work out. In the US in 1920 the top marginal tax rate was 73%, 90% during the 1950s and 69% in 1981. It may have seemed like a good idea at the time but it wasn’t. It went away because it didn’t work. It did not generate the trillions of dollars Bernie/Alexandria need to finance their pipe dreams.
Bernie/Alexandria talk continuously about taxing the top one percent, the wealthiest folks in the US, to pay for all their “free” programs. If you define the “top 1%ers as the top 1% in annual income earned, that would be about 1,275,000 households earning an AVERAGE of $440,000 a year totaling about $560 billion dollars. Fully taxed at 70% provides tax revenue of about $392 billion. The cost of the socialist’s government-run “Single Payer Health Care plan (free health care for all) is estimated to average about $3 trillion a year for the first ten years. Sorry Alexandria, the 1%ers come up about $2.6 trillion short just for the one program (if their entire income was fully taxed at 70% which, of course, it would not be). As they say in Montana, Point #3. “IT WON’T PENCIL”.
What does “free” mean when applied to programs that support the entire population, such as free health care for all. One thing that is not free is your freedom. You want a free education, free health care, a guaranteed monthly stipend? We could try it but there is ALWAYS a price. Bernie’s/Alexandria’s price is your freedom. Freedom to “be all you can be”. Give up your freedom and you will be all the government tells you you can be and no more. What is the incentive to even go to work? What is the incentive to think of a better way? What is the incentive to work harder? Under socialism, “free” equals disincentivization of the entire society.
Come on America, WAKE THE HELL UP! Do you want to be in the streets every weekend with your yellow vest like the French are, protesting against everything their government has become and what it has done to that one-proud and prosperous nation?
In a few months, yes months, the democrats/Liberals/Socialist/Progressive party will hold its first 2020 Presidential Campaign debate. Mark my words, what we are going to hear is how one candidate can “out-free” the others. You will not be able to recognize the real Democratic party, it’s gone. WAKE THE HELL UP AMERICA.
Point #4, BOTTOM LINE. Notwithstanding what has been said above, Socialism is, at its core, about economics, not politics. That begs the question, if Bernie/Alexandria, et al believe socialism is so great, why don’t we see any economists in the US writing or speaking about is virtues? Answer, because it has no virtues.
Please stay tuned for SOCIALISM, PART II, perhaps next week
Marv Covault