“I believe in markets — markets that work. Markets that have a cop on the beat and have real rules, and everybody follows them.”
—Sen. Elizabeth Warren
Just as the Constitution demands a “well-regulated militia” to prevent vigilantism, I believe that it should have required a well-regulated economy to prevent robber-baron capitalism.
Traditional socialism called for the nationalization of basic industry, and for the most part this has been a failure. Only China and Singapore have had economic success, but at a great cost, especially in China, to political freedoms. Unfortunately, this has given other forms of socialism a bad name.
Nations built by democratic Socialist, Social Democrat and Labor parties (including Israel) have placed well-designed safeguards on the private economy, which still grows, innovates and produces good jobs. The free market journal The Economist describes this as “market-friendly redistributionism,” and frequently praises these countries for their successes.
In a recent speech in Florida, Trump conflates, as so many conservatives do, authoritarian socialism with its democratic forms. Only in Venezuela, Cuba and North Korea has it been a “sad and discredited ideology.” Trump stated that “socialism promises prosperity, but it delivers poverty,” but poverty rates are lower in Canada and the European welfare states. In 2017 only one in ten children in Iceland, Norway and Denmark lived in poverty as opposed to one in five in the U.S.
Sen. Bernie Sanders calls himself a “democratic socialist,” but some say that he is just a New Deal Democrat. Here are his own words: “I think (democratic socialism) means the government makes sure that all of our people have health care; have quality child care, are able to go to college without going deeply into debt and that we create a government not dominated by big money interests.” Certainly not the Communist boogey man under our beds.
Congresswoman Alexandria Ocasio-Cortez is a member of Democratic Socialists of America, so her policies call for much more government intervention. In addition to Medicare for All and tuition-free higher education, she also supports a federal jobs guarantee and a 70-percent marginal tax rate for incomes higher than $10 million. A Harris poll found that 59 percent of registered voters support the idea, and it even garnered 45 percent among Republicans.
Ocasio-Cortez’s most controversial proposal is her Green New Deal, which calls for phasing out fossil fuels in 10 years and powering the entire electrical grid by renewables by 2030. Most Democratic leaders reject, or call for major revisions to, the plan, primarily because it is simply not feasible and also because of the estimated $2.5 trillion price tag.
Sen. Elizabeth Warren has an impressive track record. As a Harvard law professor specializing in debt, credit and bankruptcy, she was one of the first to warn about the dangers of predatory lending. Her greatest achievement thus far as senator was the creation of the Consumer Protection Agency, which had by 2017 returned $12 billion to 29 million Americans.
Although Warren has signed on to Medicare for All, presumably for political reasons, her legislative initiatives have focused on making the insurances exchanges more efficient and injecting competition into the drug markets, including federally funded drug production.
Warren is especially keen on breaking up competition-busting monopolies such as Amazon, Apple, and Facebook. She explains that “it is not capitalism to have one giant that comes in and dominates.”
Although Warren insists that she is not a socialist (most likely to keep older voters who lived through the Cold War), her proposal for universal child care is very much like what we find in social democratic countries. Some American families pay 36 percent of their income for this care, so Warren wants federal, state and local government to team up with schools, churches, tribes and nonprofits to provide high quality care. Families would pay seven percent of their income, care providers would be licensed (unlike Idaho, for example), and they would be paid the same as public school teachers.
Warren claims that her new programs will be paid by her Ultra-Millionaire Tax, which is a wealth tax rather than an income tax. When thinking about a 2000 presidential run, Donald Trump proposed a similar tax for those with over $10 million in assets. Warren suggests that a levy of two percent on wealth above $50 million and three percent above $1 billion, which she predicts will raise $210 billion per year.
Over the years I’ve become much more pragmatic on issues of political economy, so I endorse Warren’s approach over Sanders’ and Ocasio-Cortez’s.