By John C. Goodman
Originally posted on Forbes, September 2015
What we call the Reagan Revolution was not just a US phenomenon. Beginning in the last quarter of the 20th century there was massive political change all over the world. Communism was dismantled almost everywhere, managing to hang on only in Cuba and North Korea. State ownership gave way to privatization; regulation gave way to freer markets; high marginal tax rates gave way to much flatter levies; and government sponsored social insurance began to be replaced by private pensions in more than 30 countries.
Then, within the last few years or so, we have seen a counter revolution: the re-emergence of the old left. Bernie Sanders, a self-described socialist, is leading Hillary Clinton in the Democratic primary in New Hampshire and Iowa. Jeremy Corbyn has ousted Tony Blair-type moderates to become the leader of the Labour Party in Britain. Several countries, including Russian and Argentina, have re-nationalized private social security accounts. And Barack Obama has brought back to the White House leftist rhetoric that many of us thought was gone forever.
Let’s put this in perspective. The 20th century can be seen as one long debate over ideology. It was individualism versus collectivism. Capitalism versus socialism. The right to pursue your own happiness versus an obligation to live for the state. Generally speaking, the left lost that debate. After all the misery was tallied and all the bodies were counted, it was clear to almost everyone that the left was wrong about everything. They were wrong about communism. Wrong about socialism. Wrong about the welfare state.
So what new ideas do the new leftists bring to the forefront to justify our paying any attention to them? As it turns out, none! Not a one? Zero. Zilch.
Take Corbyn in Britain. He wants to re-nationalize the railways, the post office and energy production. Is there any reason to believe that government run enterprises work better than private enterprise? None at all. In the United States, the postal service spent 150 years or more trying to outlaw private sector competition. Eventually it lost huge market share to Federal Express, email and other private sector alternatives. If you are good at meeting consumer needs, you don’t have to outlaw your competitors.
For his part, Bernie Sanders told Steve Blow of The New York Times, “I have talked in 20 different speeches that 51 percent of young African-American kids are unemployed and underemployed.” What’s his solution? Raise the minimum wage. Now there are perhaps many reasons to be for a higher minimum wage. But I’ve never heard an economist argue that pricing black teenagers out of the labor market will get them more jobs and better jobs. Any freshman in Econ 101 can see through that.
Sanders other big idea is free college tuition. It’s hard to think of a more regressive proposal. Tax the high school dropouts in order to subsidize college attendees so that the latter can make higher incomes? Yes. And this is advocated in the same speeches in which Sanders complains about inequality.
But mainly Sanders, like Corbyn in the UK, proposes warmed over leftist ideas that have been around for decades – Medicare for everyone (just like Canada), more generous Social Security, etc. He would increase government’s control over our national income by $18 trillion over the next ten years.
And why is that? Is it because government does such a good job of managing heath care? Or any other enterprise? An Inspector General’s report, just out yesterday, concludes that the reason why the Obamacare exchanges have been such a mess is the federal government botched $600 million in contracts. As John Tozzi writes at Bloomberg Business:
The public employees responsible for overseeing $600 million in contracts to build healthcare.gov were inadequately trained, kept sloppy records, and failed to identify delays and problems that contributed to millions in cost overruns.
And here is a bit of a surprise. Even though Corbyn is apparently anti-Semitic, Paul Krugman wrote an apology for him in yesterday’s New York Times. More about that in a future column.