The American Socialist Republic?

For decades Americans have been seduced by government programs. In fact, any modification in them is greeted with fear and loathing – this is the so-called third rail in American politics.

While these programs have emerged incrementally, socialism or government control of the means of production, was routinely shunned. That was “the European sickness” and the more Europeans captured private capital, the more this capital crossed the Atlantic to the United States.

Now, however, with bipartisan efforts, the United States is unavoidably on the road to socialism. A Republican president and an establishment figure on Wall Street, his secretary of the treasury have nationalized the banking industry in response to the melt-down in the credit market.

In creating a new fund within Treasury, Washington bureaucrats will decide what debt instruments to purchase and how to manage and eventually sell them. They will also make massive purchases of bank stocks, guarantee bank loans and compete with sovereign wealth funds.

Moreover, the Republican candidate for president could have opposed this move standing apart from President Bush and his Democratic rival. But he chose not to do so.

In addition, Senator McCain has adopted a “cap and trade” energy position which would add yet another layer to the Washington bureaucracy and another source of government regulation.

On the Democratic side, Senator Barack Obama has indicated he wants “to spread wealth around,” a statement that smacks of redistribution. Moreover, his “tax rebate” to 95 percent of Americans includes payments to 44 percent of the Americans who do not pay taxes. Why should you get a tax rebate if you don’t pay taxes? And why call this a rebate at all?

From his health care position to his desire to increase the tax rate and capital gains taxes, Obama is, at his very core, a redistributionist. Rather than economic growth, his economic policy is based on the distribution of existing resources. Is it far fetched to describe this as “from each according to his ability to each according to his need?”

What is unfolding is the nightmare of government control of most industries. Can the airplane and car companies sustain themselves without government subventions? Will healthcare remain privatized? Will hospital care be rationed?

A Democratically controlled Congress will be eager to extend its influence with politicians becoming the chief artiters in the economy. Rather than having a third of gross domestic product as public expenditures and two-thirds private, these numbers are likely to be reversed.

As a consequence, the United States’ economy will begin to resemble the European model. Growth will be stifled, unemployment will inevitably increase, incentives will diminish along with venture capital and the standard of living Americans have enjoyed will decline. This is not a prediction based on my vivid imagination, but one predicated on empirical evidence of socialist economies.

Labor unions will assert themselves with the avoidance of the secret ballot and the ability to negotiate rules between unions and management, and radical organizations, such as ACORN, will demand their pound of flesh from the government as well. The scenario demanded by the hard core left for decades will finally be realized.

While it is true, as Senator Joe Biden, invariably points out, that one percent of the population controls 22 percent of the wealth; it is also true, but never mentioned by Biden, that the same one percent accounts for 37 percent of tax revenue.

The continued taxation of capital only drives it out of circulation. While the sin of capitalism is greed; the sin of socialism is envy, in large part because limited resources lead to a situation where modest differences in income tend to be exaggerated and invidious. Schadenfreude is the natural consequence of socialism.

Is this narrative overblown? Perhaps, but if one would have told me ten years ago the banking industry would be nationalized I would have assumed the claim was hallucinogenic. America has enjoyed decades of extraordinary wealth based on the virtues of a modified free market. Yet some believe the “unregulated market” is to blame for our present woes, notwithstanding the obvious fact that the market operates with thousands of rules and always has. One might more appropriately blame intrusive and misguided politicians for the present market turmoil.

The danger of democracy is that public participation is vulnerable to demagoguery and a free-rider syndrome. Economic egalitarianism is irresistible for those who have relatively little and long for more. This is a natural temptation but one that was largely resisted until this most recent presidential campaign.

Now socialism is on the rise as the philosophy of free market capitalism is considered the culprit for economic woe.

Will this stance change America forever? Is this merely a temporary aberration borne of financial dislocation? Or has envy already insinuated itself into the national culture?

Perhaps Americans should recall what Abraham Lincoln noted about economic distribution: you can’t make a weak man strong by making a strong man weak and you can’t make a poor man rich by making a rich man poor.

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