Is it true that the United States is becoming a socialist country? Those of us who teach economics and government can refer to a fairly good measure that enables us to answer the question. The use of the term by partisans, however, is often overly broad and inaccurate.
A few commentators use the term “socialist” as a synonym for any government activity. But it would be incorrect to describe the U.S. Coast Guard, the public library and Yosemite National Park as socialist enterprises.
When I have referred to socialism with my students, it has generally been to contrast the economic system with the greater efficiency of properly designed free markets. Economists are not terribly impressed with the performance of heavily socialist systems.
The word “socialism” describes a system in which a very large portion of economic activity is carried out by the government.
We can actually measure this and place each country on a continuum between private enterprise and public enterprise. You merely divide total government revenues by the gross domestic product. The result is a percentage that expresses the size of the government relative to the rest of the economy.
Among the industrial democracies, a figure of 30 percent government and 70 percent private spending would qualify as small government. In the old Soviet Union, the government probably absorbed 95 percent of the gross domestic product!
Each country chooses its own mix of public versus private enterprise. Each industrial democracy must determine for itself how to distribute various goods and services. Decisions about the public sphere are made at the ballot box. Choices about the private side of the system are made by casting dollar votes in the marketplace.
While the mix of public and private is unique to each country, some activities are always a matter of public decision-making. In every country, national defense is the government’s responsibility, as is management of the currency, police, courts, traffic regulations, the postal system and the licensing of professions.
Some decisions are always private, like the size and color of our houses and cars, and what we prefer for food, clothing and shelter.
There is, however, a large area of variation where countries and even communities differ over whether something will be provided by public or private enterprise. In some American communities, garbage collection, energy, road construction and even prisons are contracted privately.
In some countries, at various times, the coal industry, gas and electric energy, the telephone system, health care and even the ownership of auto and airline companies have been public monopolies.
Broadly speaking, a country that approaches 50 percent or more of economic activity in the hands of the government can be described as socialist. You could probably include Sweden (48 percent), Denmark (48.9 percent), France (44 percent) and Norway (43 percent) in this category.
The average size of tax revenues in Europe is 38 percent of GDP, including the United Kingdom (37 percent), Germany (35 percent), and Spain (36 percent). Canada is on the low side at 33 percent.
How do we compare? The most recent figures for the United States has government tax revenues absorbing 28 percent of the GDP. (This figure does not include borrowing.)
In 1975, government revenue was 25.6 percent of the GDP. When you subtract out our current high defense expenditures, it appears that the government hasn’t enlarged its share of GDP much over the past three decades.
Some of the talk about socialism is directed at the government’s strategy of taking a major position in the nation’s larger banks and auto companies. While this may appear like socialism, it is really just a stopgap measure to keep the economy from sliding deeper into a depression. Even the current health care proposals will likely expand private coverage.
There is no constituency in the United States that calls for the permanent nationalization of private industries. Some Americans briefly flirted with socialist ideas during the Great Depression, but there is no socialist tradition here.
The use of the word “socialism” in reference to government today is clearly exaggerated and inaccurate.
• Mickey McGuire, a retired high school social studies teacher, is among a select group of local residents with columns in the Tracy Press.