A lot of UW-Madison students and a significant portion of the American public are considering supporting Bernie Sanders in his bid to be the next president, and it’s not surprising that he’s gaining so much support. After all, who wouldn’t want free healthcare, free college, a guaranteed living wage, guaranteed paid vacation and renovated national infrastructure? No one, right?
The problem is that implying all of these things would be free or guaranteed is a mischaracterization of the truth. Everything in economics involves tradeoffs. Your free college and healthcare is necessarily paid for with someone else’s tax money. Your guaranteed wage may seem inevitable if a national $15 minimum wage is implemented, but there’s nothing that says employers have to hire you. If you are hired at $15 instead of what you would have otherwise been worth, your extra money comes at the expense of your employers, your coworkers or the customers of the business that have to pay higher prices. Hardly anything is truly free.
I think Sanders and his supporters have a slight idea that these socialist/democratic-socialist policies require strict economic regulation and tax increases, but they don’t have any strong justifications for why some U.S. citizens, businesses and corporations should be forced to pay to try and create a country where economic scarcity doesn’t exist and everyone has all of their needs met. Sanders’ justifications for implementing socialist economic policy revolve around appealing to emotion by vilifying rich people to suggest that they “refuse to accept” their responsibilities as Americans and, therefore, deserve to be severely taxed to support everyone else’s welfare.
A prime example comes from Sanders’ “on the issues” page of his website. It states: “This campaign is sending a message to the billionaire class: ‘you can’t have it all.’ You can’t get huge tax breaks while children in this country go hungry. You can’t continue sending our jobs to China while millions are looking for work. You can’t hide your profits in the Cayman Islands and other tax havens, while there are massive unmet needs on every corner of this nation. Your greed has got to end. You cannot take advantage of all the benefits of America, if you refuse to accept your responsibilities as Americans.”
While there are only 535 billionaires in the U.S. with a combined wealth of about $2.2 trillion (many of which are extremely generous and devoted to improving the world, like Bill Gates and Mark Zuckerberg), Sanders implies that they are responsible for child hunger and to blame for the unmet needs of the United States (universal healthcare, free college, paid time off, and so on). To Sanders, solving all of society’s problems seems as simple as taking money from evil rich people that don’t deserve to keep what they’ve earned. He portrays billionaires and the 1 percent of Americans as withholding the money and resources that would be necessary to solve all American economic problems. Unfortunately, the notion that a utopia can be reached at the small cost of taxing rich people is false—the costs (both explicit and implicit) of implementing all of Sanders’ policies are enormous.
All of the wealth that the 1% percent have isn’t sitting under a mattress doing nothing. It is invested in stocks, saved in banks which use it to make loans or tied up in property or business ventures. Without capital, businesses would struggle to start up, loans would be harder to get and technological progress that depends on investment would be harder to achieve. All of the things that rich people do with their money provide value to society. Even spending on seemingly wasteful luxury goods like private jets and exotic cars gives producers of those goods a way of life.
Ultimately, getting the world to the point where everyone can afford healthcare and education and see all of their needs satisfied requires massive technological progress. It isn’t possible to simply take away money from rich people and get whatever you want with no negative consequences. Resources aren’t perfectly convertible either. That means we couldn’t just liquidate Microsoft and Facebook and suddenly have the resources to end world hunger and provide healthcare to all. While the market capitalization of both of those companies would buy a lot of food and healthcare, the supply of the two goods isn’t infinite—cheaper food and healthcare won’t appear by throwing money at the market. Individuals becoming extremely wealthy doesn’t prevent solving problems like poverty. In fact, I’d expect progress toward eliminating poverty to coincide with people becoming quite rich.
To get to the end result that Sanders wants for society, capitalism is the way forward. Short term, his policies could help some people at the inherent expense of others. In the long run, socialism cannot create the economic growth and technological progress necessary to improve national and global standards of living. When wealth redistribution is the means of attempting to make economic progress, the market incentives that drive innovation will be gone. The investment necessary for advancement will be diminished. And perhaps most importantly, society will be attempting to move forward by trying to help some at the expense of others rather than working together to create the technological progress that allows everyone to be better off in the end. I hope the next president ushers us toward capitalism, not Sanders socialism.
Tim is a freshman majoring in finance and economics. What do you think of his thoughts? Are you concerned by Sanders’ “socialist” platform? Or is Bernie, in your opinion, one of the more attractive candidates in the race? Please send comment to opinion@dailycardinal.com.
