The socialist revival, why it appeals and why we should say no

Greg Eisert

Submitted photo/Greg Eisert

The DSA’s proposals are not equivalent to Soviet-style central planning. Nevertheless, its advocacy of public ownership makes those historical experiences relevant.”

OPINION — Socialism is attracting renewed attention in American politics, particularly among younger voters struggling with housing costs, medical expenses, student debt and economic uncertainty. Their concerns are real, and promises of expanded government benefits have found a receptive audience.

But what exactly is being proposed?

The Democratic Socialists of America’s platform envisions publicly financed essential services, greater worker control and public ownership of major industries. Its proposals include universal healthcare, publicly owned housing, tuition-free higher education, and higher taxes on wealthy individuals and corporations.

Supporters of democratic socialism frequently point to Scandinavian countries, particularly Denmark, as examples of successful social programs. But Denmark offers an important distinction.

In 2015, Denmark's prime minister rejected the characterization of his country as a socialist planned economy, explaining that Denmark is a market economy. Its extensive social programs operate alongside private enterprise and competition. They are financed through substantial taxation.

Consider two hypothetical workers, each earning $100,000 annually. Accounting for estimated income, payroll and consumption taxes, the American would have approximately $75,000 remaining, compared with $57,500 for the Dane.

That’s a difference of $17,500 annually, nearly $1,460 every month.

Denmark finances more services collectively, while Americans generally retain more purchasing power to direct toward their own priorities. Americans also pay privately for certain services financed through Danish taxes.

The comparison illustrates different tax burdens, not the total value of benefits received. Nevertheless, it demonstrates an important economic reality: government-financed programs are not costless. Their financing affects how much income remains under individual control.

Denmark’s capitalist economy is not evidence that government ownership of major industries produces greater prosperity.

The Democratic Socialists of America’s proposals would substantially expand government-financed benefits and public involvement in the economy. The financial implications are substantial.

The Urban Institute and Mercatus Center independently estimated that earlier Medicare for All proposals would increase federal spending by approximately $32 trillion over 10 years. A more recent Cato Institute analysis estimates additional federal expenditures of $40 trillion to $75 trillion for Medicare-for-All-style programs.

And that concerns health care alone.

Although some federal spending would replace existing private costs, the DSA’s platform does not provide a comprehensive accounting of its combined proposals or the revenue needed to finance them.

Higher taxes would reduce household disposable income. Increased business taxation would raise business costs and could adversely affect investment, employment and wages. Borrowing to finance expanded programs would increase federal debt and could place additional pressure on borrowing costs.

History also provides a warning.

The Soviet Union’s centrally planned economy experienced chronic shortages, inefficient production and limited consumer choice. East Germany similarly struggled with productivity and economic performance under extensive state control. Both ultimately abandoned those economic systems.

These failures reflected problems involving weakened competition, distorted prices, political control over investment, and reduced incentives to innovate.

For ordinary Americans, those economic mechanisms matter. Competition influences prices and consumer choice. Private investment supports employment and future wages. Economic freedom allows households greater control over their earnings and financial decisions.

The DSA’s proposals are not equivalent to Soviet-style central planning. Nevertheless, its advocacy of public ownership makes those historical experiences relevant.

The lesson from history is that promises of economic security do not guarantee prosperity. When government control displaces competition, private investment, and individual choice, ordinary citizens can bear the consequences through shortages, weaker economic growth, and diminished financial independence.

Greg Eisert is a former automotive-industry executive with a degree in business administration and economics, a former FINRA arbitrator and former chair of the Sun City Home Owners Association’s Government Affairs Committee. Please submit comments at yourvalley.net/letters or email them to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.