Arthur Laffer, the economist behind the Laffer curve, and one of the architects of Reaganomics, warned us a few days before the presidential election (in an article that appeared on the Wall Street Journal website), that the age of prosperity is over. He insinuated that we will remember the Bush administration for its economic ineptitude as we remember Herbert Hoover, the 31st President of the United States, under whose watch the 1930 recession was allowed to become a decade-long depression thanks to misguided and counterproductive economic policies.
The fact that a Republican administration was responsible for one of the most massive injections of Socialism into the economic system is in itself both baffling and sad. The economic bailout is tantamount to “Socialism for the rich” - the Wall Street moguls are allowed to privatize profits during the good times, but they can socialize losses when the meager times arrive. Henry Paulson, the ex Goldman Sachs CEO now US Treasury Secretary, is trying hard to salvage positions and remunerations of his Wall Street pals, no matter what the burden for the taxpayer is.
The winds of Socialism are blowing over America. Democrats are now in power with a commanding majority in Congress, in the Senate and the White House. Their victory came short of their expectations, as they don’t at this time have a filibuster-proof majority in the Senate and they failed to pick up all the seats they were aiming for in Congress. But make no mistake; Barack Obama received a mandate, first and foremost, as the exit polls demonstrate, to fix the economy. And we already know the old, trite and negative effects of the “Socialism for the rich.” The legacy of the Bush administration will be magnified by the more traditional “Socialism for the poor” - Obama’s tax plan tells it all, as he calls “tax rebate” the moneys that low-income families, who don’t pay income tax at all, will receive from the government.
European democracies have not implemented Socialism consciously and knowingly. In France, for instance, there was never a moment when the nation realized it was “crossing the Rubicon,” a historical moment like the passing of a particularly significant bill, or a referendum, or a change in the Constitution, which would have meant the country had walked over the bridge to become Socialist; furthermore, French people never officially sanctioned the institution of Socialism through a referendum.
On the contrary, socialism creeps up slowly in sediments and small bursts, consolidates its roots and develops an ability to resist being eradicated or overturned, while continuously expanding at a pace that does not frighten the population at large, which would probably oppose it if its methods and message were more overt. The fourteen years when Mitterand was in power in France are a classical example of “boiling frog Socialism.” Chirac, the conservative President who replaced Mitterand in 1994, was unable or unwilling to pay the hefty political price to return the massive doses of Socialism injected by the previous administration into the French economy. Sarkozy, elected on a platform that had the Repeal of Socialism as one of its core points, after one year and a half in power still encounters fierce resistance from those strata of society which benefited most from the parasitic socialist privileges.
The same happened in Italy. The difference between a center-right, Berlusconi-led coalition and a center-left, Prodi-led government is minimal. True, Mr. D’Alema, the Minister of Foreign Affairs of the center-left government, was openly pro-Hamas, while Mr. Frattini, the current Foreign Affairs Minister is pro-Israel. And it’s also true that Berlusconi was able to swiftly solve the garbage problem in Naples. But the promises of lowering taxes and reducing government waste, so emphatically repeated during the electoral campaign, are by no means kept, or likely to be even remembered in the months to come, and the electorate at large won’t complain, as the vast majority of Italians stands to somehow benefit from the system. Once socialism has taken over in a society it’s extremely difficult, if not impossible, to revert its trend. According to Winston Churchill "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries." European economies grow, at their peak, by one and half, maximum two percent per year; salaries are comparatively lower than in the US, and with the exception of the Scandinavian Peninsula, the standard of living is significantly lower than the US, where a yearly growth between 4 and 5 percent is not uncommon. Unemployment in the major European economies, with the exception of Great Britain, is almost the double of US unemployment: in 2007 the unemployment rate was 4.6% in the US, 8.6% in France, 8.7% in Germany and 6.2% in Italy. Those high unemployment numbers do not translate into social unrest, however, because of the massive network of welfare, subsidies, unemployment benefits which can be afforded thanks to income taxation levels that would be considered unacceptable in America; in Europe it is normal to have more than 50%, sometimes even 60% of one’s income taken by the government in taxes.
In order to advance the Socialist agenda, and to create the stealth Socialist engine that slowly expands and solidifies, redistribution is an essential ingredient, together with increased taxes and welfare. Not to be underestimated, however, is the role of the Unions. In Europe the Unions are the number one agent of stagnation and resistance to change, able to paralyze entire nations with continued strikes while protecting the privileges of the few to the detriment of the majority. One of the top priorities of Obama’s is ending secret ballots in Union’s elections. Currently, when 50% of workers in a company sign statements to unionize, that merely sets up a second stage, where workers vote by secret ballot to determine if the company will be unionized. Under the new proposal, shared by Obama and his top aids, using a system called “Card Check,” unionization would occur as soon as half the workers had openly signed cards stating that they favor union representation so that it would be visible who had refused. Such an arrangement would pave the way for a significant expansion of unionization throughout the country, an important move that would ensure an enduring socialist rule even when Republicans returned to power. Like their European predecessors, American Socialists understand that their best bet is a boiling frog style of Socialism, and the shortest way to achieve it is to create institutions, pass bills, and start government schemes not easily reversible by a future administration. Advance slowly, build trenches and resist the wave of counterattacks by the proponents of small government, free markets and individualism.
Obama received a mandate to improve the economy. That is not the same as a mandate to change the social contract of a Nation. Nevertheless Obama and the Democrats will try to pose the foundations for an America looking more and more similar to Europe. Americans who still believe in small government, free market, laissez-faire and individualism unite: resistance has begun.