The Economics of Progressivism: How the Modern Democratic Party Views the Economy and Why They’re Wrong

What is economics?

Well, in a nutshell, it is the study of scarce resources and their alternative uses.  Oil isn’t just used in your car, and steel isn’t just used in building skyscrapers.

But, how does one determine how much of the produced steel should go toward buildings versus how much should go to its other uses?  This is the reason we study economics.  To find the system in which resources are allocated to their various uses most efficiently.

So, what system does the progressive Democratic Party believe in?  Well, from our last article, you should have been able to draw out that the Left favors a centrally planned (government run) economy.  They seek to control prices, production, and industry.  They believe that the government should run the economy through various regulation, subsidies, and, over time, the eventual complete control of production of goods and services.  Basically, the Democratic Party is really a Socialist Party.  The Progressive ideology is Marxist ideology, and the Democrats have fully embraced Progressivism.

But, the question remains: Is their system an efficient one? Does it create an efficient, vibrant, and constantly expanding/productive economy?

The answer is yes and no, depending on which of those two questions and which PART of each question we are answering.

So, let’s address each question individually.

Q: IS THE PROGRESSIVE/SOCIALIST ECONOMIC MODEL AN EFFICIENT ONE?

A: The answer that history provides is a resounding no.  If we take a look into Soviet Russia, which is the epitome of Socialism in the modern world, we see a gross inefficiency in the allocation of resources.  According to two top Soviet Economists, Nikolai Shmelev and Vladimir Popov, the USSR was (according to official Soviet Government statistics) using “1,000 kilowatt hours of electrical energy, compared to 300 in West Germany.  To produce one ton of cement we use twice the amount of energy that Japan does.”  This is only one example.  Another example of the innefficiency in Soviet Russia’s centrally planned economy can be found, again, in the words of these two economists when speaking of the prices of mole skins as they were raised by the government:

  • “State purchases increased, and now all the distribution centers are filled with these pelts.  Industry is unable to use them all, and they often rot in warehouses before they can be processed.  The Ministry of Light Industry has already requested Goskomtsen (the USSR’s economic planning unit) twice to lower purchasing prices, but the ‘question has not been decided’ yet. And this is not surprising.  Its members are too busy to decide.  They have no time: besides setting prices on these pelts, they have to keep track of another 24 MILLION prices.”

This surplus of mole skins was due to Russia’s central planners raising the price that the State would pay for them.  In accordance, hunters began to devote more of their effort to getting and selling them, thus driving supply much higher than demand and creating an inefficient use of the skins and the hunters’ labor.  On the flip side of the coin, in a price coordinated economy when demand for a product rises, the price rises and creates incentives for people to direct resources toward producing and sell whatever the thing is in order to meet demand.  As the supply rises, however, less of the resources needed to create the product are used to create it, and thus those resources will flow into other places where demand is highest (and where demand is highest is usually where there is the most potential for profit).  When the state sets arbitrarily high prices, people are still incentivized to direct resources into whatever product is in question because the prices are high.  The problem is that the price will remain high and production will increase and resources will be wasted because production will not vary based on demand, but rather on how much the State is paying for the product or what they require be paid for it.

A similar occurrence can be witnessed in subsidies.  When a state sets a “price floor”, they are basically setting an arbitrary price in that they will allow the price of a product to fluctuate naturally until it hits a certain low.  At the point that it hits this low, they will subsidize the product, which basically means they will buy and take off the market as much of that product as they must in order to keep supply lower than demand.  Essentially, they create a false “scarcity” in order to create more demand for the product.  A great example of this occurred in the Great Depression, in which time the U.S. Government had a very large wheat subsidy  program.  They had set a price floor on wheat, and when prices dropped dramatically during the Great Depression, they held true and bought up a large portion of the wheat in order to take it off the market and keep prices artificially high.  This was surely a great thing for wheat farmers, but not for the consumer.  People were starving in the streets during the Depression and very few could afford wheat or wheat related products such as bread because of the high prices.  Yet, there was no physical scarcity of wheat in the country, as most of it was sitting in a government warehouse somewhere.  If the government simply hadn’t subsidized wheat in the first place, then prices would be much much lower because of the larger supply in the marketplace, allowing more of the population to afford the food they needed to survive.  This is perhaps one of the best examples of the downfalls of government price fixing.  Essentially, the progressive movement was founded to prevent such price fixing by corporations and conglomerates of businesses, yet they simply transferred the power to the government instead, which did even greater damage to the poor than ever before.

We can clearly see the wastefulness of centrally planned progressive/socialist economies based on these examples from the USSR and our own country.  Thus, we can clearly answer that the progressive/socialist economic model is NOT an efficient one.

Q: DOES THE PROGRESSIVE/SOCIALIST ECONOMIC MODEL CREATE AN EFFICIENT, VIBRANT, CONSTANTLY GROWING/PRODUCTIVE ECONOMY?

A:  The answer is a little more muddled on this one based on which part we are answering.  For example, we can’t look at the above wastefulness of past progressive/socialist systems and say that the economy is truly EFFICIENT.  According Merriam-Webster, the simple definition of efficient is, “Capable of producing desired results without wasting materials, time, or energy.” According to their full definition, something that is efficient is something that is “productive of desired effects; especially: productive without waste.”  Thus, centrally planned economies in the past have proven extremely inefficient. Even in the modern U.S., where our government has a major role in the economy through subsidies and regulation (essentially we’re are a centrally planned economy), we have a massive public debt that is equivalent to 102.98% of our GDP, and the total private and public debt in the United States is more than $62.5 Trillion!  That’s 373% of our GDP!  So, NO. The progressive/socialist model is NOT efficient.

If it is not efficient, can it be vibrant?  Well, according to Merriam-Websters simple definition of vibrant, not really.  The definition states that something that is vibrant has or shows “great life, activity, and energy.”  If the energy and activity is wasted, how can the economy be strong (the second definition of “vibrant” is “very bright and STRONG”)?  If an economy wastes it’s energy and activity (basically its life force), then it isn’t efficient and therefore not strong.  A constant and strong increase in the standard of living typically is a sign of a strong economy, and when an economy is inefficient with its resources the standard of living drops and when they are used efficiently the standard of living goes up.  Thus, an inefficient economy, like the progressive/socialist model, is also not a strong economy.  It may show great activity and energy, but if that activity and energy is wasted then it doesn’t mean anything.

What about being productive?  What does being productive mean?  According to Merriam-Webster (our hero once again), there are three simple definitions of “productive”:

  1. Doing or achieving a lot: working hard and getting good results.
  2. Producing or able to produce something especially in large amounts.
  3. Causing or resulting in something.

Doing or achieving a lot…well Progressive policies have achieved mass amounts of economic instability.  In all seriousness, however, by these definitions a progressive/socialist economic system can be productive.  They do a lot, they produce a lot of things, and the system by which they do and produce does result in something.  But, are the results good?  Are they producing a lot in a wasteful manner?  NO to the first question and YES to the second. We’ve seen in history that the results have not been good; although the USSR was able to produce a mass amount of mole skins, the energy of the hunters would have been better spent doing other things.  Thus, they were productive in hunting moles, but not in advancing the standard of living in Soviet Russia.

SO, it really comes down to whether or not they are productive in reaching the END GOAL, which is higher living standards in that particular economy.  For the progressive/socialist system, the answer is no.  It is really good in producing whatever the government is paying the highest for or subsidizing in a great quantity, but not in advancing the living standards of the economy by using resources most efficiently.  It’s overly productive in specific places, which makes it extremely unproductive in most of the other places, thus causing it to unproductive as a whole.

 

By answering these two BIG questions about progressive ideology, we’ve exposed the myth that the Left continuously tries to advance.  The question is, what IS the best system?  The answer is a free, price-coordinated economy.  But we’ll save that explanation for a future article.

I hope you’ve been educated and I hope this will make you consider who you’re voting for more carefully.  I wouldn’t want my tax dollars going to anyone who supports ANY facet of the progressive/socialist system.

Publius

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