BY MATTHEW HERBERT
A professor of mine used to say, don’t bother debating your opponents over terminology. Let them have the terms they want; get to the heart of the dispute.
Apt advice for discussing “socialism,” at least here in America. The average American’s understanding of the term has been so warped by ignorance, mass culture, and the collective guile of several presidential administrations that it is safe to say almost no one here actually knows what it means. Many Americans do, of course, know what they mean by “socialism”–perhaps a meme about not being able to choose one’s doctor in Canada, or anything that goes on in Venezuela. Americans’ cartoon ideas of socialism are so lively it would feel unkind to dissect them. And so I won’t.
The purpose of my essay is not to try to help anyone understand what “socialism” really means. It is rather to demonstrate that our country already has socialism as it is popularly understood, and the version we have is for dummies. Time and again, our government’s interventions in the free market serve to award political power and economic advantages to the numerically tiny class that already has those commodities in great abundance, and it fools us dummies into feeling, not just good about the whole arrangement, but patriotic and self righteous. There goes America, we say, pride swelling in our hearts, rewarding the intrepid few who fight their way to the top of the heap.
In other words, I am here today to illustrate the truth of Gore Vidal’s 1972 quip that in America, we have socialism for the rich and free enterprise for the poor. Vidal was exactly right.
How can this be? Well, consider first the one thing that really steams us when we start thinking about “socialist” practices–tax-and-spend handouts that remove economic risk and therefore incentivize economic dependency and other kinds of bad behavior by the poor.
This is the moral hazard argument. We reason thus: If the maternal state steps in to stay the hand of the child reaching for the hot stove, the young sprout will never learn what the real danger is and therefore won’t be able to navigate a world fraught with risk. Excessive mothering produces poor pragmatic reasoners. A better society is attained if the state keeps a cool paternal distance and allows hand-burning to occur at its natural rate.
Our thought leaders often bring this idea to life with a cast of despicable stereotypes, such as the “welfare queen.” If we taxpayers keep unstintingly laying out lavish cash benefits for the welfare queen, where will her lifestyle of merry procreation stop? With us propping up her signature bad habit, it is no wonder she gathers so many other unsavory behaviors around her–drug use, absentee fathering, urban grammar.
Our elected officials’ most common way to frame moral hazard is the perennial topic of “entitlements reform.” The state, they say, must stop abetting the bad behavior of poor people through handouts. Our war-strapped budget simply cannot keep doling out food stamps and WIC peanut butter to anyone holding out their hands to receive these riches. Sooner or later, such profligacy will sink even our great ship of state.
But guess what kind of handouts we can afford? Much larger ones that keep the rich afloat as they do the necessary and heroic work of growing the economy. The kind of work Ayn Rand thinks we should be doing. The great bank bailout of 2008 was one such instance of massive corporate welfare. Rather than letting giant banks taste the consequences of the subprime mortgage crisis they created, our government urgently rushed cash to them, on the argument they were too big to fail. Thanks to the $700 billion authorized by the Emergency Economic Stabilization Act, many bank presidents who had been facing ruin in 2008 kept their jobs and were even able to restore their multi-million dollar bonuses in 2009. Emergency stabilized!
What else makes us think of socialism? Why, federal jobs programs, of course–big, bloated organizations of make-work day laborers who in fact accomplish nothing. If we just avoid tinkering with the labor market by creating fake jobs, real jobs would arise naturally from a rational demand for them. Market conditions will of course produce a bit of see-sawing in the employment rate, but that’s life in a dynamic, highly developed economy. Workers who are both disciplined and flexible will prosper even on the choppy sea of technological change and supply-and-demand variability.
What we don’t want is anything like FDR’s New Deal, which created jobs and whole new employment agencies out of thin air. Like cash handouts, this kind of market intervention invites moral hazard, conditioning workers to believe they deserve jobs and they can plan a future. But free-market orthodoxy says workers should not learn to kneel and sup at the trough of public funds. They must roll up their sleeves and make themselves useful to America’s private wealth creators in whatever way the market demands.
It’s nice thought, but it ignores the fact that our government in fact runs a massive jobs program, for gentlemen only, in defense and security. This program is worth hundreds of billions of dollars a year. In 2013, according to the Washington Post, our government payed out $100 billion for intelligence (just one sector of defense), 70 percent of which went to private companies, which are supposed to be the avatars of capitalism.
While I admit such companies may cultivate impressively skilled work forces and even develop significant capacity to innovate, the point to bear in mind about them is that they exist because they do precisely what we rugged capitalists say should never be done–they find a richly-endowed a teat of public expenditure and fix their mouth firmly to it. Scale seems to make a difference in how we view this behavior. The “welfare queen” who pulls in a few thousand dollars a year from the public trough is a parasite, but the CEO of a large defense firm who strikes a vein of billions is a good man doing good things for the country.
Just bear this in mind the next time you hear a rich old senator like Mitch McConnell go on about the need to reduce entitlements. He’s talking about the welfare queen’s entitlements, not the defense contractor’s. (Still less those of Amazon CEO Jeff Bezos, whos won a $2.5 billion entitlement last week through corporate tax relief.) And he’s taking money from ad men who are paid to make sure we taxpayers never draw a parallel between the two.
Which brings me to the next feature of socialism for dummies–pointless, undisciplined government spending. The histories of socialist countries offer numerous object lessons in the inefficiency of ideologically driven spending. These range from the silly to the tragic. As socialist governments created “industrial cities” throughout eastern Europe in the 1940s and -50s, they spent much more on building theaters and “literary halls” than venues of low entertainment. This in deference to Marx’s doctrine that happy, fulfilled workers would naturally wish to exercise their minds at the end of the day by writing literary criticism. What the workers wanted, but didn’t get (at first), was bars. They did get them, eventually, but only after socialist governments had wasted millions on theaters that went unused and eventually sprouted with weeds.
Anyone who has read Orwell’s Animal Farm can recall the animals’ (really just the pigs’) decision to build a large windmill to power their barn, reduce their labor and ease their lives. They spend the better part of a year putting their excess labor power into building the windmill only to have it collapse in a storm because it is poorly designed. Badly demoralized but still undaunted, they pick up the pieces and try again, still without a plan, oblivious to the fact that they’re throwing good money (or its equivalent in labor) after bad. Why do they do it? Their ruling class has determined they must. For the animals to carry their socialist project of liberation through, they must build this technological marvel. It is a sacred priority, declared by the pigs.
We also do this in America. Our defense and security jobs program is permitted by the people to grab lavish amounts of cash to spend on contract cost overruns and even projects that go nowhere. To take just the latest and most glaring example, in June 2017 the F-35 Joint Strike Fighter, built by Lockheed, had reached cost overruns of $406 billion despite having met none of its development targets. It was originally scheduled to be fielded in 2008. It is still fumbling toward partial capability in late 2018–ten years overdue and counting.
Why do we allow so much of our tax revenue (and, let’s face it, borrowed sovereign wealth) to sluice into the coffers of Lockheed and other defense giants to no good purpose? There are the usual grubby political reasons, of course, most of which have to do with pork. No politician in his right mind will vote to defund a Lockheed contract if he has constituents who benefit from it.
But the overarching, unassailable reason we allow such profane waste is an ideological one. The defense of our country is a sacred value, and we cannot put a dollar figure on it. This is what Ronald Reagan meant in 1983 when he said that “defense is not a budget item.” There is no amount of money we won’t spend on defense, even if it means slopping billions over the side of the public trough, to be supped up by billionaire CEOs and their millionaire minor coteries–American heroes all.
Often I think most Americans believe socialism is nothing but tax-and-spend government. Taxing and spending is actually what governments are for. But whatever. I’m not going to try to argue. (If you’re at all curious about this line of thought, read Stephen Holmes’ and Cass Sunstein’s excellent 2000 book The Cost of Rights: Why Liberty Depends on Taxes.)
What I have tried to argue today is that our government does tax and spend, pretty lavishly on some things. The vast majority of what gets spent, though, goes to the rich, those who have learned how to feast on the state’s largess while insisting to us of the 99 percent that they’re just smarter and harder working than us and therefore deserve to be at the top of the capitalist heap. This is a lie. You should not believe it. Our capitalist masters live on socialist entitlements, but they have convinced us we should worship them as heroes of rugged individualism. This is socialism for dummies indeed.