Franke: Socialism Still Doesn’t Work

April 2, 2019

by Mark Franke

“I have seen the future, and it works!” wrote the journalist Lincoln Steffens after visiting the Soviet Union in 1919.

Except that it didn’t.

Why bring this up now, nearly 30 years after the fall of the USSR and its communist- totalitarian system of repression and deprivation? Because a new generation of political rock stars have been anointed by a slavering press, rock stars who gush on about how socialism is what America needs. Whether it is from grumpy Bernie Sanders, AOC (she even is given a rock band kind of name) or the Quixotic mayor of South Bend currently tilting at the Democratic nomination windmill, the mantra is the same.

One would think that with all the imploded Communist regimes that are on Ronald Reagan’s “ash heap of history” the book would be closed on failed Marxist-Leninism.

Which are the current socialist nations that can offer us a valuable insight into how socialism works in the real world as opposed to what is believed in the chic salons of the coastal elites? How about Venezuela, once the richest nation in South America and now the poorest? Cuba? North Korea?

But wait, the new socialists cry. They want to put the adjective “democratic” in front socialism, thinking that makes it kinder and gentler. Remember all those Democratic Republics of Wherever, most of them dictatorial Soviet satellites? Pointing to the so-called social democracies of Europe won’t work either, as these are simply over-taxed welfare states fueled by whatever economic surplus can be squeezed out of the profits of capitalists and the middle class.

Our greatest Supreme Court Chief Justice John Marshall declared in the landmark McCulloch vs. Maryland that “the power to tax is the power to destroy.” It is just this destruction that socialism performs with its unquenchable thirst for more and more government spending, fed by higher and higher tax rates on a smaller and smaller productive class.

But eventually the goose stops laying the golden eggs, as we learned from Aesop. Arthur Laffer theorized in his namesake Laffer Curve that tax rates become confiscatory at some level. After tax rates rise to this point, they produce less, not more, tax revenue since the incentives to work and take investment risk are just not worth it anymore.

Margaret Thatcher summed it up nicely: “The problem with socialism is that eventually you run out of other people’s money.”

Sweden, for one, has been backtracking on its flirtation with socialism. It cut public spending, reprivatized state-owned businesses such as the railway system, lowered taxes, completely eliminated inheritance taxes and put in place a full school-choice voucher system. This all came about after its economy reached the crisis point with inflation at 10 percent and interest rates soaring to 500 percent for a brief period.

Sweden still has high tax rates, as much as 60 percent on incomes even below the average. Why not soak just the rich? “Because the rich people might leave,” according to Swedish historian Johan Norberg in an article published by Reason magazine.

Note how people tend to vote with their feet, leaving these socialist nirvanas for places where freedom rules. That includes the freedom to own and dispose of property without government interference or confiscatory taxation. That is, if they can legally leave or have the financial wherewithal to get out of there. The border crises faced by many free states is one of too many people trying to get in, not people trying to get out — and guess from where they are coming.

Here’s a thought: Maybe our border crisis will be solved once the Democrat (with an uppercase D) socialists have their way with our economy and liberty. No one will want to come here anymore.

Seriously, though, our children and grandchildren will have to contend with the wreckage that socialism, democratic or otherwise, leaves. And apparently they just don’t get it. A poll of Millennials last summer showed that 51 percent have a positive view of socialism. Investor’s Business Daily recently debunked this incredibly naïve and ignorant attitude in an editorial cleverly entitled: “Millennials May Love Socialism, But Socialism Won’t Love Them Back.”

Friedrich Hayek called this “the Road to Serfdom.” That is the true face of socialism today.

Mark Franke, an adjunct scholar of the Indiana Policy Review, is formerly an associate vice chancellor at Indiana University-Purdue University Fort Wayne.



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