September 28, 2021

September 28, 2021

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Bernie Sanders: A Free Market Flake

by | Jun 30, 2021 |

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The thing about ‘democratic socialism’ that has always bothered me is the lack of definition. Here is how Bernie Sanders defines it: “When I use the word socialist–and I know some people aren’t comfortable about it—I’m saying that it is imperative that we create a government that works for all and not just the few. I don’t believe government should own the means of production, but I do believe that the middle class and the working families who produce the wealth of America deserve a fair deal.”

If we break out the pieces of that definition, we have an economy in which the means of production are controlled by the government, while paper ownership is kept in private hands (to the degree you can call it ‘ownership’ when the supposed ‘owner’ has no control over that which he or she ‘owns’), and we have the middle class and working families getting a ‘fair’ share of the wealth, whatever ‘fair’ might mean.

Bernie is right about one thing – what he describes is technically not socialism, as socialism is defined as ‘government ownership of the means of production. There was, however, an Italian philosopher in the early 20th Century who broke ‘ownership’ down into two pieces, one being control, and the other being profit. This philosopher reasoned that profit (and, by extension, pay) provided something traditional socialism lacked – an incentive to work efficiently. This philosopher further reasoned that government control over the means of production was far more important in providing ‘fairness’ than was paper ownership, and that having a centrally planned economy in which private ownership was maintained, would work as a kind of ‘new and improved, Socialism 2.0.’

That philosopher’s name was Giovanni Gentile, and the economic system he created was called ‘fascism.’

What Bernie Sanders is describing is fascism.

Bernie Sanders

Now, I’m not calling Bernie Sanders Hitler, so don’t misunderstand me. Hitler was both a fascist, and a racist, whereas Bernie is not, as far as I know, a racist. Bernie is a fascist more in the vein of Benito Mussolini, Francisco Franco, or Philipi Petain, but if we take Bernie at his word, using his definitions, his version of ‘democratic socialism’ is ‘fascism.’ That, by the way, is not as crazy as it sounds. Hitler’s first post WWI job was as a political propagandist for the Democratic Socialist Government of Bavaria, so if Hitler could move from democratic socialism to fascism, it is not hard to see Bernie defining democratic socialism as fascism.

I don’t think Bernie wants to consider himself a fascist, so allow me to make an argument using his definition in a different way that could conceivably make Bernie something else he would never want to be: a capitalist.

Bernie does not just call himself a ‘socialist,’ but rather, a ‘democratic socialist.’ As a ‘democratic socialist’ who believes in ‘fairness’ for the middle class and working families, Bernie should support any system that uses democratic means to deliver such ‘fairness.’

Bernie’s view is that an economy is an engine we use to power the country, and as such, he wants the government to control that engine. This is a silly way to look at an economy. Really, an economy is the sum total of everything the people do, and as such, if the economy is ‘controlled,’ so too are the people. For the people to be ‘free,’ so too must be the economy – a ‘free market’ being nothing more than what emerges when the government more or less leaves the people alone.

In a free market, the price mechanism determines the cost of everything, including labor. The price mechanism is based on supply and demand, and prices change as supply and demand change. In other words, prices are set by the need/desire to have something, as well as the willingness to produce that thing. That is true for medical care, iPhones, and yes – labor.

In a free market, businesses only make money by talking consumers (or other businesses) into buying their goods and services. Each person, in the meantime, is free to do whatever they want with their productive capacity. People can start their own businesses; they can work for other people (who have businesses), they can devote all of their time to leisure – they can do whatever they want to do.

How much a person is paid in a free market will be based entirely on how much demand there is for whatever that person decides to do. If someone wants to do something for which there is no demand, they will not get paid. If someone wants to do something for which there is a great deal of demand, they will be paid generously. The price mechanism adjusts the cost of labor, such that as the demand for a particular job changes, so too do the wages that particular job will pay.

At the end of the day, all business activity in a free market is driven by consumer demand. EVERYONE in a free market is a consumer, and as such, everyone in a free market gets to vote, with their dollars, on what the price of everything – including labor – should be. What could be more ‘democratic’ than that?

WAIT, Bernie might say! The RICH has more money and thus more of a vote! How is that ‘fair’?!?

Bernie’s hypothetical question ignores how the rich get rich in a free market – they do so by LISTENING TO THE VOICE OF SOCIETY, as given by their buying decisions, via price controls.

As my children grew up, I told them to listen to the voice of society in choosing a career path. I told them that there will be some things you really love and are passionate about, but that people are not going to want to pay you to do, and that there will be other things you love and are passionate about that people are willing to pay you to do. Things you love, but that people don’t want to pay you for – those are hobbies. Things you love that people are willing to pay you for – those are careers.

If you find the thing you love and are passionate about that society really needs you to do, that is the kind of job that will pay well. Pay attention to what careers pay, and if you want to benefit society, do what pays the most, as that is precisely where society is telling you to go.

If you have children entering High School, please tell them the same thing. We don’t need more people studying lesbian dance theory. What we need are engineers, scientists, and welders.

The price mechanism is not some magical entity. It is, rather, the literal voice of the people, as given through their everyday purchasing decisions. If the government does not manipulate pricing (which it likes to do), price is purely the voice of the people.

There is this weird belief on the left that businesses determine what they are willing to pay for labor, and certainly, businesses would like that to be true, but businesses need employees, and employees are free to choose whether or not to take or to keep a job. There are, furthermore, multiple employers at any given time looking for employees, and while skill may make a worker more valuable in the market, ironically, the more skill a worker has, the fewer potential employers there are out there. Unskilled labor can quite literally work for anyone, so while places like Wal-Mart and McDonald’s may choose to use more unskilled labor than do other businesses, neither Wal-Mart nor McDonald’s (nor anyone else), have any control over what the cost of unskilled labor is going to be. The market decides that through the buying decisions we the people make every time we buy something. Around me, Mcdonald’s is advertising $13 an hour with a $500 hiring bonus. McDonald’s would love to pay less, but the market forces them to pay more. That’s how it works. That’s what our buying decisions have decided is ‘fair.’

Furthermore, those who have the most dollars (or ‘votes’ as we are describing them here) have them because others have voted, through their buying decisions, for those people to be paid more. Even with the mega-rich, you get one-button shopping and next-day delivery to your door. Did you really think Jeff Bezos was going to give you that for free? Jeff Bezos has created a tremendous amount of value for society, only a tiny fraction of which he is able to keep. Amazon has made us all better off!

Even in the supposed ‘robber baron’ era, when Andrew Carnegie became, arguably, the richest person in human history, he did so by making stronger steel than his competitors, and by producing it at a lower cost than could his competitors. Andrew Carnegie cornered the steel market and became fabulously wealthy, but we got lower costs on cars, bridges, buildings, refrigerators – literally everything that used steel as an input. We owe Andrew Carnegie a debt of gratitude.

Note too that being rich gives people more total buying power, but in terms of those things we use in our everyday lives, a rich person does not eat more, on average, than everyone else, or use more shampoo in the shower. As such, an increase in buying power does not translate to a corresponding increase in voting power in terms of everyday purchasing decisions. What the rich have is the ability to buy things other people cannot afford at all, and ironically, as production of those things increases, they become more affordable for the rest of us. You can thank an affinity for flat-screen TVs among the rich (who bought them when they were $5,000 a pop) for the affordability of high resolution, big-screen TVs today.

A free market is the most democratic process known to man, and as such, someone who believes the people should collectively decide how the economy should operate should demand that we pull the government out of our economy (as much as that is practical), and allow the free market to operate more or less unfettered. The free market is the ultimate democracy. Government intervention exists only because some people do not like what we the people vote for through our buying decisions.

As for what is ‘fair,’ that too is determined by we the people, in a free market, using democratic processes, every time we spend money.

Bernie, in the meantime, disagrees with we the people, on what he considers ‘fair.’ Bernie wants the means of production operated against what the American people voted for through their buying decisions.

Bernie Sanders does not believe in democracy on either the buying side or the selling side of any economic decision. Bernie thinks he knows better.

Is Bernie Sanders a ‘democratic socialist’? Clearly not. Bernie Sanders has no interest in either democracy or socialism (based on the actual definitions of those words). What then is Bernie Sanders? Is he a communist? In spite of having spent his honeymoon in the Soviet Union, Bernie would say no. Is he a fascist? In spite of his definition of ‘democratic socialism’ also being the definition of ‘fascism,’ I’m going to be generous and say no – certainly Bernie would not define himself that way (and his hatred of profit is incompatible with fascism). Is he a free-market guy? In spite of the free market being the ONLY system that actually does what Bernie Sanders claims to want, no – he hates free markets.

So what is he?

I’ll answer that.. Bernie Sanders is an idiot.

Someone on the left is going to read this and say I am guilty of a logical sleight of hand. I am and thank you for noticing. What I did was to gauge these systems, not based on what they are sold by Bernie Sanders as ‘being for,’ but based on how they actually operate and what they actually do. If we gauge systems based on what they actually do, Bernie Sanders should be the most radical free-market guy on the planet. Free markets do everything Bernie asks for, delivering, over time, whatever it is the people need or want.

In theory, if we could elect people who actually then represent us (which our government is not very good at), a centrally planned economy could do what the majority want, but this form of ‘democracy’ would do only what the majority want, completely ignoring the minority, whereas a free market responds to the majority and the minority alike. A free market listens to everyone.

As for national interests… A nation is a conglomerate of people, so I would think that a system that takes care of the interests of each person in a nation, also by definition, takes care of the interests of the nation. That’s the free market.

The phrase ‘democratic socialism’ being somewhat nebulous, I do have to talk about another set of beliefs people often attribute to this phrase: a system that taxes those who have more, to give to those who have less.

In a fascist system, the people who have the most are also the people who are the most politically connected. Good luck taxing such people’s wealth away – these kinds of people are the reason our tax code is so convoluted. Their political connections protect them.

We are, incidentally, at least as much fascist as we are free market, and more than half the wealth of our nation sits within 100 miles of Washington D.C. as a result. Nancy Pelosi did not get a $120 million net worth ($196 million if you include her husband) on a $223,000 salary, because of free markets. She got it by selling power for inside information in the stock market, and by earmarking tax dollars to business ventures contracted out to her husband. If we want the nation to be ‘more fair,’ I would suggest we make it less fascist, such that it responds to the will of the people more, and to the will of the politically connected less.

Now let me say something controversial, but true: Donald Trump was hated primarily because he was moving us away from fascism, and at a very fast clip. He was hated because he threatened the gravy train of government corruption – the system that put 1/2 of all wealth within 100 miles of Washington D.C. Say what you will about Trump’s Twitter feed; he really was working in the interests of the people, against fascists ingrained in and around our government.

In a free market, the people who have the most are the people who have produced the most value for society at large, so when we talk about taxing ‘the rich’ to subsidize ‘the poor,’ what we are really talking about is taxing production to subsidize consumption. This makes the cost of producing rise, while also increasing demand, both of which will cause prices to rise. To the degree that government can prevent prices from rising, these taxes come at the expense of profit (which is what the ‘democratic socialist’ is looking for), and government can use things like price controls to prevent pricing from rising. If the government does not use price controls, then taxing production to subsidize consumption just causes inflation.

As profits drop, so too does the incentive to produce, leading to a reduction in production, which will – again – cause pricing to rise unless the government takes steps to hold prices down.

At some point, production will drop to the point that shortages emerge. Government may combat this by taking over entire industries, but the government won’t be able to operate those industries any more profitably than did the private owners (without raising prices) and will find it very difficult to maintain production in the face of constant losses. Government-owned businesses also have no incentive to operate efficiently, (and in fact, are incentivized to operate inefficiently), which is why production in such systems always slows.

Eventually, this form of democratic socialism ends up with empty shelves, and starving people. This is exactly what happened in Venezuela. Bernie argues that Venezuela collapsed because the dirty nasty capitalists refused to feed it, but really if socialism worked, it would not need to be fed by capitalism. When I was a child, Venezuela was the richest nation in South America, and the sixth richest on Earth, and that was before they found oil. Venezuela is not supposed to be poor – it got there solely because it followed the kinds of economic decision making Bernie Sanders wants us to follow.

Free markets, in the meantime, become ever more efficient over time, driving down prices, and making everyday items more affordable. As productivity rises in a free market, more can be produced with less labor, leading to higher levels of production and rising wages. Free markets rock!

Democratic socialism does not work, which is why its definition has become so nebulous – the only way to defend it is to prevent it from meaning anything so you can say, “Oh, well, THAT’s not democratic socialism’ whenever it fails. Free markets, in the meantime, do everything democratic socialists say they want the economy to do, and yet democratic socialists hate free markets. What democratic socialists really want is control over the economy, and by extension, control over our lives.

The sooner the public understands that ‘democratic socialism’ is not about democracy, nor socialism, but is entirely about control, the better. We want freedom, which is free people, in free markets.

Wallace Garneau

Wallace Garneau is a two-service military veteran, with four years in the United States Marine Corps Reserve, and four years in the US Army. He has twenty-three years of experience in process improvement roles, having served as the E-Commerce Manager, IT Manager, and Director of Business Systems for a variety of medium to large manufacturing companies. Wallace holds a Bachelors of Science from the University of Phoenix, and an MBA in Lean Manufacturing from the University of Michigan. Wallace is currently finishing a Masters of Science in Lean Manufacturing, at Kettering University.

Wallace is a published poet and essayist, and recently finished his first book - The Way Forward: Lean Leadership and Systems Thinking for Large and Small Businesses.

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