Socialism American Style

  • The 5 gets roasted for rabble-rousing…
  • … but takes a deep dive into the mailbag anyway
  • Back in the USSR: Been there, done that
  • Small business and real-life Obamacare consequences
  • A French national remembers a happier (less grumpy) France
  • The times they AREN’T a-changin’… Demise of the middle class… “A specter haunting America”… And more!

“Why are you trying to frighten your readers with this manufactured bogeyman?” a reader writes.

Yesterday, we asked The 5’s readership to sound off on the question of what a socialist takeover means to them. We got an overwhelming response — enough to fill 43 pages of a Word document!

Pro tip when submitting an entry to The 5’s mailbag: “Brevity is the soul of wit,” said Shakespeare. You stand a better chance of publication if you’re witty.

But back to our first correspondent: “President-elect Biden is a center-right moderate. Your hysteria just makes everything else you say seem equally uninformed.”

We’re not engaging in hysteria. We’re sensing a zeitgeist of apprehension among our readership and we want to dive deeper into where it comes from. And to your point…

Nathan Robinson

But that gets back to the age-old question of what is “socialism,” anyway.

“I was born in the USSR,” a reader tells us. “Socialism is a society where the means of production are publicly owned. All the profits from the production are supposed to be distributed to the workers.

“Workers are not interested in being productive, as their wages are the same as for those who are not productive. Management is not interested in being efficient and productive. Their wages are not affected. Employers don't compete for better, more qualified employees.

“There are shortages of goods and services. There are no small or big businesses to step in and fill in the demand. Everyone, but party leaders, has limited choice and quality of goods and services. Everyone is equally poor. There are no financial instruments, only bank deposits.

“Lived this life, don't want to go back. I want to be rewarded for my skills and work.”

Amen. But apart from a few hard-core ideologues, we don’t see anyone in America advocating for the classic definition of socialism. Not even self-described socialist Bernie Sanders proposes nationalizing whole industries — as happened in, say, Great Britain just after World War II.

So the people who use the term favorably usually mean a European welfare-state system of free or heavily subsidized health care, higher education and so on.

At the risk of generalizing, that’s what readers seem to fear most — along with the taxes and debt and inflation necessary to support those services.

“The current Democrat agenda would move us much further toward socialism,” writes a reader whose email is representative of many that we got.

“Just because one lives in the USA, they are NOT entitled to a minimum salary, a minimum retirement, college education or even health insurance. As a society, we should make those available for everyone willing to work for them.

“When Obama promised the Affordable Care Act would reduce insurance costs (and you could keep your doctor), it was obviously a lie. Health insurance at our small business tripled in two years — for less insurance coverage for our employees…My personal coverage went from $1,100 per month to $34,000 per year… for a family of four!

“Giving people everything discourages work and advancement. As a business owner (and founder of a children’s museum), I can tell you that we get the most complaints from those who get something free. Those who pay for goods and services appreciate what it takes to provide those.

“Free education, free housing, free salary… give me a break.”

Hear, hear. But you do realize the bulk of the Affordable Care Act was written by a health insurance lobbyist, right?

Elizabeth Fowler is her name. She was a VP for the insurer WellPoint before joining the staff of Sen. Max Baucus (D-Montana), where she drafted much of the bill. Once it became law, she became the Obama White House’s point person for implementation… and when her work was done, she went back through the revolving door and ended up at Johnson & Johnson.

Sorry, it’s not enough to rant about the injustice of “free health care” and “free college education.” Not when both of those industries are controlled by cartels that hooked up a vacuum hose to government subsidies decades ago.

As you surely know, subsidizing something has the effect of driving up its price. Health care and higher ed have become ruinously expensive for the middle class — their costs rising at a pace that far outstrips the inflation rate.

No one in Washington is proposing a free market model that would collapse costs and make it possible to, for instance, have a baby in a deluxe private room for about $500.

And so most of the millennial set don't even realize such a world is possible. Is it any wonder the European welfare state model looks more attractive to them?

The most vocal self-described “democratic socialists” point to the Nordic countries as a model to follow. If only we Americans were so lucky!

“I think that countries like Denmark and Sweden do very well,” Sen. Bernie Sanders told an audience in Iowa early on during the 2020 campaign cycle.

Last year, a JPMorgan Chase analyst named Michael Cembalest took a deep dive into the policies and economic performances of Sweden, Norway, Denmark and Finland. Just for kicks, he threw in the Netherlands, too. He analyzed data from the World Bank, the Organization for Economic Cooperation and Development and other groups.

Cembalest concluded that relative to the United States, those five governments have stronger protections of property rights and exert less control over private enterprise.

“While Nordic countries have higher taxes and greater redistribution of wealth, Nordics are just as business-friendly as the U.S. if not more so,” he wrote. “Examples include greater business freedoms, freer trade, more oligopolies and less of an impact on competition from state control over the economy.”

For the heck of it, your editor examined all those countries on the World Bank’s rankings of how easy it is to start a business — because as we’ve said for years, it’s new businesses that are the key to job creation.

The United States ranks a pitiful 55th among the countries of the world. All five of the countries Cembalest studied rank higher. (New Zealand is No. 1.)

“Sweden in fact is pretty much as ‘capitalistic’ as is the United States,” economist Deirdre McCloskey wrote last year in National Review.

“In many fields,” a Swedish diplomat told her, “we have more private ownership compared to other European countries and to America. About 80% of all new schools are privately run, as are the railroads and the subway system.”

Nor is there a bailout culture, McCloskey pointed out: “When Saab Autos began its descent into bankruptcy, no Swede suggested that the government give the company billions on the security of its worthless stock. When Volvo became a Chinese company, no Swede objected. Compare the determination of the Bush and Obama administrations in proudly capitalist America to socialize General Motors and Chrysler — Chrysler for the second time.”

Which brings us back to the mailbag. Socialism in America “would look similar to the current development in the European Union: Small incremental steps over a period of 10–20 years to increase government control over almost every aspect of people's lives.

“Each step is carefully crafted to prevent significant protests. Remember the story of the frog in the warming pot of water.

“I grew up in Europe and am now retired so it would not affect me all that much.”

“I am French-born national. Cannot vote, but lived in America for the past 42 years,” writes another.

“When I left my country in 1979, France was prosperous and happy (even though French are known to be grumpy and grouchy). The Socialist/Communists took over soon after that and my beloved country started to decline.

“Social and medical services went down the drain. Massive immigration from North Africa is sucking the air out of the socialized system. Salaries and jobs started to drop or did not keep up with inflation. High unemployment rate, almost twice as high as America. My country has even lost its spot as one of the most powerful and respected countries in the world.

“Macron, a barely disguised Socialist groomed by Hollande combined with being a puppet of the globalist, is finishing destroying my country and sinking it deeper and deeper. The citizens are desperate as the corrupted politicians are stuffing their bank accounts (we call them the caviar bourgeois). See the ‘yellow vests’ revolt, which petered out with COVID-19.

“To my surprise, I saw America getting more and more socialized the longer I lived there. Most obviously under Obama. Biden/Harris (especially Harris), if confirmed, will continue to socialize this country. It disgusts me.”

The 5: Don’t forget the immigrant influx to France was driven big-time by Sarkozy’s push for regime change in Libya and Syria.

Likewise, here in this country, the pre-COVID influx of refugees from Central America’s Northern Triangle can be traced back to U.S. intervention down there: We’re still feeling the effects of Reagan enabling Guatemala’s death squads under Rios Montt… and more recently Hillary Clinton as secretary of state gave her blessing to a right-wing coup in Honduras.

And so we can’t fault people for seeking a better life elsewhere. Does that strain the welfare system? Of course. But so what?

“The problem is that the welfare state will never go if it is saved from all stresses and strains,” wrote Sheldon Richman for the Future of Freedom Foundation in 2014. “While immigrants don’t use the welfare system as much as people think, free immigration might help bring the end of government transfers. Private aid would take their place.”

“I really do not expect much to change. We already have many of the elements of a socialist system in place,” a reader writes.

“We own no property in this country that cannot be taken away if you do not pay taxes to the elite masters that run our government. All that is taken away goes to support those in favor of those that govern (Big Industry, Big Agriculture, Big Tech, Big Pharma, Big Defense) and to the masses who have next to nothing to keep them with just enough to prevent them from rioting and creating a bigger scene than they did this summer.

“We have a government that spends beyond its means to prop up a system that benefits those with the best connections to the system.

“The most likely thing to happen with further socialist programs (basic income, Medicare for All, free college) is to hasten the demise of the middle class and strengthen the position of those with the best relationships with the governing socialists in power.”

“There is a specter haunting America, it's true,” writes our final correspondent, “but the phantom menace is just that, a bogeyman raised to frighten the ignorant and willfully blind into believing that the breadcrumb-y concessionist policies advocated by liberal Democrats, most of which will never be implemented, represent some existential threat to truth, justice and the American Way.

“Look, you already know that the actual threats to freedom and liberty are posed by gargantuan public and private debts, parabolic deficit spending, venal and corrupt politicians, entrenched self-serving bureaucrats and smugly satisfied corporate nabobs. It is almost painful to have to point out such an obvious reality.

“And so what better way to deflect attention from the real problems than to convince the mob that the *real* enemies are figurehead politicians? Socialist! Fascist! Absurd.

“If and when a real socialist takeover arises in our fair land, we will know it by the millions of armed working people in the streets and on the barricades. And they may well be met by jackbooted stormtroopers… then we will know what American fascism really looks like.

“In the meantime, all we have is more fiddling while Rome burns. A pox of both their houses, indeed! Except those houses also contain millions of hard-working, good-hearted people who are simply unable to see their way clear of the mindf*** to which they are daily subjected.”

The 5: We can’t think of a better note on which to end it today. Thanks to everyone for weighing in. Back to regular programming tomorrow.

Happy Armistice Day,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. The markets, you wonder? Still in “vaccine rally” mode — only today, the tech names are taking the lead with the Nasdaq up 1.25% and the Dow barely in the green. Gold is backsliding to $1,866.

In the meantime, it’s now 28 days until the Dec. 8 “safe harbor” date when states must settle on their slate of electors to the Electoral College.

If you’re paying attention to the balance of power in the Senate, everything’s been decided now except the two Georgia races that go to a runoff on Jan. 5 — the day before Congress meets to formally count the electoral votes. Democrats would have to win both seats to achieve a 50-50 split — and even then, Mike Pence will still be vice president until (at least?) Jan. 20. Just in case you’re playing with outlier election scenarios…

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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