Tagged: Liz Cheney

Why Can’t Republicans Beat Socialism?

As we await the outcome of the vote recounts around the country and the inevitable court battle over the artificial boost in Biden votes in Michigan, it is time to ask some pertinent questions about why Americans keep voting for socialist politicians.

Even more important is the question why the Republican party, which has declared itself anti-socialist, continues to fail in decisively beating back this nasty ideology.

In my new book Socialism or Democracy: The Fateful Question for 2024 (Palgrave), I take an in-depth look at the structure, function and consequences of socialism. My analysis traces the roots of socialism all the way back to Marx. I explain how his economic analysis has defined socialism in both theory and practice throughout the past 150 years.

I also explain that there are two strains of socialism. The first strain is well known as the version practiced in Cuba and North Korea. This is the Stalinist form where government owns all property and plans the entire economy.

Republican politicians, and conservatives in general, are very good at lambasting this communist version of socialism. We can hear prominent Republicans such as Liz Cheney make speeches to this effect. Cheney, specifically, has been forceful in her criticism of Stalinist socialism, as exemplified by her excellent speech at the International Democratic Forum in the fall of 2019.

The problem is that most Americans do not believe that the Democrat party stands for this abhorrent version of socialism. Rightly so: there is not a trace of Stalinism in mainstream Democrat policies. Bernie Sanders, the long-standing radical socialist Senator from Vermont, has openly and repeatedly declared that his socialism is not of the Soviet kind.

Plain and simple: Soviet socialism is not on the agenda of the American left.

What is on their agenda is the other strain of socialism, the one that is typically “democratically” prefixed. To be a democratic socialist is perfectly normal in American leftist circles.

This is the strain of socialism that America’s conservatives in general are having a very hard time fighting. The same is definitely true for the Republican party and for Liz Cheney. Despite her sincere commitment to fight socialism, she keeps missing the target. The reason is not that they lack dedication to fight socialism per se – the reason is that they deny that democratic socialism is socialism, period.

As I explain in my book, this is dead wrong. Democratic socialism is just another format under which socialism is practiced. The reason why Republicans fail to understand this is that they have fundamentally misunderstood socialism as an ideology: they still believe that it is all about confiscating private property.

Not once do they stop to ask themselves: why would socialists want to confiscate private property?

When practiced in its “democratic” form, socialism does not confiscate property. It leaves intact property rights in their traditional sense. Instead, the “democratic” socialist uses taxation and government spending to achieve his ideological end goal.

What is that goal? It is the very same that motivates the Stalinist socialist – the communist – to confiscate private property and put the whole economy under teleological central planning. My book explains this goal in detail, as well as its practice in the two strains of socialism.

Economic redistribution. That is what socialism is all about. It is about reducing and eventually eliminating economic differences between individuals. Under communism, this is done quickly by means of private-property confiscation. When ownership of property – including wealth – is outlawed, so are the proceeds of said property. If you cannot earn good money by owning and running a business, you cannot make more than anyone else.

But it does not stop there. Communism dictates that people be paid based on the labor value of their work. This value is crude and entirely alien to human nature, but it is what communists practice. It destroys the free market, which is entirely intentional: according to communist doctrine, a surgeon should get paid less than a factory worker because his production of labor value is lower.

In short: communism outlaws all means by which one person can earn more than another. The only exception is the cumulative addition of labor value, which favors labor-intensive manufacturing and un-mechanized agriculture over medical services.

By contrast, “democratic” socialists use democratic methods for the advancement of their ideology. They pass laws that raise taxes on “the rich”, redefine the definition of “rich” as they run out of them, and spend more and more money on handing out entitlements. The goal is to erode economic differences by means of economic attrition:

  1. More and more people get benefits from government in the form of health care, education (including college), income security, retirement and plain cash handouts;
  2. More and more higher-income households lose more and more of their money to taxes.

Working both ends of the stick, the “democratic” socialist gradually uses the welfare state to reduce and eventually do away with economic differences.

We already have a welfare state. We have one of the most progressive, most redistributive, most socialist tax codes in the world. We already have a wide roster of entitlement spending for the very purpose of redistributing income, consumption and wealth. From Social Security all the way down to the Earned Income Tax Credit; from Medicare and Medicaid to public education; we already have a major apparatus in place in America for the practice of “democratic” socialism.

It is this very strain of socialism that the Democrat party wants to expand and practice more intensely. When Republicans define socialism as communism and then put that label on the Democrat party, they appear to be just as incoherent as they are.

If Republicans ever want to win the battle against socialism, they must first learn what socialism is. Every Republican, every conservative and every libertarian in America needs to read my new book Socialism or Democracy: The Fateful Question for 2024. It goes into production at the end of this month. Stay tuned for preorder information.

Defense, Budget Deficits and Inflation

The Republicans in the House of Representatives have put together a task force to study U.S. and Chinese military capabilities. In reporting on their findings, Representative Liz Cheney (R-WY) explains that Congress needs to increase defense spending by 3-5 percent per year – in real terms – to keep our military on top of the game.

This is a tall order, but a necessary one: national defense is the first priority of government, one that we should fund in full before any other functions are considered. That, of course, is not the case today, which reduces defense spending to an item in the budget like any other: less than 15 percent of federal spending goes to defense today, compared to half of the budget 60 years ago.

In other words, by promising to do almost everything under the sun, Congress has already made it harder for itself to fund defense. However, there is another problem that Representative Cheney and the others in the Republican leadership need to consider if they want to reach their necessary but difficult funding goal: inflation.

As I explained recently, there are forces at work in our economy that point to higher inflation going forward. It is entirely possible that we will see four percent inflation next year; higher numbers are unlikely this side of 2022, but over the long term, higher inflation is more likely than lower inflation.

An inflation rate of four percent would of course make real increases in defense spending very hard. For every percentage point of inflation, Congress needs to add approximately $7.5 billion to the defense budget just to protect the military’s purchasing power. At two percent inflation – which is basically where we are today – that means $15 billion more for defense, without even adding any new real money into their budget.

Currently, Congress is giving $45-55 billion more per year to the Department of Defense, which means about four percent in real terms. However, the increase in appropriations is scheduled to taper off as we go forward, falling below two percent beyond 2022. In real terms, this means that defense spending is actually going to go backward.

And that is at the current inflation rate.

The problem is, as mentioned, that there are forces at work in the economy that are driving the inflation rate higher. To make matters worse: Congress is responsible for both of them:

  1. Cost-push inflation. As I explained recently, the cost of labor is going up at rates we have not seen in at least ten years. This increase is not caused by high growth or rapid gains in productivity, but by the wage toll that the federal government has placed on the labor market. That toll, of course, is the bonus that Congress is paying out to the unemployed: the $600 weekly compensation on top of regular unemployment has dropped to $300, but it is still there. To motivate workers to come out of idleness, employers therefore need to pay their workers more than what is motivated by the value they add to the business. The only way employers can make up the balance is by raising prices.
  2. Deficit monetization. Congress is borrowing money at rates we have not seen in peacetime, and the Federal Reserve is printing money faster than it has ever done on record – and everything suggests that they will keep the monetary printing presses working overtime for the foreseeable future. Even if the money-supply growth rate tapers off, it will nevertheless keep growing for as long as Congress maintains its enormous budget deficit. Money printing eventually leads to monetary inflation – the most dangerous form of inflation.

To add yet another warning signal of pending inflation, the Federal Reserve has “modified” its inflation goal. It is no longer looking to maintain a two-percent cap on inflation: the goal is now to keep inflation at an average of two percent, without any specification of the period of time over which that average will be calculated.

In plain English, the Federal Reserve has decided to prioritize the funding of the budget deficit over low inflation. This will have serious consequences for the economy over time; for now, it is a major problem for Congress itself – where the monetized inflation originates. Looking again specifically at the defense budget, to protect the real value of DoD procurement and employment checks, at four percent inflation our elected officials will have to add $30 billion per year to the defense budget.

If we get bad monetary inflation, in other words prices go up around ten percent per year, that $30 billion becomes $75 billion. And those numbers are calculated solely based on current spending; compound inflation is not considered. Then comes the fight to actually increase the defense budget by 3-5 percent in real terms.

Common sense – and a dollop of political cynicism – suggests that with the defense appropriations being less than 15 percent of the federal budget, and the welfare state consuming more than two thirds, it is fairly simple to see where the Congressional priorities will be – especially if inflation starts eroding entitlement checks. Therefore, the message to Republicans in Congress is clear, cold and unmistakable:

Entitlement reform – now. Roll back your promises of economic redistribution.

Otherwise, your only choices will be from the list of three bad options I discussed earlier. Not one of them will benefit our national defense.