Socialism is an economic order based on the nationalization of all private industries, or at least those industries described by Lenin as the “commanding heights” of the economy. But there is more to socialist theory than having the state simply take over the private sector. A second essential is to install an economic plan to direct all economic activity centrally. These first two principles are combined with an extensive redistribution of incomes and the pursuit of all-encompassing social welfare policies.
The first socialist President of the United States, Barak Obama, came to office after genuine socialism had been abandoned in most parts of the world. It is not known what kind of “socialist” President Obama is, since he has never admitted his credentials, training, or complete preferences. But he did announce his intention to install a “complete transformation” of the American economy and we know how ardently he promoted social welfare programs. In other countries, that would be enough to label him a “socialist.”
After the onset of the Great Recession, which occurred just before the election of Obama, severe economic problems demanded robust economic policies to overcome the global fiscal crisis. The financial freeze had basically been overcome by President Bush and Henry Paulson, but the Dodd-Frank recession that followed in its wake was left for President Obama to address. Obama and Larry Summers promoted a large stimulus spending package of nearly a trillion dollars. Unfortunately, the funds congress made available were not spent to rebuild, for example, the country’s infrastructure. The President later complained that no “shovel-ready” infrastructure projects could be found. Essentially, much of the massive stimulus fund was, therefore, frittered away in support of failing local governments which had overspent (often on pension programs). Other funds were essentially wasted on temporary green jobs, political payoffs, and several varieties of pork. This is all addressed in some detail in my book, Socialism; the bottom line was that there was no useful effect from the massive expenditures, since unemployment across the country continued to climb.
The normal pattern for business cycles is that the phase of recession is followed by a recovery. Normally the upturn is sharp as everyone is anxious to satisfy pent-up demands from the downturn and restored confidence drives a period of rapid expansion. The Obama administration, however, pursued anti-economic policies—requiring actions and expenditures that thwarted economic growth in what became history’s slowest recovery. These policies included 1) a war on coal and carbon for environmental purposes, 2) the Obamacare dictum that businesses must provide health care for all full-time workers (so firms basically only hired part-time workers), 3) new Dodd-Frank financial restrictions that stifled banking activity which would have financed a post-recession, small-business boom, and so on.
The recovery was extremely slow and painful. Socialists are sufficiently skilled to stifle and slay the private sector of an economy, but are rather clueless when it comes to managing a market economy’s health and development. The objective is merely to tax heavily and spend even more heavily on social welfare programs. The latter are especially needed when their economic policy pushes up unemployment.
In President Obama’s case, the labor-force participation rate plummeted as discouraged workers simply stopped looking for work and dropped out of the labor force; the food-stamp rolls, the ranks of the disabled, and the numbers in poverty all increased dramatically. The incomes of the middle class, however, did not do so; nor have they increased in decades. In my book on socialism I wrote that “it was an insult to the intelligence of the voter when President Obama repeated incessantly that the economy was moving in the right direction, but there was still work to do. That’s like a coach of a 0-16 NFL football team insisting that ‘our last loss was 73-3, but the field goal we made was great and we’re going in the right direction, but there’s more work to do.’” (See the footnote on p. 740.)
The problem with socialism is that it can do no more than put its hopes on Keynesian expenditures to stimulate a depressed economy. In the aftermath of 2007 and 2008 the Obama-Summers stimulus was a waste. So there was no socialist economic solution for the Great Recession. One can rail continuously that Reaganesque solutions are “trickle-down policies” that only help the rich, but there is no solution in this Democratic talking points criticism. Progressives who favor massive deficit finance to solve all problems also favor a continuous flow of commercial regulations which thwart business growth. Sponsoring continual tax increases to finance wasteful projects provides no effective solutions for the macro economy. The Obama economy left the country stagnant, indebted and disillusioned.
Friends, as you can see from the top menu, this website has a link to “Order a Copy” of the book. I turned down a prestigious publisher’s offer to publish Socialism, because that publisher intended to sell the three volume set for $360 ($120 per volume). So, I published all three volumes as one massive book with Xlibris so you could buy an electronic copy at a very low price ($3.99), or as a paperback ($15.67 at Amazon) or hardbound copy ($23.88) at a very reasonable price. Check it out. If you buy, your friends may think you are a genius!