The Biden administration’s economic policies are called progressive but really are socialist
The Biden administration and his progressive controllers have made some of the biggest moves away from classical free-market principles in our nation’s history.
The Biden administration’s economic policies are called progressive but really are socialist. The difference between progressive and socialist is only a question of degree and what matters is the direction. Any movement in the direction of giving government more power, more control over the economy, more control over people, more control over markets, is a move toward socialism.
The only question is how dramatic the move is and how fast we get there. The Biden administration and his progressive controllers have made some of the biggest moves away from classical free-market principles in our nation’s history. His $5.8 Trillion budget takes our country further down the socialist road. It likely will not pass, but it's evidence of where the administration and Democratic Party will take our country if allowed.
A few cons of socialism
Lack of incentives. If an economy has high rates of progressive taxation, it would cause disincentives to work and setting up business. Entrepreneurs may feel that if the government is taking a high percentage of their profits, they would prefer not to take the risk or work abroad. In the modern world, it is easier for the super-rich to live abroad in tax havens and free ride on others who pay tax. If tax rates are too high, they can be self-defeating and fail to significantly increase tax revenues. The Economist states that:
“Ms Ocasio-Cortez has floated a tax rate of 70% on the highest incomes, but one plausible estimate puts the extra revenue at just $12bn, or 0.3% of the total tax take” – Millennial socialism, (2019)
Another example is the experiment of French President Hollande, who imposed a top rate of income tax of 75% on incomes over €1m, however, the tax raised only meager sums as many sought to avoid paying and it was later dropped.
Government failure. In an ideal world, the government would be successful in regulating firms, labor markets and running public industries. However, government intervention is prone to government failure and an inefficient allocation of resources. For example, labor market regulations such as high minimum wages or maximum working week could lead to unemployment and a lack of flexibility which firms need to deal with a sudden increase in demand. If firms are highly regulated, it is an extra cost which may discourage investment and lead to lower economic growth.
Welfare state can cause disincentives. If a welfare state is too generous, it creates a disincentive to get a job and therefore it can reduce the labor force and individual effort.
Powerful unions can cause labor market antagonism. Ideally, socialism aims at a more harmonious society. However, if the socialist policies are geared towards strengthening trade unions and aiming for perfect equality, it can lead to antagonistic labor relations with a ‘them and us’ mentality – workers against owners. Even public ownership is not guaranteed to solve industrial relations. The ownership doesn’t matter to workers if they feel they are getting a bad deal from their government employers.
Rationing of health care. In a publicly funded health care system like the UK, doctors usually face greater financial constraints, some non-urgent operations will be rationed and there are longer waiting lists than in a private system.
Difficult to remove subsidies/government benefits. Milton Friedman argued that that “nothing was so permanent as a temporary government subsidy”. A good example is farming subsidies. In the late 1920s and 1930s, US agriculture was in crisis so the Federal government agreed to give temporary support. However, over the years, government subsidies to farming in US has continued to grow. In 2019, US farmers got a record $22.4 bn in subsidies (NPR) Farming subsidies are not really seen as ‘socialism’ but it is a form of big government intervention giving money to a certain group.
Congressional Progressive Caucus (Roll Call)