George Rebane
The Left wants to redistribute the wealth they can neither create nor understand.
Gavin Newsom, a true socialist who has California in the toilet, wants the rest of the United States to replicate the state’s existential catastrophe in governance. All the country’s outspoken socialists are calling for repressive taxes on the wealthy – i.e. those whose companies produce our goods, create jobs, and invest in risky ventures, some of which succeed to the benefit of us all, and those top 1% earners who pay over 40% of ALL federal taxes. (Compare to the bottom 50% of earners who pay only 3% of federal taxes.)
Newsom’s specific gripe is that if California continues to lead in imposing new wealth limitation and redistribution diktats, then the productive and the wealthy will leave. So the perpetual solution of socialists is always to make their countries equitably miserable. In Europe this has caused mass migrations of entrepreneurs and the well-to-do. As a result, every European country that implemented a state socialist (Marxist-Leninist) command economy during the 20th century has since transitioned back toward a capitalist, market-based economy. Today, there are no completely socialist states left in Europe.
The UK, France, Sweden, and Estonia are the poster children of turnarounds from socialist governance. In the UK the socialist experiment lasted from 1945 to 1979 when Prime Minister Thacher engineered a capitalist reversal to rescue the country from its never-ending economic doldrums. France’s experiment with socialism lasted only two years (1981-1983 under Mitterrand) before it changed to a meandering course back toward capitalism. The most noteworthy and least understood capitalist reversal occurred in Sweden which started its experiment with socialism in the 1970s and ended it after the USSR collapsed in the 1990s. Estonia was a conquered communist vassal state under the Soviet heel from 1940 to 1991 when it regained its freedom as a sovereign nation-state.
It’s most useful to compare Sweden and Estonia’s return paths to free market capitalism. For Estonia socialism was not a choice; it was imposed by the Soviet occupation. It was a strict Marxist-Leninist communist economy. Private property was outlawed, industries and farms were forcefully collectivized, and production was dictated by central planners in Moscow. The result was severe economic stagnation, consumer shortages, and a total loss of political and economic freedom.
Sweden remained a wealthy, free democracy, but in the 1970s, its labor movement attempted a democratic transition from a mixed economy into actual socialism. Beyond building a massive welfare state, they introduced the Meidner Plan—a system of “wage-earner funds.” The government heavily taxed corporate profits and used the money to buy company shares on behalf of trade unions. The explicit goal was to slowly strip ownership from private capitalists and peacefully socialize the Swedish economy.
By the early 1990s, both systems had reached a breaking point, forcing both nations to pivot hard toward free-market capitalism. When the Soviet Union collapsed in 1991, Estonia was left with a ruined economy. Under Prime Minister Mart Laar, the country instituted radical “shock therapy.” They aggressively privatized state-owned companies, slashed trade tariffs to zero, and rooted out corruption. Most famously, Estonia introduced the world’s first flat income tax in 1994. They rejected the heavy welfare state in favor of rapid, unrestricted market growth.
Sweden’s attempt at democratic socialism triggered massive capital flight and a severe banking crisis in the early 1990s. In response, a coalition government abandoned the socialist project entirely. They abolished the wage-earner funds, deregulated the banking and telecom sectors, privatized state assets, and introduced school vouchers. They saved their universal welfare state by paying for it with a fiercely deregulated, business-friendly capitalist engine.
Both countries adopted capitalism along these unique paths. Sweden applies a standard flat corporate rate. Estonia features a unique system where profits are taxed at 20% ONLY when distributed as dividends, incentivizing reinvestment with a 0% rate on retained earnings. Notwithstanding Sweden’s failed experiment with Islamic multi-culturalism, both countries are now considered as leading socio-economic models in the global community of developed nations. By any measure both countries are more capitalistic than the United States.
So why are we seriously toying with the idea that from sea to shining sea socialism should be given a try? The simple and correct answer is that overall we have evolved a dreadfully ignorant electorate from two successive generations of progressive (Marxist) public education. We Americans consider an interest in and the practice of politics to be something that polite company looks down upon. On the contrary, our Founders knew and advised us to never abandon politics in our daily round, for it is the impetus and foundation for the public debate which keeps us involved in the necessary business of maintaining the democratic republic bequeathed us. Never let your politics be handled by others, let alone by parties unknown and distant.
But that is exactly what most of us have done in recent decades. And now we are divided with each right/left group having their own and wildly different facts, histories, values, logics, and ways of reasoning. Consider that recent polls (primarily from Gallup, Pew Research, and the AP-NORC) show that two of three Democrats (Left) have a “positive view” of socialism, and only one in five have such a view of capitalism. Compare that to three of four Republicans (Right) who have a “positive view” of capitalism, and only one of seven who share that view of socialism. (Yes, there are also some Republican double dummies.) This ideological profile of our country is the fundamental motivation for scumbag politicians like Newsom to attempt to spread misery across the land.
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