The further to the left or the right you move, the more your lens on life distorts.

Wednesday, February 19, 2020


As the candidacy of Bernie Sanders rockets to the top of the polls, it would seem that the best way to assess the efficacy of the increasingly socialist model proposed by Bernie (and if we're really honest, many of the remaining Democratic candidates) is to examine the success of the blue governance model (in essence, it's socialism-lite) in practice across blue states. The socialism-lite model stresses ever growing centralized government, a regulatory regime that establishes increasingly anti-small business policies, high tax and a spending philosophy that makes unsustainable wage and pension commitments to the Democrats' most avid constituency (government unions). As a case in point, consider my ex-home state of Connecticut. The Nutmeg State has had large Democrat majorities in its legislature for 30 straight years. As a consequence, it's a perfect laboratory for examining socialism-lite.

Ryan Fazio describes the problems facing Connecticut. He writes that the current governor, Ned Lamont, suggests that he's changing course to address CT's serious problems, but in reality, it's simply not true.
First, the budget touted by the governor raised taxes on Connecticut residents by about $1.7 billion over two years, mostly in the form of various new sales taxes. It was the fourth biennial budget of the last six with significant tax increases — themselves on the heels of enormous income tax increases in the 1990s and 2000s.

Second, in order to alleviate the budget deficit in the near term, Lamont “refinanced” pension payments to state employees. The agreement with the unions doesn’t reform the system but shorts contributions by $2 billion through 2032, only to increase the taxpayer’s obligation by $5 billion from then until 2047 ...

Their third transgression included a 6.5 percent pay increase for state troopers and an 11 percent increase for assistant attorneys general. All the while, real household income has actually declined slightly since 1991 for the families who are forced to pay ever-higher taxes. It’s hard to imagine anything more unfair.

Fourth and finally, Democrats imposed some of the most onerous labor regulations in the nation on Connecticut workers this year. The state already had the fourth-most burdensome regulatory environment for small business in the US. Now, it will also suffer a $15 statewide minimum wage and workers will be hit with a new 0.5 percent payroll tax to fund a mandatory paid-leave program. The former passed despite no state having fully implemented one to date and the latter despite being the most expensive in the nation of its kind. Sadly, they will kill jobs and opportunity for the working poor most of all.
It's comical to listen to Democrats talk about "social justice" and then watch how they actually govern. They aggressively grow government on the backs of a less mobile middle class (who are hard-pressed to vote with their feet) while wealthy taxpayers flee the high tax, anti-business atmosphere they encourage in the state. Demcorats accede to union demands with concessions that hurt the working poor, and they otherwise build their fiefdoms at taxpayer expense.

Connecticut is a beautiful, well-situated state that is in dire need of a turnaround. Its population is falling, its financial liabilities are abominable, and its outlook for the future is less than bright. Fazio writes:
It is often said that the definition of insanity is trying something over and over again and expecting different results. Only devotion to a radical worldview could compel politicians to force upon their constituents the same failed policies that make no sense in reality. Until state officials change course, Connecticut stands no chance of a true turnaround.
And remember, Connecticut's travails are what socialism-lite governance renders. Can you image what true socialism (or the Dems' reasonable facsimile of it) will yield at the federal level?


But wait, argue true believers, Bernie's brand of socialism will work on a national level. That has never happened, but what has is the ruination of every country that has tried it. Spare me comparisons with Scandinavia—they're simply not analogous in kind, in population, in size or in fact.

Aldo from Lema, Peru recently published the following tweet, "Evolución 1990-2019 del PIB per cápita en Sudamérica a Paridad de Poder de Compra (PPP), dólares de 2011." It provides a measure of per capital income for all South American countries since 1990. In the 90s Venezuela (in yellow ) was at the top of the graph—a rich and vital country. Then Bernie's favorite socialist demagogue, Hugo Chavez, came into power in 1999, followed by another man Bernie praised, Nicholas Maduro. Watch what happens throughout the first two decades of this century -- turn the sound on.

Evolución 1990-2019 del PIB per cápita en Sudamérica a Paridad de Poder de Compra (PPP), dólares de 2011


It's worth noting that even among those who reject socialism, the growth of the federal swamp is inexorable. Spending cuts are near-impossible to make because every cut is politicized with hyperbole suggesting that the 'world will end' (think: the hysteria over minor 2 percent cuts that were part of the "sequester'). The greatest single failure of the Trump administration has been its inability to reign in federal spending. Niv Elis writes:
The federal budget deficit for 2019 is estimated at $984 billion, a hefty 4.7 percent of gross domestic product (GDP) and the highest since 2012, the Congressional Budget Office (CBO) recently said.

The difference between federal spending and revenue has only ever exceeded $1 trillion four times, in the period immediately following the global financial crisis.

The deficit, which has grown every year since 2015, is $205 billion higher than it was in 2018, a jump of 26 percent.

The CBO has warned that the nation's debt is on an unsustainable path. Higher levels of debt increase borrowing costs, make it harder for the government to battle economic downturns and increase the share of future spending devoted to paying off interest costs.

Since President Trump took office, the GOP has passed a massive tax cut package that reduced revenue, while Democrats and Republicans have agreed to increase spending year after year.

Budget watchers note that the main drivers of the deficit, however, come from automatic spending programs such as Social Security, Medicare and Medicaid.
The swamp rules, and until that changes (if it ever does), we're on an unsustainable fiscal path.