Ocasio-Cortez Derides Capitalism in favor of Socialism

This is a response to the recent admonition of capitalism and the political moderate by U.S. Congresswoman Alexandria Ocasio-Cortez.

America has worked thus far because of Centrism. Our primary issues do not come from moderates, but from partisans that cause division due to their extremist or reactionary beliefs. The 20th Century was rife with such people and it always lead to democide (Nazi Germany as a reaction against Communists, Soviet Union as a reaction against Capitalists) or oppression (McCarthyism as a reaction against Communism). You will have witch hunts, you will have famines, you will have mass immigration to freer lands, and stock market collapse.

I want to take time to examine Congresswoman Ocasio-Cortez’s belief that capitalism is irredeemable and should give way to socialism, and that being a moderate or a centrist is a “non-position.”

First, it is important we don’t fall into the No True Scotsman fallacy where we go through and continue to narrow down the counter examples of socialism. The reason for this is because no socialist country delves into the far left believing they will have to liquidate millions of people to bring about equality. They don’t advertise, nor brand themselves as that. Both the Soviet Union and Venezuela have come back to bite Bernie Sanders in the butt because he is on tape praising them prior to their fall.

Socialists have a problem where they don’t have any examples of their worldview being successful (I will get to the Nordic model shortly). Ask people who grew up under socialism and they’ll tell you it is horrendous. Off the top of my head I know it was tried in Russia, Cuba, Venezuela, China, Bulgaria, Albania, Vietnam, Korea, Nicaragua, and Romania. My knowledge of Romanian socialism comes primarily from a book I have called “Tortured for Christ” which is an autobiography about a man who suffered under Nazi rule during WWII, and then subsequently suffered under communist rule in his homeland. That’s not something we should just let slide by. In many of the countries I know socialism has been implemented, religion has been persecuted. This is for the same reason Nero persecuted Christians in Rome – Christianity teaches us that the State is not God. Rather, we are made in the image of God and therefore have unalienable rights, and that the rulers of this world are likewise subject to the same Master. That mentality cannot suffer to live under a far-left state which seeks to oppress individuals through collectivism. You become a subject of the State.

This is a double edged sword as some Christians are prone to socialism too. They see inequity in their society and want it fixed, but instead of doing the hard work themselves by giving of their own they seek to use the State as a means to give instead. This means that they place their burden and conviction upon another. Typically this is someone they deem as having more means than themselves. The issue here is two fold.

First, Jesus didn’t tell us to have Rome collect taxes from people better off than ourselves and then distribute it as they deemed necessary. Rather, He told us to give of our own, cheerfully, with our right hand without our left hand knowing. This is an example of why a moderate position is so important. We must take all things into account – justice and mercy, love and honor. We can’t set up a single virtue – such as helping the poor – as the only virtue or else we blaspheme our God.

Second, “the wealthy” is a completely subjective term. Take the Kulaks that were liquidated in Russia for example. They were peasant farmers, but still considered capitalists. Their land was forcibly taken from them and given to the state, and if they resisted they were murdered.

“Both peasants and Soviet officials were often uncertain as to what constituted a kulak. They often used the term to label anyone who had more property than was considered “normal”, according to subjective criteria, and personal rivalries played a part in the classification of enemies. Historian Robert Conquest argues, ‘The land of the landlords had been spontaneously seized by the peasantry in 1917–18. A small class of richer peasants with around fifty to eighty acres had then been expropriated by the Bolsheviks. Thereafter a Marxist conception of class struggle led to an almost totally imaginary class categorization being inflicted in the villages, where peasants with a couple of cows or five or six acres more than their neighbors were now being labeled “kulaks,” and a class war against them declared.’” – Kulak Wikipedia Page

Wealth isn’t objective. What ends up happening when a nation travels down the path of socialism is that there is never enough socialism. First, all those we would typically call wealthy end up leaving or their capital is forcibly taken from them via taxation. This is then distributed to others who do not use it to produce more wealth. Thus, a new class of wealth is created where before such people would not have been considered wealthy, they are now at the top of the bracket. Thus, since the system is running out of funding, the new bracket has their capital forcibly taken too. The end result is a shared poverty among subjects.
Margaret Thatcher did a great job fighting against this in England, rationally. You can watch her here in Parliament explaining how socialist policies end up making everyone less off than they were before.

She is famously quoted as stating, “The trouble with Socialism is that eventually you run out of other people’s money.”

Churchill said basically the same thing in the 40s:

“I do not at all wonder that British youth is in revolt against the morbid doctrine that nothing matters but the equal sharing of miseries, that what used to be called the ‘submerged tenth’ can only be rescued by bringing the other nine-tenths down to their level…” —Churchill, House of Commons, 13 June 1948.

“Churchill’s withering barrage of sarcasm moreover puts us in mind of that dictum concerning property asserted by the Father of the American Constitution, James Madison, when he said, in the tenth Federalist, that ‘the protection of different and unequal faculties of acquiring property [is] the first object of government.’ One might add that according to Madison, the U.S. Constitution is intended to provide equal protection to unequal abilities. This is just as surely what Abraham Lincoln meant when in 1864 wrote to the Workingmen’s Association of New York that ‘Property is the fruit of labor; property is desirable; it is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise’”
- Dr. Harry Jaffa

The end result, as Churchill once put it, is “shared misery.”

And that has eventually become true among all socialist nations. Take Greece, for example, it was once held up as a shining star of an advanced welfare state with socialist underpinnings, until its financial collapse in 2007. It experienced a depression far greater than the one America did in the early 20th Century. Its educated elite left the state, its banks defaulted, and eventually the government itself – due to taking on too much debt – was the first developed nation in history to default on a payment.

Additional Eurozone states with similar socialist structures include the Nordic countries that American socialists tend to praise. Let’s take Sweden as an example first. In the 70s it was extremely wealthy (4th in the world). It had a robust capitalist society from the 50s up until then, with taxes even lower than the US at points. But between 1970 and 1995 it created no new jobs in the private sector (capitalism waned) and became the 14th richest in the world. This period was marked by expansionist socialist policy, which was the cause of its downward spiral.

However, since then the Swedish government has cut down on its socialist policies and opened its markets back up. It has administered deregulation, school vouchers, partial privatization of the pension system, and lower taxes. These reforms effectively saved Sweden (Source: Organization for Economic Cooperation and Development, and Swedish economist Johan Norberg).

If you take a look at Denmark, which was especially touted by Bernie Sanders in his 2016 campaign as being a shining example of socialism done well, you’ll find its success isn’t because it is socialistic, but because it is capitalistic.

The Prime Minister of Denmark retorted, “I know that some people in the US associate the Nordic model with some sort of socialism,” he said, “therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”

The difference here is the fact Ocasio-Cortez is against capitalism where-as the Nordic models are not against capitalism. She believes capitalism is “irredeemable” and eventually should give way to socialism. This was a belief shared by Marx and Lenin, but the problem is – capitalism is what makes a society free and prosperous to being with. You can’t cut the tree down and keep getting its fruit at the same time. All of these Nordic countries share a common trait – low corporate taxes and rather flat high income taxes.

The low corporate taxes keep capitalism chugging along, and the flat high income taxes pays for their expansive welfare. As a practical example with Denmark, their flat top income rate is roughly 60%. This is applied to anyone making 1.2 times the average income. If this system were applied to America it means anyone making $60,000 or more a year would be taxed at a marginal rate of 60%. Such a rate is abhorrent to most Americans, which is why the socialists here try to push most of the taxation on people they deem more wealthy than themselves (Sanders used to rail against millionaires before he became one himself. He now just rails against billionaires).

The current American socialist trend, however, is away from a flat tax system and toward a progressive tax system – isolating the wealthiest among us which will lead to the downfall previously covered. There are huge trade-offs here though.

Scandinavian countries restrict economic freedom for its citizens. You may not be able to fail, but it comes at the cost of your neighbors’ economic liberty. When we look at unicorn startups we find the majority in societies that have embraced capitalism. Ever since China adopted aspects of capitalism (especially letting Hong Kong off the leash) it has become a world leader in unicorn startups followed closely by the US. This is amazing considering the People’s Republic of China was started by Mao in 1949 with the death of 45 million people in 4 years under collectivist philosophy.

In his efforts to bring equal prosperity to everyone, Mao nationalized businesses (including farming) which lead to extreme poverty. In 1978 Deng Xiaoping opened back up the private sector and created multiple market zones to attract foreign investment. Since his reforms, China has embraced (in many areas) the free market and property rights. The entire story is an excellent example of two things – one, collectivization leads to death and poverty, and two, capitalism leads to prosperity.

I will not deride Scandinavian countries for what they do well. They create a standard of living people are happy with within its borders, but they most certainly embrace capitalism even if they don’t let it off the chain like America does or like China has started to do. Ocasio-Cortez derides capitalism, as did Maduro in Venezuela, as did Stalin in Soviet Russia. It is striking to note that Scandinavian countries do not have a minimum wage, but in America, Ocasio-Cortez and Bernie Sanders want to raise the minimum wage to $15/hour – effectively pushing small business out and causing a loss in the labor force. On the flip side, when taxes were cut, multiple companies (to show their enthusiasm) raised their minimum wage to $15 an hour. In some ways, Scandinavian countries (with their low corporate taxes and no minimum wage) understand capitalism better than we do.

Take, for example, the fact Nordic nations typically rank very high on the Economic Freedom index. Hong Kong (previously mentioned when I touched on China) scores the highest on the list, with the US at the 12th spot, but we are followed very closely by Denmark (15th slot) and Finland (17th slot).
We also must address the fact Scandinavian countries are homogenous in culture. Most of them agree on social norms and work ethic, and they are relatively small nations. For example, the State of TN has more people living in it than the nation of Denmark or Finland. As for culture, here is a Quora answer that may shed light.

Back to the main point at hand – the pursuit of equity ends in shared misery. It is a sexy prospect, but it’s a flawed ideology. The book 1984 was used by some as a way to show how equality can lead to severe government oppression, but for others it was used as a handbook for implementing politics. The moral flew right over their heads. In the book we find multiple examples of government forced equity. For example, very athletic people must wear heavy weights to make it more difficult for them to play their respective sports. Very smart people must wear an implant that disrupts their ability to think. The idea is that we should all be equal in our abilities, and finances. These are practical steps to ensure equity. The reason socialist states end in authoritarianism is because socialism isn’t voluntary. It is forced collectivization, forced taxation. If you listen to people who have lived under socialism (and oppose Ocasio-Cortez for not condemning Maduro) you’ll find authoritarianism is part and parcel.

Did you know that a few years ago Massachusetts included an option for people to pay an optional tax? They were allowed to give extra money to the state government if they wanted to (5.8% instead of a 5.2% tax rate). Almost no one checked that box – including Elizabeth Warren! What this tells us is that people believe they can spend their money better than the government can. It means that socialism will never work as a voluntary measure, but must be compelled on the people. On the flip side, conservatives give at a higher rate than their liberal counterparts. In other words, the left is more interested in forcing others to fork over their cash while the right actually forks their own money over to help those in need voluntarily. The reason the moderate-right is against the government doing the giving for them is because they feel they can apply their giving better, and when it comes to a voluntary tax it is obvious the liberals agree so long as they are talking about their own cash and not someone else’s.

The bottom line here is that in the socialist paradigm, equity must be forced upon us. This leads to greater and greater government intervention, which leads to a decline in capitalism as it is regulated to death, which leads to the nationalization of industry in an attempt to save things, which leads to famine and death. Jordan Peterson does an excellent job talking about the pernicious nature of seeking equality in this interview. I can’t sum it up any better so I do hope you’ll listen to it, especially when he says “We can’t understand how one of our primary moral intuitions, which might be fairness, can transform itself into something so utterly murderous when it is played out on the political stage.”

On the flip side, the best form of an economy we have developed to lift people out of poverty has been capitalism. It inadvertently creates a form of equality by creating a middle class. The middle class used to be called the capitalist class because they were poor people with good ideas who took on investment from the wealthy class and created jobs for their friends – lifting many out of poverty and creating a more equal society by bridging that gap. Equality wasn’t the aim of capitalism, but something greater was – freedom. To have the opportunity to make something of yourself, as Abraham Lincoln alluded to in the previously cited quote, is a mark of a virtuous society. If we pursue freedom, we find more equality thrown in. If we pursue equality we find no greater level of it (as Peterson cited in his interview) occurs.

Thus, as opposed to Ocasio-Cortez who wants to stifle capitalism, I’d argue we need to open capitalism up and increase our standing on the Economic Freedom Index in the world. By doing so we will raise a larger middle class and lift people out of poverty.

As for being a moderate, the other end of the spectrum which us moderates detest is what is called crony-capitalism, or the corruption of capitalism. We equally condemn that as we do socialism. In addition, most moderates will condemn monopolies which ruin capitalism. In a pure capitalistic society, you should have 15-20 brand choices for any given product or service. A monopoly denies this choice by forcing out competition, which creates higher prices, lower quality, and corrupts capitalism. Thus, most moderates are pro trust-busting.

We hold that middle road because the roads on the far left and the far-right lead to destruction. This is a superior road to hold than that of Ocasio-Cortez because her decry of capitalism in pursuit of a socialist society will inevitably slaughter the golden goose and lead our nation to a state of poverty and scorn among the world. We cannot have such people leading in our politics. We must excise the socialist as well as the fascist from our government if we want to survive and thrive.

Written by James Thayer