Political candidates, politicians and activists are trumpeting the promise of so-called democratic socialism: a free, easy and “equal” life. The reality is painfully different.
That promise is based on the false narrative that democratic socialist governments reduce income inequality by raising the living standards of people at the lower end of the scale, at no cost to them; costs are covered by increased taxes levied on the super wealthy, who “have more money than they need.”
There are never enough wealthy people, however, to cover the costs of “free” healthcare, college or any other national give-away program. As David Burton’s Heritage Foundation report is titled, “It is Arithmetically Impossible to Fund the Progressive Agenda by Taxing the Rich.” Consequently, income inequality is reduced by raising taxes across the board, making everyone poorer.
Another reality is that income inequality typically isn’t reduced. Wealth is simply shifted from those who earned financial success to those who gained political power. The bureaucrat class becomes the dictator of income distribution while the primary targets of increased taxation move somewhere with less burdensome taxation or achieve the political power needed to reduce their tax burden.
While there are countries that have reduced income inequality by using taxation to redistribute wealth, this robbing from the rich and giving to the poor paradigm has proven unsustainable. An Organization for Economic Cooperation and Development (OECD) report finds that while Sweden, the oft-cited role model, still belongs to the group of “most equal OECD countries,” it has seen “a rapid surge of income inequality since the early 1990s.”
Another example is Denmark, but Denmark, in fact, taxes the poor to feed the poor. An Acton Institute article reports, “The government confiscates more than half of virtually all incomes. Low-income Danes pay an effective marginal tax rate of 56 percent; the middle class pay 57 percent.” That’s in addition to a 25% Value Added Tax on goods and some services and an 8,100 krone ($1,200) annual ownership tax on pickup trucks.
Like traditional socialism, democratic socialism is akin to a monarchy. As history demonstrates, ultimately it doesn’t matter whether monarchs or elected officials confiscate their money, the citizens revolt, either through violence, legislation, relocation or deception.
Democratic socialists maintain theirs is a completely different animal than traditional socialism: “Socialism is based on an all-powerful government bureaucracy,” goes the argument. “We believe that the workers and consumers who are affected by economic institutions should own and control them.”
Yet the Democratic Socialists of America (DSA) website states, “While the large concentrations of capital in industries such as energy and steel may necessitate some form of state ownership, many consumer-goods industries might be best run as cooperatives.”
The mechanisms may be different, but the end goals are the same: increased taxation and government takeover or control of private businesses. Confiscation is the only way private industries can come under state control or be run by cooperatives. In the private sector, such confiscation would be called theft. Aside from the resulting inefficiency when government wrests control from people who founded and invest in private corporations, such actions effectively kill the entrepreneurial spirit.
They also kill any viable retirement options other than a government pension. The same “evil corporations” that make executives and shareholders wealthy provide exceptional incomes to holders of privately managed 401K and individual retirement accounts. With state or cooperatives taking over, retirement income opportunities will be minimized and ultimately eliminated.
At its core, democratic socialism is nothing more than a deceptive scheme to bring a warm and fuzzy feel to government control of industry and most aspects of life. The promised benefits of “social ownership” will be short-lived, if they materialize at all. Ultimately, as the pain of socialism materializes, democratic socialism in America will crash and burn.
The examples of Northern European countries that operate under democratic socialist governments don’t relate to the United States. For nations that once were monarchies or dictatorships, democratic socialism is the lesser of evils. Yet even under the lesser of evils, these countries are unable to compete with the U.S. economic engine.
The success and attractiveness of the United States of America is largely the result of the economic opportunities guaranteed by its Constitution and inherent in its capitalist system. For hundreds of years, immigrants have come to this country to escape the chains of monarchies, dictatorships and democratic socialism. Creating those chains where they don’t exist is not only a step in the wrong direction, it’s a recipe for financial pain at all income levels.