Bernie Sanders Is Right: The US Is Already a Socialist Country

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Bernie Sanders Is Right: The US Is Already a Socialist Country

December 4, 2015

Last month, Bernie Sanders pointed out that once upon a time, government programs such as Social Security were regarded as “socialism.” Specifically, speaking about the New Deal and Franklin Roosevelt, Sanders said:

And, by the way, almost everything [FDR] proposed was called “socialist.” Social Security, which transformed life for the elderly in this country was “socialist.” The concept of the “minimum wage” was seen as a radical intrusion into the marketplace and was described as “socialist.” Unemployment insurance, abolishing child labor, the 40-hour work week, collective bargaining, strong banking regulations, deposit insurance, and job programs that put millions of people to work were all described, in one way or another, as “socialist.” Yet, these programs have become the fabric of our nation and the foundation of the middle class.

Sanders is wrong about the New Deal “putting people to work” since their government-funded activity did nothing to create wealth or end the depression. The Depression lasted until 1945. And the New Deal certainly isn't “the foundation of the middle class” which grew and thrived in the second half of the 19th century. 

However, when he classifies the New Deal programs that dominate US policy today as “socialist,” Sanders is absolutely correct. 

In fact, if a democratic socialist of the 19th century were to get into a time machine and travel to the modern United States, he'd be forced to exclaim “mission accomplished!” 

FDR was careful to not call his programs socialist, since Americans were sure to oppose anything called “socialism.” But, the voters of the 1930s were at least as easily tricked as they are today,  so FDR took what was orthodox 19th-century democratic socialism, and imposed it on the United States while calling it “fair play” or some other folksy-sounding label that would appeal to the sort of people Mencken often described as “the booboisie.” 

To get a sense of what has constituted socialism, historically speaking, it is a mistake to rely on Marxism as the benchmark. Marxism was just one type of socialism in the 19th century, and it failed to gain traction in western Europe. Part of t his is because, by the mid-19th century, it was already becoming clear that the predictions of Marxism were wrong. The ownership of capital was not becoming more concentrated. It was becoming more diffuse. The working classes were not descending into a wretched proletariat in western Europe. They were experiencing gains in their standard of living. 

More astute socialists saw this and departed from Marx, forming the backbone of western-style democratic socialism. Chief among these theorists was Eduard Bernstein. For Bernstein, socialism was not about revolution. It was about using democratic institutions to regulate the capitalists in a way that Bernstein though benefited the workers. These included things like government pensions, minimum wages, state regulation of labor hours, and more. 

This type of socialism became popular is western Europe and gained the support of many elites in Britain, for example, who made up the Fabian Socialists. 

Just Admit It: Social Security Is Socialism 

New Deal propaganda has been so effective though, that many people who support socialism imagine that they are opposed to it. 

For example, government old-age pension in the US enjoy support that is as near to “universal” as anything is likely to get:

when Pew surveyed Americans as to which government programs should be cut, lopsided majorities opposed any cuts to Medicare or Social Security. When asked what programs should be cut as part of budget negotiations in DC, 87 percent of respondents opposed cuts to Social Security, while 82 percent opposed cuts to Medicare. (The popularity of these programs extends across Republicans, Democrats, and unaffiliated voters.)

There's no doubt that many of these people claim to oppose socialism, but such people apparently lack the insight of Bernie Sanders. Sure, the supporters of Medicare and Social Security rationalize their support for a socialist program by claiming they “paid in” to some imaginary trust fund. But in reality, support for Social Security is nothing more than support for taking the property of current wage earners and redistributing it to pensioners. This has always been the case, and it explains why pensioners in the early decades of the Social Security programs often received far more in benefits than they ever paid in Social Security taxes.

The democratic socialists are often honest about this. The current “anti-socialist” supporters of Social Security, on the other hand, are kidding themselves. And, of course, the same is true of Medicare, where claims of “paying in” are all the more absurd since Medicare recipients nowadays are likely to receive much more in benefits than they “paid in.”

In America, though, where “socialism” is a bad word, this sort of thing isn't socialism, we're told. It's “compassionate conservatism” or some other term manufactured by campaign spin doctors.

Large majorities of Americans also like poverty relief programs like Medicaid and housing assistance, so its not surprising that a large portion of the federal budget goes to these programs:

Source: Office of Management and Budget, Table 5.1

But socialism isn't just about cash transfer payment. It's largely about government regulation, which is where the New Deal was most revolutionary. As political scientist Theda Skocpol pointed out years ago in her research (most especially in her book Protecting Soldiers and Mothers) the US has had “welfare” going back to the 19th century.

What was most different about the New Deal — other than its scale — was how it took a largely unregulated economic system and imposed a massive amount of new regulation on property owners in the form of laws related to wages, labor, prices, and more. Arguably, this sort of regulation is far more damaging than mere cash transfers since it directly impedes the creation of wealth before it can even be redistributed.

But never mind, those sorts of regulations are popular too. When it comes to the minimum wage, for example — that socialist goal from the 19th century — a lopsided majority of Americans are for that. And Americans aren't just for the minimum wage. They for raising it! According to Gallup, a majority of Americans polled in 2013 (76%) wanted to raise the minimum wage.

And of course, there is also no lack of support for deposit insurance, banking regulations, “anti-trust” regulations and an endless list of other regs.

So, it's hard to not scoff and smirk when one reads in The New York Times that “Even Clinton Supporters Warm to Socialism” when there's nothing to warm too. They're already there. It's also a safe bet that, given the polling data on old-age benefits, that a sizable portion of GOP voters have long ago “warmed to socialism” as well.

The US Is More Socialist than Many Countries 

And if we're measuring socialism by the sheer volume of wealth that is redistributed, the United States ranks second in the wealthy West. As I noted in “'Social Expenditures' In the US Are Higher Than All Other OECD Countries, Except France,” when we look at the sheer volume of wealth redistribution that results from cash transfers, regulations, and manipulation of the tax code, government expenditures on social programs are enormous in the United States. But even if we look at straight cash transfers, the United States spends more on redistribution of wealth (as a percentage of GDP) than Australia, Canada, and Iceland  — three countries that have rarely been called excessively capitalist. Moreover, the US is close behind both New Zealand and Norway (y axis= % of GDP):

Source: OECD

The fact of the matter is that government spending on old-age benefits and health care is so immense in the US (health care spending in the US is 4th highest in the world), that by  no  measure could the United States be deemed “not socialist” if we're going to turn around the next minute and call Canada or even Norway “socialist.” Unless, of course, one takes the position that Norway's 20-percent level of social spending is “socialist,” but the US's 18-percent level is “free market.” 

At the same time, if the US is already approaching Norway in terms of cash transfers for social spending, it's hard to see why we need all those big tax increases Bernie wants. 


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