The Case Against Socialism

by Rand Paul

  Fukuyama tries to convince us that history is headed toward a liberal, democratic utopia. But regimes of the twentieth century inform us that the “end of history” can go either way. While there is an argument that many countries have headed away from the autocracy of the Iron Curtain, there still remain plenty of countries clinging to the model of a single-party, strongman rule.

  Dostoyevsky would argue that part of the recognition of self-worth is that “most advantageous advantage” of free will, even the freedom to act simply out of caprice. For Hegel and Fukuyama, though, recognition comes about by war. Fukuyama and Hegel seem blasé about war. Fukuyama writes unemotionally that “war is fundamentally driven by the desire for recognition. . . .”9 Hegel saw war as necessary: “War protects the people from corruption which an everlasting peace would bring upon it.”10

  Kimball quotes the German thinker Hans Blumenberg: “If there were an imminent final goal of history, then those who believe they know it and claim to promote its attainment would be legitimized in using all the others who do not know it . . . as a mere means.” Once the “final solution” is believed to be an option, it becomes certain that some totalitarian, a Hitler or a Stalin, will use that “ideology of historical inevitability” to justify whatever means are necessary.

  Kimball reminds us that “the twentieth century has acquainted us in terrifyingly exquisite detail with what happens when people are treated as ‘moments’ in an impersonal dialectic.”11

  The danger of historical determinism is that it provides philosophical cover for any megalomaniac who seeks to prove that his or her program is historically inevitable.

  Both the left and right often succumb to the “end of history” ideal. Stanley and Lee point out that “leaders across the political spectrum have been quick to adopt this form of historical determinism.”

  “Hillary Clinton . . . has . . . a similar outlook in the realm of foreign policy,” Stanley and Lee write. “She has subtly distanced herself from Barack Obama’s cautious realism abroad and instead used discrete references to the past to justify aggressively exporting liberal values across the globe as often as possible. Given that history has ‘proved’ how great liberalism was in previous battles against tyranny, the argument goes, liberalism will inevitably win out if we pick enough fights and put enough muscle behind it.”12

  Neoliberals like Clinton are virtually indistinguishable from neoconservatives like Bill Kristol in their support for military intervention in Libya, Syria, Afghanistan, Yemen, Somalia, Mali, Niger, etc. The only difference is the liberal neocons are more honest about their goal of nation building.

  If history were, indeed, unfolding toward liberty, we would still need to understand what is meant by liberty. Left and right sometimes do agree that freedom is the goal, only they differ on their definition of freedom. Positive “liberty” is what today’s socialists yearn for. Positive liberty can also be described as the “freedom” to get something concrete, such as health care, a car, a house, or food.

  Can man really discover self-worth in the command economy of Venezuela or the autocracy of Cuba? Of course not. The question remains, though, whether there are still enough Americans who put their faith in the individual, and in liberty, to ensure that our nation resists the siren call of “free stuff” that socialism offers. Time will tell.

  From my perspective, the cautionary moral of a utopia is: don’t succumb to any end-of-history utopias from the right or the left. Don’t accept any preordained linearity to history. Because simply that acquiescence, that attenuation of free will, may be enough to allow the recurrent strongman in history to justify his or her edicts as science or evolution or simply as the inevitable.

  Part VI

  Never Let a Crisis Go to Waste: Socialism and Alarmism

  “You never want a serious crisis to go to waste. And what I mean by that [is] it’s an opportunity to do things that you think you could not do before.”

  Rahm Emanuel

  Chapter 34

  Socialism Leads to Cronyism

  Today’s socialists sometimes claim they’re not against all capitalism, just crony capitalism. They point to the bank bailout (aka the Troubled Asset Relief Program, or TARP) of 2008 as a prime example.

  After the market discovered that subprime mortgages were bundled together with traditional safe mortgages and called AAA securities, the government solution was to bail out the biggest banks for their bad decisions. The result? Furor erupted on both the right and the left.

  From the right came the Tea Party movement. I know because I was there. I spoke at the very first Tea Party rally at Faneuil Hall in Boston in December 2007. This was one year before the election of President Obama. Those on the left and in the media often portray the genesis of the Tea Party movement as a protest against Obama. This is false. The citizens at the first Tea Party rallies came together because they were worried about the accumulation of government debt, the housing collapse, and the concern that we’d transfer trillions from responsible citizens to irresponsible ones.

  From the left came the Occupy Wall Street movement, upset that the nation’s wealthy were using a government bailout to protect themselves from bad decisions.

  Both left and right were correct: the bailout was the very definition of crony capitalism. For a decade, the big banks had been allowed to reap enormous profits, but now that their bad decisions were coming home to roost, the taxpayer was being forced to cover their losses. What other industry could bring down the economy through malfeasance and get nearly a half trillion in loans to make sure the key players survived?

  Some of today’s socialists claim that the capitalism they oppose is precisely this kind of crony capitalism. Bernie Sanders, to his credit, voted against the $350 billion bank bailout, although he did vote for a $15 billion bailout of the automotive industry. It’s difficult to understand how bailing out banks is crony capitalism but bailing out the billion-dollar car industry is not. Consistency, though, has never been a big concern for the left.

  Progressives are right to decry crony capitalism. However, they should recognize that socialism is just another form of cronyism. Byron Schlomach, director of the 1889 Institute, a free-market think tank in Oklahoma, writes, “crony capitalism is more akin to socialism than it is to free enterprise. . . .” He is absolutely correct in this observation.

  Schlomach explains:

  Privilege and prosperity of elites side-by-side with unemployment and economic stagnation perfectly describes socialist economies like Cuba and Venezuela. There, government officials and their favored cronies do well while the masses languish. Then-expatriated Soviet historian Michael Voslensky’s 1984 book “Nomenklatura” described the privileged class of party elites in the Soviet Union, who enjoyed lives of relative ease and luxury. He pointed out that every sort of class exploitation Marx and Lenin accused the capitalist system of committing occurred in the Soviet Union, in spades, and was committed by communist leaders.1

  When Alexandria Ocasio-Cortez complains about special tax breaks for Amazon, she needs to understand that she is complaining about markets not being free enough. As Schlomach explains: when “government rewards some businesses and not others with tax breaks or outright subsidies, it is a socialistic practice. Whether or not they actually succeed, government officials are attempting to control the flow of resources in our economy with state and local economic development deals. By definition, this is socialistic, because socialism involves, after all, government control of resources.”

  Today’s socialists compound their error by failing to realize that socialism also grants privileges to a new class of elites: government planners. As Schlomach explains: to “those who see socialism as a counter to the elitism they see in capitalist economies, think again. History teaches that, due to socialism’s centralized nature, there is no place more replete with cronyism than one practicing socialism.”2 In other words, there is no bigger elite than a government elite.

  Another rallying cry of
the new socialists is that “the rich” aren’t paying enough in taxes. In the shining face of increased prosperity, reduced poverty, and record-low unemployment in America, Bernie and the gang are reduced to using “income inequality” as their evidence of capitalist failure. After all, it is unfair that we can’t all live like Beyoncé and Jay-Z.

  Our socialist friends conveniently ignore the fact that our top 1 percent of income earners already pays nearly 40 percent of our income tax revenue and the top 10 percent pays nearly 70 percent of the total.3 And yet Bernie and other liberal millionaires and billionaires like Warren Buffett, Howard Schultz, and Bill Gates frequently whine and opine that they should be paying more to the U.S. government. They wring their hands in frustration at the injustice of their inability to pay more money.

  Fortunately, Adam Brandon, president of FreedomWorks, gave these wealthy victims a simple solution to this vexing problem with a link to the donation page PayYourFairShareFirst.com. He wrote in the Washington Examiner, “Why wait for Congress to demand more money? The federal government has a donation page available right now for these economic altruists to lead by example.” FreedomWorks even tweeted the website link to Gates, Buffett, Bernie, and the gang to ensure that they were fully aware that there was nothing standing in their way of paying more to Uncle Sam. Not one of them responded to the opportunity.

  As Brandon wrote,

  Is it possible they are not being sincere? After all, Bill Gates led Microsoft while it moved profits offshore to dodge billions of dollars in taxes. Howard Schultz cofounded a venture capital group that invested in a financial firm that helped wealthy people dodge hundreds of millions in taxes. For decades, Warren Buffett avoided paying billions of dollars in taxes by taking advantage of what is now called the “Buffett Loophole.” . . . Remind me again, which political party is the party of big business? Sorry, Sen. Elizabeth Warren, but the “robber barons” of the 21st century are voting Democrat, not Republican. When big business colludes with Big Government, it happens at the expense of the rest of us. . . . Yet, Democrats want to force millions of families into a complicated tax code that wastes time and hard-earned money. Why? Because they feel guilty for being rich. The solution to their guilt is a therapist, not a tax hike. Regular families can’t afford teams of lawyers and lobbyists dedicated to avoiding taxes. We work hard and play by the rules. If Democrats want to punish themselves with extra taxes, they can make a voluntary donation to the federal government and leave us out of it.4

  Chapter 35

  If Socialists Can’t Find a Crisis, They Will Create One

  Most socialist governments rise up claiming to be the solution to a widespread economic disaster, such as peasants starving while corrupt leaders wage pointless wars. However, today’s socialists have to overcome the longest economic expansion in American history.

  When Alexandria Ocasio-Cortez arrived in Washington, she set off a race on the left to see who could endorse the most extreme proposals. If you first heard about the “Green New Deal” by word of mouth, you might be forgiven if your initial impression was one of disbelief.

  The cost alone is mind-boggling. Former Congressional Budget Office (CBO) director Douglas Holtz-Eakin estimates that the low-carbon electricity grid alone will cost $5.4 trillion. The “New Zero Emissions Transportation System” will cost about $2 trillion. Ocasio-Cortez’s program for a “guaranteed job for everyone”—somewhere between $6.8 trillion and $44.6 trillion. Wow!

  “Medicare for All”—over $30 trillion. Guaranteed Green Housing, $1.6 to $4.2 trillion, and “Food Security,” $1.5 billion. Anybody else alarmed that the projects are so grandiose that the cost can only be approximated to within a few trillion dollars?

  But is the Green New Deal socialism? Let’s consider how AOC and Bernie and their merry troupe of socialists will accomplish their dream. How and who will close down the fossil fuel factories? What government SWAT team will shut down the automobile manufacturers and the gas stations? Who will force the people from their current homes into “green living quarters”?

  And what about all those carbon-producing cows? AOC is ready with an answer. In the outline she and Senator Edward Markey released, they explained that they “set a goal to get to net-zero, rather than zero emissions, in 10 years because we aren’t sure that we’ll be able to fully get rid of farting cows and airplanes that fast.”1

  Don’t laugh. California is well on its way to regulating cows out of existence. According to the Los Angeles Times, the San Joaquin Valley Air Pollution Control District claims that “gases from ruminating dairy cows, not exhaust from cars, are the region’s biggest single source of a chief smog-forming pollutant.”2

  It would be funny if these climate change alarmists weren’t serious. It’s not only cows these crazies want to eliminate, but humans as well. CO2 exhalers—aka all animals, including humans—are a big part of the problem, according to environmentalist Diane Francis. Writing at the Canadian National Post, she claims that “the world’s other species, vegetation, resources, oceans, arable land, water supplies and atmosphere are being destroyed and pushed out of existence as a result of humanity’s soaring reproduction rate.”

  Francis’s answer? She believes that a “planetary law, such as China’s one-child policy, is the only way to reverse the disastrous global birthrate currently, which is one million births every four days.”3

  Think about that. In addition to eliminating the belching cows, some environmental extremists actually propose emulating China’s mass abortion and mandatory reproductive limitations.

  Beyond the mind-boggling costs and outright lunacy of restricting the populations of humans and cows, the Green New Deal also promises a primary goal of socialism—communal ownership.

  AOC’s legislative resolution calls for “providing and leveraging, in a way that ensures that the public receives appropriate ownership stakes . . . [in] businesses working on the Green New Deal mobilization,” as well as “community ownership” in “local and regional economies.”

  The original overview released for the Green New Deal also offered a guaranteed job and income even for those “unable or unwilling” to work. The concept of a universal basic income (UBI) is not new. Even such libertarian stalwarts as Hayek and Milton Friedman succumbed to the allure of distributing welfare in a less destructive way.4

  We already have a variant of universal basic income in the form of the Earned Income Tax Credit and the Child Tax Credit. Together the government spends about $100 billion each year on refundable tax credits that are really “tax credits” in name only—as the payments are not limited to taxes that an individual has paid. In other words, these tax credits are simply a transfer payment from other workers. As Robert Bellafiore writes at TaxFoundation.org, “Today, tax credits provide a negative income tax rate to the bottom two quintiles, causing their income to increase.”5

  Even though Milton Friedman promoted the concept, he likely would blanch at what the program has become. The Cato Institute has reported that there is a 25 percent fraud rate in the Child Tax Credit program, costing around $6 billion annually.6 There have been repeated allegations that the Child Tax Credit program does not require proof of legal residence in the United States and that illegal aliens use the program to receive what are essentially welfare payments. In addition, because the government does not require Social Security numbers for the children claimed, it is very easy to claim nonexistent children in order to defraud the American taxpayer.

  José Niño writes at Mises.org that proponents of these tax credits fail to understand Frederic Bastiat’s “concept of the ‘seen and the unseen’”:

  When a transfer policy like the UBI is implemented, what is seen is the transfer of money from one sector of the economy to humbler sectors. However, what is not seen is the money that productive sectors of the economy lose out on. Under normal circumstances, this same money would otherwise be allocated towards business expansion and other ventures that increase worker output and worker inco
mes.7

  Indeed, the bigger this transfer program becomes, the more money is drained away from productive enterprises that create sustainable jobs supported by consumer interest in their services or products.

  Conservatives who support refundable tax credits often support them as an alternative to the high bureaucratic costs of our current welfare state. But inevitably, these tax credits have accumulated on top of and in addition to all of the other welfare programs.

  A guaranteed job or income may sound appealing but it is simply another variant of the fallacy of “something for nothing” and should be rejected.

  Today’s socialists present the Green New Deal as absolutely necessary for the world’s survival. It’s not as if we aren’t already spending exorbitant sums to ward off this “devastating military attack,” as Bernie describes climate change. Forbes magazine estimated that in Obama’s first term we spent $150 billion on subsidies for green energy projects and to combat climate change—plus another $8–$10 billion in wind and solar tax credits. Not to mention a few more billion dollars spent by states that require their utility companies to purchase costly “green” energy.8

  Around the world the money spent on climate change is truly staggering. In 2013 the Climate Policy Initiative reported that “global investment in climate change” reached $359 billion that year. And yet, the CPI declared that the sum “falls far short of what’s needed.” How much is needed, you ask? They suggest a modest $5 trillion.9

  So what are we getting for all this money? According to Stephen Moore, Senior Fellow at The Heritage Foundation, “the real scandal of the near trillion dollars that governments have stolen from taxpayers to fund climate change hysteria and research [is that,] by the industry’s own admission, there has been almost no progress worldwide in combating climate change.”