[This is the addended transcript of my regular KVMR commentary broadcast on 16 January 2019.]
George Rebane
Today our socialist politicians feel that they have the wind at their back to fundamentally transform our country into the Socialist States of America. And that may well be the case as poll after poll shows that for most Americans capitalism has fallen out of favor, or at best they are indifferent to its existence and role in supporting their quality of life. The Millennials, those born between 1981 and 1996, are now the major voting block, having taken their positions in government and the private sector workforce. Their attitudes reflect the education they received in our unionized public schools, and most are definitely in favor of socialism as the better way to organize society and our economy – over half prefer socialism to capitalism.
For most Americans, tilting leftward or already there, Scandinavia is their siren song of socialism. And among those nations, Sweden is the posterchild and most frequent answer to, ‘Why can’t we be more like …?’ Sweden is held up to us by both progressive politicians and their handmaiden media as the paragon of how to correctly do government.
Led by under-educated naïfs like Alexandria Octavio-Cortez and old proto-communist Bernie Sanders, we see formerly sensible center-left Democrats start to embrace the hard-left narrative that delivers invectives against constitutionality, religion, American sovereignty, the immorality of secure borders, and, of course, the merciless greed and inequality of a capitalistic society. Today the whole enterprise of educating the electorate has been made easier by holding up President Trump as the despised capitalist-in-chief and exemplar of successfully practiced capitalism.
Sweden, in its enthusiastic adoption of socialism in the 1970s and 80s, was going to show the world how an enlightened government of the technocratic elites would bring about an equitable, prosperous, and content society. The Swedes confidently headed down that road with their small, culturally coherent, and racially cohesive population. What could go wrong? Yet it turned out that Sweden’s experiment with unsustainable socialist policies was disastrous as its economic indicators slid to the bottom of the EU economic barrel.
The WSJ reports that “Until the mid-20th century, Sweden pursued highly competitive market-based policies. By 1970 Sweden achieved the world’s fourth-highest per capita income. Then increasingly radical Social Democratic governments raised taxes, spending and regulation much more than any other Western European country. Economic performance sputtered. By the early 1990s, Sweden’s per capita income ranking had dropped to 14th. Economic growth from 1970 to the early 1990s was roughly 1 percentage point lower than in Europe and 2 points lower than in the U.S.”
By the mid-1990s Sweden realized its mistake and began rapidly implementing market-based reforms and returned a large measure of economic success in response to an aggressive program of privatization and market-based reforms. Its economic growth now ranks behind only the Baltic states and Slovakia. This little piece of European socio-political history has somehow escaped the curricula of our schools and colleges. (more here and here)
Also swept under the rug is Sweden’s other problem in what they call their “vulnerable regions” – insular and unassimilated Muslim communities growing in its big cities. Sweden’s continued embrace of globalism, multi-culturalism, and unfettered migration gave rise to such regions where Sharia law rules and police seldom venture. No one in Sweden or other similarly afflicted EU countries knows what to do about Islam’s quiet re-invasion of Europe, today an entire community of socialism-bound nations that for the first time in history can no longer afford to defend itself. (more here, here, and here) And here is Sweden attempting to put the best face on the problem.
And all such policies, initiatives, and programs which haven’t worked there are promoted and propagandized here today. Their continued adoption in America, with each successive election cycle, depends on the ongoing distillation of news from over there that support only our own established road to socialism.
My name is Rebane, and I also expand on this and related themes on Rebane’s Ruminations where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively. However, my views are not necessarily shared by KVMR. Thank you for listening.
Addendum: Sweden’s disastrous state of affairs was made possible by enlarging government and its participation in the economy through increasing spending and transfer payments to over 70% of GDP. The Swedes were literally drowning in a tsunami of regulations and sky-high taxes of the kind now planned for us after 2020 by our ardent and ambitious progressives at all levels of government.
One direct result of Sweden’s deteriorating economy was the emigration of thousands of its wealth producers to sunnier and less regulated climes in the south of Europe. Through hosting exchange students and sending our own daughters overseas to live in Europe, our family got to know several European families up close and personal. Most of these relationships continue after 50+ years. One of ‘our families’ from Malmo was a successful retailer of fine crystal and operator of advanced tech (then Todd-AO) movie theaters. He told of several of his business associates who in the 1970s were transplanting themselves and their businesses to Spain where they were welcomed with open arms and special tax and regulatory dispensations. And he had plans to do the same.
The main thing that happened was a phenomenon totally invisible and antithetical to the progressive mind, which holds that government always increases its revenues by increasing taxes. There are many reasoned economical arguments, effectively summarized by the Laffer Curve, against such a belief. Eventually you start taking away enough from the workers and wealth generators so that they no longer want to earn monies under confiscatory tax rates. And that’s what Sweden wound up doing in the 1980s, as one social program after another became alarmingly unsustainable. The Swedes became wise to this downward spiral in the early 1990s and started reversing course. They have yet to apply that wisdom to their multi-cultural immigration and social policies.
(The astute reader will recall that any program, government or private sector, is unsustainable if, year after year, it continues to demand an ever increasing percentage of the institution’s income.) Governments maintain unsustainable programs through borrowing, usually without any commensurate plan for paying back the loans. Of course, such policies also become unsustainable as debt service costs demand an ever-higher percentage of both the budget and the GDP from which government revenues are derived. In the end, even the most dim-witted see the whole enterprise as a Ponzi fraud which finally collapses when evermore stifling government policies reduce GDP growth until the only alternative remaining is the destruction of the nation’s currency.)
Here in the US there now has arisen a very prominent useful idiot for the Left – congresswoman Alexandria Octavio-Cortez who was seated on the House Finance Committee by that paragon of financial acumen – wait for it – congresswoman Maxine Waters. Yes, little freshman Alexandria “looks forward to working under the leadership” of Mad Max to get her vision of a 70% tax rate for all who earn above $10M a year into a bill that will be sent to die in the Senate. But the woke Americans should consider what if these maniacal mavens ever get complete control of the government again – memories of the 2009-2010 Obama years.
The venerable Tax Foundation, which does analyses on tax policies proposed and implemented, tells us that AOC’s proposal will have a definite back-side-of-the-Laffer-Curve effect on the national fisc. The hoped for added revenues are destined to fund the progressives’ ‘Green New Deal’, the cost of which, of course, no one knows or has put pencil to. Depending on which combination of the three tranches of income – wages, interest, capital gains – get hit with the 70%, the best cumulative ten-year increase will be less than $300B, and worst will be an actual loss of $63.5B in federal revenues.
And all this does not take into account the impact such a tax will have on the economy which is sure to take a major hit as the so-called loopholes of the Eisenhower 90% tax era have long been closed. (The Left likes to cite the growth during that era, without telling their nebbishes that no one actually paid tax under that rate.) The bottom line today is the same as always. There is not enough money in the top 1% (who already pay 30% of federal taxes) to fund any of the grandiose progressive programs, let alone grow the economy to reduce deficits – forget paying down the national debt. The solution – the new socialists have to do what Sweden and all the economically stunted governments have done, go after the middle class, because that’s where the money is. Talk about a national emergency when all those Green New Deal, and nationalized healthcare, and … bills come due. So I again ask the middle class, ‘For whom are those idiots useful?’
[17jan19 update] A reader from Irwin, PA sends the following figures that illustrate the above commentary on tax rates, taxes, and federal revenues. It again exposes the bamboozle (aka lies) that ALL Democrats have been spraying on the electorate about higher tax rates, especially their impact on government income. The truth as known by students of (real) economics is that government revenues depend on economic growth and the health of the economy that is supported by taxable transactions. Increase unavoidable taxes and regulations on such economic activity, as did Sweden and other socialist countries, and you have what ranges from tepid economies to the economic disasters and population migrations so common to countries (e.g. Venezuela) south of our border. (more here)
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