Morning Reads – Thursday, February 7, 2019

The talk about socialism isn’t about socialism. Our economy – like every economy in the developed world – is a mix of “capitalist” market institutions and “socialist” regulatory and re-distributive institutions. If the WSJ is really concerned about socialism, I look forward to the editorial board’s next column calling for an end to Social Security and Medicare. I’m sure that will go over real well with their readership.

Socialism v. capitalism isn’t a binary choice. Anyone framing the argument this way is either not that bright or operating in bad faith. The real debate is over how we structure and balance these different elements of our political economy.

None of the “socialists” running for office in the US are calling for the nationalization of industry or the abolition of private property. What they’re arguing for is a stronger social safety net and stronger governmental regulation of various industries. You can have those things while having capitalist economies (I’d argue that places like Sweden and Denmark are more traditionally capitalist than the U.S. is)

Sanders & Ocasio-Coretz need capitalism to pay for their “socialist” safety net programs. The only way to finance safety net guarantees is through tax revenue that can only be sustained through capitalist innovation, competition, trade, and growth.

Meanwhile, the GOP needs socialism to sustain capitalism. Insuring folks against bad luck and the downside risks of capitalist dynamism is how you maintain political support for “neoliberal” economics and ensure prosperity is broadly shared. Anxiety about dislocation and loss inevitably shape democratic (small d) politics… look no further than Donald Trump, whose campaign succeeded because he targeted voters who had been burned by economic instability and were anxious and uncertain about the future.

I think it’s worth quoting Elizabeth Warren on this:
I am a capitalist. I believe in markets. What I don’t believe in is cheating. That’s where the difference is. … I love what functioning economies can do. They are what make us rich, they are what create opportunity. But only fair markets, markets with rules. Markets without rules is about the rich take it all, it’s about the powerful get all of it. And that’s what’s gone wrong in America.”

Again, markets make us richer. But we need them to make all of us richer and making sure the rules of the game aren’t rigged to favor folks who already won and that regulations enable competition while protecting consumers. There’s a compromise to be had here. But it requires the GOP to get away from the notion that “the free market will provide,” because we’ve clearly seen that isn’t the case.