American Socialism (2)

Every country has its own national myths and one of ours is that we are a capitalist democracy (more on democracy another time) with no taint of the evil socialism practised by effete Europeans who spend more time in pubs, bars, and cafes than at work.

As usual this cherished national myth is full of holes. First there are the really pure socialist programs that involve a direct transfer of cash from one group (frequently the rich - but not always) to another temporarily favored group.

Some of the most egregious are:

• Social Security
• Medicare
• Medicaid
• Farm subsidies - including provision of irrigation water and grazing rights on Federal (i.e. OUR) land at prices far below what the free market would pay.
• Rural Electrification Administration (now issuing highly subsidized loans so that people who live in rural areas can have cable TV)
• The Universal Service Fund which levies a very substantial tax on our land line telephone bills so that people who live in rural areas can have highly subsidized telephone service. Perhaps someone should talk to cell phone providers in India or Africa to see how this is done affordably without taxes and subsidies.
• AMTRAK
• Public Transit which in days of old, used to make money but now, thanks to cheap gasoline combined with union driven work rules and pay scales, is a never ending drain on the taxpayer's purse.
• Taxpayer subsidized flood insurance for those stupid enough to build in a flood plain or rich enough to have a house on the beach. Usually this involves a level of risk that no commercial insurance company would take for less than $5,000 but the Federal Government (i.e. us) will take for $400. To add insult to injury, when houses are flooded, taxpayers' funds are frequently given to those who refused to buy into this highly subsidized program.
• The deduction of mortgage interest expense (an interesting reverse Robin Hood maneuver which robs from the poor to give to the rich)

I am sure that, given time, I could come up with many more but there are many other forms of socialism rampant in our society:

• Think of the fortunate few who are recipients of really cheap electricity generated by the Tennessee Valley Authority and the Bonneville Power Authority. The electricity is so cheap because the government provided the capital without charging proper interest or imposing any requirement to show a commercial profit.
• The refusal of our elected representatives - egged on by the airlines - to introduce congestion pricing at our busiest airports.
• The howls of jealous rage when some [amazingly sensible] politician suggests a congestion charge to use really crowded streets (New York's Mayor Bloomberg proposed it but was shouted down even though supposedly super-socialist London did it - where it worked).
• The insulting term ' Lexus Lanes' when another sensible politician suggests variable pricing HOT (High Occupancy Toll) roads. (Let the market decide who wants to get to work fast and whether they are willing to pay the price. Others can take public transit if they do not want to sit in traffic jams.)

The essence of capitalism - i.e. not socialism - is business failure. But now we have banks that are too big to fail (CitiGroup, Bank of America, and on and on) as well as companies that must also be bailed out (General Motors, Chrysler) or given loans when no commercial banker or venture capitalist would look at them.

Then there are

• Rent controls
• Zoning
• Licensing of barbers and beauticians (It doesn't take 600 hours of class work to learn to cut and style hair)
• New York City's iniquitous controls restricting the number of taxi medallions
• The exemption of churches and other houses of worship from property taxes
• Anti-scalping laws that prohibit a person from selling tickets to concerts, sporting, and similar events for more than list price. (Sounds like allocation by 'standing in line' which is definitely socialist)
• Subsidized housing: in addition to the above mentioned tax deductions for mortgage interest, government backed guarantees to banks that mortgages will be repaid (Fannie Mae, Freddie Mac, FHA, USDA) thereby reducing the interest cost far below the proper market price.

And finally, at least for today, the incompetence of government provided K - 12 education. It is possible to make a good argument that the taxpayer should pay for kindergarten, elementary and secondary education. Having the taxpayer write the checks is a form of insurance against the excessive costs generated by having a large family, it spreads the cost burden over time, and it removes some very strong, but undesirable and dysfunctional, market incentives for parents to send their children to work at the earliest possible age rather than sending them to school.

No one, however, can make a good argument - at least not with a straight face - that government, particularly in the form of School Boards which have been captured by Teachers Unions, should be the near monopoly provider.

There are times when markets fail - sometimes times when it is not possible for them to succeed. That is when regulation or socialist solutions are appropriate (more on that another time too) but the market option is usually best and certainly, until proven ineffective or dysfunctional, should be the first choice when we try to determine how we organize our society for maximum freedom.

So, if those who accuse President Obama of trying to turn America into a socialist paradise - or hell hole, take your pick - are willing to be rigorous about surrendering the benefits that they have received from Socialist America, I will be more than willing to listen to their arguments. Until then, I would be grateful if they kept in mind that thought is almost always of greater value than shouting