CEA’s Bottom Line on Socialism

The Council of Economic Advisers’ recent “The Opportunity Costs of Socialism” report provides a clear and disturbing warning. The advance of socialist policies means squashed personal freedoms and vanquished economic opportunities. Ultimately, if history is any guide, socialism is a vision of abject failure. There is much history to support these observations.

No doubt those espousing bringing this radical vision to America are confident they will do better. They will insist their ideological forerunners made too many mistakes or were unprepared. Unfortunately, evidence that today’s extremists are better suited to make socialism work is wanting. The truth is, a bad system is just a bad system.

The many wrongs and problems America’s newly resurgent socialists vehemently denounce are deep concerns for many Americans, from racial injustice to the environment, from income inequality to access to affordable, quality health care. Socialists have no monopoly on compassion.

The deep disputes are rarely over the essential definitions of the problems, but rather the proposed solutions. The solutions offered by America’s socialists, like those who came before, all involve the essential calculation of more government, less we the people.

Consider two examples raised in the CEA report. While the Soviet Union under Joseph Stalin made a good run at it, the People’s Republic of China under Chairman Mao Zedong undoubtedly takes first prize in the strict application of socialist principles. In so doing Mao condemned tens of millions to starvation and left China nearly bankrupt – socially, politically, and economically.

In the years after Mao, first under Deng Xiaoping and ever since, China has evolved what it calls “socialism with Chinese characteristics,” which in the economic sphere roughly translates to a system bearing almost no trace of anything socialist. China today has a mixed economy in which some sectors are dominated by massive, largely stagnant state-owned enterprises such as can be found in a great many countries, socialist and non-socialist alike. The rest of the Chinese economy, the growing part, bears a striking resemblance to caricatures of America’s wild-west economic model at its wildest.

America’s socialists like to point to the “Nordic” countries as examples. In 2015, Vermont Senator Bernie Sanders, a self-proclaimed “democratic socialist,” observed in one interview, “Democratic socialism is taking a hard look at what countries like Denmark, Sweden, Norway, and Finland … have done over the years.” He went on to say, “there’s much that we can learn from those countries that have had social democratic governments.…”

Senator Sanders is surely correct in that latter observation. There is much we can learn.

Years ago, these Nordic countries deeply embraced the big government socialist model. But, as the CEA report notes in chapter and verse, these countries quickly realized the folly of their ways, abandoned the extreme forms of socialism for which Senator Sanders and friends pine, and now look remarkably like America today.

Which is perhaps the most important lesson from history, the lesson Senator Sanders and friends cannot abide: Countries which adopt and apply this political philosophy invariably suffer badly and just as invariably abandon that philosophy. As the great NFL coach Bill Parcells once famously observed, “You are what your record says you are.” And socialist countries are now 0 for as many as you care to count.

Critics will no doubt take issue with aspects of the CEA report laying bare socialisms many costs. However, critics cannot refute the report’s central lesson: America would be far better off learning from the painful histories of others rather than itself proving yet again socialism’s peril.

About the authors

J.D. Foster

Dr. J.D. Foster is the former senior vice president, Economic Policy Division, and former chief economist at the U.S. Chamber of Commerce. He explores and explains developments in the U.S. and global economies.