The U.S. is a Socialist State!

 Several people have told me over the past year of their belief that the United States is becoming a socialist country. 

Many believe Obama is a socialist

Pundits on radio and television proclaim that we are redistributing wealth through taxes from rich to poor.  Claiming liberty is under threat, it is said we are losing our capitalism and becoming a socialistic country.  

Sean Hannity and Sarah Palin seem to take this for granted.  Rush Limbaugh preaches that a socialist trend will bring the country down.  On the political right, the national move toward socialism is taken as a goal of the political left.

There are two basic themes being espoused.  One is that the United States is socialist already.  The other is that the United States is becoming socialist.

Let us examine some data to see if these claims are warranted.

What is Socialism?

Socialist countries try to achieve and maintain an even balance between the poorest and richest citizens.  One of the major aims of socialism is to ensure that people are economically equal.   Non-socialist countries will have very rich and very poor segments, where wealth and income are distributed unevenly.

A common thought

Socialism in its purest form is an economic system where a collective of people or government owns the means of production and distribution.  

In pure socialism there is no private property.  In pure socialism everyone shares the benefits of property equally.  

Pure socialism has never been achieved by a modern nation state.  Some level capitalism has always been allowed.

There are degrees of socialism. 

Some real-life socialist-like states have their government planning their economies, allowing businesses to operate for profit under close supervision.  Countries like Cuba, North Korea and Burma practice this form of socialism. 

Other real-life socialist like states allow workers to share control of businesses with owners.  India and Germany have variations of this form of socialism.  Where implemented carefully and thoughtfully these kinds of economies thrive.

Lastly are those countries with market socialism.  Nationalized businesses compete within a market, returning the profits to the state.  China’s recent economic boom has occurred using this form of socialism.

Distribution of Income

If we divide citizens into five groups (quin-tiles) and look at their annual income the difference between the richest fifth and the poorest fifth in socialistic nation would be small.

Current income distribution in the United States

With a little reflection, most people realize this is not the case for the United States.  When asked to estimate the balance of incomes, most citizens predicted that there was a significant imbalance between rich and poor.

When asked what their ideal balance was, citizens thought in general terms that the rich should stay rich, but not so rich.  They also thought poor people needed to earn more of the income pie.

The actual distribution of incomes is much different than expected in the survey.  

The wealthiest have significantly more annual income than the average citizen expected.  

The very poorest are much worse off than citizens thought, estimated or considered ideal.

The current distribution of income among citizens of the United States is very clearly not showing signs of socialism today.  To the contrary, in terms of income distribution the United States is not a socialist nation.

Distribution of wealth and assets
in the United States

Control of Wealth

In socialism the government or collectives of citizens control the wealth of the land.  If this is true we would see an even distribution of wealth between citizens.  The facts indicate otherwise.

One percent of the population controls 43% of the total wealth of the nation.

The bottom 80% of the population controls only 7% of the nation’s wealth.

Clearly property and money are not being redistributed to the poor in any large scale.  Rather, we see a very few people owning most of the riches.

The current distribution of wealth among citizens of the United States is very clearly not showing signs of socialism today.  To the contrary, in terms of wealth ownership the United States is not socialist today.

Income Trends

If the United States is trending toward socialism, then we would see data that showed the poorest citizens having gains in income while the richest citizens lost it.

If we examine data from 1963, before the liberal Lyndon Johnson became president and started the Great Society program, and compare it with income distribution in 2009, when the results of George W. Bush’s economic policies were in full effect, what shall we see?

During this time frame, there has been a surge in the number of citizens who are making less income and plunge in the number of citizens who are making more.  

Fewer and fewer people are earning good incomes.  More and more people are earning poor incomes.

  

If we examine the over all trend in incomes during this period, we discover that we are moving farther and father away from a socialist economy.  

In 1963, the United States was much closer to a socialist balance of incomes than it was in 2009. 

During this forty year period, the economic balance has shifted drastically away from the poor to the rich.

While the number of people who are earning good incomes is dropping, the amount of income being earned by the rich is steadily rising.

The current trend for wealth and incomes among citizens of the United States is very clearly not showing signs of trending toward socialism.  To the contrary, the United States has been becoming less socialist as time passes.

Unions and Government

If the United States was becoming socialistic, then unions of labor would be gaining power.  

Data from 1948 until 2008 shows a different trend.  Labor unions, including government and private sector unions, have dropped to less than half of their peak rate during Harry Truman’s liberal administration.

If the United States was trying to redistribute wealth, we would not see a dramatic fall in federal taxation on the rich.  In socialism, the rich are taxed heavily to support the poor.

When looking at tax revenues by source, we see a dramatic rise in taxes on payroll income.  This represents and increase in the taxation of labor.

Meanwhile, taxes on corporate revenue fallen significantly.  Businesses are given greater access to capital by reduced tax rates.

The individual tax rate is applied on money not earned by labor.   The individual tax rate includes things like inheritance taxes, stocks profits, dividends, and interest income.  The individual tax rate has remained fairly consistent.  Taxes on wealth not earned by labor have remained flat.

The current trend for government and labor in the United States is very clearly not showing signs of trending toward socialism.  To the contrary, the United States has been becoming less socialist over time.

  

Ignorance or Lies?

Clearly the facts show that the United States is NOT BECOMING SOCIALIST.  It is in fact becoming less socialist.

So why are people saying we are becoming socialist?  I will not venture to guess at their motives here, perhaps in another post.  I will suggest a course of action for we the listeners.

Those who ARE saying that the United States is becoming socialist are either ignorant of the facts or intentionally lying.

When a pundit does not know the facts, they should not be speaking about the issue.  Ignorance is not a qualification for expertise.  Listening to ignorance will only breed ignorance.   Continuing to listen to the opinions’ of ignorant speakers is a foolish thing to do.

When a pundit does know the facts and deliberately lies about them, they have broken trust and should not be listened to.  Audiences should ignore them until they leave or change their ways.  Listening to someone who lies to you is a foolish thing to do.

Limbaugh, Palin, Hannity, and others who spout that the United States is currently socialist or becoming socialist are either uninformed or telling falsehoods.  Either way, wisdom suggests, we should stop listening to them.