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Tuesday, August 4, 2020

Has it Ever Worked Anywhere?

Polls show younger voters to be sympathetic to what is often called "Democratic Socialism" which is why socialists like Sen. Bernie Sanders and Congresswoman Alexandria Ocasio Cortez are popular among the young. 

Conservatives tirelessly point out, though, that socialism has never worked well anywhere and usually makes the middle class poor and the poorer classes even poorer. In fact, socialism is often a disaster as we've seen in countries like Venezuela, North Korea and Cuba. 

Progressives often counter this argument by declaring that those countries have misapplied socialist principles, and direct our attention instead to Scandinavian countries like Sweden and Denmark as examples of  socialist success stories. 

A short piece in a Heritage Foundation pamphlet, however, explains why these counterexamples don't work:
First, these countries are not technically socialist....socialism entails a centrally planned economy with nationalized means of production. Although these countries have high income taxes and provide generous social programs, they remain prosperous because of their free-market economies. 

Denmark ranks as the 8th most economically free country in The Heritage Foundation’s Index of Economic Freedom, which cites free-market policies and regulatory efficiency as reasons for the high standard of living. Sweden is ranked 22nd and Norway 28th, both with similar descriptions of thriving private sectors and open markets. 

These three countries are clearly not operating under centrally planned economies, or their economic freedom scores would be significantly lower.

Second, the success of these countries is clearly based on a capitalist foundation, and it predates the expansion of social programs. Sweden, for example, became a wealthy country in the mid-20th century under a capitalist system with low tax rates. 

Social programs and high tax rates were not implemented until the 1970s, which caused the economy to significantly underperform and unemployment to rise. In recent years, Sweden has been privatizing socialized sectors, such as education and health care, cutting tax rates, and making welfare less generous. 

Even though tax rates and government spending remains comparatively high, open-market policies generate the revenue to support the spending.

Finally, these countries are largely homogeneous and have a culture that is conducive to a large welfare state. Scandinavians are described as hardworking citizens with extremely high levels of social trust and cohesion. 

By contrast, America is a much larger country with lower levels of social trust, and therefore, a comparison is difficult to assess. Norway, Denmark, and Sweden are not democratic socialist countries that the U.S. can be accurately compared with, and could be better described as “compassionate capitalists.” 

As such, the “democratic socialists”... are left with no successful examples of their vision, only disastrous ones.
The allure of socialism is hard to understand given the fact that 1) it has had such a calamitous effect on the economies of so many countries that have tried it, and 2) that countries in which it has been an unambiguous success have proven to be as elusive as the fountain of youth.