Blog Post

AEIdeas

So Bernie Sanders gave his big speech on “democratic socialism.”

Where to begin?

Here are three things that immediately grabbed my attention, really the core of his indictment of market capitalism:

1) Sanders said the “reality is that for the last 40 years the great middle class of this country has been in decline,” something which certainly isn’t statistically true. Middle-income living standards have actually risen by something like 40-50%. Even the New York Times has noted how the middle class, at least through 2000, only got smaller “because of more Americans climbing the economic ladder into upper-income brackets.” And as Obama White House economist Jason Furman said before he became an Obama White House economist, ” … people are substantially better off than they were 30 years ago.”

2) Sanders said “that in a democratic, civilized society the wealthiest people and the largest corporations must pay their fair share of taxes.” Yet the Tax Foundation noted today that the top 1% earned nearly a fifth of national income but paid nearly 40% of the federal income taxes. The TF also found that “the top 1 percent of taxpayers paid a higher effective income tax rate than any other group, at 27.1 percent, which is over 8 times higher than taxpayers in the bottom 50 percent (3.3 percent).”

3) Sanders said “most Americans can pay lower taxes – if hedge fund managers who make billions manipulating the marketplace finally pay the taxes they should.” Yet scholar Lane Kenworthy, author of the recent book, “Social Democratic America,” concedes the democratic socialist agenda will require broad tax increases on the middle class: “Washington, however, cannot realistically squeeze an additional ten percent of GDP in tax revenues solely from those at the top, even though the well-off are receiving a steadily larger share of the country’s pretax income.”

I’m not going to do a line-by-line analysis, but I don’t find this effort, as either defense or advocacy, particularly impressive or even factually sound. For a mental palate cleanser, I suggest this piece by Deirdre McCloskey in National Review, “The Great Enrichment.”

OK, one more thing: Is Sanders even aware of new research showing how wealth inequality is driven by housing and government policy? As I have written: