The Socialist Myth

[Gone4Good]

Of the many ridiculous hyperbolic claims that pass for truth these days the one expressed most frequently is that the U.S. is, or is becoming, a socialist state. The truth, though is that the U.S. is far less “socialist”, and government intervention in the private sector is far smaller, than it was at nearly any time in the past 80 years.

Here’s an article about how the 1996 Welfare Reform law is keeping the growth of welfare recipients below 10% notwithstanding a more than doubling of the unemployment rate.

Or consider . . .
- The median top marginal tax rate from 1920-2010 is 70% versus 35% today
- Union membership has declined from 36% of all workers in 1945 to 13% today
- Social Security was reformed in 1983 to be less generous
- Welfare reformed in 1996 to be less generous
- Many industries regulated in the 30’s have been deregulated – Rail & Truck transportation deregulated in 1971, natural gas deregulation in 1977, airline deregulation in 1978, interstate bus deregulation in 1982, ocean shipping deregulation in 1984, Telecommunications deregulation in 1996, and Glass-Steagall repeal 1999 . . . among others.
- Wage & price controls 1971-1973


Looked at objectively, it is very hard to say we're a more socialist country today than we were in say, 1950. But yet many people [-]are told[/-] assume we are.

 

[ejman]

Interesting when you put it on a list. Substantial deregulation over time yet it would appear (subjectively from what I see @ the media) that most people don't feel they are better off today. I don't know why.

 

[FIREd]

That word, "socialism", has been so mangled over the years that it has become virtually meaningless anyways. In the US "socialism" is used to describe any deviation from capitalism, in China it is used to describe any deviation from communism, and in Europe it is used as a catch-all term to loosely describe any left-of-center ideology. There are so many shades of gray here that I don't really know what "socialism" means anymore.

What I know for sure is that deviation from capitalism in the US didn't start under Obama... Social security, Medicare, food stamps, unemployment insurance, progressive tax system, all go back several decades.

 

[Focus]

Yes, it's a fallacy -- obviously so, when one compares it to our past, as you do. And also obvious when one compares the U.S. to other industrialized nations. But then exceptionalism (another fallacy, it can be argued) is rampant, so there's rarely much credence given to what other nations are doing.

I took a logic course back in college, and it helped make me aware of all the different ways people use fallacies to argue a point (see this wikipedia page for a list). The media, instead of serving as a counterbalance, generally promote and elaborate upon the fallacies.

The Web has only made things worse, accelerating the fallacy of "false attribution" (occurring "when when an advocate appeals to an irrelevant, unqualified, unidentified, biased or fabricated source in support of an argument").

 

[samclem]

What the US is experiencing is not socialism (usually defined as government or public ownership of the means of production).

We are experiencing the unprecedented intrusion of government into our lives. Lots of government involvement to help people they believe are too dull to know what is good for them. And lots more taking of private property for government use (including redistribution to others).

I'd call it "collectivism", not socialism.

There could be several reasons people feel things are moving in this direction. We've had some recent legislation that definitely fueled the fire. and, one good and objective indicator of how much control the government at all levels exerts is to look at how much the government spends as a portion of the total economy.

Government spending (all levels):


Maybe this has some relationship to the present public unease and the backlash.

 

[Gone4Good]

We are experiencing the unprecedented intrusion of government into our lives.

You mean more intrusive than Nixon's wage & price controls?

 

[ziggy29]

Socialism isn't an all-or-nothing thing. To say "we are socialist" is like seeing various shades of gray and seeing it as either black or white.

There are periods of time when the color gets a little lighter or a little darker, but never is it either pure black or pure white. Yes, we're moving in the bigger government direction now, but history shows that the mood of the electorate tends to look like a pendulum -- constantly going from left to right and left to right, through and overshooting the center. At some point, we'll collectively decide we have too much government and scale it back. Lather, rinse, repeat.

Yet we live in a time of 24/7 "news" from cable, talk radio, bloggers and such, all with their own distinct point of view. Doesn't matter whether it's a right wing news outlet decrying all government programs and interventions as "socialist" or a left wing news outlet which can't stop insulting and attacking the Tea Parties. They all give a slanted view and audiences which selectively don't want to think outside their own comfort zones eat it up. We live in a media era when no one has to entertain the idea that they might be wrong and that maybe, just maybe, the "other side" has some good points and some good ideas. And I think that's contributing to the death or respectful and civil political discourse -- too many people are becoming too intransigent.

P. S. -- thanks for keeping it civil so far.

 

[Gone4Good]

Yes, it's a fallacy --

Nailed it.

 

[brewer12345]

You mean more intrusive than Nixon's wage & price controls?

Or how about the time of the House UnAmerican Activities Committee?

 

[ziggy29]

- The median top marginal tax rate from 1920-2010 is 70% versus 35% today

Speaking of fallacies, it's a fallacy to use a drop in median (and top) marginal tax rates an example of "less government" or "less taxation of the wealthy" when you don't also factor in the corresponding elimination of most loopholes and deductions.

How many people really *paid* the 70% rate with much of their income? When that was in effect, there were a *lot* more tax shelters in place -- and no AMT. It was much, much easier (and many would say less economically productive) to put massive amounts of income into tax shelters where high earners could easily avoid ever tripping a 70% bracket.

Not accounting for that is a major flaw in the reasoning, IMO. When my property tax *rate* is cut 5%, it doesn't feel like a cut when the appraisal is up 10%. Rates only tell part of the story.

 

[mickeyd]

There is nothing wrong with being a socialist, it's just the denial of that fact that seems to rub many folks the wrong way. A lot of people think that it's some kind of slam to be called a socialist or a liberal, but have no problem with being known as a progressive. I've never quite understood this, but there are many, many things that I do not understand, this being but one of them.

 

[samclem]

You mean more intrusive than Nixon's wage & price controls?

They were bad. They are gone. That is good.

Before you mention it--we also had rationing in WW-II, and internment of American citizens. So, there have been other outrages.

 

[Gone4Good]

Speaking of fallacies, it's a fallacy to use a drop in median (and top) marginal tax rates an example of "less government" or "less taxation of the wealthy" when you don't also factor in the corresponding elimination of most loopholes and deductions.

How many people really *paid* the 70% rate with much of their income? When that was in effect, there were a *lot* more tax shelters in place -- and no AMT. It was much, much easier (and many would say less economically productive) to put massive amounts of income into tax shelters where high earners could easily avoid ever tripping a 70% bracket.

Not accounting for that is a major flaw in the reasoning, IMO. When my property tax *rate* is cut 5%, it doesn't feel like a cut when the appraisal is up 10%. Rates only tell part of the story.

Valid point. But it may also just be another fallacy. Do you know of any study that compares effective tax rates by income group across time?

Update . . .
Here's one stab at it. I make no representation of the quality of this report, but here is a study that claims to look at effective tax rates. This is a chart that someone created from the report.

 

[Gone4Good]

They were bad. They are gone. That is good.

Before you mention it--we also had rationing in WW-II, and internment of American citizens. So, there have been other outrages.

For sure, but that is my entire point. The current level of government intervention isn't at all unprecedented. On the contrary, it is actually quite mild compared with our own history and incredibly low when compared with a real socialist country.

 

[donheff]

We are experiencing the unprecedented intrusion of government into our lives. Lots of government involvement to help people they believe are too dull to know what is good for them. And lots more taking of private property for government use (including redistribution to others).

I'd call it "collectivism", not socialism....one good and objective indicator of how much control the government at all levels exerts is to look at how much the government spends as a portion of the total economy.

Doesn't feel that way to me. Maybe some of the chart gurus can compare federal spending as a proportion of GDP sans Medicare and Medicaid. They are a huge drain but how many of us feel that they amount to intrusion in our lives? How many would actually vote to abolish them? With the massive deregulation and privatization over the past three decades I feel like its actually the reverse. The bigger fear of "intrusion" these days seems to be coming from private companies who mine our every transaction.

I do think many people our age feel the Government is "intruding" because of court decisions and laws on topics like religion and sexuality that appear to reach down into our lives. But most of those decisions/laws simply protect groups that were subject to "intrusion" on their rights in the past.

 

[samclem]

Maybe some of the chart gurus can compare federal spending as a proportion of GDP sans Medicare and Medicaid. They are a huge drain but how many of us feel that they amount to intrusion in our lives? How many would actually vote to abolish them?

I don't see the reason for "not counting" these programs. It's money taken from people, right? It doesn't matter if the program is "kind", or popular, or well entrenched. When government takes property for redistribution to others, that's collectivism, isn't it?

For those on this board who are younger than 65, government at all levels is now spending more, as percentage of our nation's economy, than at any time since you've been alive. And well above the average. This, plus the vector (more of the same promised by our leadership), plus the recent legislation, plus talk of more "good ideas" coming, plus the statements of our leaders (regarding money, a stated desire to have government "spread it around" hardly encourages the public to believe a politician is a booster of private property rights).

"We're not socialist" is a strawman. Are we more or less free with each passing year? Free to succeed, free to fail, free to make our own decisions and to be left alone.

 

[billin]

The top income tax rate was 70% before 1920? Sounds like pure BS. The 16th Amendment wasn't even ratified until 1913. The top rate in 1913 was 7% on incomes over 500,000.00 and up. The myth must be that here was trjuth in the article.....

 

[unclemick]

We need to send some of those more dorky Americans to socialism school in Sweden so they can get it right and know what they are talking about.

I who grew up in PUD land am a mere amateur.

And that's no Norwegian joke.

heh heh heh - as for 'intrusion' try running thru airports like O.J. did way back in that ad when he was young. Times change.

 

[Gone4Good]

The top income tax rate was 70% before 1920? Sounds like pure BS. .

Good thing nobody said it was.

 

[clifp]

They were bad. They are gone. That is good.

Before you mention it--we also had rationing in WW-II, and internment of American citizens. So, there have been other outrages.

Actually the socialism during WWII was quite extreme. In addition to the massive draft, civilian and business behavior was regulated by a vast array of bureaucrats

Not only was there rationing of host of product but selling of rationed products was generally illegal, (blackmarket) In addition a whole host of other activities were restricted. The prices of many industrial and consumer products were regulated by the Office of Price Administration. Many companies were not allowed to sell their products to who they wanted and what every price the market would bear, but instead had to ship products (like steel or coal) to which ever firm the government deemed the most critical. Of course entire industries like the auto, aircraft and appliance were order to switch from civilian to military production for the duration.

Not only were the wage of top executive controlled but also line worker wages were controlled by National War Labor Board. One of the reason we have employee health insurance is that Henry Kaiser in scheme to make working at his shipyards more attractive provided on site health care. He did this because he couldn't raise wages because of the NWLB.

The flow of labor was also restricted and regulated. If you had a critical skill say aircraft welding you weren't allow to quit your job and work for a different company, without approval. People ability to move where they pleased was also regulated, notably you generally needed permission to move to either Washington D.C.or Hawaii. Hawaii spent most of the war under martial law, and all civilian authority (including the courts) was replaced by a military governor.

One of the ironies of WWII, is that Nazi Germany had far more free-market and even entrepreneurial economy than the US did. Of course our socialist economy out produced Germany and Japan combined in most armaments.

 

[ERD50]

Seems odd to claim something is a 'myth' without even defining what "it" is. Unless one is just trying to make an empty proclamation.

Nailed it.

Yes, if your definition of 'nailed it' is 'you agreed with me'. Esp considering no facts were presented in the 'nailing', just opinion.

-ERD50

 

[donheff]

Doesn't feel that way to me. Maybe some of the chart gurus can compare federal spending as a proportion of GDP sans Medicare and Medicaid. They are a huge drain but how many of us feel that they amount to intrusion in our lives? How many would actually vote to abolish them? With the massive deregulation and privatization over the past three decades I feel like its actually the reverse. The bigger fear of "intrusion" these days seems to be coming from private companies who mine our every transaction.

I do think many people our age feel the Government is "intruding" because of court decisions and laws on topics like religion and sexuality that appear to reach down into our lives. But most of those decisions/laws simply protect groups that were subject to "intrusion" on their rights in the past.

I don't see the reason for "not counting" these programs. It's money taken from people, right? It doesn't matter if the program is "kind", or popular, or well entrenched. When government takes property for redistribution to others, that's collectivism, isn't it?

For those on this board who are younger than 65, government at all levels is now spending more, as percentage of our nation's economy, than at any time since you've been alive.

"We're not socialist" is a strawman. Are we more or less free with each passing year? Free to succeed, free to fail, free to make our own decisions and to be left alone.

The reason I suggested "not counting" Medicare and SS spending "" is that I don't see many people agreeing that they represent government intrusions into their lives. Outside of these areas I suspect the increase in government spending (and thus the area for real intrusion) is not great. I do recognize that government involvement in those areas has greatly increased -- I just don't see it as an intrusion.

To my mind the biggest recent intrusions of government involve overreactions in the war on terror. I doubt that these represent much of the cost curve. I do worry that commercial interests are making me less free and that they influence government to insure that they are uncontrolled in their actions.

 

[ziggy29]

I do worry that commercial interests are making me less free and that they influence government to insure that they are uncontrolled in their actions.

Frankly, I think both increasing government *and* increasing corporatism are potential nuisances, at times "attacking" us from different angles but to (sometimes) the same effect in the end.

 

[Gone4Good]

"We're not socialist" is a strawman.

It's hardly a "strawman". It's a reaction to the very specific claims, here and elsewhere, that we are in fact a socialist nation.

Since almost all other industrialized social welfare nations have a VAT, and since the US has recently become a flat out social welfare nation ( though perhaps not exactly an industrial one), why wouldn't we turn to the same revenue sources that have proven so powerful in other countries?

So if people want to casually throw around this notion, then maybe they can step up and defend it.

Are we more or less free with each passing year? Free to succeed, free to fail, free to make our own decisions and to be left alone.

I don't see how I'm any less free today than I ever have been. Someone will have to show me exactly what I can't do today that I was able to do before (airport security aside). I know that I'm free to choose a telephone provider, whereas in the past I couldn't. Same too with natural gas and electricity (in some states). I'm free to fly regional airlines. I know that broadcasters are more free to broadcast vulgarity, and I'm more free to hear it if I wish. And more importantly, I know that compared with prior decades women and minorities have far more freedoms than they once had.

 

[FinanceDude]

I don't see how I'm any less free today than I ever have been. Someone will have to show me exactly what I can't do today that I was able to do before (airport security aside). I know that I'm free to choose a telephone provider, whereas in the past I couldn't. Same too with natural gas and electricity (in some states). I'm free to fly regional airlines. I know that broadcasters are more free to broadcast vulgarity, and I'm more free to hear it if I wish. And more importantly, I know that compared with prior decades women and minorities have far more freedoms than they once had.

Are you free to choose your own healthcare in 4 years?