This post is one in a series entitled Posthumous Refutations. Previously in this series: The Seen and Unseen of Obama’s Stimulus Plans.
Vermont Senator Bernie Sanders appeared on the Colbert Report on Tuesday (H/T “Hard Rain” from the Mises Forums). Stephen Colbert started off addressing Sanders’ socialism. It would have been funnier and more fitting for his character had Colbert conducted a mock-McCarthyesque interrogation of Sanders. Instead he somewhat soft-pedaled the topic:
Colbert: “Before we get started Senator, I want to give you chance to address these vicious rumors that you’re a socialist.”
Sanders: “I am democratic socialist, that is correct.”
Colbert: “What is the difference? Is that not an oxymoron?
Sanders: What Democratic Socialism is about is making sure that all people get a piece of the pie, that we have a far fairer distribution of wealth and income than currently exists, and I think it is a national disgrace that you have so few with so much and so many with so little.
Of course the pie analogy is always a poor one regarding the wealth of a society. A pie is of a certain size, which remains constant regardless of how it’s sliced. But the wealth of a society dries up and contracts when it is regularly carved up and doled out by egalitarians like Sanders and President Obama, who said, “I think when you spread the wealth around, it’s good for everybody.”
In Human Action, chapter 32, section 1, Ludwig von Mises explained the gross misconception that lies within the “philosophy of confiscation”: (emphasis added)
Interventionism is guided by the idea that interfering with property rights does not affect the size of production. The most naive manifestation of this fallacy is presented by confiscatory interventionism. The yield of production activities is considered a given magnitude independent of the merely accidental arrangements of society’s social order. The task of the government is seen as the “fair” distribution of this national income among the various members of society.
The interventionists and the socialists contend that all commodities are turned out by a social process of production. When this process comes to an end and its fruits ripen, a second social process, that of distribution of the yield, follows and allots a share to each. The characteristic feature of the capitalist order is that the shares allotted are unequal. Some people–the entrepreneurs, the capitalists, and the landowners–appropriate to themselves more than they should. Accordingly, the portions of other people are curtailed. Government should by rights expropriate the surplus of the privileged and distribute it among the underprivileged.
Now in the market economy this alleged dualism of two independent processes, that of production and that of distribution, does not exist. There is only one process going on. Goods are not first produced and then distributed. There is no such thing as an appropriation of portions out of a stock of ownerless goods. The products come into existence as somebody’s property. If one wants to distribute them, one must first confiscate them. It is certainly very easy for the governmental apparatus of compulsion and coercion to embark upon confiscation and expropriation. But this does not prove that a durable system of economic affairs can be built upon such confiscation and expropriation.
When the Vikings turned their backs upon a community of autarkic peasants whom they had plundered, the surviving victims began to work, to till the soil, and to build again. When the pirates returned after some years, they again found things to seize. But capitalism cannot stand such reiterated predatory raids. Its capital accumulation and investments are founded upon the expectation that no such expropriation will occur. If this expectation is absent, people will prefer to consume their capital instead of safeguarding it for the expropriators. This is the inherent error of all plans that aim at combining private ownership and reiterated expropriation.
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Glad I could contribute to this series. The most depressing thing about Sanders’ appearance on the show was the audience’s wild cheers when he pedaled his confiscatory rhetoric.
I don’t suppose anyone in the studio audience realizes that it’s government that grabs the biggest slice of the so-called pie and redistributes it unequally and inefficiently. Of course, it’s always someone else who has to pay… never them. Poor souls, just another casualty of hip.
“If this expectation is absent, people will prefer to consume their capital instead of safeguarding it for the expropriators”
I wonder if that’s why pimps dress and spend so extravaggently, because they know they could get arrested and go to jail any minute.
if prostitution were legal, would pimps wear beige slacks?
Hard Rain, thanks for the heads up. If you want to read something just as depressing, go to Bloomberg’s web site for today and check out their poll. Americans want the guv to tax the rich to pay for jobs.
Gee, aren’t there some pies that do stay the same size?
As long as Bernie Sanders has more money that half of all Americans his rantings are just hypocritical hot air.
Anyone who recognizes the concept of diminishing marginal returns should hope for the MOST wealth disparity in a society, so that one man’s insignificant loss is another’s year’s sustenance. Just because the ratio of wealth of the wealthiest to poorest is large, doesn’t mean the denominator is small.
This is an effect beyond the “shrinking pie” analogy, which I think would be better illustrated by the “shrinking Hayekian triangle”. The more that is redistributed from those with the most wealth to those with the least, the shorter any one producer’s triangle is. This makes for less higher-order capital production in a society, making for less productive jobs, less ability to create new wealth or innovation, and less resource maximization.
Redistribution, in this sense, is killing both humanity (at least stifling) and the Earth (because more resources are needed to support the same amount of people), and must be opposed by any environmentalist or civil liberal.
This is basically the “Ghetto Punk” mentality. They have no money. They see other people with money and they figure that they are entitled to “redistribute” that persons money. They see people’s houses and feel entitled to redistribute the flat panel TV’s. They go outside the ghetto into wealthy neighborhoods and see people with houses with more cars parked outside than people living in the house? They feel that this is unjust – after all nobody can drive two cars at the same time can they? Therefore, why not redistribute some of these cars to someone who does not have a nice car, like himself. Then they come upon Bill Gates house – 16 flat panel TV’s and a movie theater. Bill Gates is not Brigham Young. This is obscene – he does not need all these TV’s – why not redistribute some of them to people who are living in poverty (two year old car, regular color TV, basic cable, and last years iPhone). The problem is what happens when everybody thinks this way. (Hint – look at Zimbabwe).
Bernie Sanders – now I know what BS stands for.
Maybe Americans will send less letters to Congress and more to Santa Claus.
iawai wrote what is worth quoting in full:
Anyone who recognizes the concept of diminishing marginal returns should hope for the MOST wealth disparity in a society, so that one man’s insignificant loss is another’s year’s sustenance. Just because the ratio of wealth of the wealthiest to poorest is large, doesn’t mean the denominator is small.
This is an effect beyond the “shrinking pie” analogy, which I think would be better illustrated by the “shrinking Hayekian triangle”. The more that is redistributed from those with the most wealth to those with the least, the shorter any one producer’s triangle is. This makes for less higher-order capital production in a society, making for less productive jobs, less ability to create new wealth or innovation, and less resource maximization.
Redistribution, in this sense, is killing both humanity (at least stifling) and the Earth (because more resources are needed to support the same amount of people), and must be opposed by any environmentalist or civil liberal.
So really, what government engorgement & expropriation does, is replace the successful wealth-generating entrepreneur in a wealth-disparate society with a growing pie, with a non-wealth-generating government official in a wealth-disparate society with a shrinking pie!
I’ve always like Sanders. Although a lot of his crap is statist and really classical Western socialism, some of it is lighter… surprisingly more libertarian than anything. I’ve read he supports healthcare cooperatives and worker cooperatives in his home state of Vermont. Democratic socialist ideology has two sides.. the consfiscatory end and the charity through work and taxes end. It’s a cultural program as much as it is a conceptual one. If you want a good outline, at least as someone who opposes Sanders’ socialism, read Clement Attlee’s book The Social Worker.
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