Town Crier: What socialism is — and what it isn't
by Mickey McGuire
Nov 06, 2009 | 926 views | 75 75 comments | 5 5 recommendations | email to a friend | print
In the past few months, several politicians have taken to using the word “socialist” to describe policies that may expand the role of the government.

Is it true that the United States is becoming a socialist country? Those of us who teach economics and government can refer to a fairly good measure that enables us to answer the question. The use of the term by partisans, however, is often overly broad and inaccurate.

A few commentators use the term “socialist” as a synonym for any government activity. But it would be incorrect to describe the U.S. Coast Guard, the public library and Yosemite National Park as socialist enterprises.

When I have referred to socialism with my students, it has generally been to contrast the economic system with the greater efficiency of properly designed free markets. Economists are not terribly impressed with the performance of heavily socialist systems.

The word “socialism” describes a system in which a very large portion of economic activity is carried out by the government.

We can actually measure this and place each country on a continuum between private enterprise and public enterprise. You merely divide total government revenues by the gross domestic product. The result is a percentage that expresses the size of the government relative to the rest of the economy.

Among the industrial democracies, a figure of 30 percent government and 70 percent private spending would qualify as small government. In the old Soviet Union, the government probably absorbed 95 percent of the gross domestic product!

Each country chooses its own mix of public versus private enterprise. Each industrial democracy must determine for itself how to distribute various goods and services. Decisions about the public sphere are made at the ballot box. Choices about the private side of the system are made by casting dollar votes in the marketplace.

While the mix of public and private is unique to each country, some activities are always a matter of public decision-making. In every country, national defense is the government’s responsibility, as is management of the currency, police, courts, traffic regulations, the postal system and the licensing of professions.

Some decisions are always private, like the size and color of our houses and cars, and what we prefer for food, clothing and shelter.

There is, however, a large area of variation where countries and even communities differ over whether something will be provided by public or private enterprise. In some American communities, garbage collection, energy, road construction and even prisons are contracted privately.

In some countries, at various times, the coal industry, gas and electric energy, the telephone system, health care and even the ownership of auto and airline companies have been public monopolies.

Broadly speaking, a country that approaches 50 percent or more of economic activity in the hands of the government can be described as socialist. You could probably include Sweden (48 percent), Denmark (48.9 percent), France (44 percent) and Norway (43 percent) in this category.

The average size of tax revenues in Europe is 38 percent of GDP, including the United Kingdom (37 percent), Germany (35 percent), and Spain (36 percent). Canada is on the low side at 33 percent.

How do we compare? The most recent figures for the United States has government tax revenues absorbing 28 percent of the GDP. (This figure does not include borrowing.)

In 1975, government revenue was 25.6 percent of the GDP. When you subtract out our current high defense expenditures, it appears that the government hasn’t enlarged its share of GDP much over the past three decades.

Some of the talk about socialism is directed at the government’s strategy of taking a major position in the nation’s larger banks and auto companies. While this may appear like socialism, it is really just a stopgap measure to keep the economy from sliding deeper into a depression. Even the current health care proposals will likely expand private coverage.

There is no constituency in the United States that calls for the permanent nationalization of private industries. Some Americans briefly flirted with socialist ideas during the Great Depression, but there is no socialist tradition here.

The use of the word “socialism” in reference to government today is clearly exaggerated and inaccurate.

• Mickey McGuire, a retired high school social studies teacher, is among a select group of local residents with columns in the Tracy Press.

comments (75)
« TomBenigno wrote on Tuesday, Nov 17 at 03:55 PM »
Concerned:

It all depends on who's books, their trying to cook.
« RedHotChilliPeppers wrote on Monday, Nov 16 at 01:05 PM »
Tom,

Peak oil predictions for worlds oil supplies have come and gone. The time is now for who can cookBook the longest. Those numbers are largely irrelavent. If you look at what companies are discounting. Up to 40%. Then look at federal impact on city budgets up to 20%. Then look at unployment numbers at over 10%. The "numbers are clearly fabricated. The author doesn't account for 15 to 40 of the US economy which has come and gone. Consider further that these "economists" won't even account for the "underemployed" whose "unemployment has run out and are now working two jobs. As they say in England, long live the king. Never trust a liberal to keep your books?
« TomBenigno wrote on Monday, Nov 16 at 11:46 AM »
Chilipepperonastick:

Read the book and then call me. As the doctors would say "TAKE TWO OF THESE AND CALL ME IN THE MORNING. You will be shocked.
« RedHotChilliPeppers wrote on Monday, Nov 16 at 07:52 AM »
There are many problems with saying what socialism is and what socialism isn't. And then telling us that the federal government is lying about the numbers. Are we on par with the French who gave this country the Statue of Liberty and Champaigne?
« TomBenigno wrote on Monday, Nov 16 at 07:12 AM »
MarleyNyou:

Who found who? For What?
« MarleyNMe wrote on Sunday, Nov 15 at 01:14 PM »
Looks like they found their man?
« TomBenigno wrote on Sunday, Nov 15 at 11:18 AM »
Concerned:

The Socialist or Communist agenda is starting to look like an American dream. Read the book "THE NAKED COMMUNIST" written by former FBI executive W. Cleon Skousen written in 1958. Read pages 259 to 262.

Some of the issues he writes about seem to be what's going on today, in our country. One interesting agenda is #15 on page 260. Capture one or both political parties in the USA.

The reading is stunning to say the least.

« MarleyNMe wrote on Tuesday, Nov 10 at 08:27 PM »
I also like how Mick placed an emphasis on being lied to in the past "eight" years.

Mick,

If I count your "numbers" shouldn't that be seven years, plus one?

Keep going. Too funny.

Have a nice evening, to all !!!

« MarleyNMe wrote on Tuesday, Nov 10 at 08:23 PM »
After reading the entirety of the letter and the silly QnA section below, I have concluded the following:

This letter to the TP is less of a definition of what "socialism" is, or isn't.

It appears to have moreso defined precisely what a "know it all" is.

Maybe we should be talking about what a third world country looks like. Has the author been to what is called the "ghetto" in America to see what that is and isn't?

Socialism is when people have control and others don't. To say it another way, less than 25% of American's live in Ghetto's.

And growing.

Let's take off the rose colored glasses and stop pretending everything is peachy in Amerace, cuz we got numbers.

If you read down in the comment section you will see where the author admits that we don't even know the numbers.

I'll give you a hint. It has to do with the value of "mortgage backed securities".

That's why I brought it up.

Keep going Mickey! As an economist, I'd just wink to everyone else and say with a twinkle, you seem to be doing a fine job with those "numbers", Mick.

Keep going. Keep going....
« mamcguire wrote on Tuesday, Nov 10 at 07:57 PM »
Tertian,

If you read my last post in fairness you will notice that I didn't say that the government doesn't lie to us. The past eight years, more than any other, proves that the government does lie to us. My actual statement was in defense of the data collecting agencies I mentioned. Fortunately, there are plenty of people like you and me that are paying attention. Mick
« HD8 wrote on Tuesday, Nov 10 at 02:43 PM »
Ornley Gumfudgen,

Love your comments to Mickey, obviously you hit a nerve. I believe Ronald Reagan said this and in my opinion this fits a certain liberal to a T. The trouble with our liberal friends is not that they’re ignorant, it’s just that they know so much that isn’t so.

« HawkEyes2see wrote on Tuesday, Nov 10 at 08:19 AM »
Mickey,

If I had to guess I'd say you can't see the handwritin on the wall?
« markj wrote on Tuesday, Nov 10 at 07:58 AM »
Some ramblings for everyone.

There's a big difference between government regulation and government control, this administration wants the latter.

The governments math can never be trusted. if they say it's going to cost $900 billion, triple it and you may be close to the actual amount. Cash for Clunkers original budget - $1 billion, actual cost - $3 billion. The government bribed people into buying a car, took credit for many sales that would have been made anyway, and in the process gave people $4500 for cars worth $500. Yeah, these guy's sure know how to run a business. Oh, almost forgot, then they come out and bragged about coming in under budget, even though their original projection was off by 66% and they had to vote to throw another $2 billion into the program.

The margin Obama won the election by (4%) is hardly the mandate his minions brag about.

This administration does not seem to care about "the will of the governed" as someone mentioned earlier.

The two auto companies the government helped are still spiraling towards the abyss, - kiss that money good-bye, while the one that didn't take any money - Ford, is cruising along. Hmmmmm

Although I'm 48, I still remember my dad saying, "the sign of an ignorant man is a man who thinks he's smarter than what he actually is. Proof of this is sitting all around Washington right now.

« TomBenigno wrote on Tuesday, Nov 10 at 07:46 AM »
Mick:

See what you started. Just answer all those concerned, it takes one to know one. Socialist that is.