Is this capitalism?!!

The great economist Pierre Lemieux published the Substack post, "If this is Capitalism, Give Me Socialism," recently. He wrote that surveys revealed, "...more than 50% of voters aged 18 to 39 would like a democratic socialist candidate' to win the 2028 presidential election; and that three-fourths agree that 'Major Industries like health care, energy, and big tech should be nationalized.'” 

Dr. Lemieux notes that people are attracted to socialism because they think the current system in the U.S. is capitalism. But is it? 

When I was earning a degree in economics in the late 1980s, no respected economist referred to the U.S. as capitalist. At best, it was a mixed economy. So, how did it become capitalist? Socialists declared it so with the election of Reagan as President in 1980 because Reagan ended price controls on energy and transportation. The mainstream media, historians, the social sciences and humanities promote socialism. Socialists claimed that Reagan had unleashed wild west, no-holds-barred, totally unregulated, laissez-faire capitalism. But he hadn't. 

Eat the Rich! The Billionaire Tax

Jean-Jacques Rousseau wrote, "When the people shall have nothing more to eat, they will eat the rich." That's the thinking behind the many calls for a billionaire tax. Even the Wall Street Journal, the supposed fortress of capitalism, jumped on the wagon claiming "Billionaires' Low Taxes are Becoming a Problem for the Economy."

According to the Journal, billionaires often employ complex financial strategies to minimize their tax liabilities, resulting in tax rates significantly lower than those paid by average households. Yet, if that's true, why did the top 1% pay 46% of all income taxes? They paid twice as much in taxes as the bottom 90%. 

The Journal wrote that lower tax payments from the ultra-wealthy diminish government ability to fund public services such as education, infrastructure, and social programs. If true, then why are federal revenues, mostly income taxes, holding at 17% of GDP, the average since World War II? 

Gini in the bottle: how inequality measures fail

The standard measures of inequality don't measure what they claim to measure. 

Because socialists lost the economic debate with the collapse of the Soviet Union, they have used other means to advance socialism, such as the environment or critical theory. Another prong of attack is inequality. Clearly, they say, socialism can't make us richer, but it can reduce inequality. They use measures such as the Gini Coefficient, which provides a single numerical score (0 to 1) representing overall inequality, and percentile ratios like the Palma Ratio (top 10% vs. bottom 40%) and decile ratios (e.g., 90th percentile vs. 10th percentile), which focus on specific parts of the distribution. Other measures include the Theil index and the Lorenz curve, which illustrates income distribution.

Deporting immigrants won't cheapen housing

National Conservatives offer terrible economic policies, but their worst has to be the claim that deporting illegal immigrants will raise wages and reduce house prices. The Daily Signal recently published an article making that claim. Here is a sample: 

"In this regard, immigration enforcement achieves two macro objectives at once: It makes America safer while also attacking the systemic affordability crisis.... The evidence is already compelling. The early economic returns on immigration enforcement are nothing short of stunning...

Thankfully, under President Donald Trump, real wages have risen every single month of his presidency...These gains result largely from at least 2.5 million illegal aliens leaving America...

Masses of illegal aliens crowd out citizens in the housing market. According to Apartment List, since Trump took office, national rent prices for Americans have actually declined by 1.4%. CNBC called the current trend “one of the more renter-friendly periods in a decade."

Warmth of the collective can suffocate

In his inaugural speech, Mayor Mamdani prophesied, "We will replace the frigidity of rugged individualism with the warmth of collectivism." I criticized earlier his straw man (false) version of individualism, which came from socialists, not capitalists. Today I want to ask if collectivism is always warm? 

F.A. Hayek, a Nobel Prize winner and the second greatest economist of the 20th century behind Ludwig von Mises, wrote in his last book, The Fatal Conceit: The Errors of Socialism, that we live in two worlds. One is the family, church, or tribe in which everyone knows everyone else, their needs, weaknesses and strengths. The other is the larger world of the nation in which few people know each other.

European free healthcare is no utopia

U.S. democratic socialists look to Europe as their utopia. So, when someone mentions the greater wealth of U.S. citizens, as I did recently, socialists across the world regurgitate the mantra that Europe is morally superior because it has free healthcare and college education. Yes, it has free healthcare, but is that the whole truth? 

Healthcare is a scarce resource that must be rationed. So if the state provides free healthcare, it must ration it in some manner. It's impossible to provide all the healthcare everyone wants when they want it. So, those socialist countries offering free healthcare ration it by long wait times and denial of services. In the U.S., people rage against insurance companies for denying services, but they are happy for the government to deny them. 

Poor in the U.S. are richer than the typical European

When Mamdani was elected mayor of New York City, pro-capitalist commentators rushed to compare him to Stalin or Mao and the horrors their versions of socialism caused. But Mamdani doesn't want Soviet or Chinese style socialism. He, and most socialists in the U.S., want European style socialism, with Sweden as their idol. 

But do they know anything about European socialism? I say European rather than Swedish because Sweden is a tiny nation, 10.5 million people, smaller than most large U.S. cities. It's statistical malpractice to compare a tiny nation to a huge one like the U.S. with 340 million. Sound statistics require that sample sizes be similar so that sample size doesn't affect the analysis.