JPMorgan: ‘A real-life proof of concept for a successful democratic socialist society, like the Lost City of Atlantis, has yet to be found.’
AEIdeas
The above headline quotes a new JPMorgan report that attempts to determine how democratic socialism works in the real world. But author Michael Cembalest, of JP Morgan Asset Management specifically, couldn’t find one that met his criteria, which were as follows:
What about Scandinavia? The self-described democratic socialist Bernie Sanders thinks the Nordic nations do a great job modeling his philosophy. Back in April, for instance, Sanders told a Burlington, Iowa audience that while Soviet-style socialism was “not my thing,” he did think that countries like “Denmark and Sweden do very well.” And that is hardly the only time Sanders has pointed to the region as democratic socialism done right. But after examining those economies, Cembalest concludes as follows (bold by me):
While Nordic countries have higher taxes and greater redistribution of wealth, Nordics are just as business-friendly as the US if not more so. Examples include greater business freedoms, freer trade, more oligopolies and less of an impact on competition from state control over the economy. And … while Nordics raise more taxes than the US, the gap usually results from regressive VAT/consumption taxes and Social Security taxes rather than from progressive income taxes. The bottom line: copy the Nordic model if you like, but understand that it entails a lot of capitalism and pro-business policies, a lot of taxation on middle class spending and wages, minimal reliance on corporate taxation and plenty of co-pays and deductibles in its healthcare system.
Anyone with even a cursory knowledge of what Bernie Sanders and Alexandria Ocasio-Cortez have been advocating — higher taxes on business, more state intervention, protectionism to “help” workers, breaking up Big Tech — realize the difference with the Scandinavian model as presented here. Of course, there is another country that meets many of the criteria identified by Cembalest:
With Nordic countries firmly rooted in capitalism and free markets, if I wanted to find examples of democratic socialism in practice, I’d have to look elsewhere. … I couldn’t find any country that ticked all these democratic socialist boxes, but I did find one that came close: Argentina, which has defaulted 7 times since its independence in 1816, which has seen the largest relative standard of living decline in the world since 1900, and which is on the brink of political and economic chaos again in 2019. Here my journey ended, halfway around the world from Scandinavia where it began. A real-life proof of concept for a successful democratic socialist society, like the Lost City of Atlantis, has yet to be found.
Argentina used to be among the richest nations in the world. Not any more. Two devastating charts:
