Wednesday, March 25, 2009

Socialism here we come?

Really? Does anyone with a MIND really believe that? Can anyone take someone seriously when they say rolling back the tax code 8 years to the Clinton era before the Bush tax cuts took effect is socialism? It's too much. It's exaggeration and it makes great political theater unless you run into people who believe it! It'd be like someone on the left saying that under a Republican president any attempt to reduce the size of government would be Anarchy and we'd soon have to defend ourselves against the Mexican Drug Lords (good thing we'd have our second amendment and semi-automatic weapons) since we reduced government so much.

At least you know that anyone who goes to the extremes over small policy changes is not out to protect you but out to create fear and panic and serve their own agenda. I think that's called demagoguery and a wise man once said that is the most destructive abuse of political position (see Hitler).

Anyway - here's a great blog from an American who lived in the UK for 12 years about the over-hyped charges of socialism:

Apparently, some people believe President Barack Obama wants to turn the United States into a socialist country -- with fears that this would be a terrible step in the wrong direction. Fair to say, most people with these fears have never lived in a socialist country. I have, in Britain, for 12 years. I thought I'd share a bit about how terribly different and strange that economic system is from the one we enjoy in the United States.

It's not that different.

In Britain, you have rich people, poor people and a lot of people in between. The key difference, economically speaking, is that the poor people have a safety net both in terms of income support and universal health care. This does not come by taxing the rich people to death. Neither does this produce a huge class of people who do nothing but live off the state.

I'll expand on both of these points in a moment. But first, let me further clarify that both "sides" in the "Barack wants to make us socialist" debate haven't actually lived in a socialist country. I say both sides, but it really seems to be one side shouting loudly that this is going to happen and another side arguing it is not, rather than being "pro-socialist." No one wants to be pro-socialist, since that word sounds almost as bad as some people have made "liberal" be.

Not only have most people arguing not experienced socialism, but the term itself fails to be defined. When I hear it in commentary, usually from those who feel we're headed in that direction, it seems to be a shorthand description for an Animal Farm-esque country with high taxes where everyone gets the same amount of money regardless of how hard they work or their own personal initiative and talents.

It's been a long time since I had to study different economic models, and it is far from my area of expertise. What exactly is a socialist country? If we hit Wikipedia, it says:

Socialism refers to a broad set of economic theories of social organization advocating public or state ownership and administration of the means of production and distribution of goods, and a society characterized by equality for all individuals, with a fair or egalitarian method of compensation

Well, who wants to trust what Wikipedia says. OK, how about Encarta:

Socialism, economic and social system under which essential industries and social services are publicly and cooperatively owned and democratically controlled with a view to equal opportunity and equal benefit for all. The term socialism also refers to the doctrine behind this system and the political movement inspired by it.

So the key points of socialism:

The state owns industry
People earn equally
By that definition, Britain isn't socialist. Most of Europe isn't. But I say I have lived in a socialist country, because let's consider some of the popular ways people assume socialism to be defined. From a search on "socialist country," I came across these gems:

It estimated that Americans pay approx. 43 % of our income to local, state and the federal government in one form of tax or the other. Does this mean that if this number goes up to , say 51 % , we are technically, for the most part a socialist country ? Is it more likely that government will GROW instead of shrink ? Ron Paul fans ? (Askville)

I'm talking, like, Sweden. Where you pay a grip load of taxes, but don't usually end up being neck-deep in debt from healthcare, student loans, or stuff like that. Would you move there? Discuss. (Yelp)

I love America. I hope it remains a democracy, not a Socialist society. ... If you look at spreading the wealth, that's honestly right out of Karl Marx's mouth (Joe The Plumber)

Maybe I need to restructure this question a little bit here because I agree with you, I think we're still a center right country, but the American people did elect Barack Obama who did say he was going to spread the wealth with Vice President Joe Biden who said it's our patriotic duty to pay more taxes. Why should we be surprised that they followed through what their promises are? Back door national health care. (Sean Hannity)
The key points of socialism as I've read it in the past months according to popular accounts, usually by those who have a view to "stopping it," are:

Higher taxes on the rich, which in turn provide some services for those with less wealth
National health care
Let's take higher taxes first. If taxing rich people more is what makes a country socialist, well, Britain sure does that. However, it doesn't do it to the degree people still think is the case. Years and years and years ago, there was a time when some people with extremely high wealth could find up to 90% of their income taxed. As I've talked to many people over the years, there's still a perception that Britain and much of Europe still has taxation rates of 50% or more.

That's not the case, in Britain. In fact, as a top rate earner, I paid about the same in taxes in Britain than I did in the United States.

In Britain, I paid a national income tax of 41%. Not all of my income was taxed at that rate, just the amount above around $60,000. That income tax also included my National Insurance contribution, which is like Social Security for the UK.

In the United States, the rate is about 28% when you get above $60,000 on up to 35%, if you earn over $350,000. Cheaper, right? Ah, but I've also got a Social Security contribution to make. Plus, I live in the state of California, which has a 9.3% top rate on state income tax. Combined, it's not that far away from Britain. It certainly isn't the vast difference that many assume is the case in "socialist" Britain or Europe.

Moreover, if taxing people who earn more a higher rate is what makes a socialist country, then I guess we've been living the socialist life here in the United States for ages. For as long as I can remember, there's been a tiered system of income tax rates. How did this suddenly become a tipping point under Obama?

Now let's move to universal health care. I love America dearly. I'm proud of my country, patriotic and happy to be back living at home once again. But our lack of health care is a national embarrassment. It's shameful. We appear as a backward, savage country when you talk about our health care system compared to far more civilized countries on this front in Europe or in Canada.

In Britain, the National Health Service covered the birth of both of my children, completely. I paid for parking on trips to the hospital. That was it. Not only that, but for months afterward, a "health visitor" came to our house to do follow-up health care check-ups. I also had my kids to the emergency room on three or four different occasions, again without any cost to me. My wife had an unexpected life-threatening illness that was treated again at no cost.

Everyone is covered. People don't sell their homes in order to get treatment just to stay alive. People don't worry that they might get struck down out of the blue and lose everything. Children don't have to hope that their families are lucky enough to be under the poverty live in order to be covered, or lucky enough that their families can afford coverage. People don't live in fear there will be some pre-existing condition that's used to block coverage. They don't worry that losing their jobs means losing their health care coverage.

When you try to explain the US "system" of health care to those in Britain, you really understand just how appalling our country covers our own citizens. People simply can't comprehend the idea that people are allowed to die or get needed medical treatment simply because they are poor.

The NHS is not perfect. The hospitals can be busy. Emergency room waiting times can be long. It is a bureaucratic nightmare that constantly screams that they just need more money. At times, I desperately wanted there to be some competitor to the NHS just so some of those who had almost an entitlement attitude to their jobs got a kick in the ass. But it was far better than having nothing, and those who weren't happy with what was provided had the option to go for private care.

Nor is the UK some type of utopia. I can't speak to the coverage provided to those who lose their jobs in terms of income protection. I can say there is a strong culture of people being "on benefit," to the degree that you'd see things like movie tickets still sold in places at a lower rate to those who could show an unemployment card. But I don't think it's the case that you have a vast wasteland of unemployed slackers living off the work of others.

I don't think it's constructive at all, during the real challenge that the US faces right now economically, to simplify things as "socialist or not," especially when that term is ill-defined. Having universal health care doesn't mean being a socialist country; lacking it doesn't mean you're a capitalistic country. The reality is that the United States is far from practicing some pure form of capitalism. We have a tradition, especially since the Great Depression, of having the state provide basic benefits that protect our citizens overall.

Laws protect workers from unsafe employment practices. Laws protect citizens from unsafe food packaging. Laws and structures ensure that our money doesn't go "poof" when deposited into a bank. Laws protect us from companies gaining unfair monopolies. Laws provide us with a guaranteed retirement income (even if what's that worth seems so worthless these days).

If you've never read Upton Sinclair's The Jungle, or John Steinbeck's The Grapes Of Wrath, I strongly encourage you do so, especially if you worry that caring better for our citizens is somehow turning American into some socialist state. They are gripping novels of a time America moved away from. What we really need are more books like this now to capture the popular spirit of just how dysfunctional our current society is in caring for all of its people. It can be done -- where necessary and useful -- without taxing the rich to death and without abandoning the poor, and doing so makes us all stronger.

Postscript: Jeffrey McManus notes that the UK also charges a 15% VAT (sales tax) charge on products and services that consumers purchase. I did mean to mention this. That's absolutely true -- in fact, it used to be 17.5%. But it's not levied on everything (food, for instance) similar to how in California, sales tax isn't applied to everything. Taxes can also be much higher than in the US for things like cigarettes or gasoline (when I left last year, we were paying $14 per gallon for gas, 75% of which was due to government taxes).

In California, we also pay sales tax -- around 8%, depending on your county. That still puts the UK higher on the sales tax rate. But the main point I'm making I think is still true -- the UK doesn't have this 50%+ income tax rate that some people seem to assume is a hallmark of the country or a requirement of a "socialist" state.

I also can't stress enough that I'm not saying the UK is perfect, or that taxes in the US should go up or that everything the UK provides as a government service is something the US should do. I actually tend to want the government to provide as little as possible (since what it does provide tends to become bureaucratic, in my view) and charge as little tax as possible. There are also no end of things that either the UK government or the European Union decides it needs to regulate things that I find infuriating.

Case in point -- buy a drink in any bar in the EU. You'll see a line on the glass to ensure that you are getting the "full" amount you paid for, say a full shot glass. The drink has to be poured up to the line. It's stupid -- no one regulates the prices charged. So if one bar "shorted" you a little by not pouring a completely full shot, it doesn't matter since they might be charging you far less than some other overpriced bar that fills right to the top.

Still, I think we need a fair and renewed assessment of what basic services we should be covering for our citizens free from charged political concepts and lockstep viewpoints. Do we, as a country, think all people here should be provided with basic health care? That's not a "socialist" viewpoint to me, any more than asking if we think all children should be entitled to a basic education. At some point, the US grew up in its thinking to decide education for all was a service that should be provided, because it benefited the country as a whole. Does something benefit the country? We need to ask ourselves that, not does X, Y, Z add up into some ill-conceived political concept.

By Danny Sullivan on Mar. 17, 2009 | Permalink


Finlands finest said...

WOW! I, too lived in a socialist country for a time, and I agree 100% with the writer from the UK.

Anonymous said...

Yeah, it's a ridiculous statement.

But that's politics for you. All sides make ridiculous statements, extreme bias, hypocrisy, etc.