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Politics & Policy

A Response to Wilkinson about Socialism

(Larry Downing/Reuters)

I thank Will Wilkinson for his thoughtful response to my column about the trendy talk of socialism among Democrats.

One thing: Wilkinson writes that I’m wrong to claim that the live argument is not whether to have a welfare state but how to design it, that “the fundamental difference between Right and Left is where to draw that line (or those lines) and how to go about helping those we decide to help.” Instead, Wilkinson insists: “A Republican Party that remains doggedly devoted to Grover Norquist’s goal of shrinking government until it’s small enough to drown in a bathtub isn’t pro-lifeboat. It’s pro-drowning.”

It is true that the Republican party has a weakness for homicidal political tropes in the Norquistian mode, but the fact is that nobody has actually been shrinking government at all, much less shrinking it down to convenient murdering size. Federal spending per capita in real dollars in 2016 was twice what it was in the Nixon years and three times what it was in the Eisenhower years. That’s the opposite of shrinking.

You couldn’t drown the goddamned thing in the Pacific Ocean.

Conservatism may well have been the most important American ideological force of the second half of the 20th century, but that did not coincide with reducing the scale of the federal enterprise in meaningful terms; conservatism in the 21st century, which currently is suffering from a populist infection, is actively defensive about many aspects of the welfare state. The most important structural drivers of federal spending are a small number of entitlement programs, most of them (Social Security is the most significant exception) dating from the 1960s. If Wilkinson and others are curious about why some Republicans remain so deeply opposed to the ACA regime, they might want to go back and take a look at the original spending projections for Medicare and Medicaid.

Federal spending per capita amounts to about one-third of median income per capita; per capita spending by government at all levels well exceeds half of median income per capita. Total government spending is around 42 percent of GDP, about the same as Canada and only 2 percentage points behind Norway — or about halfway between Switzerland and Sweden. That’s not Ayn Rand territory. It’s not even Lee Kwan Yew territory.

“Libertarian” is a word that often is used by people on the Right who are understandably embarrassed to call themselves Republicans. Libertarianism in practice does not have much of a constituency. (Unfortunately.) Neither socialism nor Scandinavian-style welfare states have much of a real American constituency, either — as Wilkinson notes, such specimens as Alexandria Ocasio-Cortez go temporarily aphasic when it comes to the uncomfortable question of paying for all those wonderful benefits.

What’s important to understand here — for Left and Right alike — is that one of the differences between the United States and, say, the United Kingdom or Norway is that their middle classes pay very high taxes. The radical split between the United States and the Scandinavian countries is not how we tax the rich — the rich have it pretty good in Sweden, too — but in how we tax the middle class, i.e., we don’t, not much by way of comparison, anyway. As Kyle Pomerleau of the Tax Foundation put it in 2015:

The rates are not necessarily the most important feature of the Scandinavian income tax systems. In fact, the United States’ top marginal income tax rate is higher than Norway’s and only 18 percent lower than Sweden’s, yet raises 40 percent less income and payroll tax revenue than Norway and 50 percent less than Sweden.

Scandinavian income taxes raise a lot of revenue because they are actually rather flat. In other words, they tax most people at these high rates, not just high-income taxpayers. The top marginal tax rate of 60 percent in Denmark applies to all income over 1.2 times the average income in Denmark. From the American perspective, this means that all income over $60,000 (1.2 times the average income of about $50,000 in the United States) would be taxed at 60 percent.

Sweden and Norway have similarly flat income tax systems. Sweden’s top marginal tax rate of 56.9 percent applies to all income over 1.5 times the average income in Sweden. Norway’s top marginal tax rate of 39 percent applies to all income over 1.6 times the average Norwegian income.

I’ll believe that the Democrats are serious about that Scandinavian welfare state when they start talking about the need to radically raise taxes on the middle class. Grover Norquist will have a good giggle at that.

What all of this fails to capture is that while it matters what the tax rates are and what the spending figures are, it also matters — a great deal, probably more — how that money gets spent. Things like program design, the character of public-sector institutions, and administrative norms are enormously important. And those things are what are really radically different between the United States and, say, Denmark. My sense is that there are not very many Americans who want to pay Danish taxes, but they’d be happier paying them in return for Copenhagen’s services than for those of Philadelphia or Cleveland. And that is not just a question of appropriating the money.

I know that when I travel abroad, I have the same kind of experiences that other admirers of European life report: Riding a train in Switzerland or going through the airport in the Netherlands or seeing how well-kept Vienna is and thinking, “We’ve got to get us some of that.” What that is other than higher taxes is the more interesting conversation.


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