Socialism, lies and the right-wing media

December 5, 2012

Listen to an hour or two of conservative media and you’re likely to hear the words “socialism” or “socialist” applied to President Barack Obama or the Democratic Party, if not both.

The use of those words by eminent right-wing talkers such as Rush Limbaugh and Sean Hannity, in fact, has been so promiscuous that my bafflement at the label has withered thanks to repeated exposure. Then I saw some new figures from the Federal Reserve Bank of St. Louis and my outrage at this misnomer flared up again.

First, let’s look at the nature of socialism. In The Concise Encyclopedia of Economics, the late Robert Heilbroner — a socialist himself, as well as a professor of economics at New York City’s New School — defined the movement thus: “a centrally planned economy in which the government controls all means of production.”

Heilbroner, who died in 2005, was not complimentary about socialism, nor was he sanguine about its future. “Born of a commitment to remedy the economic and moral defects of capitalism, it has far surpassed capitalism in both economic malfunction and moral cruelty,” he wrote. He added that it was not clear “[w]hether socialism in some form will eventually return as a major organizing force in human affairs.”

Has Obama been a socialist president? Not in the sense that American government has taken control of all means of production, nor in the sense that government has taken over major sectors. Yes, many loathe Obamacare, the president’s new health care regime. But it’s very different from the “single payer” solution that many wealthy industrialized Western nations have, in which the central government guarantees and pays for a certain level of health care for all citizens.

While Obama’s program implements many new rules, it grants existing health insurance companies significant freedom to write policies and set prices, unless I grossly misunderstand it. Americans must either buy health insurance policies from private companies or pay a fine (called a tax by some) to the government for not doing so. Here, the government is setting guidelines, some arguably quite constrictive — but it is not taking direct control of the health care sector.

One crude concept of socialism that I have involves wealth being divided equally, regardless of effort or contribution. A problem with doing this, of course, is that it deprives individuals of the motivation to work hard or well. Why put in eight hard hours of labor if the lollygagger is paid the same as a nose-to-the-grindstone type?

Well, redistribution of wealth is occurring under Obama — but it involves money from the poor being increasingly accumulated by the already wealthy, not riches flowing to those with meagre back accounts.

***

As noted by BusinessInsider.com on Dec. 1, corporate profits as of the third quarter of 2012 hit a record high: about 11 percent of gross domestic product. This ratio has been volatile over the years, but it generally ranged from 4 to 7 percent for about half a centuruy.

A decade ago, corporate profits as a percentage of GDP started to increase sharply. The recent recession caused the figure to nosedive. But in a relatively short time, corporate profits managed to eclipse their previous high-water mark, which was about six years old.

What’s happening to employee wages? Worker had represented about 50 to 54 percent of GDP for nearly a quarter century — until 1975. Since then, however, salaries have been trending downward. Wages hit 43.5 percent of GDP in the third quarter of this year, representing an all time low.

Of course, even as an individual’s wages fall, his or her income can rise thanks to good investments. But last year, Gallup found that 54 percent of Americans owned stock, the lowest figure since 1999. A recent Census table (one-page PDF; scroll down to the bottom) showed that as a family’s income rises, so does the likelihood that it will have direct or indirect stock holdings. (Contributing to a retirement fund would be one way to have indirect holdings, according to a footnote.)

***

Unsurprisingly, that same Census table shows that as a family’s income rises, so does the value of its investments. The median value in 2007 of holdings by families in the lowest 20 percent of income was $6,500. In the second quintile (income ranking from 20 percent to 39.9 percent of all U.S. families), the holdings’ median value was $8,800, rising to $17,700 in the third quintile and nearly twice that, $34,100, in the fourth quintile.

In higher income brackets, values shot up rapidly. For families whose income ranked from 80 to 89.9 percent, median holdings were worth $62,000. In the top 10 percent, they were an astounding $219,000.

This website, which belongs to a University of California at Santa Cruz sociology professor, presents 2012 data from a New York University economist showing the degree to which wealth has flowed upward over the years. (Scroll down to the first table.)

In 1983, the top 1 percent had 33.8 percent of all wealth; the next 19 percent, 47.5 percent; and the bottom 80 percent just 18.7 percent. In 1992, the top 1 percent’s share had grown to 37.2 percent, while the bottom 80 percent’s had fallen to 16.2 percent.

In 2001, the top 1 percent’s take had dropped to 33.4 percent. But the next 19 percent had seen their portion grow to 51 percent, while the remainder’s assets shrunk to 15.6 percent.

This year, the top 1 percent had 35.4 percent of wealth; the next 19 percent, 53.5 percent; and the remaining 80 percent a paltry 11.1 percent — down sharply from 2007, when their claim weighed in at 15 percent.

***

So what does all this tell you? My flippant side wants to write all signs point to Barack Obama being a completely ineffective socialist.

But, says my serious side, the truth is that these numbers show how a number of forces have colluded throughout the decades to make the top 20 percent of the American population ever richer — even as the remaining 80 percent find themselves clinging to a constantly diminishing share of national wealth.

And yet there’s one more important lesson to take from all this. It’s very simple: When you hear someone call Obama a socialist, that person’s economic and political views are likely to have as much value as a fresh pile of manure.

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