Bernie Sanders, a self-confessed Democratic Socialist, is leading the charge to convert us to another Democratic Socialist nation. I thought it would be useful to look at other countries that have taken the plunge to see what happened to them.
In the 1950s, New Zealand was one of the richest countries in the world in terms of G.D.P., personal income, and freedom. New Zealand was tied to Britain even more so than to Australia, their neighbor. As Britain became more Socialistic, so did New Zealand, with more regulation, higher taxes (over 60% at the highest marginal rate), government control of transportation, utilities, telecommunication, agriculture, manufacturing, price control, labor practices, and others using a variety of methods such as subsidies, rent control, housing regulation, control of labor, etc.
In two decades, the country was close to bankruptcy. In 1984 they took a sharp turn to the right with the privatizing of government-run industry, reduction of regulations in housing, labor, agriculture, and also abandoning subsidies. The highest tax rates went down to 33%, and prosperity returned, not such a good mark for the Democratic Socialists.
Of course, we all know what happened to the arch progenitor of Socialist governments, the U.S.S.R. (United Soviet Socialist Republics), starting in 1922 to 1991. It was founded on Marxist principles and led by Vladimir Lenin and Joseph Stalin. It finally collapsed under Mikhail Gorbachev. The academic Socialists claim that Socialism has not worked because it has never been tried. But the Soviets had the longest run of any of them. The Soviet farms failed to produce enough food; people lined up for blocks to buy bread in Moscow. If they could not get it together in nearly seven decades, how long will it take our genius Socialists like Bernie, A.O.C., and Elizabeth Warren?
Israel, India, and the United Kingdom all had a run at Socialism with little success. After World War II, Britain’s Labor Party nationalized every major industry and introduced a variety of Socialist programs in England. For 30 years, Britain needed ever-increasing taxes to fund their social programs, to a peak of 83% on income and 98% on capital gains. Medical care became a function of the state, and the lines at the medical clinics were getting longer and longer, where some people were dying waiting to see a doctor. The unions constantly demanded a higher share that they achieved with strikes. The garbage was not collected by the garbage trucks and piled up in the streets, and the bodies didn’t get buried by the striking grave diggers. Most major industries and housing were owned by the state. Britain had the slowest growing economy in all of Europe. Margaret Thatcher won the election of 1979, and she immediately privatized major industry, allowed private medical practices, and cut taxes in half. The economy revived and went to second strongest only after Spain. Inflation fell from 27% to 2.5%, and G.D.P. rose to 3.2%.
India gained independence from Britain in 1947. Jawaharlal Nehru, under pressure from the Communist Party of India, instituted a Socialist government. This lasted almost 30 years. He nationalized almost everything, including banks. One of the leading economists of India declared that “the only improving productivity in India was crime.” Top personal income tax was a crushing 97.75%. It was Rajiv Gandhi, the son of Indira Gandhi, who became PM after his mother’s assassination, and the man who cast off the chains of Socialism. G.D.P. went up to 9%. The middle class doubled in size. In 2017 India overtook Germany in having the fourth-largest auto market in the world and was the second-largest smartphone producer, a position the U.S. had held previously.
Israel is unique in that it is the only country where Socialism actually worked, but only for a short time. It too adopted Socialism from its outset. The principle that was cherished by the Israelis was that the economy should benefit all of society. That rings very much like something Karl Marx might have said. The connection between Jewishness and left-wing ideology is a curious phenomenon. Marx was an ethnic Jew, although his parents had converted to Lutheranism to avoid anti-Semitism. Jews also have a strong hatred of Fascism for obvious reasons. Leftist ideology is as far as you can get from Hitler. Most American Jews are Progressives or at least Democrats, but that is not the case in Israel. Israelis now have stong anti-Socialists sentiments in almost everything, especially economics.
It is not surprising that the early government of Israel was left. Israel was born out of creating a homeland for Jews, an idea that came from Theodor Herzl in his book, The Jewish State (1896). There was plenty of motivation to avoid a right-wing Capitalistic style of government. The Socialistic idea that Capitalism exploits the worker, and the only correction is to give the government the means of production to the state as proposed by a landsman, Karl Marx, in his book, Das Kapital.
At first, Socialism was accepted by the Israeli population. Most of the early settlers in Israel were survivors of the Holocaust and immigrants from the Slavic countries of Europe. Almost all young people worked in collective farms called “kibbutzim,” where people worked for food, shelter, and a small stipend. There was no private property. People ate together and socialized together. Any money they earned outside of the collective farm was given to it. In 1965 the chickens came home to roost, as they say, and the Six-Day War made things worse. Inflation of 17% took the few perks they had. Socialism vs. Free Market Economy became a publicly debated subject. Inflation rose to a peak of 450%. In 1977 the Likud party won the elections. They were the Pro-Free Market Party. The Nobel Laureate, Milton Friedman, was called in as a consultant. His advice to the policymakers was, “Set your people free!” Privatization followed. “The most successful experiment in Socialism appears to have resolutely embraced Capitalism,” as quoted from a prominent economist.
China is a special case. It is nominally still Communist. The government pays lip service to the principles of Communism, but these principles have been laundered ever since Mao Tse-Tung died in1976. The Communist party allows investors, including foreign investors, to buy into state-owned companies, but always maintains majority interest. There are over 150,000 state-owned businesses that provide jobs for millions of Chinese, but the state maintains control. China is slowly turning Capitalist but with a Chinese flavor. This has given rise to a large middle class that enjoys the rewards of Free-Market Enterprise. China is another example that Socialism is not the answer.
The Nordic countries of Denmark, Norway, and Sweden do not qualify as Socialist since most of the means of production are in the hands of private ownership. In Sweden’s last election, the Democratic Socialists garnered only 30% of the vote. They, however, regulate wealth accumulation through taxes, but have had to modify their confiscatory rates, as they were causing high-earning productive citizens to leave the country, and they had to trim their public expenditures dramatically, as the country was facing bankruptcy. For the last thirty years, they have fostered a Free-Market Economy with the abandonment of “Keynesian” economics. The current center-right government of Sweden has cut taxes four times, abolished the wealth tax, and eliminated the inheritance and gift taxes. They are now in better economic health than ever!
I cannot talk about Venezuela and North Korea, as they are total disasters that no one holds up as successful Socialist countries. North Korea’s yearly per capita income is $1,523, which is laughable, if it were not so tragic. Venezuela is not far behind. It ranked last among all 32 countries in the Americas in overall economic health. Cuba used to be one of the most successful countries in Latin America. It ranked 5th in our hemisphere in per capita income and 2nd, only to the U.S., in car ownership. That has slipped under the magic of Socialism. Two-thirds of Cubans earn less than $100 a month. Household staples are rationed, and their G.D.P. is negative.
In conclusion, Democratic Socialism has no success stories!