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| DATE | 2016-12-25 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout-NYLXS] Sanders and Socialism
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AP Photo
2016
Why Democrats Should Beware Sanders’ Socialism
He’s a socialist, not a liberal—and there’s a big difference.
By Paul Starr
February 22, 2016
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The excitement surrounding Bernie Sanders’ presidential bid has many on
the left hoping that Americans are ready to embrace socialism. That
would be something. After the Republicans renominated Richard Nixon in
1968, James Reston of the New York Times called Nixon’s victory at the
convention “the greatest comeback since Lazarus.” If Sanders raises
socialism from the dead, that resurrection will surely top Nixon’s.
So, just what is Sanders’ socialism? As analogs to his own program,
Sanders points to the policies of Franklin D. Roosevelt’s New Deal and
the social democracies of northern Europe. As a liberal, I find a lot to
like about both of those. But Sanders’ portrayal of democratic socialism
as nothing but the New Deal is a disingenuous sleight of hand that plays
on foggy historical memories. And his comparison to Nordic social
democracy is equally misleading: Much of Sanders’s platform ignores the
economic realities that European socialists long ago accepted.
Many people may be inclined to interpret Sanders’ calls for a revolution
as just a rhetorical flourish. I think we should take it seriously. His
policies are rooted in a socialist framework rather than a liberal one.
And despite what Republicans may say, there’s a big difference between
socialism and liberalism. Democrats and independents attracted to
Sanders ought to think twice before shrugging off his self-description
as a socialist.
Politicians can try to give words their own spin—see the debate between
Sanders and Hillary Clinton over the meaning of “progressive”—but they
cannot insist on public amnesia about what those terms have signified
before their campaigns. Socialism has a history, and Sanders himself has
a history as a socialist. Both of those are relevant to understanding
Sanders’ proposals and where he wants America to go.
The term “socialism” first came into use in the 1830s in France and
Britain, just around the time the word “individualism” was being
popularized. Socialism primarily referred to socializing private
property, putting it either in communal ownership (as in the
experimental communities of that era) or in the hands of the state.
After the experimental communities faded or failed, socialists focused
on state ownership of the means of production and state planning of the
economy.
Sanders’ portrayal of democratic socialism as nothing but the New
Deal is a disingenuous sleight of hand that plays on foggy historical
memories.
Social insurance programs—worker’s compensation, unemployment insurance,
health insurance, old-age pensions—had other origins, chiefly as a
response of anti-socialist governments to the rise of socialism and
labor unions, first in Germany under Bismarck in the 1880s and later in
other European countries, including Britain a quarter-century later
under the Liberal Party’s David Lloyd George. Lloyd George also
introduced a more progressive income tax shortly before the United
States ratified the 16th Amendment in 1913, enabling Congress to pass an
income tax under Woodrow Wilson.
The policies distinctively associated with socialism—nationalization of
industry and economic planning—had disappointing results where they were
adopted. They were notably unsuccessful in adjusting to economic change
and generating high rates of innovation. The political pressures that
governments face restrict their ability to make tough but necessary
economic decisions—to shrink industries in decline and reallocate
capital to areas of growth.
During the mid-20th century, the United States was fortunate to avoid
the program that socialists were calling for at that time. While
Roosevelt experimented with different strategies in the New Deal, he did
not undertake any large-scale nationalization, and the primary legacies
he left behind were Social Security and regulatory agencies that not
only maintained capitalism but also saved it from self-destructive
excesses. Far from embracing socialism, Roosevelt rejected it and ran
against socialist opponents, who had no doubt that socialism and the New
Deal were very different.
As the old socialist program of state ownership and planning became
harder to defend in the era after World War II, “social democrats” and
“democratic socialists”—terms intended to emphasize they weren’t
Bolsheviks—championed expanded social-insurance programs and progressive
taxation. These redistributive policies have been at the heart of the
northern European model Sanders invokes, except that he misses one key
aspect of it. Based on a “class compromise,” that model includes trade
and tax policies sought by business. The northern European countries tax
labor and consumption heavily, but they have open-trade policies and
lower taxes on capital to foster growth.
The Vermont senator calls for increasing the top marginal tax rate on
capital gains to 64.2 percent, which would not only be nearly triple the
current rate and a peacetime record in the United States but also far
higher than in any of the countries Sanders admires. In contrast,
Denmark’s tax rate on capital gains—the highest rate in Europe—is 42
percent; France’s, 34.4 percent; Sweden’s, 30 percent; and Germany’s, 25
percent. Under Barack Obama, the U.S. rate has risen from 15 percent to
23.8 percent, a significant increase but well within both recent U.S.
experience and current patterns abroad.
Sanders’ 64.2 percent capital gains rate actually understates the full
brunt of his program. He also advocates a significant financial
transaction tax (FTT), which would tax losses as well as gains. (We
currently have a tiny FTT, which pays for the Security and Exchange
Commission, but Sanders is talking about one that will be big enough to
finance free college tuition for all.) Add in state taxes on capital
gains averaging about 4 percent nationally—and reaching 13 percent in
California—and there is little doubt that Sanders’s capital gains tax is
at counterproductive levels. With total marginal rates approaching 70
percent, people would hold on to appreciated assets rather than sell
them. As a result, government revenue from the tax would fall. So would
new investment, with serious repercussions for economic growth.
Sanders gives no indication of even considering these difficulties.
Whenever he talks about taxing “Wall Street,” he frames it as a
repayment and a punishment for past financial misconduct. The business
model of Wall Street, he says, is “fraud.” And so he calls for taxes at
confiscatory levels—economic consequences for the country be damned.
He is still calling for a “revolution” to achieve socialism,
blasting the “ruling class,” endorsing taxes at confiscatory levels and
proposing a health plan that would effectively nationalize a sixth of
the economy.
Sanders’ single-payer health plan shows the same indifference to
real-world consequences. The plan calls for eliminating all patient cost
sharing and promises to cover the full range of services, including
long-term care. With health care running at 17.5 percent of gross
domestic product, Sanders’ plan would sweep a huge share of economic
activity into the federal government and invite that share to grow.
Another way of looking at single payer is that it would make Washington
the sole checkpoint, removing the incentive for anyone else—patients,
providers, employers or state governments—even to monitor, much less
hold back, excessive costs. It would leave no alternative except federal
management of the health sector.
Although Sanders often justifies his plan by referring to Canada and
European countries, they generally achieve universal coverage without
the degree of centralization he is calling for. The Canadian system is
financed and run at the provincial level. Many European countries have
multiple insurance funds and institutionalized bargaining among
stakeholder groups, with power devolved on regional bodies. As in the
case of tax policy, Sanders’ policies are more traditionally socialist
than those of most of the countries he invokes as models.
Sanders’ program reflects his life commitments. In some respects, his
biography recapitulates the journey of socialism itself. When he was in
his 20s, Sanders worked on a radical kibbutz in Israel—the communal
socialist phase. In 1979, he produced a video about the longtime
Socialist Party leader Eugene Debs; on the soundtrack, released by
Folkways Records, you can hear Sanders performing Debs’ speeches calling
for an end to capitalism. In 1980, Sanders served as a presidential
elector for the Socialist Workers Party, which supported the
nationalization of industry and expressed solidarity with revolutionary
dictatorships, including Iran (this at the time Iran was holding
American hostages).
As he has pursued a political career in Vermont and as a member of
Congress, Sanders has repositioned himself close to liberals, while
denying he was a Democrat until the current campaign. But even now his
worldview and the policies he is advocating are consistent with his old
faith. He is still calling for a “revolution” to achieve socialism,
blasting the “ruling class,” endorsing taxes at confiscatory levels and
proposing a health plan that would effectively nationalize a sixth of
the economy. Summing up his proposals, left-of-center economists
estimate that it would increase the size of the federal government by 40
percent to 50 percent.
Sanders is also doing what populists on both sides of the political
spectrum do so well: the mobilization of resentment. The attacks on
billionaires and Wall Street are a way of eliciting a roar of approval
from angry audiences without necessarily having good solutions for the
problems that caused that anger in the first place.
In the wake of the 2008 financial crisis and the government’s failure to
prosecute those responsible for it, many Democrats are legitimately
angry and therefore receptive to this kind of appeal. Whether socialism
is what they want is another question. Some writers on the left point to
the Des Moines Register poll before the Iowa caucuses, in which 43
percent of likely Democratic caucus-goers said they would use the word
“socialist” to describe themselves, compared with 38 percent who would
use the word “capitalist.” But among the general population, the
socialist label is still largely a political taboo. In a June 2015
Gallup poll asking voters whether they would support candidates with
certain characteristics, “socialist” was a disqualifier for more voters
(50 percent) than any other attribute, including “Muslim” and “atheist.”
After feverish right-wing accusations that every liberal proposal is
tantamount to socialism, the last thing liberals need is a Democratic
presidential candidate blurring that line.
READ MORE
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I Get Sanders’ Appeal. But He’s Not a Credible President.
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2016
Bernie’s Army of Coders
By Darren Samuelsohn
Receptivity to the socialist label is higher among the young. But as
Nate Silver of FiveThirtyEight has pointed out, public opinion data on
preferences about the size of government among young people do not show
a shift toward a socialist worldview. A higher rate of self-identified
“socialists” is more about anger at capitalist excess than it is genuine
socialist fervor.
Since Republicans have been calling Obama a socialist for the past eight
years, the label socialist may seem to many to be a synonym for
progressive or liberal. But the differences between socialism and
liberalism are fundamental. At its core, liberalism has a concern for
liberty. While liberals have expanded public programs, they also have
sought to strengthen rights that limit arbitrary power, both
governmental and private. Liberals do not sanctify the free market, but
they care about preserving the incentives that stimulate innovation and
investment and make possible a flourishing economy.
Socialism and Sanders have their heart in a different place—economic
equality before all else. Socialism is still the dream of those who
don’t worry about concentrating power in the state or about the perverse
effects of making goods and services available at a zero price. To bring
socialism back from the dead wearing New Deal liberalism as a mask is no
service to either. Socialists should know the difference, and liberals
should too. After feverish right-wing accusations that every liberal
proposal is tantamount to socialism, the last thing liberals need is a
Democratic presidential candidate blurring that line.
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Paul Starr is professor of sociology and public affairs at Princeton
University and co-editor of the American Prospect. His book Freedom’s
Power is a history of liberalism. He was a senior adviser to Bill
Clinton in 1993.
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