The Many Shades of Socialism (Hint: They're All Not Good)

Recent polls among younger voters indicate that they are warm to the idea of socialism at the cost of ditching capitalism.  It never delivers the economic goods and is oppressive and painful to many.  On the Right, a lot of ink is dedicated to teaching these people about the failures of socialism.


The rise of Bernie Sanders at one end of the age spectrum has made socialism acceptable in some circles.  At the other end of the age spectrum, AOC has made socialism hip.  Unfortunately, most of the rhetoric from the Right compares socialism to the failures in Cuba and Venezuela.  This may not be the winning formula for gaining converts.  While it is certainly necessary to point out that both countries are hell holes, Venezuela was largely absent from the news until the population reached mass starvation levels and despite the death of Fidel Castro, Cuba remains a socialist hell hole.

When Sanders and others talk about socialism, they are not talking about confiscating private property, nationalizing every industry and suppressing the press except for a government-run channel.  They are talking about places like Denmark or Sweden.  Socialism exists on a spectrum with oppressive dictatorships at one end and socialist democracies on the other end.  The difference is in the degree they use oppression and compulsory taxation to achieve their goals.  One end of the spectrum allows elections and the other end disallows or makes a mockery of elections.  No one seriously believes, for example, that Macron in France is a ruthless despot (except, perhaps, many French people).  Yet, like other socialist countries, taxation is oppressive and the French welfare state is gigantic.


What they share and what is the source of their eventual failing is the fact that both attempt, to varying degrees, to substitute the decisions of government planners for those of private citizens interacting in a competitive economic environment.  The difference between Denmark and Venezuela is in how much the government planners attempt to control and therefore eventually destroy.

Sanders and AOC often point to Nordic countries, but they are really talking about a French socialist model.  When both Denmark and Sweden had socialist models akin to that of France and advocated here by Sanders and AOC, they realized the results were so bad that they changed course and introduced some dramatic free market reforms.  Although not necessarily libertarian success stories, spending cuts coupled with decreased tax burdens were the cure for a rotting apple scenario.

Now France is learning the same lesson.  All the goodies available to French citizens which are basically the same goodies offered in policy proposals by Sanders and AOC come at tremendous costs.  The only way to pay for them is through regressive and oppressive taxation.  These are taxes and fees heaped upon the backs of the middle class and the poor- the very people Sanders claim they are the champion of.


France was once a role model of what government can do for its population.  Today, it has become a laughing stock ever since the Yellow Vests have taken to the streets illustrating the oppressive taxation the French suffer.  Those are not upper class rich people protesting in the streets about taxes.  They are people who benefitted from the French welfare state and ones who supported the policies the French government adopted.

The OECD, in their annual revenue reports, noted that France collects taxes equal to 46.2% of GDP.  The OECD average is 34.2% and 27.1% in the United States.  According to the Wall Street Journal:

France doesn’t collect that revenue in the ways you might think. Despite the stereotype of heavy European income taxes on the rich, Paris relies disproportionately on social-insurance, payroll and property taxes. Social taxes account for 37% of French revenue; the OECD average is 26%. Payroll and property taxes contribute 3% and 9%, compared to the OECD averages of 1% and 6%.

It should be noted that payroll taxes eat up a larger share than other taxes in the earnings of lower and middle income earners.  France also has a regressive consumption tax that further disproportionately affects lower and middle income earners.  The stereotype that the rich in France “pay their fair share” is a myth.


While it may be true that government payouts are also regressive in that lower and middle income earners receive more benefits, consider that logic.  In effect, they are taxing one group to redistribute benefits to that same group.  Considering that a gas tax increase coupled with the 214 other taxes paid in France have become so regressive, it is no surprise that almost daily, sometimes violent, protests have been the norm since November 2018.

Combine these taxes with France’s rigid labor laws- another brick in the socialist dream- and the problem becomes worse.  There are disincentives in their laws to hire people.  In many French fast food outlets, robotics have replaced humans.  Their so-called “family friendly” laws penalize women from working or even entering the workforce.  They are also quite generous with those who do not work at all regardless of gender.  The result is a 24.5% unemployment rate for young workers and decades of anemic economic growth.

If the dreams of Sanders and AOC ever came to fruition, the stark reality would emerge.  It would not be the bankers and politicians who would suffer.  Instead, it is the dopes who fall for their crap who would suffer the most from high taxes, high unemployment, and economic growth that would move in the opposite direction from increased spending to pay for their pipe dreams.


Of course, the rich would also suffer at first just as they did in other “socialist democracies,” but they have the means to escape any socialist nightmare.  The ones left most screwed would be those at the middle and the bottom.  Socialism, despite the model and despite the “success” touted in other countries, is a recipe for economic disaster.  Countries like Sweden and Denmark found out the hard way and made the necessary adjustments in time.  Venezuela and Cuba remain intransigent.  The United States has an opportunity to avoid the examples of Cuba, Venezuela, Sweden, Denmark and France and it is not in the Utopian musings of a Latina from the Bronx or a geriatric Senator from Vermont.



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