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The Problem with Socialism

I like Bernie Sanders, and I’m really happy he is running for president. He brings a breath of fresh air to a country where the conversation has sometimes swung way too far to the right.

But the debate last night highlighted why I would rather he not win the presidency. He conflates two things that I think are important to distinguish from each other: equality and opportunity.

The Declaration of Independence famously asserted that everyone has the inalienable right to “life, liberty, and the pursuit of happiness” and that governments should protect those rights. It did not say that we should be given happiness, just that we should have the opportunity to pursue our happiness.

And that’s what I believe. Everyone should have an equal opportunity at success (however they define it, such as getting rich if that’s what they want), as long as it doesn’t trample on other people’s rights. America became great because we were the land of opportunity. To regain that, we must have a level playing field. When people believe they have an fair chance at success, they will try harder.

But Sanders keeps harping on inequality. He is in favor of massive government job creation programs, which I think is unwise. Even socialist countries failed at that. He attacks the rich, seemingly just for the offense of being rich. I have no problem with people being rich, as long as they actually earned it. What bothers me is people who get richer from government corporate welfare, like hedge fund managers who take advantage of insane tax breaks, bankers who throw lavish parties for themselves using bailout money, or CEOs who cash in their golden parachutes after destroying the companies they were supposed to lead.

People who earned their wealth also know that the same opportunities they received must be available to everyone. That’s why they don’t mind paying their fair share back.

Sanders also attacks capitalism as a problem, deriding the “casino capitalist system“. As I’ve said many times, the problem is not capitalism, it is what wrongly passes for capitalism in this country. When we extend protectionist things like copyrights beyond the lifetime of the creator, we no longer have a capitalistic free market. When we bail out large companies (including banks) we no longer have a a market-based system. What we need is capitalism where everyone has equal opportunity to create and succeed at their own business. Not a system like socialism where everyone is guaranteed success.



  1. ebdoug wrote:

    As an ex public health nurse, I disagree with you. Twelve year old new mother comes in to Public health with her new born. Her brother has raped her and given her this baby. (and many more after in their one room shack) What chance does this baby have ? Actually none. Years later he is now back in jail for parole violation. We as a nation have to support that baby. That is socialism.
    Expectant mother and all around her: Smoking, giving that baby carbon monoxide poisoning before the baby is even born. That baby has no chance and ends up in special education classes at great expense to the rest of us. That baby never had a chance under the constitution.
    Generations and generations of people brought down in life because of carbon monoxide poisoning before birth. I often wonder if I would have been a genius like the first born in my family where my mother was too sick to smoke.
    Work programs: There is a series on the work programs of Roosevelt in the great depression. Programs that gave rise to our beautiful parks. The sense of satisfaction and self worth that those that were rounded up and sent to these programs. (like the military-you know compulsory military as other countries have) We have so much we could do to improve these programs if we had enough tax money to implement these programs. Hard work as all reading this know gives rise to internal hormones that increase your self worth. Lack of work leads to depression. Do these mass murders have jobs? Are they out running, training for marathons? Are they involved with any sports?
    Social security would be considered socialist. How much more is put in the program beyond what the worker puts in?
    Those hanging around on the street corners with cigarettes hanging out of their mouths further contaminating the next generation. Are they happy? Did they ever have a chance at pursuing happiness?
    We take care of our own. “Be happy and don’t hurt anyone,” is my philosophy.

    Thursday, October 15, 2015 at 4:45 am | Permalink
  2. ThatGuy wrote:

    I’m a little confused by this piece; isn’t it clear that equality (particularly as it relates to income, which was Sanders’ focus) is almost inextricably linked with opportunity? For example: someone born into a family with the means to put them through college debt free has far more opportunities coming out of college than someone saddled with loads of debt.

    I’m also not terribly sure you and Sanders differ that much on capitalism. You say the problem is what “wrongly passes” for capitalism in this country, isn’t that casino capitalism? Where the deck is stacked in favor of the house (the already wealthy) against those actually creating that wealth?

    We can’t possibly hope to have any semblance of equal opportunity (which can then still become a meritocracy if everyone starts at the same place) with such insane levels of income inequality. Proposing, as Sanders does, that those benefiting the most from the opportunity and wealth in the US should have to lend a strong hand to those struggling is hardly guaranteeing everyone’s success.

    Which brings me to my biggest disappointment of Sanders from the debate: his bumbling avoidance of explaining Democratic Socialism. This is not the red menace of a society where a rocket scientist and a janitor make the same amount of money. This is where each of those individuals can support themselves and their families if they put in a hard day’s work, and where their children have the chance to be socially mobile and improve upon their parents’ work, rather than be doomed to it.

    Thursday, October 15, 2015 at 6:50 am | Permalink
  3. Sniff wrote:

    Unfettered capitalism is definitely the problem here. Sanders harps on income inequality because that is what is making America a land of Inopportunity. Leveling the playing field is what Sanders is doing. In the growing world market you cannot be competitive without a college degree and some form of work experience. Sanders wants to makes higher education tuition free and create jobs fixing infrastructure for the government(both of which have happened in this country, and successfully if I might add). This “guaranteed success” you say socialism gives everyone sort-of looks like the “level the playing field” you are calling for. Right now, the middle class is suffering from stagnant wages and increasing debt, the opportunities for them are just not the same for those who are rich. It’s also worth mentioning that Sanders’ actual policy isn’t true socialism and this is why he raises the issue that he is a democratic socialist, and there’s a pretty big difference. When he calls for a “political revolution” he doesn’t want something like the Bolshevik Revolution, he wants America to wake up and open their eyes; the system is rigged and not in their favor. He doesn’t want state control of the means of production,like socialism calls for, he just wants workers to have a larger piece and a rich, upper-class to not have almost all of it. You want a capitalist system that works, well the one under the democratic socialist theory seems too. This why Sanders points to countries like Denmark, Sweden, and Norway so much.

    Thursday, October 15, 2015 at 9:43 am | Permalink
  4. JimJam wrote:

    With respect to government job creation, it’s critical that they be taken in context like any economic policies.

    It’s wildly simplistic to state that “government job creation” doesn’t work (look at our military industries). The more legitimate arguments against government programs, such as crowding out private investment, are at the opposite end of the spectrum from where we find ourselves in the USA.

    Having suffered decades of chronic under-investment and enjoying structural infrastructure disadvantages that negatively impact our collective efficiency,the case for a “government job creation program” aka infrastructure investment, could not be stronger.

    Any blanket assertion that government jobs programs don’t work is false. In our context, it’s an example of how successfully right wing propaganda has penetrated the mainstream.

    Thursday, October 15, 2015 at 9:52 am | Permalink
  5. Iron Knee wrote:

    You guys are arguing the wrong points. I am well aware of the problems inherent in too much inequality. As I said, however, this is the symptom, not the cause.

    The real points are that Sanders is harping on inequality. He should be harping on opportunity for two reasons. First, in order to get elected in this country where terms like “tax and spend”, “nanny state”, and “welfare queen” are all too popular. Surveys repeatedly show that Americans would rather vote for a hispanic black gay atheist than a socialist.

    And second because many government programs to attack *inequality* failed miserably. The whole conservative point is that you cannot give someone equality, they have to work for it themselves (of course, conservatives then want to abolish inheritance taxes so they can give tons of money to their children tax free — I didn’t say they were consistent).

    There are plenty of examples of countries (England is a familiar example) that went “democratic socialist” and it didn’t work out for them and they swung (hard) the other way. In fact, the “Reagan revolution” was in some ways a response to the previous Democratic excesses.

    All of us know people who were given a free college education and didn’t do much with it. I would rather give everyone an equal opportunity to go to college, even if that means going into a reasonable amount of debt (not insane amounts, like we currently see).

    I also see giving everyone a free college education as bad for universities. It means that universities have absolutely no incentive to be relevant. Sniff says “In the growing world market you cannot be competitive without a college degree and some form of work experience.” Already some companies (like Google) have declared that they don’t care if a job applicant has a college degree.

    Finally, leveling the playing field absolutely is not the same thing as guaranteeing success. You still have to work hard and play the game in order to win. What we have lost is the spirit of “let the best person win”.

    Thursday, October 15, 2015 at 10:39 am | Permalink
  6. Zed wrote:

    This post was a little too binary. Pure capitalism is just as much a failure, arguably greater, as socialism or communism. But we don’t live in a capitalist economy. Agriculture has price supports. Computing has copyright protection. Energy has huge tax protections. Travel and Sports are heavily subsidized by public infrastructure (when’s the last time you landed at a private airport? How many pro athletes learned to play on publicly owned fields and courts or in public schools?).

    The question in 21st century modern economies is not, “Will the government support the economy?” or “should the government pick winners and losers?” The questions are to what degree will the government support industries and how much of a role will it play in picking winners and losers.

    Let’s take a “simple” example, roads. Everyone benefits from roads so everyone should pay for roads. Simple enough. But does John Q. Public actually use/benefit from roads as much as FedEx, UPS, or all the companies that benefit from their access to a publicly created infrastructure? When we fund roads through a gas tax we tilt the cost towards John Q Public. When we fund roads through a wealth tax (a property tax, for example) we tilt the cost towards the wealthy. This is not a question of “capitalism” v “socialism.” This is a question of “equality,” specifically “income equality” because using a gas tax lowers disposable income while a property tax taxes those who have benefited most from the infrastructure. Everyone needs good roads. Who pays?

    Thursday, October 15, 2015 at 10:49 am | Permalink
  7. PATRIOTSGT wrote:

    IK – I agree nearly 100% with your position.

    Earning something is much better then getting something.
    Public College is too expensive for many, but public universities are regulated by local and state governments, including the prices they charge. The price of college will continue to go up as long as federal college dollars go up. Take away all subsidies from the government and when the enrollments dramatically drop the price will become market driven and drop.

    Almost all private universities will provide grants for 100% of EFC or Expected Family Contribution as indicated on the FAFSA. So if a student wants to kick but in school and do well on SATs/ACTs and their family makes below the poverty level, the student can go to school for free. But also, not everyone needs to or should or wants to attend college. Why not learn a trade, those schools are much less expensive and probably provide a much better ROI then a political science major at the university.

    Anyone who believes there is no opportunity in America, is just too busy complaining about it to see the opportunities around them.
    Yeah we need to fix some big money problems where the gov’t is deep in big money pockets. We also need to reduce the endless rising fees for doing business in America. Not necessarily for hedge funds and mega corps, but for the small guys because it’s killing jobs and progress. If a corporation or non-profit can afford to spend millions on lobbying then they afford a tax increase.

    There is also an extensive underground system of business that thrives outside the government. They pay no taxes, report no income and collect big money from taxpayers. There is extensive fraud, scamming, waste and abuse of government programs. These issues cost 10’s of billions or more annually. (Money that could be put towards education).

    Thursday, October 15, 2015 at 11:48 am | Permalink
  8. ThatGuy wrote:

    I’m still very confused as to where this gulf between income inequality and opportunity is coming from. Your ability to pay for things directly relates to your (or your children’s) opportunity to go to college which studies show makes you more likely to take home a larger paycheck. No one is arguing that people shouldn’t work (though I am skeptical of the concept of dignity through work, sounds a little too familiar) but merely that having parents who didn’t make as much as Mr. and Mrs. Jones shouldn’t preclude you from access to education that doesn’t come with immense debt. Debt which, in turn, helps depress the entire economy.

    I’d also take issue with saying that we should avoid social democracy simply because Americans are too ill-informed to actually know what socialism or social democracy is beyond a scary thing from Red Dawn. The Nordic countries and much of Europe experiences happier and longer lives than the US due to social democratic policies, and even “hard turn” UK is far closer to a social democracy than the US.

    We have indeed lost the principle of “let the best person win.” In place of a meritocracy we have an oligarchy that has managed to delude enough people into thinking that America is still the land of opportunity and that they must vote against their self interest and get a second job.

    I say this as someone fortunate enough to come out of college debt free and to have found a job very quickly. I’ll note that it did require me to have a degree in order to get hired but not to actually execute. Google may be forward-thinking enough to recognize that good ideas and work ethic trump an embossed piece of paper but I can assure you, most organizations are not Google.

    Thursday, October 15, 2015 at 12:20 pm | Permalink
  9. redjon wrote:

    Agreed regarding wealth being fine for those who earned it. Being the child of somebody who earned it, however, is not the same as having earned it.

    The GOP would basically eliminate the inheritance tax, which already has a threshold so high that hardly anyone will pay it. I say we should BEGIN by taxing inheritance at the same rates as earned income and see what that brings.

    No problem with going back to the tax rates of the when-life-was-wonderful 1950s, either. When businesses had to actually create something worthwhile in order to earn the next marginal dollar rather than find the next tax dodge.

    Thursday, October 15, 2015 at 1:54 pm | Permalink
  10. Zed wrote:

    Patriotsgt – Interesting choice of topics.

    1. Public University state funding has declined radically in real dollars in the past 35 years. The rise in tuition is to (mostly) compensate for the loss of state dollars. Public Universities are not for-profit institutions, there is no incentive to maximize profit. The notion that “the free market” governs tuition pricing is demonstrably wrong. Public University’s are purely “Income has to cover Costs.” If costs are up, income has to go up. If Income goes down (say, from a reduction of state funds or losses from endowment investments) than either costs have to go down (Hah!) or else income from a different source has to go up.

    2. “Almost all private universities will provide grants for 100% of EFC or Expected Family Contribution as indicated on the FAFSA.” – nope. Just.Not.True. Private colleges fund “tuition” through a combination of full pay students, endowment funds, state dollars, and federal dollars. They can only admit poor students to the degree that their income allows. The 2008 market collapse did a great deal of financial harm to private colleges.

    The fascinating thing about Public University funding (and K-12 funding) is that reducing state funding harms a state’s economy. Education dollars are a direct infusion of cash into the economy, creating jobs for people who then spend that money on goods and services, creating still more jobs. Actual “trickle down” economics.

    Thursday, October 15, 2015 at 1:56 pm | Permalink
  11. Iron Knee wrote:

    Trucks (like from FedEx and UPS, and other commercial vehicles) pay Heavy Highway Vehicle Use tax to the fed and many states. That’s why they are always weighing trucks on highways.

    But I agree with you Zed. We don’t have pure *anything* (this point has been discussed many times in this blog over the years). Even most hard right US conservatives support spending huge amounts of tax money on the military, which is about as close as one gets to pure socialism in this country.

    As for your roads example, when I visited China, I found it interesting that all of their freeways are toll roads. Not socialist at all!

    I think the problem is that we are stuck on ideology — whether we should be more capitalist or socialist. The answer is to be pragmatic. See what works best. Once upon a time, we had private fire fighting companies, but that didn’t work so well and endangered the public safety, so they became public.

    Thursday, October 15, 2015 at 1:59 pm | Permalink
  12. Mountain Man wrote:

    And let’s not forget unearned inheritance. There’s nothing wrong with passing on a reasonable amount of one’s lifetime earnings to one’s heirs. Unfortunately we’ve changed the inheritance laws in America to the point that we’re in danger of creating an inherited aristocracy. The Donald’s a perfect example. On his own hook he’s taken the vast wealth he was given and done worse over his lifetime than the same amount of money invested in a reputable index fund. Yet there he sits fat, happy and threatening to become our next President. W was another example of a person with minimal talent and competence who got far out of his depth thanks to inherited money.

    Thursday, October 15, 2015 at 2:28 pm | Permalink
  13. PATRIOTSGT wrote:

    ZED – Ok not “nearly all” but according to this report at least 62 offer to cover 100% and many more a significant portion there of.

    And this statement from you-
    “They can only admit poor students to the degree that their income allows.” may be true, but if you qualify for admission, which is significantly higher then many public universities, they will cover you 100%.

    I think public universities can control their costs, but they have no incentive to do so because they can simply rely or more public funding. Particularly if those universities would use available income streams from the huge amounts of money they get from the sports enterprise to offset tuition costs it could help reducing the costs for all.

    And I do agree that it is not all one system ie socialism or capitalism, but a blended combination. The difficulty seems to be finding the right blend.

    Thursday, October 15, 2015 at 2:42 pm | Permalink
  14. Michael wrote:

    Hi, local friendly public university professor here. And I can tell you most certainly that public universities “have no incentive to” control costs because they “can simply rely or more public funding” is patently false. State legislatures drive the issue, not the other way around. It generally starts with mandates from the legislature that we have to accept X number of students, and we will be given Y dollars to support them. Y used to be about 40-50% of the actual cost to educate the student; now, Y is about 10% of the cost. Tuition makes up most of the rest, followed by grant funding and donations from alumni.

    Simply put, educating students is expensive, but that cost has NOT actually changed much over time. The key indicator of this is that faculty salaries have NOT risen exorbitantly. In fact, it generally hasn’t kept pace with inflation. There is a little evidence that increased layers of bureaucracy and administration have contributed slightly, but the biggest cause of increasing tuition has been state budget cuts.

    The place where people often think there IS room to trim costs is in new buildings, recreation centers, dorms that would put your house to shame, etc. But all of that is (mostly) independent of tuition cost. Capital funding and operating costs are generally different line items on the state budget. While we could stop requesting new buildings and freeze all construction, that would do absolutely nothing to decrease tuition costs. That is, there isn’t a single state legislature that would convert such a saving in one line item into an increase in spending in another. Instead, they would just cut tax rates and give themselves a pat on the back for saving Joe Taxpayer $3.57. They would then loudly proclaim during their re-election campaign about how they have a proven record of cutting taxes and wasteful spending.

    Thursday, October 15, 2015 at 3:54 pm | Permalink
  15. PATIOTSGT wrote:

    Thanks Michael for your common sense response.

    So how do we lower costs for students or is there no way to achieve that?

    Thursday, October 15, 2015 at 4:04 pm | Permalink
  16. Michael wrote:

    Ooh, I just noticed the discussion also involved the private university “free tuition” game. This practice, when you dig into it, is actually an ethically dubious method of shifting costs.

    The basic premise is this: People tend to associate higher costs with higher quality. A university that charges $60,000 for tuition is perceived as more prestigious than one that charges $6,000. But no one ever actually pays $60,000. That’s just a ruse used to cover the actual costs and make the students’ parents feel better. If everyone actually ends up paying $40,000 for what they perceived to be a $60,000 education, they all just feel better.

    At the very end of the income spectrum, yes, they generally give those students merit-based scholarships that cover 100% of tuition. They do this by making the students who are not quite at that end of the spectrum more. But those students don’t complain because they already think they’re getting a discount.

    Private universities that engage in this game generally have one other funding source that public institutions (except top tier research universities) don’t: billion-dollar endowments that are often invested, allowing the institution to keep the principal intact while using profits for funding. Essentially, they use a combination of financial tricks that most public universities simply cannot do.

    Thursday, October 15, 2015 at 4:10 pm | Permalink
  17. Michael wrote:

    To start, we have to have a culture change. A big part of the rationale for state support for education was that it was in the common interest. That is, if we (collectively) helped somebody go to college to become a doctor, they would pay us back by providing quality medical care later on. Over time, the rhetoric has shifted. You no longer go to college to learn how to contribute to society. You go to college to advance yourself by getting a better job and earning more money. Thus, the motivation for college is now considered to be greed, rather than good citizenship.

    To bring this back to some of IK’s original points, this is a legacy of the Reagan revolution and a reaction to the excesses of democratic socialism. When the rhetoric is all about pulling yourself up by your bootstraps and “greed is good,” our culture places less emphasis on supporting the common good. When we start to see providing higher education as an investment in social welfare, rather than as a means of self-improvement, it makes more sense to increase state support per student. That will, in turn, reduce the out-of-pocket expenses for tuition.

    As a tangential side point, another element here is changes to federal funding for research (which is that other mechanism used to raise money). For a variety of reasons, there is less and less money available for grants. In some places, this has decreased the success rate for getting a grant to below 10%. This wastes a LOT of time and money, because faculty at research institutions now have to apply over and over and over again. That is, instead of doing research and teaching, their primary job activity now is fundraising.

    Thursday, October 15, 2015 at 4:22 pm | Permalink
  18. ebdoug wrote:

    Free college education. As I’ve said before, I watched Reagan take away the free education in California when he was governor.
    Free is not “free”. The grades have to be maintained or the student loses the “free”.
    You can’t just go to college and party as a certain George W Bush did. Both he and I majored in C grades. Had we had a government free education, we would have been quickly out of college. We had free through our families.

    Now the college educated person earns more.
    Since we have a graduated income tax, the college educated pay a bigger percentage in taxes which circulates back into educating more people who don’t have families who can pay for their education. California was doing really well when I moved there in 1966. After Reagan was elected and the “free” education was taken away, California started its problems. I was watching it by afar by then.

    Military: The military trained come out(supported by the government, i.e. our taxes) with skills. Less crime (no I have no statistics) Better wage earners and citizens in this country.

    Thursday, October 15, 2015 at 5:56 pm | Permalink
  19. Iron Knee wrote:

    Great discussion! It is this kind of discussion that makes slaving away on this blog all worthwhile!

    Michael, I especially like your point about a culture change. Whatever happened to “ask not what your country can do for you, ask what you can do for your country.”?

    The right claims to love their country. Hah!

    I also want to point out that there is a difference between infrastructure programs (which I strongly support) and massive work creation programs (which I am dubious about).

    Thursday, October 15, 2015 at 6:07 pm | Permalink
  20. tnb wrote:

    You say this

    “Sanders also attacks capitalism as a problem, deriding the “casino capitalist system“. As I’ve said many times, the problem is not capitalism, it is what wrongly passes for capitalism in this country.”

    But it looks to me like you are saying the same thing as Sanders. He calls it the “casino capitalist system“. You call it “what wrongly passes for capitalism in this country.”

    Regardless of the words the current system is clearly broken for a large percentage of the people.

    Bernie is the only candidate not completely owned by the current broken system.

    Friday, October 16, 2015 at 6:16 am | Permalink
  21. Iron Knee wrote:

    I guess it depends on what you define as capitalism. To me, free market capitalism includes a level playing field so that everyone competes freely and equally. So the problem (at least to me) is not capitalism itself, it is the fact that we do not have a level playing field. Some people are given an unfair advantage.

    Examples of this include buying off politicians to get laws changed to give yourself an unfair advantage (e.g., subsidies for fossil fuel companies, or longer copyrights for media companies). Another example is monopolistic behavior, like we are seeing in drug companies.

    There are still cases where capitalism doesn’t work very well (fire companies, streets and roads, etc.) and in those cases pragmatism says that some level of socialism is ok. But when it does work, capitalism is a very good system. So I think it is a mistake to be against capitalism. There is a good reason why the computer revolution largely happened in the US.

    The problem now seems to be that Citizens United and other decisions seem to have made our political system too easily corrupted. This is not just a problem with capitalism. It is just as bad (if not worse) in a socialist system. Corruption is bad, and must constantly be fought. The fact that our political system has become corrupt is not necessarily a problem with capitalism per se.

    Friday, October 16, 2015 at 7:04 am | Permalink
  22. ThatGuy wrote:

    This might be worth a read:

    Interesting to note that Forbes ranks Denmark as the best place to do business, while attributing the continued slide by the US to added regulation. Perhaps Denmark found the best combination of socialism and capitalism to not only ensure a healthy business environment but also a happy and healthy populace. Or perhaps Forbes ought to be suffering from some cognitive dissonance right about now.

    Friday, October 16, 2015 at 2:20 pm | Permalink
  23. ebdoug wrote:

    ThatGuy=I always wish there was a “like” button on here when I read the article about Denmark.
    Denmark also takes in immigrants.

    Friday, October 16, 2015 at 3:56 pm | Permalink
  24. Iron Knee wrote:

    ThatGuy, the article you linked to is saying basically the same thing I was trying to say (although it looks like I didn’t do as good a job.)

    Socialism is better at some things, and capitalism is better at some things. We should stop arguing about which one is better, and instead try to figure out how to do everything the best way, and ignore superfluous labels.

    Friday, October 16, 2015 at 8:25 pm | Permalink
  25. Joe Blow wrote:

    As I see it part of the problem with both socialism and capitalism (in this context) is the use of fluid definitions, what is socialism to one person may not be to another.

    Friday, October 16, 2015 at 8:35 pm | Permalink
  26. I think there are a number of points that you do not seem to have thought all the way through. I have published an extended commentary on your post on my own blog: What’s so bad about socialism?

    — Larry

    Saturday, October 17, 2015 at 6:27 am | Permalink