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Socialism Or Enabled Capitalism

By Karl Smith | The GOP talks about our economy as if we had pure capitalism and a non-free-market solution to anything is heresy.  The problem with their ideal is that pure capitalism does not create the necessary conditions for most businesses to exist.  Most companies do not exist without healthy and educated employees, without infrastructure, without research, without safe communities, without community development, or without safety nets.  These necessary conditions are not paid for individually by businesses but are paid for collectively with our citizens through our local, state, and federal governments.  These necessary conditions are our Basic Public Investments (BPIs). 

A Pure Free Market (PFM), the GOP’s utopia, would only have people that can afford health care to have it and just have people that could afford education (of any level) to have it.  A PFM would only create infrastructure supported by user fees.  Most of the infrastructure we take for granted today, would not exist.  A PFM would not have basic research that drives innovation and opportunities that create businesses and the tools we now take for granted.  Our whole tech industry started with government-supported basic research.

A PFM creates more drags on businesses. A PFM would not provide the safety and security of employees, customers, and property needed for most companies to exist without private security forces.  A PFM would not create business opportunities created by community development.  Finally, a PFM would not have safety nets that allow business to recover from disasters which in turn enables communities and local economies also to recover.  Our safety nets eliminate or reduce long term damage to families, businesses, communities, and the economy.

Our BPIs solve short term problems but also address issues that pay off over a few years to many decades.  Since businesses primarily focus on quarter-to-quarter profits, most business investments are more for a months-to-years time frame and less so for a decade or more.  Without long-term investments, many business opportunities will not exist.

By collectively paying for our BPIs, we create the necessary conditions for many more businesses to exist and prosper.  After WWII we significantly expanded investments in our BPIs, and it paid off huge for our citizens, businesses, and economy.  We significantly expanded the middle class and created a strong consumer base benefiting our citizens, businesses, and economy.  These investments paid for themselves.

In 3rd world countries, without the massive investments in the BPIs, generally from two-thirds to three-quarters of their populations are in poverty. Yes, there are “the few” that do prosper, but in general, the whole economy is not vibrant, there is a relatively small middle class, and most people live in some level of poverty.  Other factors contribute to the lack of widespread prosperity like insufficient regulations creating stability for businesses, corruption, and not valuing workers.

In the US over the last 30 years, the GOP has pushed the trend to decrease our BPIs resulting in less prosperity for more citizens and businesses.  These cuts cost taxpayers in reduced tax revenues and increased expenses, so the cuts ultimately cost more than the cuts save.  The cuts to our BPIs drive up debt and not down. 

Some of the cuts are in dollar amounts, and others are hidden in not keeping the investments up with inflation so in real terms year after year there is less investment. 

Cuts in our BPIs decrease opportunities for businesses and increase costs.  For example, companies are held back by a lack of sufficiently educated potential employees.  The lack of some form of universal health care means businesses lose productivity and employees from histories of inadequate health care creating issues for employees and their families.  Countless companies never start because the potential founders cannot risk being without health care.  Each cut in nominal or real terms to creating and maintaining infrastructure, research, safe communities, and so on has negative impacts on the creation, survival, and prosperity of businesses.

Increasing our investments in our BPIs is necessary to create more opportunities for our citizens and businesses. 

Some form of universal health care will eliminate related drags on businesses where employers will have the benefit of employees and their families that have had good health care from before birth.  More companies will start with people not worried about their future access to health care.  Employees will be more productive with fewer health care issues of themselves and family members.  A non-employer-based health insurance system would free businesses from managing health care insurance which is another drag on businesses detracting from their mission. 

Improving our public education system and higher education allowing more citizens access to education without regard to family income will expand opportunities of businesses and grow the economy.

Increasing investments in research, infrastructure and the rest of our BPIs increases business opportunities thereby growing the economy.

Creating the prosperous and shared economy that we should expect in the 21st century can only be accomplished by improving the necessary conditions for businesses which means increasing our BPIs. 

Not all that we need to prosper as businesses or citizens can be purchased individually by businesses or citizens.  Driving to the lowest tax rate reduces the necessary conditions for our people to thrive and businesses to exist and prosper is not in the best interests of our people or businesses.  However, paying for our BPIs is not from taxing the hell out of the rich or most of our citizens.  Our BPIs pay for themselves!  With modest tax rates, an expanded economy creates more tax revenues!

Indeed, a fairer tax system helps kickstart increasing investments.  From there, our BPIs have an immediate stimulus effect and associated increased tax revenues, long term additional tax revenues from healthy and educated employees, infrastructure, research and the rest of the BPIs, and multiplier effects from pulling in business investments due to more customers with more money.  Over time our BPIs create and save more tax revenue than cost and thereby create a profit for taxpayers.  These tax revenue surpluses can ultimately pay down and off our national debt, kickstart further BPI investments, and lower tax rates.

Expanding our BPIs is not turning our economy into pure socialism as the GOP seems to insinuate.  To reach our potential as people and businesses, we need the opportunities created by our BPIs.  We have only seen the tip of the iceberg of our potential compared to what we will accomplish if we fully appreciate and support our BPIs.  We will have more freedom to pursue business ventures and our dreams. 

Capitalism needs to embrace our Basic Public Investments as a means of increasing stability, maximizing prosperity, and benefiting all.  In other words, Basic Public Investments are a vital part of a healthy capitalistic system that benefits all.

What some people are calling socialism like health-care for all, low cost or free higher education, and the Green-New-Deal, I call “Enabling Capitalism” to reach a whole new level of prosperity the world has never seen. 

Instead of focusing on labels like Capitalism or Socialism, let’s focus on creating the necessary conditions for our people to thrive and our businesses to exist and prosper.  Our BPIs are we-the-people investing in America and Americans, and we are great investments!

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