Champions of Democratic Socialism

Tonight, we renew our resolve that America will never be a socialist country.

~Donald J. Trump/2019 State of the Union

If I were a betting man, I would place a healthy wager on Kalshi that Trump’s 2027 State of the Union will include the following statement. “Tonight, we renew our resolve that American will never be a communist country.” Why settle for hyperbole when adynaton can generate more fear? (Adynaton: pushing an overstatement past mere exaggeration into the realm of absolute impossibility. Example: When pigs fly.)

Today’s post was triggered by coverage of the Democratic primary in Michigan between Representative Haley Stevens and Abdul El-Sayed, Wayne County Director of Health, Human and Veteran Services. Haley is considered the “establishment” candidate endorsed by Governor Gretchen Whitmer. El-Sayed, a self-described “progressive,” has been pegged by Republicans as a “socialist” due to his endorsement by Bernie Sanders and support for “Medicare for All.” Journalists and political pundits are using this race as one more example of a growing division within the Democratic Party, best characterized by Politico columnist Jonathan Martin as a contest between the center left and the far left of which Sanders, Alexandria Ocasio-Cortex, and Zohran Mamdani are the poster children.

Yes, Sanders, AOC, and Mamdani may be the face of the democratic socialist movement much like a skin rash is a symptom of a deeper medical condition. They are not the root cause of its rise among American voters, especially young Americans. The real champions of democratic socialism, the ones who made its recent insurgence possible may surprise you. At the top of the list are Ronald Reagan, Arthur Laffer, David Stockman, and (drum roll) Donald J. Trump. Why? These four individuals are most responsible for creating the environment which set off and continues to support the growing inequality in wealth and income distribution in the United States.

The impact of their policies and actions is contained in the following chart prepared by INEQUALITY.ORG, using Federal Reserve data.

In 1989, the ratio of wealth between the top 0.1 percent and bottom 50 percent was less than 3:1. Thirty five years later (2024), the ratio was almost 6:1. In absolute dollars that translates into total wealth of $4.08 trillion for the bottom 50 percent versus $22.48 trillion for the top 0.1 percent of which 905 billionaires had a cumulative net worth of $7.8 trillion. When, at the same time, the cost of housing, food, healthcare and education were all on the rise, no one should be surprised there was a backlash against a system (capitalism) that many perceived as the root cause of this indefensible disparity between the uber rich and the rest of us.

Why blame Reagan, Laffer, Stockman, and Trump? It all started with Laffer, an economics professor at the University of Chicago (1967-76) and the University of Southern California (1976-84). As a member of Reagan’s Economic Policy Board (1981-89), he introduced Reagan and his wunderkind budget director, 34 year old Stockman, to what became know as the “Laffer Theory.” Laffer claimed there was an optimum tax rate between zero and 100 percent which would maximize government revenues. Both raising rates above this optimum or lowering them below the optimum would decrease total government revenue.

In case he failed to cause enough damage to the national economy with the “Laffer Curve,” Laffer also offered the concept of “supply-side economics.” Again Reagan and Stockman were the receptive target audience whom he convinced that lower taxes, deregulation and free-market policies would accelerate economic growth. Supply-side economics, also known as “Reaganomics” or “Trickle-down Economics” did lead to economic growth and lower inflation. At what cost? The national debt tripled between 1981 and 1989. In other words, Laffer’s theories, based on Adam Smith’s preference for monetary policy, only work if they are juiced with federal subsidies which sound an awful lot like John Maynard Keynes-style fiscal policies.

This cocktail mix consisting of the “optimum tax rate” and “trickle down economics” has been the elixir of choice for each Republican administration since 1980. At the end of each president’s tenure, those experiments based on Laffer’s theories resulted in an annual gross domestic product (GDP) as follows: Reagan (3.7 percent), Bush I (2.8), Bush II (-2.6 percent), and Trump 1.0 (-2.1). Compare that to the three Democratic administration since Reagan: Clinton (4.1), Obama (2.5), and Biden (2.8). And please keep in mind Obama and Biden had to clean up the economic disasters left behind by Bush II and Trump. Yet, Trump 2.0, is employing it one more time, ignoring Albert Einstein’s warning, “Trying the same thing over and over again, expecting a different result, is the definition of insanity.”

Trump regularly posts AI images of his face on Mt. Rushmore. To accommodate this narcissistic obsession, I will gladly find another mountain where he can be enshrined next to Laffer, Reagan, and Stockman. I will even gild their mugs with 24 carat gold. The signage will inform visitors these are the people who made democratic socialism what it is today based on the timeline. It was no coincidence that no American politician ever called himself or herself a “democratic socialist” until 1981 when (you guessed it) Bernie Sanders ran for mayor of Burlington, Vermont. Adding to this monument to governmental malpractice, playing in the background will be an AI version of Freddy Mercury and Queen singing “We Are The Champions.” Except in this parody, instead of “the world,” they are the champions of “duh world.”

For what it’s worth.
Dr. ESP