How Social Democracy Can Save Us

Nobody should be forced into debt due to a cancer diagnosis or an unforeseen accident. Nobody should need to work two jobs just to make ends meet. And nobody’s zip code should determine their destiny. Unfortunately, across the United States, the cost of living has continued to climb, outpacing wage growth and the average American family’s ability to pay rent and healthcare premiums. At the end of the day, a strong middle-class, economic mobility, and a smaller divide between the poorest and wealthiest Americans are the best ways to make an America that works for all citizens. For decades, the trend has been the opposite, but that doesn’t have to be the case moving forward.

What the U.S. needs is Social Democracy.  Universal healthcare, tuition-free university and trade school, a living minimum wage, housing as a right, a plan to combat climate change – all of these policies are central to this platform.

Universal healthcare gives all Americans healthcare regardless of their ability to pay. It has no copays, no deductibles, and can be used at any hospital and with any doctor. The Kaiser Family Foundation found that 25% of Americans struggle to pay down medical bills and that healthcare costs are the number one reason people file for bankruptcy in the U.S. We have made great improvements, such as the Affordable Care Act, but our system still does not cover everyone and places a heavy burden on individual families. Instead, universal healthcare would distribute the cost via corporate and progressive taxes, while giving the government collective bargaining power for lower prices on prescription drugs and medical services. Some suggest Medicare for All, a program that would expand Medicare to all Americans, while others support a public-private mix, where non-profit private insurers contract with the government, meet government standards, and are of equal or lower cost. The U.S. is also the only developed country without some form of universal healthcare, and those countries that do have either better health outcomes, lower per-patient costs, or both.

In addition to a healthy citizenry, our society would benefit from a highly-educated populace that isn’t burdened by tens if not hundreds of thousands of dollars in student loan debt. The system we have currently forces graduates to struggle for years, sometimes decades, in order to pay off their loans. Many people also have to drop out of college or choose never to apply simply because they do not have the money. Instead, our education system must focus on empowering the best and brightest among us, regardless of their ability to pay. Colleges will not be flooded with unqualified applications – we should simply remove the financial burden of attending, which will likely increase the quality of students pursuing higher education and make the U.S. economy more competitive.

Housing also needs to become a right. As the population grows and new housing developments are made with only the upper echelons of society in mind, housing prices are skyrocketing and people are having difficulty affording rent. This housing crisis has spread across the country with wealthy and, admittedly, liberal states such as New York and California bearing the worst of it. The government needs to ensure that new housing developments include lower-income units and expand programs to fully house the homeless. Programs like tax credits to landlords for affordable housing units, additional government contracts for comfortable lower-income housing via a national housing trust, and utilizing existing and vacant units by offering them to homeless people would help greatly.

We must enact a $15 minimum wage to assist the tens of millions of Americans who remain in poverty. The last time the federal minimum wage was increased was in 2009 (to $7.25), and that figure has not subsequently been adjusted to keep pace with inflation or the cost of living. If someone works 40 hours a week for a year, they will make only fifteen thousand dollars – well below the poverty line. At that point, the minimum wage becomes a race to the bottom to see who is the most desperate for a source of income. Some states and cities are raising the minimum wage, but we need the federal government to raise the bar across the country and peg the wage to inflation moving forward. Studies done by the University of Washington and UC Berkeley demonstrate that raising the minimum wage does not harm employment, does not significantly increase inflation, and boosts standards of living for all economic classes.

Lastly, we need to combat climate change by transitioning the U.S. to zero carbon emissions within the coming decades. This can and must be done by investing heavily in renewable energy infrastructure and by instituting a carbon tax. The latter can be implemented as a marginal tax system, where the amount of carbon produced is taxed at progressively higher rates while everyone – companies and citizens alike – will be given a standard deductible that reduces the burden on those who cannot afford a Tesla. If the government does not get involved aggressively and immediately, climate change will eventually cost the U.S. economy hundreds of billions of dollars a year.

Now: how in the world are we going to pay for all of that? Such policies are admittedly expensive. Taxes will go up overall, yes, but the focus will primarily be on the wealthiest of Americans. I’m not just talking about the top one percent – I’m talking those making ten, twenty, fifty million. Right now, the U.S. tax system treats those making $500,000 the same as someone making $100,000,000. Some have suggested a new marginal tax rate as high as 70%, and to be honest, that’s not crazy. Our country had tax rates as high as 90% during the fifties – one of the periods of greatest economic expansion in American history. However, the wealthiest Americans make the majority of their money through investments – something the U.S. taxes at a lesser rate. In order for the system be truly equitable, we need to make the capital gains tax a marginal progressive system. One might think this would disincentivize people from working harder or investing in the economy, but the more money you make, the less value each successive dollar has. The difference between making fifty million versus sixty million is so small at that level that paying an additional ten or twenty cents on the dollar will not translate to a radical change in spending. In addition, the tax only impacts money made over a certain limit, not all of it in aggregate. As for the average American, their taxes may go up, but they will actually have more money to spend from what they save in terms of medical and educational expenses.

Then there’s the elephant in the room: this platform is often referred to as Democratic Socialism. When people hear “socialism,” they think about seizing the means of production and central planning. However, the system I am advocating is better called Social Democracy – a capitalist market system with strong public services and government regulation. To many, the difference between full-blown socialism and capitalism with some socialist policies/programs is moot. Many fear that such policies will inevitably reduce people’s incentive to work. I firmly reject that notion – I do not believe that greed and fending off starvation are the driving forces behind people’s desire to work. These policies are not unpopular either. The Pew Research Center found that 58% of Americans  support a $15 minimum wage, Reuters reports that 60% of Americans support tuition-free college and 70% Medicare for All, and Fox News – Fox News! – reports that 70% of Americans support raising taxes on those making $5 million or more a year. These are not only policies that we can enact and that people want to enact – they are ones that we must enact to ensure that the U.S. does not work solely for the few but for all.