The Republican Attack On “Socialism”

Senator Ron Johnson’s postmortem on the 2018 election, in which Republicans lost all the Wisconsin state-wide races, starts off:

The following report represents the combined effort of hundreds of patriots who realize that the conservative movement and Republican Party of Wisconsin is a crucial firewall against the increasingly radical socialist beliefs of the Democrat Party. I sincerely thank them all for their efforts and long-term commitment.

The postmortem goes on to excoriate Wisconsin’s Republican party, claiming that it:

drifted from its roots as a grassroots organization and became a top-down bureaucracy, disconnected from local activists, recklessly reliant on outside consultants and took for granted money that was raised to keep the party functioning properly.

Johnson’s complaint was a veiled critique against the campaign of former governor Scott Walker. The Journal Sentinel reported that the Republican Party maxed out its credit cards and Politico reported that efforts “are already underway to pay off the party’s post-midterm debt.” The article goes on to report that Diane Hendricks recently gave the state party $500,000.

Like the earlier Republican National Committee autopsy after 2012 election under the leadership of Wisconsin’s Reince Priebus, this analysis concentrated on the structural and mechanical failures of the party, while giving little attention to the party’s actual ideas. Both reports emphasized the need for more outreach to members of demographics where Republican candidates are weak, including women, African Americans, and Hispanics. Yet a reader would conclude from the discussion that the cause is too few staff members from these demographics. There is no hint that the weakness may reflect Republican ideas.

Johnson’s mention of socialism and the need for a “firewall” against it reflects recent tweets from President Donald Trump, apparently reflecting a belief that fear of socialism is a winning issue for Republicans, triggered in part by the success of candidates, such as Bernie Sanders or Alexandria Ocasio-Cortez, who are willing to call themselves “socialists” or “social democrats.”

Trump and Johnson are not alone in this belief. Locally the right-wing Badger Institute sent out a seven-page fundraiser letter. It pointed to a recent Gallup poll that found, according to the letter, that Democrats “have a more positive view of socialism than capitalism.” Other polls have found a similar disdain for capitalism among Millennials.

Why has contemporary capitalism attracted such disdain? Let’s start with the “father of capitalism,” the 18th Century Scottish philosopher and economist Adam Smith. Smith argued that “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Using the contemporary pin industry, he argued that an “invisible hand” operated to solve shortages. If the demand for one kind of pin exceeded supply, the price of that pin would rise, causing manufacturers to increase production of that pin.

However, unlike some contemporary advocates of capitalism, Smith had no illusions, commenting that:

The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

For players in a pure free market, however, life can be, in Thomas Hobbes’ memorable phrase, “solitary, poor, nasty, brutish, and short.” Someone will always be trying to design a pin that is better or cheaper. One way to make life less brutish is to get government to set up barriers to new competitors.

The classic example of this was the Interstate Commerce Commission. What started as an attempt to protect farmers and ranchers against price gouging by western railroads ended up as protecting transportation firms of all kinds against competition. This phenomenon, called “regulatory capture,” was analyzed by the Nobel laureate economist George Stigler.

Although generally considered a conservative, Stigler, like Smith had no allusion about businesses. I once attended a talk he gave to a group of business executives. He told a joke that went like this: “If tomorrow you announced that, as a matter of principle, you would accept no government subsidies, I would write you a letter of appreciation and sell your stock short.”

There are several reasons that firms are able to capture their regulators. Perhaps the most innocent is that they have the incentive to develop expertise in often complex regulatory issues. Or they may contribute to politicians likely to push for favorable regulations. A third is a revolving door, in which regulators retire and get a much more lucrative position with one of the firms they used to regulate.

The Walker regime offered an abundance of examples of regulatory capture, including allowing a mining company to write Wisconsin’s mining law, virtually eliminating the income tax break on manufacturers, and making the DNR more polluter friendly. Similarly, the Trump administration offers a smorgasbord of examples, especially its appointment of numerous high-level regulators who previously worked for firms being regulated.

The Badger Institute fundraiser asserts that “the mainstream media doesn’t want to dwell upon the plain fact that every time socialism has been tried, it has left a long trail of human misery in its path.” This is an odd statement, particularly coming from a Milwaukee-based organization, with three socialist mayors, who far from leaving human misery, offered residents competent, honest government.

The self-styled socialists in the United States tend to look towards the model of socialism developed and practiced in countries like Sweden and Denmark. Far from offering a trail of human misery, these countries rate higher on human freedom than the United States, according to the Koch-funded Cato Foundation—and at or near the top on surveys of happiness, which is no small matter. As Adam Smith observed, “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

This brings us back to Johnson’s postmortem on the 2018 elections. It lacks any vision of where it wants to take Wisconsin. Instead it concludes by attacking various good government groups, including the League of Conservation Voters, the League of Women Voters, and Common Cause. It is telling, I think, that there is no room in the contemporary Republican party for people concerned about the environment, for ending gerrymandering (by either party), or for reducing the role of big money in elections.

Johnson concludes “The Republican Party of Wisconsin is at the hub of the center right movement in Wisconsin, and has a responsibility to be as effective as possible to advance it here.”

What is “it”? Johnson does not say.