A new report from the White House Council of Economic Advisers warns that socialism is making a political comeback.
“Coincident with the 200th anniversary of Karl Marx’s birth, socialism is making a comeback in American political discourse,” stated the report, titled “The Opportunity Costs of Socialism.”
The report finds similarities in language employed by liberals like New York congressional candidate Alexandria Ocasio-Cortez and Sens. Elizabeth Warren, a Massachusetts Democrat, and Bernie Sanders, the Vermont independent, with that of Chinese communist leader Mao Zedong in describing the nature of business to exploit workers.
The report examines several sectors of the economy, and warns that socialism would be bad for any or all of them.
“The historical evidence suggests that the socialist program for the U.S. would make shortages, or otherwise degrade quality, of whatever product or service is put under a public monopoly. The pace of innovation would slow, and living standards generally would be lower. These are the opportunity costs of socialism from a modern American perspective,” the report said.
Implementing socialist policies would impose a crushing financial burden on the middle class, said Kevin Hassett, chairman of the council.
“If the United States implemented policies similar to those currently in place in Nordic countries, American families earning the average wage would be taxed $2,000 to $5,000 more per year net of transfers,” he said in a call to reporters, according to a White House media pool report.
It could get worse, he added.
“Replacing U.S. policies with highly socialist policies, such as Venezuela’s, would reduce its real GDP even more: at least 40 percent in the long run, or about $24,000 per year for the average person,” he said.
During the call, Hassett said socialism stifles something that is uniquely American in the private sector — innovation.
“There’s a heck of a lot of innovation in the private sector right now, in places like health care. In fact, you know, you might even argue that it’s about the most innovative sector,” he said.
Margaret Thatcher had it right about socialism: “Eventually, you run out of other people’s money to spend.” pic.twitter.com/9IwOEGmbT2
— Paul Ryan (@SpeakerRyan) October 23, 2018
Hassett noted that socialism cannot compete.
“From an economic perspective, it’s not difficult to see why socialism has not been optimal. It provides little material incentive for production and innovation — that is, for people in businesses to do what they can do to enlarge the economic pie,” he said.
“By distributing goods and services for free, socialism provides little incentive to reduce waste and robs the market of important signals as to what people want, when they want it, and where they want it.”
The report did note one crucial difference between the American politicians espousing socialist-like policies and their fellow travelers:
“We find that historical proponents of socialist policies and those in the contemporary United States share some of their visions and intents. They both characterize the distribution of income in market economies as the unjust result of “exploitation,” which should be rectified by extensive state control. The proposed solutions include single-payer systems, high tax rates (“from each according to his ability”), and public policies that hand out much of the Nation’s goods and services “free” of charge (“to each according to his needs”). Where they differ is that contemporary democratic socialists denounce state brutality and would allow individuals to privately own the means of production in many industries.”
But in his conference call with reporters, Hassett pointed out that socialism always fails.
“Even if highly socialist policies are peacefully implemented under the auspices of democracy, the fundamental incentive distortions and information problems created by large, state organizations and the centralized control of resources are also present in industrialized countries, as is currently the case in Venezuela,” Hassett said.
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