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Do New Socialists Really Want Socialism?

By Rick Kahler CFP®

Increasingly in the US, it’s becoming more socially acceptable—perhaps even fashionable—to be anti-wealth and anti-capitalism.

Even identifying as a socialist is no longer the dominion of the far left but is gaining popularity. A number of mainstream politicians, including Presidential candidates, are self-identifying as “socialist.” According to a February 19 article by Mike Allen in Google’s Axios, polling shows younger Americans are souring on capitalism and don’t find the label “socialist” scary or demeaning.

Interestingly, the meanings I see thrown about for socialism and capitalism rarely agree with the traditional definitions.

For example, some self-proclaimed socialists call for higher taxes on the rich, more funding for massive infrastructure improvements, and expanding social welfare programs with proposals like “Medicare for all.” These are not necessarily socialism, but rather an expansion of social programs. There is a difference.

Socialism is an economic system in which the means of production and distribution of goods are owned and controlled collectively or by the government. It is characterized by production for use rather than profit, equality of individual wealth and incomes, the absence of competitive economic activity, and government determination of investment, prices, and production levels.

A truly socialistic economy has no privately owned business. Since all business are government-owned, there is no competitive force serving to improve services or drive down prices. Prices are not set competitively but by government policy. Everyone is economically equal, with no rich or poor. At least in theory.

Embracing increased taxes on fossil fuels and more government spending for health care or green initiatives is not inherently a call for a socialistic economy. It is a call for bigger government and placing more restrictions on free enterprise, which is only a step toward socialism.

For example, the Scandinavian countries have massive social programs. Yet they are not socialistic economies. Their systems allow for free markets and the private ownership of business, meaning their social programs are funded by capitalism and free enterprise.

We have yet to see a society that has successfully tried real socialism. Countries that have attempted it, according to Forbes, are China, Cambodia, Cuba, East Germany, Ethiopia, North Korea, Poland, Romania, the USSR, and Venezuela. Even though many of them have abandoned socialism, the effects are long lasting. Of these countries, according to the Economist, in 2016 Poland had the highest standard of living, ranking at 68 worldwide.

Israeli David Rubin, author of the Trump and the Jews, says in a February Yonkers Tribune article, “I must warn my many American friends to learn some critical lessons from Israel’s socialist past.” He points out that Israel’s founders created a socialist-based economy intended to provide financial security for its new citizens, including millions of refugees. The country struggled with economic stagnation, soaring inflation, low wages, and high prices. In the 1980’s Israel began a shift to free market capitalism, and today its economy is thriving.

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An idea strongly identified with today’s self-identified socialists in the US is the “Green New Deal” resolution which failed to pass in the Senate. In addition to proposals to aggressively reduce greenhouse gas emissions and require the use of renewable energy, it also calls for “guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.”

Assessment

Imposing stringent regulations on property owners and businesses isn’t inherently socialistic, although it would raise prices for everyone, especially the low-income Americans the proposal intends to protect.

However, guaranteeing a lifelong sustainable income for every person in the US, and placing health care under the dominion of the government, does take a giant step toward socialism.

Your thoughts are appreciated

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