Democratic presidential candidate Bernie Sanders is planning a major speech on his political philosophy of democratic socialism. With his second-place standing in the polls solidified, many are wondering what would happen in a Sanders economy, and what exactly is democratic socialism.
Several declared campaign positions give us guidance. As was made clear in last week's debate, Sanders' presidential campaign is focused almost exclusively on income inequality. He offered that democratic socialism is "saying that it is immoral and wrong that the top one-tenth of 1 percent in this country own almost 90 percent — almost — own almost as much wealth as the bottom 90 percent."
So democratic socialism remedies income inequality. But how? One of Sanders' go-to proposals is raising the minimum wage to $15 an hour. Though it is understandable that people want to help low-income families, when it comes to the minimum wage this type of earner is the exception — not the rule.
Half of minimum wage earners are under 25 years old, and two-thirds work part-time. Additionally, the average annual income for a family with a minimum wage earner is $53,000, right in line with the U.S. median. Minimum wage jobs offer an opportunity for the young to gain work experience, and increasing the minimum wage makes moving up the career ladder more difficult.
Students across the country have also been smitten by the sound of democratic socialism. One reason: the promise of "free college." Though often sold as a way to help low-income students afford college, free college is primarily a subsidy for children of upper and upper-middle-class Americans, not aid for the poor. Of the $70 billion in new spending on subsidized college that Sanders is promising, more than $56 billion will go to students from families with above-average incomes.
Sending more misled high school graduates straight to a four-year college is not the answer. Four in ten college freshmen fail to graduate within six years. America needs to rethink its higher education model, not shuffle more taxpayer dollars into a system that leaves many young people with nothing but debt.
Sanders also believes that Social Security is among the "most successful government programs in American history." But this program is proving unsustainable. By 2050, Social Security and Medicare taxes must rise to nearly a third of wage income — more than double today's rate — to keep up with projected benefit levels. And yet it is the view of democratic socialism, apparently, that these programs not only avoid cost-cutting, but should actually be expanded.
Entitlement programs are not only transfers from the young to old — they are transfers from the poor to the wealthy. The average household headed by someone 65 years of age or older has almost 50 times as much wealth as a household headed by an adult 35 and younger. Back in 1984, this gap was 10 to one.
Democratic socialism thus appears only to be using failed policies like the above in service of the "99 percent." However, as Hillary Clinton rightly stated about the merits of capitalism during the debate, "We would be making a grave mistake to turn our backs on what built the greatest middle class in history." Sanders himself could not deny this, responding that, "Of course, we have to support small and medium-sized businesses."
Perhaps it is responses like these that have us now pondering labels like "democratic socialist capitalist." Although, once we've reached that point, one wonders: Does the label mean anything at all?
Jared Meyer is a fellow at the Manhattan Institute. He is the coauthor with Diana Furchtgott-Roth of Disinherited: How Washington Is Betraying America's Young. Follow Jared on Twitter here.
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