Democratic socialist politicians, with no understanding of economics, are on the rise. Alexandria Ocasio-Cortez, Bernie Sanders, and others have risen to prominence within the Democratic Party. Their proposed policies would cost over $100 trillion.
Socialism intrigues voters by offering them “free stuff.” The problem is that the “stuff” has to be paid for and the cost is too high to justify.
FREE COLLEGE COST: $70,000,000,000 PER YEAR
College costs are unreasonably high, but further government intervention isn’t the solution. Through student loan forgiveness and other government subsidized college programs, there is now an artificially high demand for college.
Research shows that college completion rates fall the less students have to pay. If college were completely free, there would be little incentive to complete school. Not having “skin in the game” does not encourage students to complete their education.
MEDICARE FOR ALL COST: $3,260,000,000,000 PER YEAR
A study by George Mason University estimates that the Bernie Sanders’ “Medicare For All” plan would cost Americans 32.6 trillion dollars in 10 years. That would come out to 3.26 trillion per year, which is about the same amount that taxpayers paid in taxes in 2017.
This cost is simply impossible to pay for. The study says, “A doubling of all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.” This, however, hasn’t stopped multiple politicians from supporting single payer health care.
HIGHER MINIMUM WAGE COST: JOBS
As people fight for a $15 minimum wage nationwide, they don’t realize the harm it would do to jobs. It is already evident in the places that have raised their minimum wage. Instead of paying the increased salaries, businesses are implementing technology to replace the workers.
Many large companies can survive a higher minimum wage by increasing technology, but small businesses cannot do the same. About a third of minimum wage workers are employed by small businesses. Increasing the minimum wage would lead to the destruction of small businesses and would, in turn, cause the loss of jobs.
HIGHER TAXES: PERSONAL INCOMES
To pay for socialist programs, government would have to increase income tax rates. The problem here is that this decreases income growth. Economic historian Richard Vedder writes,
Factoid: from 2010 to 2017, some 2,520,022 native-born Americans on net moved into the nine zero state income tax states from the 41 others with such taxes. It is no wonder zero state income tax states like Texas, Florida and Tennessee tend to economically outperform high income tax states like California, New York, and New Jersey.
Americans need to realize that socialism is not the answer to their problems. There are ample reasons why it doesn’t work, and the cost is a main one.