Socialism. Mathematics. Only one is a science. And never the twain shall meet.
The old Soviet Union fan, Bernie Sanders, is raging all over social media about the billionaires.
Other assorted leftists, from Chief Elizabeth “Dances with Bull” Warren, to her ideological granddaughter, Alexandria “She Guevara” Ocasio-Cortez, are surfing the wave of public discontent with the 1% (or 5% or 10%), arguing that the rich should be paying “more” or “their fair share” (whatever that amounts to). Previously, the left wanted to increase income taxes; now it wants to tax assets. Warren’s plan “is to levy a 2 percent tax on fortunes worth more than $50 million, and a 3 percent tax on fortunes worth more than $1 billion… This tax would hit approximately 75,000 families and raise $2.75 trillion over a 10-year period.” Others think this is far too optimistic an estimate. How Bernie plans to eliminate billionaires altogether is anyone’s guess.
But let’s think about it for a second.
The Forbes 400 – the four hundred richest Americans, all multi-billionaires – are currently worth $2.96 trillion. There are another 221 billionaires in America who don’t make the list. They are relatively poor; altogether, Forbes estimates that American billionaires have a net worth of $3.11 trillion.
Donald Trump’s proposed federal budget for 2020 is $4.746 trillion. If President Bernie sent out goons with guns and expropriated all American billionaires, they could fund the US government for 8 months.
What about “the rich” more broadly speaking? Well, the dreaded top 1% of wealthiest Americans have the net worth of $25 trillion. Put the 1% against the wall or merely liquidate all their assets and settle all their liabilities and you can run the Federal Government for around 5 years.
Remember, after five years all that money is gone. It can only be spent once and it will have been spent by the government. And when the government runs out of billionaires and the 1%, it has to go down the list of top percentiles.
As of last year, the total net wealth in the United States was around $98 trillion. It has increased rather strongly, from around $62 trillion in 2010. Most of that increase accrued to the top 20 per cent of the population, who own over three quarters of the nation’s wealth – but they are also the very people who are getting progressively expropriated in our little thought experiment. And once you’re completely expropriated you can’t keep getting richer.
Remember, too: we are talking about the “ordinary” Federal budget; the budget as it currently is, where 60 per cent goes to mandated spending on Social Security, Medicare and Medicaid, and a further half a trillion dollars pays the interest on the mountain of government debt. This is the mean budget that according to the left doesn’t go nearly enough to help “the poor” or “the people”. So it’s a budget without Warren’s “Medicare for all”, without AOC’s Green New Deal, without Bernie’s free tertiary education, without the endless list of all the goodies that American socialists believe all Americans – as well as illegal migrants – deserve.
What is the total cost of an acceptable socialist budget, one that offers free health care, free education, more generous welfare, guaranteed jobs for all, not to mention a serious “investment” in fighting climate change? Your guess is as good as anyone’s. Let’s be absolutely modest – let’s assume that socialists “only” double the budget to some $10 trillion a year. And let’s forget about taxing income or even taxing assets, because that clearly won’t be anywhere enough – we have to confiscate the wealth. And at $10 trillion a year, confiscating the wealth of the top 20% who own 77% of all the wealth in the country, you could run your socialist government for at least 8 years – the American pie keeps growing over those future years but you are eating precisely that growing part, and at a rate faster than the growth. And redistributing wealth – particularly from those more entrepreneurial and productive to those less so – doesn’t magically increase the overall wealth; the bottom 20% won’t suddenly join the middle class, and stay in the middle class, after you kill every single billionaire.
Sure, these are all speculative numbers. But the point is pretty clear and it has been made many a time before, including by Margaret Thatcher, who once quipped that the problem with socialism is that sooner or later you run out of other people’s money. That’s true when you’re “only” taxing income. But it’s just as true when you go “full commo” and move beyond taxation to confiscation. There just isn’t enough money to pay for socialism.