Socialist? Capitalist? Americans Live In A Mixed Economy, Without Labels
Sen. Bernie Sanders
Democratic Senate nominee Abdul El-Sayed of Michigan keeps calling himself a capitalist. And the Democratic Socialists of America keep backing him to the eyeballs.
Why? Because the DSA understands that El-Sayed has to say that to win over even Democrats in a moderate state like Michigan. They firmly expect that once elected, he would do as they say, which happily conforms with what he truly believes.
Confusing? Yes, on purpose. But let's move beyond this war of labels. Let's stop using socialist and capitalist as either compliments or denunciations.
The United States has a mixed economy, as do most modern countries. It has an economic system in which both the government and the private sector control resources. The American government runs public education, Medicare, and the U.S. Postal Service, to name a few programs. They are all taxpayer supported.
Why does a stamp on a letter going from a remote farmhouse in North Dakota to Chicago cost the same as a stamp on a letter sent from one Chicago apartment to another three blocks away? In a purely capitalist system, the stamp's price would have reflected the difference in cost of delivery. The North Dakotan would have had to pay for this service, a lot more. But U.S. law mandates "universal service," which keeps the cost of a stamp fixed. Thus, dense cities subsidize mail delivery in rural areas.
Private companies, such as UPS and FedEx, charge vastly higher prices for delivery to remote places. Note that President Donald Trump has supported selling off the USPS to a private company.
Franklin D. Roosevelt pushed through the Social Security Act of 1935 as part of his New Deal program. America was in the jaws of Great Depression, and FDR used the power of the federal government to create jobs, stabilize the financial system and keep the destitute elderly alive.
New York's Democratic Socialist mayor, Zohran Mamdani, says he's another FDR. But FDR said, "No one in the United States believes more firmly than I in the system of private business, private property and private profit."
Roosevelt's new government programs were intended to save the capitalist-market system from collapsing, not, to use Mamdani's words, "replace the frigidity of rugged individualism with the warmth of collectivism." Where are the heroic peasants of the Soviet agitprop films waving banners?
Socialist Bernie Sanders heralds Sweden as the socialist model, citing its free health care, free college, and so forth. He also says, "I don't think billionaires should exist."
Sanders may not be up to date on Sweden's economy. It is highly capitalist with more billionaires per capita than the United States. The social programs he admires are supported by taxes.
Sweden, meanwhile, has been tightening the rules for receiving government benefits. For example, it's been cutting benefits to those not working. It has also adopted a hyper-restrictive immigration policy. In addition to the shock of a massive influx of people from very different cultures, Swedes rebelled at the impoverished newcomers' claims on its social programs.
The number of migrants entering Sweden was down to 12,000 last year from 117,000 in 2016. And the country is trying to get people already there with residency permits to leave.
What do the "abolish-ICE" Democratic Socialists think of that?
As conservative economist Milton Friedman famously put it, "It's just obvious you can't have free immigration and a welfare state."
Here's how it works: Our capitalist-market system generates a huge amount of wealth that can be taxed to pay for social and other programs. A balance must be found between encouraging wealth creation and crafting a tax code able to raise money for desired public needs. That's a lot harder than throwing around dated labels.
Froma Harrop is an award winning journalist who covers politics, economics and culture. She has worked on the Reuters business desk, edited economics reports for The New York Times News Service and served on the Providence Journal editorial board.
Reprinted with permission from Creators.
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