Socialism lies in the ‘Land of Make Believe’ with unicorns and fairies

In the aftermath of the Great Recession, Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.) have been able to sell the false notion that our economic system is rigged and that the pain caused by the Great Recession was the result of corporate greed and exploitation.

Lost in all of this is the fact that government policy to make home ownership available to all was the predicate for subsequent corporate irresponsibility.

None the less, the Great Recession led to a greater focus on income and wealth inequality, which have gotten worse in recent years.

Until recently, wages for middle- and low-income Americans have been growing more slowly, college graduates are being saddled with large educational debt, good jobs seem to be fewer, and there is pessimism about the current generation being better off economically than their parents. Growing pessimism about the future has replaced optimism. Criticism of capitalism has increased substantially.

In a 2014 opinion piece in the New York Times, Tyler Cower, a professor at George Mason University, made the following point:

“The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth.”

The 2016 presidential race gave Bernie Sanders the platform to promote “democratic socialism” and awaken millions of millennials from political apathy. It’s not clear what democratic socialism is, but it has been conflated with socialism.

Young people see socialism as superior to free-market capitalism as reflected in polling data. Those who like socialism ignore how capitalism has eliminated many of mankind’s worst problems, such as pestilence and gross hunger and poverty while providing a strong record of economic growth and advances in technology. Socialism has accomplished just the opposite. 

The one explanation for the disconnect between polling data and facts is that capitalism is being evaluated against a nonexistent utopia that will provide free education, universal health care and equality of incomes, all without exploding the national debt or cratering the economy.

The reality is quite different. Estimates of the 10-year costs of these freebies is staggering — $42 trillion, or twice the current national debt. Before all of this could happen, Margaret Thatcher’s observation that, “Pretty soon you run out of other people’s money” would cause the brakes to be applied. 

When it is pointed out to advocates of socialism that all past attempts have failed — Russia/Soviet Union, Venezuela and Cuba, for example — they revert to claiming that their model is similar to Scandinavian countries like Sweden and Denmark.

The advocates confuse socialism with what is actually known as social democracy, wherein the government promotes a welfare agenda through taxation and spending, using market-based economics to generate wealth.

In those nations, the means of production are privately owned — 90 percent in Sweden for example — not state-owned.

This was made clear by the prime minister of Denmark, who, in a speech at the Kennedy School of Government said, “I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.” 

While advocates might concede definitional misstatements, they also will no doubt contend that Scandinavian countries are better off. They can point to universal health care, free college tuition and a generous safety net as evidence that we should be more like Denmark or Norway.

Superficial comparisons are dangerous and misleading. Trying to compare Denmark and Sweden to the United States is analogous to using the turning radius of a speed boat to draw inference about turning a cruise liner. 

The so-called Nordic model works in these small countries — Denmark’s population is 5.7 million; Sweden’s is 8.9 million — because of a culture with strong emphasis on work and individual responsibility combined with homogenous populations and the wealth-creation of capitalism.

The solution to many of the problems that the critics of capitalism cite is not to make the government even more powerful but to reverse the growth in crony capitalism that spreads because of the symbiotic relationship between legislators, regulators and business leaders who use their wealth to bias the system. As Winston Churchill remarked, “Capitalism is the worst form of government, save all others.”

William O’Keefe is president and founder of Solutions Consulting, a firm that specializes in strategic counseling in public policy and management. O’Keefe previously served as executive vice president and CEO of the American Petroleum Institute.