MySay: Socialism label has lost value in the US and worldwide

This article first appeared in Forum, The Edge Malaysia Weekly, on March 11, 2019 - March 17, 2019.
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In most parts of the world, being called a “socialist” neither upsets politicians nor riles voters. Not anymore. People in Europe, Asia and elsewhere do not equate socialism with communism and often express a positive view of “democratic socialism”. Even Americans yawn when one of their politicians is called a socialist. Since winning control of the House of Representatives, many Democrats have spoken in favour of a “Green New Deal” — a proposal that would substantially raise taxes on the wealthiest Americans, largely to fund a massive plan to combat climate change.

But President Donald Trump is betting that the socialism label still carries negative weight. He ridiculed the Democrats’ plan and, in his January State of the Union address, made a promise to his countrymen: “We renew our resolve that America will never be a socialist country.”

Later, when Amazon responded to hostile comments by politicians and activists by scrapping its plan to open a headquarters in New York City, CNN analyst and former Republican Senator Rick Santorum opined that America now is experiencing “what socialism looks like”.

But Democrats have not become defensive or shied away from the criticism, for good reasons. First, high-school history students recognise that even the most far-left politicians are not actually socialists. Socialism is an economic system in which the means and distribution of goods and services is owned or controlled by government instead of by private industry.

Today, only a few nations, with notoriously wretched economies — most notably North Korea, Cuba and Venezuela, which undertook socialism during the reign of Hugo Chavez — can fairly be labelled socialist countries. Since the collapse of the Soviet Union in 1991 and the market reforms under Chinese leader Deng Xiaoping in the 1980s, the world’s nations have rejected socialism.

Nevertheless, critics of those who favour liberal tax and spending policies have expanded the meaning of socialism to the point that it no longer matches its dictionary definition. Today, the term is routinely used to describe any economic system with a progressive tax policy (that is, one that taxes high income earners at a higher rate than those with lower incomes) or broad, national policies in which government redistributes wealth, such as with welfare payments or national health insurance. This is the socialism to which Trump refers.

There are two problems with Trump’s effort to demonise Democrats as the socialist party. First, the US has for decades — since the New Deal of the 1930s — embraced numerous socialist policies, most notably Social Security, Medicare and Medicaid, and each of these has become a staple of American budgetary policy — in other words, they are untouchable. No politician, Trump included, would dare propose the elimination or serious curtailing of any of them.

Second, the squeamishness Americans once had about socialism — which stemmed from its association with communist adversaries China and the Soviet Union following World War II — barely exists, especially with younger Americans.

Trump-Republicans casually (and incorrectly) apply the socialism label to Western democracies, particularly the UK, Sweden, Denmark and Norway. But none of these countries even remotely qualifies as a socialist nation as they showcase privately owned industries largely free to operate as they choose. Only Norway features fairly substantial government ownership of companies, but even there, it falls well short of 50% ownership.

Even if one concedes the Trump-Republican argument that socialism actually means redistributive policies, the “socialist” nations of Western Europe do not stand apart from the US when one compares national policies. Yes, the “Nordic model” of Scandinavian nations does guarantee all citizens and residents a social safety net, including universal healthcare, free education, and generous welfare programmes — but so does the “American model”.

America’s 50 states offer massive welfare benefits, providing people unearned income, food stamps, subsidised education for a majority of university-bound students, free or reduced-cost lunches for schoolchildren, Medicare (medical care for the elderly) and Medicaid (medical care for the poor). Moreover, the American Social Security “system”, while touted as a pension plan where money is invested for people and paid to them when they reach a certain age, is in fact a tax-and-spend set-up where the money one “invests” is merely a tax payment and money “withdrawn” from this system is given to recipients based on a formula established by Congress.

Furthermore, under Social Security, the government is not required to pay any person anything, regardless of how much an individual has contributed. In other words, it is in no way similar to Malaysia’s Employees Provident Fund or Singapore’s Central Provident Fund, both of which actually provide individuals fiduciary guarantees that the money is real, and belongs to those individuals who contributed. In other words, the American “pension” system is, by comparison, very “socialistic”.

Much of the Trump-Republican argument regarding the evils promoted by Democrats who would usher in socialism revolves around healthcare. They insist that the welfare line must be drawn at universal healthcare, if the US is to avoid the “socialism” of almost all advanced democracies. But this one is a canard. First, no-cost healthcare has long been provided to the poor and elderly, as noted earlier.

Second, about three-fourths of American workers are covered by lavish healthcare plans, which are provided tax-free to workers and are tax-deductible to employers. So, this is “socialism” of a different stripe.

In the final analysis, the developed nations of the world, East and West, have very similar economic redistributive policies. If one uses a strict definition, none of these nations are socialist; if one applies the squishy definition that labels redistributive policies socialist policies, all are socialist. In either case, those who would separate the US from the rest — whether to perpetuate the myth that it is a capitalist haven or to fight redistribution at the margins, by name-calling — are waging a disingenuous war.

William G Borges is a professor in the American Degree Programme at HELP University