Socialism: Who Is Going To Pay For It?

Socialists believe government has a role in the distribution of some goods and services, such as medically necessary health care, child care and education. We all know Medicare, free child care, and free college are not free. Someone has to pay for them. Many people dismissed Bernie Sander’s policies as nice ideas, “but who is going to pay for it?” Some of them remind us, “nothing is free.”

This question presumes a naïveté in those who support Bernie Sanders, as if it never occurred to them that someone would have to pay. But everyone knows who Bernie wants to pay for these programs: the rich!

Bernie Sanders’ democratic socialism presupposes that the wealthy do not have their wealth because they deserve it, or because they worked that much harder than everyone else. They accumulated their wealth because we live in a society in which the wealthy have a vulgar amount of power, and they use their power to make sure they remain in power and accumulate more money. Donald Trump is one of the most brazen, but the same it true of Jeff Bezos, Warren Buffett, Bill Gates, Mark Zuckerberg, Michael Bloomberg, the Waltons and the Koch Brothers.

In Figure 1 are a few policies that Bernie called out on his website* to make the wealthy pay their fair share.

Fig. 1

Appendix A: The Counter Argument

There is one counter argument I would like to proactively respond to. The argument goes, “If you tax the wealthy, they will not invest into creating new jobs.” The problem with this argument: it is obvious that making less profit is better than making no profit at all. The rich are not so stubborn as to keep their money in the bank just because, if they were to invest it they would have to share some of the profits with the IRS.

But this is not entirely true, is it? There is a way in which people are right when they say taxing the rich is counter-productive because the rich will not invest in new jobs. The wealthy have several ways to fight taxes and other hits to their bottom line. The wealthy can always choose to act collectively as a class in what is known as a capital strike, where they intentionally crash the economy in order to fight taxes and working class victories, acting as though they are the victims of an abstract, natural law called “economics.” As horrible as this sounds, this strategy is rational. The wealthy recognize that their long term interests are under threat. If they submit to accepting less power and profits now, what will keep the people from taking even more power from them in the future, which is exactly what socialists are hoping happens. Socialists are fighting for a world without billionaires.

We saw the wealthy threaten a capital strike recently in California when the Supreme Court ordered Uber and Lyft to reclassify their drivers from independent contractors to employees. As employees they qualified for worker protections for which independent contractors do not qualify. In the end, rather than calling a capital strike Uber, Lyft, DoorDash, Instacart and Uber-owned Postmates invested more than $200,000,000 supporting Proposition 22. They won. Proposition 22 exempted them from treating their drivers as employees.

Globalization is another factor that could contribute in the wealthy refraining from creating new jobs. They can always move their factories to less developed countries overseas. This worked in the 80’s and 90’s. This was one of the most effective tools capital used against unions.

Socialists see globalization as an argument for international solidarity against capitalism, an argument that capitalists will betray the nation that birthed them at the slightest provocation. The wealthy became wealthy as a consequence of the opportunities made possible by the hard work of the workers, and the taxes paid by the tax payers of their country, yet they blackmail their government, claiming they will have no choice but to move overseas if they are forced to pay their fair share of taxes. The kicker is that they may actually be right because, once an industry moves en masse overseas, the free market obligates everyone else to move overseas just to compete. Again, this is why socialism requires international solidarity of the working class.

*The link worked when I began writing this, but a couple weeks later when I published it, it no longer worked. The name of the article was “Ten Fair Ways to Reduce the Deficit and Create Jobs.” The link was https://www.sanders.senate.gov/top10