By Alan W. Dowd, ASCF Senior Fellow
MAY 2019—Not long ago, there was a stigma in America attached to the word “socialism.” It was viewed as alien and indeed hostile to the American way of life. As Reagan put it in 1967, “Our national purpose is to unleash the full talent and genius of the individual—not to create mass movements with the citizenry subjecting themselves to the whims of the state.”
But today, prominent political figures are openly advocating socialist ideas and even accepting the socialist label (see here and here). There are growing calls for government control over corporations, universal income stipends, nationalizing healthcare, and reengineering America’s entire housing infrastructure and energy grid according to standards determined by government’s “commanding heights.”
A key reason for the embrace of socialist ideas by elected officials is the eyebrow-raising support for socialism among new voting blocs. Americans born since 1981 (known as Millennials and Generation Z) will represent 37 percent of the electorate next year—and nearly 50 percent of them say they would “prefer living in a socialist country.” For anyone who believes in freedom and in America’s role defending freedom, these numbers are cause for concern.
Regrettably, these new generations of voters don’t seem to grasp that our system of free enterprise and free markets, though imperfect, has fueled the world’s progress for centuries. The technologies that make our lives easier, working hours more efficient, and leisure time more enjoyable—the technologies at which the Millennial Generation and Generation Z are so adept and to which they are so connected—are the byproduct not of socialism, but of free enterprise. “We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down,” Reagan explained. “Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success—only then can societies remain economically alive, dynamic, prosperous, progressive and free.”
That’s what the free enterprise system—better known as capitalism—enables free people to do. Characterized by high levels of individual liberty, private ownership of property and freedom of choice, this way of organizing an economy and meeting the needs of society has proven more effective than any of the alternatives humanity has tried.
Socialism—which is characterized by high levels of state control, government intervention and wealth redistribution—is one of those alternative systems. Indeed, it was the main alternative to capitalism for much of the 20th century, until its chief proponent—the Union of Soviet Socialist Republics—failed. For a time, the Soviet system’s collapse served as proof of the futility of socialism and the superiority of capitalism—especially among Americans. But with Millennials and Generation Z lacking the firsthand memory and historical understanding of the myriad problems associated with socialism, America’s default distaste for Marx’s theories is disappearing.
Our challenge is to educate Millennials and Generations Z on socialism’s shortcomings and capitalism’s benefits. A good place to start is the lessons of the Soviet Union. The Soviet state controlled every aspect of the economy and adopted the most extreme form of socialism. Yet Mikhail Gorbachev recalls how, as the Soviet Union collapsed around him, “I was ashamed for my country—perhaps the country with the richest resources on earth, and we couldn’t provide toothpaste for our people.”
Or consider the Koreas—one people separated into two political-economic systems. Communist North Korea’s GDP is $28.5 billion, per-capita GDP $1,700 (215th in the world) and average life expectancy 70 years. Capitalist South Korea’s GDP is $2.02 trillion (15th in the world), per-capita GDP $39,400 (47th in the world) and average life expectancy 82 years. As James Morris noted when he headed the World Food Program, “The average seven-year-old North Korean boy is eight inches shorter, 20 pounds lighter and has a ten-year-shorter life expectancy than his seven-year-old counterpart in South Korea.”
The Chile-Venezuela pairing offers a similarly stark contrast, as economic historian John Steele Gordon details: “Since 1975, the Venezuelan economy has shrunk by 17 percent. Chile’s has grown by 287 percent.” The reason: Chile abandoned socialism in 1973, while Venezuela embraced it in 1999. This transformed Chile (where the poverty rate has plummeted from 45 percent to 14 percent, the unemployment rate is 6 percent, the inflation rate is 4 percent, and per-capita GDP has jumped 276 percent in the past 40 years) and devastated Venezuela (where the inflation rate is a staggering 1.6 million percent, the poverty rate has jumped to 87 percent, the unemployment rate is 44 percent, the public-health system has collapsed, and some 10,000 Venezuelans are flowing into Brazil each month to seek food and medicine).
Socialism’s devastating impact on North Korea, Venezuela, Gorbachev’s homeland and everywhere else it has been tried serves as a bridge to America’s defense of freedom abroad.
America’s reach, relevance and role overseas have always been a function of America’s economic strength at home. “We cannot meet our world responsibilities without a strong economic policy which is effective at home and in the world marketplace,” as Reagan explained.
Reagan recognized that a mushrooming government diminishes America’s economic dynamism—and with it, America’s position on the world stage.
That’s why the drive to expand existing government programs and create new ones is so worrisome. Redistribution programs and entitlements already account for 50 percent of federal spending (up from 40 percent in 2009 and 26 percent in 1974), and America is feeling the crunch. In 2008, the national debt represented 64 percent of GDP. By 2013, it hit 100 percent of GDP. In 2016, it was 104 percent of GDP. And by 2020, the national debt is projected to eclipse 108 percent of GDP.
“The most significant threat to our national security is our debt,” former Joint Chiefs Chairman Adm. Michael Mullen has warned, adding: “The strength and the support and the resources that our military uses are directly related to the health of our economy.”
We simply cannot keep spending in an unsustainable manner and yet expect to keep our military equipped, postured and trained to do all we ask it to do. Make no mistake, our current spending trajectory is the very definition of unsustainable—and if Washington adopts a socialist agenda enfolding Medicare for All ($3 trillion annually), the Green New Deal ($51.1 trillion over 10 years) and Jobs for All ($2 trillion annually), there simply won’t be anything left for defense.
At $710 billion in annual outlays, defense is a juicy target for those who want to push America away from free enterprise and toward socialism. But defense is not the cause of our fiscal woes—and should never be used as a piggybank for other government programs. Defense accounts for 15.2 percent of federal spending today—down from 21 percent in 2009, down from 26.7 percent of in 1984, down from 30 percent in 1974. Given that Russia is rearming and redrawing Europe’s map, China is turning itself into a global power and annexing vast swaths of the open seas, jihadist groups are laying siege to civilization, and rogue regimes from Iran to North Korea are menacing U.S. allies and interests, the Pentagon needs every bit of that 15.2 percent of federal spending.
“We must put our economic house in order so that we can once again show the world by example that ours is the best for all who want security and freedom,” Reagan counseled. What was true in 1980, remains true today.
There’s a roadmap that will lead us toward a more sensible, more sustainable economic future. In 2010, a bipartisan federal commission appointed by the president offered policymakers a solution to our fiscal woes—and it was decidedly not socialist. Known as the “Simpson-Bowles Commission,” it proposed creating a Cut and Invest Committee to trim 2 percent from discretionary spending annually; reforming the tax code, eliminating tax loopholes and broadening the tax base; cutting congressional and White House budgets by 15 percent; freezing pay for Members of Congress and other civilian federal employees; reducing the federal workforce through attrition; ending Medicare-Medicaid dual eligibility; changing the way civil-service pensions are calculated; and gradually increasing the Social Security retirement age by indexing it to life-expectancy. The plan would dramatically reduce the deficit; keep federal spending at or below the historical average of 21 percent of GDP; ensure long-term solvency for Social Security; and steadily reduce the debt to 40 percent of GDP. Yet President Obama refused to endorse his own commission’s recommendations, and Congress never acted on them.
Neither the Simpson-Bowles Commission nor those who of us who are warning about the lurch toward socialism are proposing the elimination of sustainable, effective programs. A good and great nation should provide a safety net where it’s needed. But there must be limits on the size of the safety net, or else government runs the risk of encouraging idleness. And there must be limits on what government takes to maintain that safety net, or else government runs the risk of discouraging free enterprise.
“Government and private enterprise complement each other,” Reagan explained. “They must continue to coexist and cooperate. But we must always ask: Is government working to liberate and empower the individual? Is it creating incentives for people to produce, save, invest and profit from legitimate risks and honest toil? Or does it seek to compel, command and coerce people into submission and dependence?”
These are the trillion-dollar questions. Regardless of their good intentions, those advocating for socialism today are opening the door to more government control and less freedom at home—and less military muscle and more danger abroad.
Photo: Creator:Orhan Cam