The political landscape in the United States continues to become ever more divisive—and ever more incoherent. The Trump administration is engaging in a major program of deregulation and lower taxation at home, while pursuing tariffs and a trade war abroad. Simultaneously, a growing fraction of the Democratic party is moving left from liberalism to progressivism to democratic socialism. Politicians like Bernie Sanders and Elizabeth Warren proudly call themselves democratic socialists and advance a vision for the country in which well designed regulations mitigate what they regard as the corrosive the effects and embedded inequality of the capitalist system. They rightly dissociate themselves from the brutality and totalitarianism of the socialist regimes, from the Soviet Union to China to Cuba to Venezuela; their hope is to achieve a state-dominated economy in a benign democratic form.
But how exactly does a socialist economy operate within a democratic system? As if on cue, this question is addressed by President Trump's Council of Economic Advisors in a timely new report, “The Opportunity Costs of Socialism.” Its conclusion is that socialism cannot succeed even in democratic societies. The Report makes its case in part by showing how once prosperous nations like Cuba and Venezuela have become economic basket cases as formerly democratic institutions gave way to totalitarian rule.
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