Recently, with the marked radicalization of U.S. politics, the discussion of socialism has resurfaced as an actual governmental solution for the problems facing the United States. In fact, just the other day, I was walking across the Diag at the University of Michigan and a large banner read that “capitalism has failed” and “socialism has the answer.” Initially, I had just scoffed at it, thinking of it as just another one of those socialist “seize the means of production” memes. But when I looked into it, I realized this was an actual problem.
According to a Harvard Institute of Politics poll in spring 2016, 33 percent of the 18 to 29-year-old respondents supported socialism and a startling 51-percent majority did not support capitalism. The Chicago Tribune cited a study in which 44 percent of the young respondents would prefer living in a socialist country. Obviously, there was something that was changing the political dynamics of the millennial generation, so I set out to look at some of the major points made by those in support of socialism and dissect why some of my peers had begun to lean so far left.
Desire for economic equality was the most frequently cited reason for support. As stated by Anthony Giddens in The Class Structures of the Advanced Studies, socialist societies cause the “disappearance of classes.” Sen. Bernie Sanders, I-Vt., used this argument frequently in his attacks on the top 1 percent. But I question, is income inequality really that big of an issue?
When an economy is restructured such that it is socialist — as defined by Merriam Webster dictionary — “a system or condition of society in which the means of production are owned and controlled by the state.” (It’s worth noting that there are many other definitions out there, yet this seems to be the most widely accepted). As such, there is no freedom of choice in your labor. It is by default owed to the state. Because of this, there is no free market in which supply is meeting demand. Rather, people don’t have many options in purchasing a good and are forced to pay others for work they may — and perhaps even society as a whole — find unnecessary. In this sense, socialism actually suppresses an individual’s freedom to choose how they want to live.
For example, consider I have a lemonade stand in the Upper Peninsula. When it gets cold outside, I will not get very many customers. Because of this, I will be forced to close my shop and find another endeavor that will cater to the market so I can make money. I make a choice to provide for the whims of society for my own survival. If I go against the market, there is decreased demand for my product and I will not earn as much. However, in a socialist economy, the government owns the means of production for my lemonade shop. The government defines what the market needs, and as such, defines when and which type of lemonade an individual can consume.
By doing this, the government forces a redistribution of wealth in the population — something that has gained a lot of support recently. But this is largely immoral, and here’s why. Using the same metaphor, imagine I have invented a new type of lemonade that not only tastes great but is also very healthy. Suddenly, as a result of my hard work, there is a lot of demand for my product and I become part of the 1 percent. Then, the government comes by and says I shouldn’t be allowed to be making that much money because there are people who are making much less than I am. As a result, they redistribute my added wealth to the poor, deciding for me how much money I need.
The money that I got from selling the lemonade, however, is money I earned. Blatantly taking it from me on the pretense of equity is theft. Now, I’m not saying there shouldn’t be taxes. There are things — public goods — that the government provides and for which it should charge me, such as the military, police, etc. But I don’t, in any way, owe my money to those under the poverty line. I did not steal from them to get rich — I made the money entirely on my own.
Perhaps a more dangerous side effect of this idea of equity in wealth is a lack of competition. If I knew I, as a lemonade maker, would make the same amount of money no matter what I did, would I have decided to innovate and create that better tasting, healthy lemonade? Probably not. I would have done the bare minimum, as there was no incentive for me to do any better. I would get paid the same. This is perhaps the greatest aspect of capitalism. A free market means that there will always be competition, and therefore innovation. Without a free market, Jeff Bezos would not have had the incentive to create Amazon. Nor would Larry Page and Sergey Brin have created Google.
Obviously, the example of the lemonade stand was an oversimplification of a very complex economy. However, the basic principles that drive its existence in a capitalist and socialist society still hold true. There’s a reason why the standard of living in the United States has increased so dramatically over the last few decades. There’s a reason why the Heritage Foundation reports that “62 percent of ‘poor’ households own a car,” with “poor” operationalized as “anyone with ʻcash income’ less than the official poverty threshold.” There’s a reason why the United States leads the rest of the world in scientific and technological innovation.
So, to answer my previous question, no. I don’t think income inequality is something we need to be very concerned about. A study by the Brookings Institution said of Americans who have at least finished high school, got a full-time job and waited until age 21 to get married and have children, only 2 percent are in poverty and nearly 75 percent are in the middle class. Just those three things. As long as every individual has equal opportunity in being able to do those things, the resulting inequality is of little matter. All people should feel capable of being able to move between classes if they work toward it. In this sense, inequality is actually a positive force, creating competition and thereby providing incentives for individuals to work toward benefiting human society. The market will simply reward individuals based on their contributions to it.
This is not to say that we have reached that point yet. There are obviously many flaws in the United States that prevent equal access to some basic institutions. To solve these issues, there are two approaches: one that uses the government more and one that doesn’t. Both are very valid approaches, about which debate is warranted.
This is what the Democratic and Republican parties should discuss. Not whether or not Jeff Bezos should be giving more to charity.
Adithya Sanjay can be reached at asanjay@umich.edu.