W hen President Trump declared in his recent State of the Union speech that “America will never be a socialist country,” he was absolutely correct. Look up socialism in any dictionary and you will find something like this: A political and economic system in which the means of production is owned by the government. Does that sound like anything that could ever happen in the United States? It’s safe to say that no one in any mainstream American political party wants our government in the business of manufacturing consumer products.
But is it then correct to think that America is a capitalist nation? Well, not in any pure sense, because certain portions of our economy are not controlled by private owners for the purpose of making profit. We are actually a mixed economy, where both socialism and regulated capitalism play equally important roles. Capitalism tends to generate the wealth, and socialism tends to support and protect the wealth. If you think of socialism as government employees carrying out government tasks, you quickly realize that socialism provides some essential functions in our society:
Protecting wealth: police, firefighters, military, laws, courts, jails
Educating future workers: public schools and libraries
Building/maintaining transportation infrastructure to facilitate commerce: public roads, ports, bridges, rail lines
Providing other infrastructure to facilitate commerce: currency, central bank, postal system, rural electrification
Some portray socialism as similar to the totalitarian regime under Joseph Stalin. But the democratic socialism advocated by Bernie Sanders and others is completely different than a centrally planned, authoritarian system. Democratic socialists advocate for a similar mix of regulated capitalism and socialism that most Americans approve of, and which is found in most countries across the world.
The only real difference between the liberal and conservative viewpoint is where each might strike the balance between the systems. Liberals might want the government to do more to regulate and enforce the disposal of toxic waste (increased socialism), but few conservatives would advocate for the complete elimination of regulations and enforcement (as could theoretically happen under pure capitalism). In other words, both sides of the political spectrum are quibbling about the balance point rather than about adopting one system or the other.
To further explore how we as a society strike the balance between socialism and capitalism, consider health insurance. Almost every country in the industrialized world has chosen to provide universal health care by socializing their health insurance.
By contrast, the United States stands alone with our heavy reliance on for-profit health insurance (even though we do have socialized health insurance in the form of Medicare). So, health insurance is an excellent test of the effectiveness of both systems, and the results speak for themselves. Numerous studies over the years have shown that Americans pay twice as much for health care as anyone else, and that we have relatively poor results to show for it.
For example, a July 2017 study by the Commonwealth Fund concluded “the United States ranks last in health care system performance among the 11 countries included in this study…”
And the Journal of the American Medical Association stated: “In 2016, the United States spent nearly twice as much as 10 high-income countries on medical care and performed less well on many population health outcomes.” The AMA also identified a primary cost driver: “Eight percent of spending goes toward ‘administration and governance…’
By comparison, only 1 percent of health spending goes toward such costs in France and Japan.” That essentially means that Americans are paying eight times as much overhead as other nations that rely exclusively on socialized health insurance.
So, in the United States, there really is no legitimate political debate over whether capitalism or socialism is the better system. Both are superior at what they are intended for, and we need both to maintain balance in our country. None of us want a for-profit military, and none want our government manufacturing tennis shoes.