Thursday, June 04, 2009

Socialism graph

Andrew Sullivan and a number of the left-leaning blogs out there have been citing this graph:

click to enlarge

The graph's purpose is to counter accusations that the Obama Administration is engaged in socialism. It strikes me, however, as mostly a strawman.

Strictly defined, socialism is about government ownership and control of the means of production. Using this definition it is clear that Obama is hardly the second coming of Che Guevara. I think that few, if any, critics of the Obama Administration believe that the president actually intends to nationalize or similarly assert direct control over the private sector economy of the United States. I take Obama at his word when he says that he would like to relinquish General Motors back into private hands at the earliest opportunity.

Socialism's connotation, however, has been changing and now seems a bit ill-defined, with most people arguably now simply associating it with large-scale government efforts designed to redistribute wealth from one segment of the population to another. Welfare, for example, may be regarded as socialist even though the government nationalizes nothing except money from the taxpayer's wallet.

Indeed, as wikipedia says:
Many social democrats, particularly in European welfare states, refer to themselves as "socialists", introducing a degree of ambiguity to the understanding of what the term means.
It is this contemporary European definition of socialism that I think most people who currently use the term mean to employ.

Few countries in the world are classically socialist -- North Korea and Cuba, and perhaps Venezuela are the only ones that spring readily to mind -- but there are far more that are engaged in sizeable government wealth redistribution efforts designed to promote a more egalitarian society. Indeed, given initiatives such as social security, medicare/aid and welfare a case could be made that the U.S. is already to some extent a socialist country.

Just as capitalism is not a black and white matter with countries more painted in shades of gray based on their degree of economic freedom, so too it is with socialism. The legitimate fear is not that Barack Obama will turn the U.S. into a dystopian workers paradise, but that he will succeed in moving us further along this continuum from our current shade of gray into something closer to the solid black that defines one endpoint of this scale.

This move towards socialism will not be advanced through government takeovers of industry and business, but through regulation. Nationalization, for the most part, is rather passé. While allowing for complete control, it places government on the hook for dissatisfied service and -- even worse -- financial losses. Examples include Amtrak and the U.S. Postal Service.

Far better is to regulate the industry. With regulation government does not shoulder the burden of any compliance costs and is able to more easily dodge blame for adverse impacts. If and when socialized medicine arrives, it will not be through government takeovers of hospitals and turning doctors into federal employees, it will be through rules imposed on businesses and health care insurers.

With rules come control, and the number of rules is astonishing: in 2008 the Federal Register was 80,700 pages long.

Those looking at government takeovers and ownership of companies for evidence of socialism are studying the wrong metric.

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