The Human Condition:

Beyond Socialism – August 2, 2020

Puppet master

The progressive far left of the Democratic Party, taking the line from Bernie Sanders and other members of the “Democratic Socialist” persuasion, has put forward a number of proposals designed to appeal to American voters: Medicare for All, Free College for All, Universal Basic Income, and similar direct subsidies from the federal government. To the ears of those of us on the center and right, this sounds like classic socialism. But is any of it really the kind of socialism that Karl Marx, Rosa Luxemburg, Vladimir Lenin, Leon Trotsky, or Mao Zedong would recognize?

Let’s take Medicare For All. Presumably, it would extend Medicare coverage to all Americans, not just those over 65. Presumably, it would continue the payroll withholding that we all pay as registered Social Security recipients, currently taxed at 2.9% of wage and salary income, split between employer and employee (or wholly paid by the self-employed) on the first $125,000 of income. Also presumably, it would still cover only 80% of the recipient’s medical and hospital costs, and still allow the recipient to buy supplemental private insurance under “Medicare Advantage” plans to cover the remaining 20%, usually with a modest co-pay for doctor and hospital visits and drug costs. So this is basically a government-run insurance program, managed by the Centers for Medicare and Medicaid Services. This is not philosophically different from private insurance, except that it is supported—at least in part—by payroll tax revenues and does not allow for a profit motive. As the largest single payer in the country’s medical system, this extension of Medicare would be able to dictate to doctors and hospitals the levels of service they might provide and the charges they could bill. These would be “negotiated” to the same extent that any dealings with a monopoly supplier or monopoly consumer—think of the U.S. Department of Defense when buying weapon systems—are a negotiation.

Contrast this with the healthcare offered under socialist systems like the British National Health Service (NHS). There the government health agency owns and operates the hospitals and other facilities, directly purchases medical equipment and supplies, directly employs doctors, nurses, and other staff, and provides service for free to British citizens—other than through the taxes they pay. Some doctors and services may be privately owned and operated, but they must be supported by patients paying their own way or having private health insurance. The Canadian healthcare system, called Canadian Medicare, is funded by taxes through the provinces and pays the bulk of costs associated with hospitals and doctors—which are then owned by private, nonprofit institutions. Unlike the British system, Canadians cannot use private insurance in most of the provinces to pay for government-covered basic services or obtain private, fee-for-service medical care anywhere within the country.

Or consider Free College for All. Presumably, the government—which now guarantees almost all student loans—would continue to offer them but at almost no interest or without payback terms, making the money virtually free as a taxpayer-funded service. I have not heard of any proposal with a plan for nationalizing the universities and community colleges, putting those institutions under government ownership and control, and directly hiring and paying the professors and other staff.1

Neither of these progressive proposals in their most advanced form would involve the government actually owning the means of production (hospitals and colleges), managing the infrastructure for provision of services (administration and billing), or employing the personnel who offer those services (doctors and professors)—which is the classic definition of socialism. Doctors would still have to rent, staff, and furnish their own offices. Hospitals would have to build and equip facilities and maintain a requisite hospital beds based on their estimates of the available market. Colleges would still have to acquire land, build classrooms and football stadiums, and determine their own curriculums based on the needs of their projected student population.

The “socialism” offered by the progressive Left in America is not about ownership of the means of production and infrastructure for services.2 It’s not even about financing these means on the producing side. Instead, it’s about providing the individual buyer with the money to pay for the goods and services he or she takes. Building and paying for the factories to make goods, the commercial associations to provide services, the stores and offices to distribute them, and the logistic systems to mediate between them are all left to the individual, privately held providers. This is even less socialist than our current system of providing universal, K-12 education: the local public school, which is owned and operated by the local school district, which in turn is an agency of the local government.

Socialism is messy. As every country that has tried it—nationalizing all means of production and provision of services—has discovered, it’s hard to get politically connected bureaucrats—usually rising party members—to care deeply about or know and understand intimately the facilities and people they’ve been sent to manage. Suddenly, the government is responsible for making things that actually work, getting them into the public’s hands in a timely fashion, and providing the services that people need to go on living and thriving. That’s all hard and takes dedication—and usually a stake in the game, represented by some kind of return on the managing individual’s time and effort, not just a gold star at party headquarters. Owning the business and making people happy are hard when done at the remove of government and party politics.

Even Elizabeth Warren, one of the Democrats’ most ardent progressives, doesn’t want to nationalize the U.S. economy as the Soviets tried to do (and failed) or the Chinese Communists tried (and eventually elided into a form of crony capitalism). Instead of abolishing U.S. corporations and their funding mechanism of venture and shareholder capitalism, Warren would put them under a charter system. The corporations would still own their productive facilities, make investments, and manage themselves, but they would operate under rules and obligations dictated by the federal government. This system would put the government’s social goals and recognition of other stakeholder needs—like communities, minorities, customers, unions, the environment, and whoever else comes to mind—alongside whatever the shareholders and owners of the company are trying to achieve. She wants to control the corporations and the U.S. economy without actually taking responsibility for making wise investments, creating and supplying useful products, offering good service, or running the business without running it into the ground. However, when you’re not responsible for the productive outcome, you can cheerfully make rules without regard for consequences.

That said, in relation to Medicare for All, Free College for All, and similar proposals, there is still the moral equivalent of socialism when the government is the sole buyer—the monopoly buyer—of medical, educational, and other services through the rules it lays down for what products and options the individual buyer will have access to through the government program and under what conditions they will be provided. The government is then in a position to dictate pricing and supply terms to the independent providers. Some providers, as under the British NHS system, would still exist outside the government-funded products and services, able to charge wealthy clients paying with their own money or with private insurance for non-government–covered services and procedures. However, there may not be enough wealthy people to go around to make offering these products and services a profitable strategy. Other providers, as under the Canadian system, would likely be limited to serving all citizens through the government-funded facilities without a private exception and rationing products and services accordingly. No, he who pays the piper not only calls the tune but, essentially, owns the piper.

Under those conditions, we can only hope the piper survives. And maybe, ultimately, that is the point of these proposals.

1. However, for example, the California State University (CSU) and the Regents of the University of California (UC) systems, both of which operate campuses up and down the state, are largely funded by public money from taxes, supplemented by tuition, fees, and other resources.

2. See, for example, Why Own When You Can Rent? from October 13, 2013.