“Democratic Socialism” is a growing movement on the US political left. Thus, it’s important to pay attention to its ideas, and outline where they go wrong. My Cato Institute colleague Alex Nowrasteh recently posted a succinct, but thorough and insightful critique of ten ideas in the Democratic Socialists of America (DSA) platform. DSA is probably the best-known currently active socialist organization in the US. Here’s an excerpt:
1. “Under socialism, ‘You have no debt. You don’t need health insurance. You don’t pay a mortgage or have a landlord, because comfortable housing is a human right.'”
There are prices on housing, medicine, food, and energy because these goods are scarce and have alternative uses. “Scarce” means that there are not enough of them to satisfy all demand at a price of zero. Those goods must be produced by people who must be fed, trained, equipped, and persuaded to show up to work. In a free-market economy, workers produce those goods because they are paid to do so, the owners of firms organize production efficiently because their profits depend on it, and the owners of capital sell it to the most profitable firms. All that activity is guided by the incentives and information provided by prices.
Similarly, there are many different uses for these goods. Prices provide a signal and an incentive to producers to decide what to build and to consumers to decide what to buy. Abolishing prices abolishes neither the costs of production nor the choices of consumption. It destroys the information and incentives that tell producers what to make, in what quantity, where, and at what sacrifice of alternatives. No socialist economy has ever solved the problem of efficiently allocating those resources without prices set by market exchange…..
3. “As free market economies fail, they turn to right-wing authoritarianism, but ‘if we lived in a classless society and governed ourselves, we could freely build a world without war or poverty.'”
Economic freedom and political freedom are correlated. The Economic Freedom of the World report finds that the freest quartile of economies enjoys average incomes 6.2 times higher than the least free. Incomes for the poorest tenth are 7.8 times higher, and life expectancy is 17 years longer. Denmark, the democratic socialists’ favorite exhibit, is nothing of the sort. It ranks ninth in the world for economic freedom, and its prime minister traveled to Harvard to say, “Denmark is far from a socialist planned economy. Denmark is a market economy.” The regimes that actually abolished private ownership ran the authoritarian experiment themselves. More than two dozen socialist trials ran over the past century, and every one that collectivized its economy ended in one-party rule. Socialists will often deny that those countries were really socialist because they are selecting on outcomes, but there is a long history of Western socialists celebrating each new socialist government at the beginning of its reign, only to sour on it when the disaster strikes….
The classless society fared no better on its other promises of peace and social harmony. Each trial produced a new ruling class of party officials with better apartments and worse manners than the bourgeoisie they replaced; peace among nations tracks commerce rather than collective ownership,…. Authoritarianism follows the concentration of economic power in the state. That concentration is the DSA’s core proposal….
4. “Guarantee universal healthcare at no cost to individuals.”
“At no cost to individuals” doesn’t include the individuals who will pay for it. The Mercatus Center’s Charles Blahous estimated that Medicare for All would add $32.6 trillion in federal costs over 10 years under assumptions favorable to the plan, and the left-leaning Urban Institute put the figure at $34 trillion. That mostly shifts spending from premiums to higher taxes, but the new expanded tax bill would start near a tenth of GDP, grow from there, and exceed what doubling all projected federal individual and corporate income tax collections could cover. And presumably the entire point is to expand health care consumption, which randomized experiments show does little to improve health, so these estimates understate the additional resources such a scheme would require. Single-payer systems also pay with longer wait times, because a monopoly provider whose patients cannot take their business elsewhere doesn’t have an incentive to change. England’s National Health Service carried 7.3 million waiting cases as of this spring, and the median Canadian patient now waits 28.6 weeks between referral and treatment, triple the wait in 1993.
America’s own health care problems cannot be blamed on free markets because the United States does not have a free market health care system. The US government controls 84 percent of health spending through a complex system of tax rules, expenditures, and other mechanisms. That’s higher than in 27 out of 38 OECD countries. The share of the US health care sector under government control “is closer to communist Cuba (89%) than the average OECD nation (75%),” according to Michael Cannon of the Cato Institute. The specific portions of national health care systems under direct government control, and the ways they are controlled, vary across countries. American health care is a largely government-run system.
As they say, read the whole thing!
For those interested, Alex is just as tough on right-wing versions of economic statism. See our coauthored article, “The Case Against Nationalism.” Nationalist and socialist central planning have much in common.
I previously wrote about “The Perils of Democratic Socialism” (a 2019 post that remains relevant to today’s DSA agenda), and more recently about “The Contradictions of Socialist Prison Abolitionism” (which highlights the clash between socialists’ coercive economic agenda and the desire of many of them to abolish prisons). In 2024, I wrote about how Venezuela – a nation until recently held up as a model by many Western socialists – exemplifes the dangers of democratic socialism.
Socialism – in the DSA-endorsed sense of government control over all or most of the economy – has led to disaster wherever tried. We are unlikely to make it work much better than the Russians, Chinese, Cubans, North Koreans, and others who came before.