A Third Choice in a Binary System

Link to Medium Article

We’re at a pivotal point in society.

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The Situation

In some ways, I think I know what my parents’ generation (born 1910–1924) felt when their kids (Early Baby Boomers) didn’t see communism as an existential threat to the United States. The differences are:

1. communism wasn’t knocking on the door of the White House, and
2. my brother’s half of our generation were (rightfully) protesting dying in a war against an ideology most of them didn’t embrace anyway.

My brother’s generation were not communists. Like many young people of every generation, they didn’t understand much about economics and they tended to let their “feels” make their decisions for them, but most of them liked the perks of capitalism and most of them had at least an inkling that they didn’t want to live in a Soviet-Marxist society. Exceptions existed, of course — hence, Bernie Sanders.

The situation today is very different from 1972.

History

In the 1972 election, George McGovern’s platform advocated:

1. withdrawal from the Vietnam War in exchange for the return of American prisoners of war
2. amnesty for draft evaders who had left the country
3. an anti-war platform (although he didn’t rule out military action if the Vietnamese refused to release American POWs)
4. an across-the-board 37% reduction in defense spending over three years
5. a “demogrant” program to replace the personal income tax exemption with a $1,000 tax credit as a minimum-income floor for every citizen in America to replace the welfare bureaucracy
6. support ratification of the Equal Rights Amendment

As a libertarian, I don’t object to the first four points, I think the 6th is totally unnecessary, and there’s a now-former presidential candidate advocating for something similar to the 5th point. McGovern was an antiwar candidate who wanted to get rid of the welfare system by creating a universal basic income scheme that would have failed and by now, Andrew Yang would have nothing to talk about. I know it would have failed because I live in Alaska where it is currently failing and that’s even with it being supported by something more real than the federal income tax base (the mineral wealth of Alaska). That’s another topic I’ll discuss some other time.

2020

Now let’s look at what the frontrunner for the 2020 Democratic nomination is promising.

Bernie Sanders was the frontrunner in the Democratic 2020 primary polls until Super Tuesday when the Democratic leadership marshaled its forces to assure he won’t be the nominee. I wouldn’t be surprised if he runs as a third-party candidate, which will assure the Democrats lose in November. In the meantime, expect violence outside the Democratic convention and an attempt to put him on the ballot regardless of the primary polls. That he got so close to the nomination should concern us all.

Sanders promises a massive redistribution of income in this country through wealth transfers from the “wealthy” to the “poor”. Sanders advocates for:

1. Medicare for all, a government single-payer system and demands lower prescription drug prices (pegged to the median drug price of Canada, the UK, France, Germany and Japan.
2. Cancellation of all medical debt (an estimated $81 billion in past-due medical debt).
3. guaranteed “free” post-secondary education.
4. raising the federal minimum wage to at least $15 an hour
5. doubling union membership
6. enacting a federal jobs guarantee with the aim of a full-employment economy.
7. giving workers ownership stakes in the companies they work for and equal say on company boards (all publicly-traded companies would be required to have at least 20% employee ownership)
8. a federal tax on “extreme wealth” (an annual tax on the total gross wealth of from 1–8% with the purpose of eliminating billionaires entirely).
9. a progressive estate tax
10. a progressive corporate tax rate increases
11. a Wall Street tax
12. Wall Street reform
13. create a Bureau of Corporate Governance in the Department of Commerce that would force corporations into a federal charter system that would require them to consider the interest of all stakeholders, not just shareholders.
14. ban large-scale stock buybacks
15. free child care and pre-K for all
16. he’s signed onto a version of the Green New Deal, promising to reach 100% renewable energy for electricity and transportation by 2030 and complete decarbonization by 2050.

Wholesale Economic Takeovers Are Usually Bad for Individualism

Bernie Sanders’ platform amounts to a Wholesale takeover of the American economy at almost every level. It all adds up to a whole lot of taxes and taxes have a way of rolling down from the “wealthy” to the middle class and even the working poor. That was the lesson we all should have learned from the federal income tax, which started in 1917 at 1% on income of $0–20,000 up to 7% on income of $500,000 and up. By World War 2, taxes peaked at 94% on income over $200,000 (about $2.5 million in today’s dollars). Those making $0-2,000 paid a tax rate of 23%. Today, those in the $0-$9,700 bracket pay 10% (but are usually eligible for all of that back in a refund), while top ratepayers making $510,301 or more pay 37%.

Moreover, what Sanders is promising is the suppression of investment and deep mining of investment income in the US. Naturally, investors are terrified of a Bernie Sanders president and ordinary people should be also.

His proposals all represent major hits to the earnings of almost every large company in the United States. Don’t think that matters to you? Do you enjoy low consumer good prices? Would you like to go back to the days of paying $1000 for an I-Phone? Do you have a retirement account that is invested in the stock market? Are you enjoying good growth there currently? That goes away under a Sanders presidency because investors will be forced to hide their income or off-shore it and those of us who are small-potatoes will pay the price when the big-players exit the market.

Sanders Appeal

So why is Sanders doing so well in the Democratic primaries?

Because unlike the Greatest Generation, who didn’t understand the temporary view of their children on the Vietnam War, we raised Gen Y and Millennials as economic illiterates and spoiled rotten brats. How did we do that?

We raised them to believe that college was 100% necessary and then we made college unaffordable with a raft of government programs designed as tuition supports that produce unintended (and completely predictable) consequences. The cost of college tuition has risen by six times more than the rate of inflation since the 1980s, strangling millions of young Americans with college loans that seem impossible to repay. (“Seem” because a lot of people have figured out that continuing to live as though you’re in college after you’re employed pays those loans down quickly).

We raised our kids to believe they were special and worth listening to from birth. I know. I love my kids too, but I also taught them college should be a debt-free enterprise and that they would learn wisdom as they grew older (a fact that at 27 and 21, they both admit to, the 27-year-old more than the 21-year-old). Meanwhile, the establishment in both political parties ignored young voters, who were raised to believe they were the most important people on the planet. To be told they need to cough up the Social Security payments of their (to their eyes) wealthy grandparents flew in the face of their belief in their own superiority. To also have the ACA’s mandates fall most heavily on them right when they needed an income to pay down their loans was frankly unfair. Since they don’t know how economics works and the Obama administration didn’t either, they ended up feeling put upon, which warmed them up for socialism’s empty promises.

We raised them to believe America is a horrible place and in crisis. For the last 12 years, the Democratic establishment has insisted that the Republicans were plotting to bring down the “free world”. The “tea party” (a loosely-affiliated grassroots movement of mostly middle-class people) was demagogued as white supremacists in league with the KKK. Every little phrase or action from people concerned about the increasing size and cost of government became a dog-whistle for “racism”. For the last three years, the Democrats have insisted Trump supports white supremacy and is controlled by Russia’s President Vladimir Putin.

Clearly, the world is ending and moderate Democratic candidates just won’t do in such a crisis.

To Be Fair

Meanwhile, the Republican establishment during the Obama administration told their partisans that the growing national debt was going to eat the economy (which it will, eventually), but then stopped talking about it when Trump became president and continued spending at Obama-era rates.

That hypocrisy did not go unnoticed by younger voters. There appears to be a step toward the libertarian section among young people of a more fiscally-conservative bent. They’re not buying Bernie’s socialist claims, but they’re also not buying Republican claims any longer. (I predict a major reshuffling of both major parties either in 2024, but that’s another post as well.)

Comparing Two Ideologies

It currently looks like Sanders will not be the Democratic frontrunner going into the convention, but the Bernie faction is either going to demand a Biden running mate with a Marxist bent or they’ll vote third-party. Will the Democrats give them what they want?

Biden shows clear signs of dementia and he’s a year younger than Bernie (who recently had a heart attack), so don’t expect him to be the actual nominee. Or if he is the nominee, he’ll have a running mate who is younger and healthier. The Democratic Party establishment doesn’t want to kill the goose that lays golden eggs and installing an out-Marxist in the White House wouldn’t really feed the goose. They want someone who sounds just socialist enough to prevent Bernie supporters from voting for Trump or the Libertarian candidate, but they want someone they can control.

I’m kind of sad that Bernie won’t be in the race in November, but I was looking forward to the comparison between two economic systems with widespread political fallout.

Socialism

Socialism to the extent Bernie Sanders proposes is not possible without restrictions on democratic liberties.

Socialist planning cannot coexist with individual rights. Under socialism, culture must produce “some form of commitment to the idea of a morally conscious collectivity, antagonistic to a bourgeois culture which encourages the primary importance of the individual”, which naturally asserts the rights of individuals to speak their minds freely and act as they wish within reasonable grounds.

Economic centralization requires authoritarian control over the lives of every individual in the country.

Medical care centralization will require rationing and care dictates throughout the country (these have already increased under the ACA).

Education “reform” means more centralization and the elimination of diversity of ideas because a central office will have to make decisions for everyone on a one-size-fits-all basis.

And it all adds up to about $42.5 trillion over 10 years (or $4.25 trillion a year).

Current federal estimates for tax revenue are $44 trillion over the same period with a deficit of roughly $12.4 trillion. THAT’S ON TOP OF ALL THE SPENDING WE’RE ALREADY DOING. We’d go from the government being about 18–22% of GDP to between 40–50% of GDP. Include state and local governments, and the total government spend works out to around 60% of GDP.

Even with massive cuts to defense, you’d still come out with a $34 trillion shortfall over 10 years. You’d need to seize 100% of all corporate profits, plus 100% of all income above $90,000 (per individual) or impose a VAT tax around 87% on all consumer transactions to cover all that spending.

History also shows that the vast power necessary to establish and maintain socialism naturally attracts unscrupulous people who prioritize their own interests over those of society. Moreover, socialism typically destroys the production incentives of ordinary people. They used to joke in the USSR and Eastern-bloc countries — “They pretend to pay us, so we pretend to work.”

Oh, I know. That wasn’t REAL socialism. The communism regimes of the past were dictatorships. If they’d been “democratic socialism”, the leaders would have made the system work for the benefit of the people because the voters would have “thrown the bastards out” at the next election.

I call shenanigans on that. How many socialist societies have to be tried before we accept that what they became was REAL socialism? It’s highly unlikely these mythical “democratic” communist-socialist states would remain democratic for long. Democracy requires effective opposition parties that are able to put out their messages and mobilize voters. That requires extensive resources. In an economic system in which nearly all valuable resources are controlled by the state, the incumbent government easily stranges opposition by denying them access to those resources. Under socialism, the opposition can’t function if they’re not allowed to spread their message. It may not start out that way for President Bernie Sanders, but it will end that way for the American people if we elect him because Sanders advocates for a wholesale takeover of the journalism as well as medical care, education, and the economy.

Mercantilism

I’m not a Trump supporter so I’m not uncomfortable pointing out that Trump is NOT a capitalist. He may be a capitalist in his business dealings, but as president, he has conducted himself as a mercantilist. This makes sense if you recognize the US hasn’t been a free-market economy since the 1860s and has become an increasingly mixed-economy since World War 2. We are already socialism-lite and most of the economic issues we have currently can be traced to the mercantilist/socialist/fascist features of our economy. Capitalism can only succeed in the US if it cozies up to the government in a crony-capitalism system, no better explained than by the Wall Street bailouts of 2008 and 2009. Economically, we have far more in common with Scandinavian big-welfare countries than we do more free-market Hong Kong or Estonia.

Mercentilism isn’t often thought of these days. We tend to think of it as something from the 17th century, but the concept of mercantilism is “the economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances, which a government should encourage by means of protectionism.” That’s Trump. That’s crony capitalism. That’s not capitalism.

We’ve Reached a Pivot

So the real argument we will face this election cycle is —

1. Do we want to remain in this quasi-free-market or
2. Do we want to go fully socialist and become the American European Union just as the European Union is waking up to the damage it is doing to the European economy and the natural rights of individuals?
3. Do we throw caution to the wind and elect a third-party candidate who takes us toward a more capitalist and individual-liberty-based system.

As I said at the beginning, we are at a pivot point for our society. We’re either going left toward socialism, which requires authoritarian central planning and probable eventual totalitarianism or we’re holding steady with a mercantilist mixed-economy that’s not working for most people and will eventually lead us to Door #1 anyway. But the pivot point gives us an opportunity to consider a third option — if we’re willing to think outside the two-party box that has defined us forever.

Vote third party in 2020 because doing the same thing over and over again expecting different results hasn’t worked so far.

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Lela Markham is an Alaska-based novelist and blogger interested in a variety of topics, mostly from a libertarian perspective.