Bernie Is a Capitalist, Whether He Likes It or Not
This column originally appeared at the Foundation for Economic Education on April 19th, 2019
Sen. Bernie Sanders belatedly released his tax returns this week. The New York Times reported:
The returns show that Mr. Sanders’s earnings shot up after his first presidential bid, when he built up a vast national following. He and his wife, Jane O’Meara Sanders, reported income that topped $1 million in 2016 and 2017, lifted by proceeds from his books.
The couple had an adjusted gross income of $561,293 in 2018, according to their most recent tax return. Mr. Sanders had about $393,000 in book income last year, and he and his wife reported giving nearly $19,000 to charity.
His income now puts him within the top 1 percent of taxpayers, according to data from the Internal Revenue Service.
Apparently, nothing succeeds like penalizing success.
Sen. Sanders said, “I wrote a best-selling book. If you write a best-selling book, you can be a millionaire, too.” But his incarnation as John Galt didn’t last. In a Fox News town-hall, Bret Baier asked him, “When you wrote the book and you made the money, isn’t that the definition of capitalism and the American dream?”
After an uncomfortable pause, the senator answered, “No.”
But he is wrong. Having an idea, acting on it, and making a pile of money is the very definition of successful entrepreneurship.
Sen. Sanders took a laptop costing a few hundred dollars and produced, in Our Revolution: A Future to Believe In, a document for which he was paid $795,000. Taking an input valued at a few hundred dollars and turning it into an output worth $795,000 is the essence of entrepreneurial capitalism.
And Senator Sanders is right—he deserves that money. In January 2018, an estimated 73 percent of US adults owned either a desktop or a laptop. That’s 187.4 million people. How many of them produced a word document worth $795,000? Very few. No doubt Jersey Shore’s Snooki used a laptop like Sen. Sanders’ to produce Gorilla Beach, her debut novel, but there were more people willing to pay—and pay more money—for Sen. Sanders’ book. Value is subjective, after all. By providing greater satisfaction, Sen. Sanders reaped greater rewards.
Be the Change? You First
Sen. Sanders and his wife paid an effective tax rate of 26 percent, well below the levels of 70 percent or so he claims “the 1 percent”—which includes him—ought to pay. They topped this up with $19,000 in charitable donations, another 3.4 percent of their income.
But if Sen. Sanders really thinks he isn’t having enough of his income taken from him, he can solve this situation unilaterally, and he can do it today—without waiting for Congress. He can donate his money to the federal government.
On Wednesday night, Tucker Carlson asked a Sanders supporter, Nomiki Konst, why he didn’t do just that. “Because that’s not how our government functions,” she replied, “Where do you send that form? The IRS? ‘Hi IRS, here’s a cheque for 70 percent?’”
No, you send it to the Treasury, as their website clearly instructs.
“Who does that?” she went on, “I would love to see one guest on your show that has actually written an entire paycheck.” In fact, so far in 2019, the Treasury has received $3.7 million in “Gift Contributions to Reduce Debt Held by the Public.” Carlson could get one of these donors on his show.
There’s an old line that “Government is simply the name we give to the things we choose to do together.” Konst’s argument shows how hollow that phrase really is.
Sen. Sanders has a choice, as do the members of the so-called Patriotic Millionaires. If they truly feel that politicians are not getting enough money to spend, they can give them some more. They can choose to “Be the change.” But they don’t. They will only act on their professed desire if other people are forced to act along with them. For all their talk about wanting to give the government more money, they make such payment contingent on other people who may not want to do so being forced to by law.
This is a curious form of generosity. It is an even more curious form of choice. Where is the choice for the people who think they already pay enough in tax? Government is not simply the name we give to the things we “choose to do together,” it is the name we give to things where 51 percent of people choose something, and the other 49 percent have to go along. As economist Milton Friedman once wrote, “You may get to vote once a year—on what? On a long, long list of propositions, with very little relationship between your vote and what ultimately happens.”
Socialism Is Not about Sharing
Sen. Sanders claims to be a socialist, and socialism is often described as “sharing.” But there is nothing inherently socialist about sharing. You can just as easily share under capitalism. Indeed, the latest World Giving Index produced by the Charities Aid Foundation listed the United States, New Zealand, Canada, Australia, Ireland, the United Kingdom, and the Netherlands—all seven of them capitalist countries—in the top 10 most charitable countries over the last five years. By contrast, Venezuela, formerly Sen. Sanders’s poster child for “democratic” socialism, ranked a miserly 115th in 2017.
In 2011, the year when Sen. Sanders was boosting Venezuela, it ranked 118th compared to first place for the capitalist USA. But then, according to the World Bank, in 2011, GDP per capita in the US was $49,000 compared to just $14,000 in Venezuela*. Under capitalism, you actually have something to share. As Margaret Thatcher once put it,
No one would remember the Good Samaritan if he’d only had good intentions; he had money, as well.
Giving your money voluntarily—what most people would think of as sharing—is not what socialists actually mean by the word. That is why Sen. Sanders and the Patriotic Millionaires refuse to give the federal government their money voluntarily while a mechanism exists to do so and others are already using it. Their idea of sharing is that the government takes money from somebody else to hand it out as it sees fit. We already have a degree of this in capitalist societies. Today’s socialists want to increase the amount of people’s wealth that passes through the hands of the government.
The socialist notion of “sharing” is nothing of the kind. Sharing is voluntary, this is coerced. It is not sharing but coercion that is the essence of socialism. As the British author Kingsley Amis—a youthful socialist who came to support Thatcher—put it, “if socialism is not about compulsion, it is about nothing.”
* In constant 2010 dollars
John Phelan is an economist at the Center of the America Experiment.