Creeping socialism: the problem that isn't there

Wealth isn't being redistributed from the top to the bottom, despite conservative rhetoric

October 02, 2012|Thomas F. Schaller

If a politician rose in the well of Congress to urge his colleagues to take action to repel the recent Martian attack, he'd be laughed out of office and strongly encouraged to get his head examined. Pondering solutions to imaginary problems is public policy insanity.

So I ask: Given that the threat of socialism swallowing America is as imaginary as a Martian invasion, why aren't politicians and television pundits who warn that something must be done to reverse redistributive welfare in the United States also treated with dismissive ridicule? In fact, on almost any measure — from the growing share of income earned or wealth controlled by either the top 1 percent or 10 percent; the geometric rise in CEO-to-worker pay ratio; the declining rates of intergenerational mobility that reinforce and exacerbate these disparities — America is not becoming more socialist, nor is the country's wealth being redistributed. (At least not from rich to poor.)

But to listen to many conservatives, including the current Republican presidential ticket, you'd think America is brimming with lazy lay-abouts who pay no taxes while the rest of us who work hard and take responsibility for our lives are picking up the tab for their irresponsible slovenliness. Those "lucky duckies," as the Wall Street Journal once called them, are sucking dry the socialist teat, while glorious "job creators" bear every burden and fight every tax-raising foe.

Of course, that 47 percent includes millions of nonpayers who are now retired after spending their lifetimes paying incomes, or students who are about to commence paying taxes for the rest of their working lifetimes. Meanwhile, since the recent economic meltdown of 2007-2008, America's top 10 percent have done just fine.

According to analyses by University of California economist Emmanuel Saez, in the immediate aftermath of the recent economic crisis the top 10 percent of Americans went from holding 49.7 percent to 46.5 percent of total national income. (I now pause a moment to let those percentages sink in.) But this decline was smaller than the drop following the much-shallower 2001 recession, Mr. Saez explains. Moreover, because most of the decline can be attributed to realized capital gains losses from the stock market, it has since been more than offset by the gains resulting from the sharp rise in the Obama-era stock market, during which the Dow Jones has risen 70 percent and the Nasdaq has more than doubled.

"This suggests that the Great Recession will only depress top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s," writes Mr. Saez. Translation: Despite the high concentration of income at the top of American society, the Great Recession will ultimately do nothing to equalize income levels that have been widening between rich and poor for more than four decades.

You might think those calling for further tax cuts for the wealthiest Americans would first need to demonstrate how the tax code and government welfare programs have yielded greater income parity. You'd be wrong: Conservative politicians and their media apologists continue to bemoan the so-called problem of creeping socialism as if it were a real threat. Along with allied interest groups, they have managed to turn the policy process inside out, providing tax policy "solutions" to non-existent "problems."

Policy process perversions of this sort can lead to costly, even fatal consequences. For those with short memories, let's not forget the catastrophic consequences of the Iraq War. As The New York Times recently reported, the Bush Administration was so hell-bent on invading Iraq even before — yes, before — the unrelated Sept. 11, 2001, attacks, President George W. Bush's national security team ignored repeated warnings signals of al-Qaeda's pending strikes. They had a ready-made solution, which is why Secretary of Defense Donald Rumsfeld was proposing to invade Iraq within hours of the attacks, before the actual perpetrators were known.

Just as Saddam Hussein posed no threat to the United States in September 2001, neither is creeping socialism menacing the country today. Treat those who suggest otherwise with the same skepticism you would somebody trying to convince you the Martians just landed.

Thomas F. Schaller teaches political science at UMBC. His column appears every other Wednesday. His email is schaller67@gmail.com. Twitter: @schaller67.

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