Transcript: Sutherland’s Congressional Series event with Rep. Chris Stewart and visiting scholar Romina Boccia

August 2, 2019

The following are unedited transcriptions of remarks delivered by both Rep. Chris Stewart (R-Utah) and Romina Boccia, the Director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation, during Free Enterprise or Socialism Where Is America Headed?

Rep. Chris Stewart:

Rick, thank you so much for the invitation and for your friendship and for your leadership as well as others, other friends in the room, for your leadership in this great institution. Sutherland is a gem for not just political thought but economics and culture and religious freedom and many other things and we’re just grateful for your leadership. So it’s good to be here. I appreciate the tone you set as you were saying, “We don’t want people here who are gonna be hissing and booing.” My family is not here so I think we’re okay with that because they’re often my worst critics. And like to recognize Gary Webster, my District Director who is with me here today.

I’m going to be respectful and I feel like that’s really part of my personality. It’s part of my responsibilities. On the other hand as well, I have to tell the truth as I see it and some of you may agree and some of you may disagree and when we get to the questions, we can certainly have a dialogue. But the same time on this topic particularly, I feel like I have to be honest with people and just call it the way that I see it. But again, I’m not going to be abrupt and I’m not going to be certainly rude or abusive in any way but I will be as honest as I can.

You see this tie that I have on, I have a story about this tie and I’m going to come back to it. When I was first elected to Congress, I had my first opportunity to be on national television. Oh my gosh, my staff was nervous. I was a little nervous but not as nervous as my staff. And I thought, “Man, they really think I’m gonna screw this up or they’re worried for me.” And I came in and my chief, my good friend, Brian Steed, he looked at me and goes, “Where did you get that tie?” He says, “That’s an ugly tie. You can’t wear that tie.”

I was like, “Dude, I paid like $80 for this tie which, for me, is a lot of money.” I said, “This is the nicest tie that I have.” He said, “No, no. You can’t wear that.” And they made me change and I put on his tie. It’s like, “Okay, I’ll put on your tie.” And I went and did the thing and I thought it was okay. The next day, I came in with this tie and they said, one of them said to me, “Now, see, that’s a good-looking tie.” And I said, true story, “I bought this with Gary, by the way, in Abilene, Texas in 1979 at Kmart and I paid like $4.99 for it.” So that was the good-looking tie.

Now my point in that is this. We have different opinions on things, right? And some people look at the tie and they may like it or they may not like it. And some of us look at the political world and we have certainly different views on that. Socialism is something where there’s different opinions and we’re gonna talk about that. But again, all I can do is say the facts as I see them and we’ll try and sort through the opinion to where we actually talk about reality. And that’s what I’m going to try and focus today on is some of the reality.

When I was a pilot in the Air Force, and I was so proud to serve and I loved my time in the Air Force and many of you have heard me say this. These are not my Air Force pilot wings, these are my father’s. And I wear them almost everywhere I go when I’m working. And five of my brothers served in the military. It’s kind of deep in our DNA and I loved serving. But when I was a young lieutenant in the Air Force, this is in the ’80s and ’90s, I expected we might fight the Communist socialists in the Fulda Gap at Germany.

I did not think that we would be fighting that idea in Congress in my home country but we truly are. And there was a kind of seminal moment for me when I realized, you know, this is something we really have to talk about. And that was when President Trump at his State of the Union, he said, “We will never be a socialist country.” And almost every one of my Democratic colleagues sat on their hands and they would not clap for that statement. I remember watching them and thinking, “What are you thinking? Do you really think that socialism is the future of our country? Do you really think that’s the best that we can give our children? That that’s the best model, economic and political model, that we can give our children for their future so they can have some hope?”

And the truth is, is that many people do. They genuinely do and they’re being thoughtful about it. And I’d like to just read for you a couple of quotes here which I think it stated pretty clearly. Bernie Sanders says that quote, democratic socialism means that we must create an economy that works for all, not just for the very wealthy. That sounds fine, that sounds swell. Danny Katch who is a popular socialist writer, he says, “Socialism is society whose top priority is meeting all of the people’s needs ranging from food, shelter, healthcare, to art, culture, and companionship.”

Well, I can understand arguing why you’d want it to meet people’s needs in food and shelter but companionship and others seems like maybe a bit of a stretch but that’s what his thinking was. And one of the most well-known socialist Democrats now is, of course, a colleague of mine, Alexandria Ocasio-Cortez, and she writes, as an example, in the wealthiest nation of the world, working families shouldn’t have to struggle. And you read those quotes and you think, “Well, how could you disagree with that?”

This is, I mean my friend, Alexandria Ocasio-Cortez, is saying she’s going to make it so we don’t even have to struggle. Who could argue with that? And some will argue that if you don’t believe that, then you’re evil or you’re greedy or you’re selfish and you’re not willing to share. And many Americans and especially young people, although in my conversations, it’s not just young people. I’ve had the opportunity to speak on this subject in various places around the country and it’s not just young people who have taken this view now.

But they look at me often when I discuss this and there’s implied in their demeanor, in their argument, you’re a bad person for not wanting to support us in these arguments. But here’s the reality. History has shown, and I’m gonna dive into this a little bit, history has shown that this is a fantasy. This is an absolute fantasy. Socialism always leads to misery and oppression and pain for people. It’s been tried dozens and dozens of times. By one count, a scholar that I had a chance to sit down an interview for our podcast, by one count in the last century and maybe a little bit on the edges of before and after that, 78 times it has been tried and it has failed every single time. And the list is long, and you all know it.

I don’t need to read through 78 names of countries. But of course, the one we think about now primarily is Venezuela, but you could look at North Korea, you could look at the previous Soviet Union. They’re not really socialists now although their foundation is. There is something different than that, a kind of totalitarian socialism. You could look at a South American country, Central American countries, Eastern European countries, and a lot of nations in between.

Now having said that, I wanna acknowledge two important things that I think are for us to be fair at this, we have to recognize as well. And the first is that free enterprise and capitalism is not perfect. It has its flaws and it has failed us in some ways. There are still poor among us. And if you don’t believe that, then you haven’t walked out more than a block from where we’re sitting right now. Because as Gary and I were driving down, we passed a bunch of them on the street out there. Now there’s a lot of reasons for that and we can talk about that another time but the reality is, is there are still poor among us.

The second thing is income inequality is a problem and it’s a growing problem and it’s something that we’re going to have to be serious about addressing it sometime. Interestingly though, in the last generation in about my adult lifetime, we’ve had two eras where income inequality expanded more than the average. One of them was under President Clinton and the worst one was under President Obama. So, I want to address income inequality but I think it’s a fair proposition as under Democratic leadership, did the problem get worse or did it get better? And the economics on that are also pretty clear.

Now here’s a Republican failure to be fair. We have to recognize that we don’t have pure free market. We have something, a hybrid of that, and that’s crony capitalism and it has its faults as well. And many times, and believe me, that’s why I’m adverse to the expansion of government power because that allows us to pick and choose, in too many cases, what businesses will be successful, what businesses will get the government favor or the government grants or the government money or the government regulations or tax incentives. And again, that’s something I think the Republicans have to be willing to address.

And then the last one is this. You could argue I think pretty effectively from an economic point of view. And I don’t think they mentioned in my introduction; I’ve got my degree in economics. Now I don’t consider myself an economist, but I think I have a basic understanding of it. And you could look at it and pretty clearly understand that the Great Recession or the recession of 2008 was at least aggravated because of over-regulation and, in some cases, because of under-regulation.

And there is a role for government in regulating, in an appropriate manner, our economy and we have to find that fine line where we don’t overdo it but, on some cases, don’t ignore it and let some things, the laissez-faire, the invisible hand work without some government direction because it’s necessary. So, I recognize the first thing that, once again, free enterprise is not perfect. And we simply have to do better at that. And if we’re going to stand here, if I’m going to stand here as a Republican, as a capitalist, as of someone who argues for the free market, and if I’m going to argue that this is the preferred method, I have to be willing to recognize its faults and how we’re going to address those faults as well.

The second thing I would say to you, and I’m just gonna say this briefly but I wish we could elaborate it, but it is the purpose of the federal government is not to ensure that all men are equal. It’s to ensure that all men are equally free. And our founding fathers understood that. It can’t ensure that all men are equal, but it must, as best it can, ensure that all men are equally free. And that’s the essence of I think democracy, free markets, and free enterprise.

Now you’re going to hear me say this a couple times. You’re gonna hear me say, “But wait,” because then, I’m gonna advocate or make the arguments that I’ve heard others make in why they don’t agree with me or why they’re proposing something else. So, some will say, “But wait, we’re not really proposing socialist ideas.” And that’s been true to a fair degree up until the last maybe couple of years with Senator Sanders, but certainly in the last six months or so. I’m going to elaborate on in a moment.

They’ve said, “We’re not really suggesting socialist, true socialist policies or programs.” Kind of true up until the last six months. Absolutely demonstrably untrue now as I will show you here in just a minute. And the second thing they will say, they’ll say, “But wait, this is not really socialism, not by the classic definition.” And the classic definition of socialism/communism, and there is a difference, is a difference of degree. But that’s where you control the means of production. That’s the classic ultimate definition of socialism. So we’re not suggesting that but there’s been this real dramatic kind of a breakthrough in the last, I don’t know, a couple of generations, maybe in the last 50 years of political thought.

And that is you could just…they’ve discovered something critical that they could accomplish, and it was something new and it opened the door for them, and that is you don’t have to have legal ownership of something. You don’t have to control the title to a business or a means of production in order to control it. You can control it through regulation, you can control it through the administrative state, and you can control it through the tax incentives or disincentives.

And you don’t have to own a business if you can ultimately tax its profits. And in some cases, taxes profits, as some have suggested, at 80% or 92%. That’s essentially owning and controlling the means of production if you can do that. And it also has this one other great benefit by this process and that is it allows them deniability because as they implement these regulations or these authoritative administrative decisions or tax policies, and it causes the enterprise to fail, which it will, they can say, “Well, it wasn’t us. This is capitalism’s failure. See, look, capitalism failed here.”

Well, it failed because of the heavy hand of government that allows them to have the benefits of it but never the accountability. Because if they owned the enterprise, they would be accountable for its failure. By them not owning it, they can point the finger at capitalism and say, “Capitalism failed. We just regulated or taxed it.” And that’s an important thing that we’re seeing again and again in the modern world.

Advocates also say, “But wait, we don’t want to be socialists like North Korea. We wanna be socialists like Norway, like the Scandinavian countries.” And you know, Senator Sanders, who’s, you know, God bless him, I’m so proud of him about this, he’s honest with people. He’s been a socialist his entire adult life. He runs as a socialist, as an independent. He’s never tried to fool people. He says, “I am a socialist. These are the things I believe.” But interestingly, one of the presidents of a country in Norway, I’m not going to identify which one because this is a private conversation although I think many people reported it, she called him in the last election and she said, “Quit referring to us as a socialist country. We’re not.”

She said, “The only people who think we’re socialists are Democrats in the United States. We don’t think we’re socialists. Our people don’t think we’re socialists. We consider ourselves a free market, a free market economy with just very generous welfare benefits.” And that’s a fair description of that. I have here from, you know, a source that I think is a terrific on this and it’s the Heritage Foundation, which…but there’s others as well. There’s the Fraser Institute, the World Bank, and the World Economic Forum.

These are the listings of the freest economies from a market perspective. United States comes in at number 12. You know who is one step above us? Iceland. Do you know who is one step below us, two steps below us? Denmark. Many of the Nordic countries are some of the freest countries in the world. That’s out of a list of 180 nations. That’s not out of a list of 30 or 40. That’s a list out of 180 nations and they recognize we are free. You know who has a lower tax rate than the United States even after our recent tax reform, is the Nordic countries, because they recognize that that low business tax rate is what generates the economic prosperity where they can then afford a generous welfare state.

All right. Now, let me talk a little bit about this thing we started out with earlier and that is that I said, “Well, I don’t think many of the ideas have been truly socialist, but I think they are now.” And let’s explore that just quickly and give some illustrations of why I think it is. And you’re gonna hear me say a word four times, because it’s a word that distinguishes what I think has been proposed before and what we’re seeing now.

The first thing I would add or talk about is Medicare for all. $32 trillion is what this will cost. $32 trillion. I tell you, no one in this room knows…really understands what 32 trillion is. It’s a lot. But a lot of people have realized, as I talked about this, they don’t care. For one thing, the number is so large that they don’t understand it any longer. And the other is they think, “Well, it doesn’t matter because someone else is going to pay for it.” Here’s the reality. If you actually paid for Medicare for All, and by the way, those who propose it don’t have any intention of paying for it, not in a real way as I’ll show you in a moment.

But if you actually paid for it, you at least double the taxes for every American taxpayer and every American business, which gets you to about 31 trillion. So you don’t quite get there. But you get close if you double everyone’s taxes. And the reason is, is this. This is roughly but it’s about right. Right now, you have about three workers who are supporting every one person on Medicare. This will inverse that. You’re gonna have two people on Medicare supported by every single worker. And you can’t do that unless you’re raising taxes and you’re not going to do it just on the rich. You’re gonna have to do it on every American taxpayer.

And the last thing is this. And I said I was gonna mention this word four times. This is first time I’m gonna say it. The thing that kills this, the political argument that kills this, it isn’t the money, I’ve realized that. It’s the, when you point out to Americans, it will take away your private insurance. You have no choice. I won’t ask you to raise your hand but if I asked you in the room, “How many of you have private insurance and how many of you wanna keep it,” I would say to you, not under Medicare for All. You are compelled, and there’s the word, you are compelled to go on the government program, and you have no choice.

And for most Americans, they say, “No, don’t take away my private insurance.” But you have no choice. You’re compelled. The word is compulsion. Let’s talk about one more. This is too easy. The Green New Deal. So, Medicare for all is something like 32 trillion, maybe 32.8, maybe 33. The Green New Deal, and some people deny this, but it’s actually at least this number and probably more, $93 trillion. A recent report, just actually this morning, it costs the average American household $70,000 in the first year and $250,000 in the first five years. Makes air travel illegal, takes that away. Millions of jobs, good jobs, including jobs here in Utah, in the energy industry, disappear. They go away overnight.

If you have a car, I drive this 1999 Ford F150. I’ve had it since it was new. I love that car…truck. Sorry. My truck would be offended that I just called it a car. I love that truck. If the Green New Deal is implemented, that truck will be worth, well, it almost is worth zero now, but it will be worth zero overnight. You’re not gonna be able to sell it and all of you who drive anything but an electric vehicle, try selling your car or your truck because it’s gonna be worth nothing because no one’s gonna be able to drive it. And then go try buy an electric car and how much you’re gonna pay for that under the current production standards which they have which are very, very difficult to ramp up by the way because of rare earths.

Very difficult, probably impossible, to build the batteries that we would need for everyone in the United States to drive an electric car short of the next 30 years. And how much are you gonna pay for your electric car? Your house is going to have to be redesigned or remodeled or rebuilt in some circumstances and even redesigns agriculture. I grew up farming and ranching and the tractor that I drove wouldn’t be allowed to be used under the Green New Deal. By the way, as a bonus, it goes after welfare as well.

Again, you can’t accomplish any of that without compulsion. You have to force people into that. You have to take away their car. You have to force them to rebuild their home. You have to take away their air travel. One more, student debt. And I’ll use my family as a great illustration of this. I have six children. I love my kids. They’re great kids. I’m a little embarrassed to say this. I have three attorneys in my family. One of them is still in law school right now. I have a doctor. And one of my sons is an electrician. So some of my sons go to law school and medical school. They’re gonna make a lot of money in their lives but they have enormous student debt.

And we’re gonna say to my other son-in-law, who is electrician who went through trade school, paid for it himself, you have to pay for their education. And they’re going to make $500,000 a year and you’re gonna make much less than that but you still have to pay for their education. How in the world is that fair? How in the world is it fair to take someone who is working in a trade and force them to pay for other kids, who by their own decision, made this economic analysis, “I’m gonna absorb debt but I’m gonna pay for it because I’m gonna have a great career.” It was a good decision.

But we’re gonna say, “You poor people, we’re gonna pay for that. We’re gonna force this guy who’s laying cable or milking cows or working construction, we’re gonna have them pay for your student debt.” How in the world is that fair? But once again, that word compulsion. The last one, Elizabeth Warren’s wealth tax, which she says, and I’m gonna quote this because it’s just hilarious, “The funding will be used to pay for Medicare for All, student loan debt, forgiveness, and free higher education.” Her proposal is a 2% tax on all wealth above $50 million, 2% tax on $50 million, you’re gonna pay for Medicare for All, student loan debt, student loan forgiveness, and as a bonus, higher education.

It raises $2.7 billion or trillion dollars. It doesn’t even begin to pay for it. But here’s the deal. Every one of those individuals are compelled to tell the federal government how many shoes do you have? How many cars do you drive? Where’s your house? What other assets do you have? List everything you own and we’re going to tax it at a 2% rate. It’s clearly unconstitutional. The Constitution allows you to tax income. It never allows you to tax what everyone owns, their wealth, their assets. And I’d love to see the court proceedings on that. And it’s a fantasy anyway. It’s $2.7 trillion. And once again, those individuals are compelled to reveal everything about their lives, every asset they have in order to comply with this.

Last thing, this is worth making and this point is worth making. I gotta go quickly. Okay, I’m gonna tell this but I gotta do it real quick. When I was first in Congress, I was set on the Science Committee and I was actually Chairman of one of the subcommittees there. And I had an individual, he’s a very famous author, he lives in the UK, he’s a scholar, Cambridge, etc., etc. He’s an atheist and he’s made a lot of money and sold a lot of books about atheism, which is great. I think that’s fine. And he came to meet with me and by the way, when I tell the story, I want you to know that he and I have developed a friendship and we’ve kept in contact with one another.

But the premise of him coming to meet with us was the idea that you can’t be on the Science Committee and be a Christian. They’re just incompatible. So, he sits down and he’s got six people with him. He had someone there to take pictures and someone there to take notes and someone there to carry his briefcase. He had this entourage with him. He comes in, he sits down, and we have a chance to chat and then one of his friends is introducing him. And he’s introducing him. He says, “This is Richard Dawkins and he’s blah, blah, blah and blah, blah, blah and all these books, international seller.”

And he says, “And he’s considered the third smartest man in the world.” And he goes on and I was like, “Wait, wait, wait. Stop.” So that begs a lot of questions. If he’s the third smartest man in the world, who’s the first smartest man in the world? And they said, I can never remember his name, the guy in the wheelchair.

Audience member: Stephen Hawking.

Stewart: Stephen Hawking, right. He says he’s considered the first one and then someone else a second. I said, “How do you know there’s not some guy in India who’s really the third smartest man in the world? And we just don’t know anything about him or who he is?” Okay, well, he might be but he’s considered third. Okay. So we have this, we started this conversation and he says, first, I’m trying to remember. He says, “Well, you’re a Christian, right?” And I said, “Yes, I am.” He said, “Well, how old do you think the earth is?” And he expected me to say, what?

Audience member: Seven thousand years.

Stewart: Seven thousand years. Yeah. I said, “Well, I think it’s like 3.2 billion years or something like that. Is that close?” So, he’s a little taken back. He says, “I thought you were Christian. I say, “Yeah, but my faith teaches it. We’ve never took a stand on that and I think sciences shows here, it’s been here more than 7000 years.” He’s a little taken back. And you mentioned this other member of Congress who is on the Science Committee with me, he says, “Well, he thinks the earth is only 7000 years old.” He’s like, “Yeah, I know.” But you gotta I think just give people a little latitude for their faith and for science and allow them to make your own separation. Well, that make no sense to me. He says, “Let me ask you this. If you were really sick, would you go to a doctor who thought the earth was only 7000 years old?”

And I said, “Well, is he a good doctor?” He said, “Yeah.” I suppose I’m sure I’d go to him. And he said, “You’d go to a doctor who thinks the earth is only 7000 years old?” I said, “Well, the third smartest man in the world just told me he’s a good doctor. So of course, I’ll go to him.” And my point is this. Many times now, people look at the failures of socialism and they say, “Yeah, but we’re smarter. We’re gonna do it right this time. Although 70 times have failed, don’t worry about those. We’re gonna do it right because we’re smarter.”

And I don’t care if you get the third smartest man in the world, there’s still enormous fundamental, institutional structural challenges to making this work for people. I’m gonna close with this. Benefits of free enterprise and capitalism. In my lifetime, and I know I’m not young any longer, so it’s been a few years, but in my lifetime, free markets have lifted at least 2 billion people on this earth, 2 billion people out of abject poverty, something like 375 or 378 million of them in India alone, just since the mid-’90s. It’s eliminated 80% of abject poverty in the world.

We didn’t do that through communist rule, we didn’t do it through socialist implementation, we did that when Africa and many Southern and Central American nations as well as Asian countries turned away from the socialist model and began to embrace some measure of free enterprise. That’s the outcome of that. And it’s hard to argue with that. One other argument I’d make. When was the last time you bought a product from Russia? It’s probably been a while, if you ever have. When was the last time you bought something from China that wasn’t built with technology stolen from the U.S.?

And my point is this. The free markets create this brilliant innovation that it’s just demonstrably apparent. The innovation in the last 100 years or more but particularly in the last 20 or 30 years of my lifetime have clearly come from the United States or something similar to the United States that fosters and promotes innovation and how that has bettered our lives or I would argue, in some cases, challenged our lives because I think these are a social cancer, actually. But that’s a whole other topic. And then maybe the most important point I can make on this, and then I’ll end, the most generous people in the world are Americans.

We have blessed so many people’s lives through our generosity. There’s not another country that comes close to the generosity that we provide and share to other people. We cannot do that, no nation can do that if they’re broke. And one of the enormous benefits, I would argue one of the or the most important benefit of free enterprise and the efficiency and the wealth that is created, it has allowed us to facilitate humanitarian efforts around the world and how we’ve been able to help others. I could go on but the choice between this and I think the choice between this is really clear.

It’s a choice between an imperfect system that has enormous benefits and abject failure. And the imperfections of this program cannot detract or should not detract from the success we’ve had and the contrast with the failure of the other option. Coming back to my tie, some people like it, some people don’t. It was only $4.99. That’s an opinion. Much of what we’ve talked about here is just the truth and I hope that we can help people to see that. Thank you for the opportunity to be here with you. It’s an honor to be with you in this group and this organization. I appreciate the chance. Are there any questions or I’ve run out of time? A few minutes.

Rick B. Larsen (Sutherland Institute president): I am not the smartest guy in the world so I failed to tell you something. If you have questions, you have a card and pens that have been passed down the row, could you pass them to the end of the row and we’ll go through them. And we have a few that have already come to the end of the row that we’ll give you time to formulate your questions.

Stewart: I took too much time. Do we have one or two minutes?

Stewart: Someone yelled, “Yes, one minute.”

Larsen: We’ll take a few minutes. Interesting question, is it worth making a distinction between Democratic socialism and socialism?

Stewart: Well, I guess you would have to ask a Democratic socialist this because I don’t know what the answer to that is. I really don’t. I mean, I know that…I’m gonna let someone else make that argument because I don’t understand the distinction. The programs that I suggested, they were all made by Democratic socialists. I suppose there are hardcore socialist who truly say, “We’re gonna own every factory,” or, “We’re gonna control it.” That’s certainly a distinction but I think I’ll let them make that argument.

Larsen: We’re committed to ask probing questions no matter the perspective. So I’m gonna ask this one. You can make the argument that free enterprise is equitable when it’s equitable for everyone, then you get into this slippery slope of what is equity. But is it reasonable that people would take the perspective that if privileged businesses are benefited through tax programs, that’s essentially another form of socialism? I think you touched on this.

Stewart: Yeah.

Larsen: So how do you explain to someone, benefits corporations that are perhaps subsidized by taxpayers, why is that not socialism in the making?

Stewart: Well, it is and I hope to point that out. The crony capitalism, although I don’t know how to describe it as socialism although there is an element to it to that, I think it’s something, you know, even in some ways, even more corrupt or corruptible but that is crony capitalism is much like that. It has much the same deficiencies and much the same flaws although there’s two different ways that crony capitalism benefits a business. One of them is just through direct subsidies. One of the great examples we’ve seen, and most of us would remember, so I’ll just use it for that reason, Solyndra, which had 400 or 540 million dollars direct subsidies and went bankrupt and they had nothing for it.

Direct government payments, that’s one form of it, which I object to. Another one is preferred tax structures, which, although there may be some reasons for that, once again, because there is a proper role in government. For example, I have been a strong advocate for National Institutes for Health. I think there’s a role in government filling the market where the market can’t or won’t. And you can sometimes do that through tax incentives as well. An example that some of you in the room would agree with, we’ve seen recently, is tax preferences for emerging technologies and green technology. But once again, they have the same corruptible influences you have in other forms of socialism. It’s something that we should recognize and try to minimize.

Larsen: Okay. I’m gonna mix three questions here. One of the reasons that Sutherland engages on this discussion around socialism and free markets, being free market advocates, make no mistake, but we think the appealing language around socialism is the fairness, the caregiving, the compassion. So here we are coming up on a very interesting election year. You’ve cited specific examples of where inequality actually has seemed to increase in specific areas under democratic leadership. We have candidates running unapologetically on socialist principles. What is your view when it comes to the voting public? Do you think most people actually understand what they’re being offered under a socialist agenda or are they just responding to the compassionate language?

Stewart: I think it’s probably a little bit of both and we’re somewhere along a scale of that. Now, initially, and for some people at the end of this process as well, they are responding to this compassion. And they’re doing it, I believe, out of a compassionate heart. I don’t think they’re doing it because they wanna be one of the smartest men in the world or be those who are in control. I think many of them actually have a compassionate soul and want to help other people. And I think to be fair, we need to recognize that they’re not being nefarious or evil intended in this.

But on the other hand, if you want to help people, then let’s be realistic about the best way to help people and what works and what doesn’t work. Because if you really wanna help people, it can’t just be words, it can’t just be an idea. It has to, at the end of day, actually do something for those people. So that’s one scale. And then I think some people, long as we have this conversation, will begin to realize, well, I don’t think that is the best way forward and I think I would look at something else and maybe what we have now, we should modify it and adapt it and make it a little better but we shouldn’t throw it away.

And my view on this as the American people, oh, gosh, I’m gonna make a controversial statement here. I’ll try to do it carefully. My relation with President Trump is like a lot of people in the room. It’s a little bit strained for some reasons. I think that he has done a lot to help American people, especially working Americans. He makes my job so much harder in a lot of ways. His demeanor would, in normal circumstances, make it hard for him to be reelected, I think, except for two things. One is he can really point his finger at some success. And the second thing is, he probably wouldn’t have been elected in the first place were it not for Hillary Clinton. She just was a bad candidate.

And I think my thought is that the democratic friends and colleagues may choose someone who gives him that same argument and that is they’re gonna advocate for policies that most Americans just won’t accept, this being one of them. And so you asked me politically on where the electorate is, I don’t know. We’ll see in 2020. We’ll see in 15 months. But I think it’s a nearly impossible argument to make for some of these things that we’ve talked about today for most Americans.

Larsen: This may need to be the last…this will be the last question. And you’ve referenced this a little bit. I’ll ask you to go a little deeper. Somehow the debate turned between capitalism and socialism as opposed to improving capitalism. Crony capitalism, I don’t think there’s anyone who raises their hand in support of crony capitalism or corporate welfare, but where do you begin to make the argument that let’s not abandon those principles, let’s improve on those. Let’s re-establish virtue in capitalism. Where do you begin?

Stewart: Yeah. I actually think there’s a good news and a good answer for that. And that is that we really tried to do that in the recent tax reform for a number of ways. One is to align our corporate tax rate with competitive nations around the world, make us more competitive, and that’s often been talked about. Reducing their tax rates for all Americans as well and the vast majority of Americans have benefited from that. That’s just an economic fact, something like between 89% and 92% of Americans got a tax cut. But part of that was to simplify it as well and to do what’s implied there in your question, to eliminate some of those distortions in the market because of tax policies, which some of them are generations old and had completely unintended consequences.

And one of the benefits of tax reform and regulatory reform, because they kind of go hand in hand, is to remove that heavy hand of the government and allow the markets to work in a more free way rather than being distorted because someone came to a congressional office and convinced a group of senators and congressmen to prefer their industry or to prefer their undertaking of what they’re doing economically. Once again, thank you. It’s been an honor. Thank you.

Romina Boccia:

Polls in recent years tell us that a majority of women, millennials, and democrats now hold a favorable view of socialism, and among all Americans, about 43% hold that favorable view of socialism. But there’s some good news, because Gallup also took a close look at what exactly do people think that socialism means? And it turns out only about 17% or one seventh of Americans think that socialism means what it actually means, which is government control, or ownership over the means of production. So if that’s not what people understand under socialism, what do they think it means? About one-third, and this was the most cohesive argument that people presented because folks were all over the place, but about one-third think that it has to do with equality, or caring for others.

If there is one person, a French philosopher who understood America at its core better than anybody else, it was Tocqueville in his book, “Democracy in America.” And he once criticized socialism during a speech to the French assembly in 1848. And this was concerning the question of a jobs guarantee. Sound familiar? He argued, the first characteristic of socialism is, and I quote, “An incessant, vigorous, and extreme appeal to the material possessions of men.” That’s where you get calls for higher wages, Medicare for All, pay even for people who don’t want to work. And you’ll see these underlying tones and many of these claims made by socialists or democratic socialists today.

By the way, I think that democratic socialism is an oxymoron because you might get to socialism by democratic means, by people making the mistake of voting for socialist politicians and voting for socialist policies. And that’s what happened in Venezuela. They actually voted their government into power. 

But once you have socialism, once you get socialism, there’s no more democracy left because the only way you can enforce it is by totalitarianism, by coercion. And if that’s anything, it’s undemocratic.

But back to Tocqueville. The second trait, always present, Tocqueville said, “Is an attack, either direct or indirect, on the principle of private property.” Wealth taxes are one example of that. But we also heard that from President Obama: “you did not build that.” That’s the idea.

And the third trait, according to Tocqueville is “a profound opposition to personal liberty and scorn for individual reason, a complete contempt for the individual.” The idea there is that people cannot be trusted. Left to their own devices, they will make bad choices, and so we should relieve them of those choices in the first place.

Now, today’s democratic socialists if you think of Bernie Sanders, Alexandria Ocasio-Cortez, which you mentioned, Representative Stewart, they try to distance themselves from countries like Venezuela or Cuba. They say that this is not the kind of socialism they have in mind. And thank goodness, because if you look at Venezuela today, among the people that haven’t managed to leave, to flee their own country, leaving behind everything they know and cherish… among the people who are still living in Venezuela today, nine out of 10 are living in poverty. And here’s a statistic that’s going to make everyone who’s on a diet jealous, but it’s really quite horrible. People in Venezuela lost an average of 24 pounds, 24 pounds in just one year. They are literally starving to death. That is what socialism delivers.

But democratic socialists in America are telling us no, no, no, don’t worry, we’re not trying to kill the golden goose. We’re just trying to channel market forces in a more socially equitable manner. That’s what they claim, because capitalism, according to them has become too greedy, and has resulted in terrible excesses. Inequality supposedly is on the rise. The poor aren’t getting ahead and that’s why we must overhaul completely our economic system so it can be more fair and equitable.

Policies from a universal basic income, to job guarantees, to paying people who don’t want to work, (that was a leak in the green new deal, but we know where they’re trying to head). We’re told give shape to these aspirations. And left to their own devices, greedy capitalists will destroy our planet in 12 years. But the green new deal will save us, so they proclaim.

So what are we looking at? In many ways, it’s a subtle, a more subtle, incremental socialism than what we were used to in the past, where socialism was a cry for a revolution. Today, socialism is sold to us as generating more social justice, protecting our planet and caring for the vulnerable. Who could be opposed to that? And so, as was mentioned before, they point to market driven nations like Sweden and Norway as examples. Actually, I was lucky enough to visit Sweden last year. Sweden right now is 18th on the heritage index for economic freedom, and in fact, they have a freer economy in many ways than the United States does.

For one, they have school choice. They also do not have open-ended entitlement programs that are bankrupting our country here in the United States. They actually put their pensions and health programs on a budget. They also protect property rights in significant ways, and they actually have a more consolidated banking sector than we have in the United States. So yes, they do have a generous welfare state, but it’s on a budget, and they are very much a free market economy. 

But the wealth generating properties of markets are really not so much in question today. Instead, the question is, is our system distributing the gains from our free enterprise system equitably? And if you ask those same millennials, 55% of which have a favorable view of socialism today, what they think of entrepreneurs and small business, over 90% think that those are good things. They understand that people operating businesses, launching companies, innovating, creating products that make our lives better, are earning an honest living. They’re working, they’re creating benefits for the rest of society and reaping rewards from that.

But there’s also a level of disillusionment with today’s status quo. And I think that really came to life during the Great Recession in 2008. And that was that people thought it was fundamentally unjust that the government was bailing out big banks, and traditional industries like U.S. car manufacturing, as average Americans suffered, losing their jobs, in many cases, losing their homes and seeing their savings eroded in a giant stock market crash, that they didn’t understand exactly where it came from. And it was never really explained to them how government policies were creating the kind of risk taking that ultimately led to our economy’s demise. Instead, it was blamed on unfettered capitalism and not enough regulation. And so that’s what people came to believe. But I think that what we did is we offered a wrong diagnosis, and therefore, inaccurate responses to dealing with this issue, that the system is rigged in favor of entrenched, special interests, that is leaving newcomers and vulnerable populations behind. So what are we doing about that? I think what we need to do is we need to offer a positive, concrete, actionable agenda to enhance economic mobility and unshackle entrepreneurship.

And in part, we must do this not just by pointing out the wealth generating properties of the free enterprise system, though that is very much the case, but we need to appeal to men’s higher virtues. Not just to men’s material needs because socialists while they promise many programs that appeal to men’s material needs, they also pull at our heartstrings. They appeal to us from a sense of compassion, which we all feel. We strive, we strive to fight for what’s good and right. It’s our human nature. We seek a sense of purpose and social connections, through families, at work, and in other aspects of civil society, such as churches and community groups. And in our hearts, we know that the state really cannot replace loving families, nurturing homes, and caring communities. The companionship that the state wants to offer us is very empty indeed. 

Our most human needs ultimately are best met in intimate and personal settings. And problems, and we have them all, they’re best addressed closest to the source. What we do know, however, is that government can crowd out those effective institutions of civil society that provide those caring and nurturing environments. And that can lead to calls for more government because those civil society institutions are disappearing. And there are bad policies that are leading to those outcomes, such as marriage penalties in the tax code that are discouraging people from family formation. And a welfare system that is contributing to the breakdown of basic social functions, and creating pathologies that are not inherent to the free market system, such as intergenerational poverty that are furthered by those very government policies.

A universal basic income is really no solution. Because we know that people, we, get a sense of purpose and social connections from working and supporting ourselves and our communities. That kind of satisfaction comes from doing not just having. A government check cannot replace that sense. Freedom, not socialism, empowers doing. And so freedom is about so much more than just generating wealth and making our country a wealthier place, although it does that too.

So this is where I believe we can stage an effective opposition to what I call the siren song of socialism, that whispers ever so sweet in our ears, but will lead to our demise if we succumb to it. Because today’s socialists are trying to lure us in by appealing to higher virtues such as our generosity, selflessness, and love of planet while at the same time exploiting our most harmful vices, including jealousy and envy.

While they appeal to concepts like fairness and justice, if you look closely, they turned those concepts upside down. There’s nothing compassionate about taking from one person who works hard every day and giving to another who chooses not to do so. We can all agree that we should care for and provide for the most vulnerable among us in our society, but that’s not what many of our entitlement systems do today. So we need to ask ourselves, what are we doing to unrig the system, to free entrepreneurs, and to ensure that there aren’t industries like the financial industry that are elevated above all others, that don’t suffer the same consequences from taking bad actions, but only reap the rewards from good investment decisions? That’s not right. That is not free enterprise.

What are we for? We need to tell people what we are for, and I believe we are for individuals fulfilling their full potential. We are for serving each other in accordance with our own means and values. And we are for caring one another in the most effective means possible, but without generating permanent dependence. That means giving people a hand up, but not a permanent hand out. And we are for dismantling the most destructive aspects of the status quo that hamper creativity, entrepreneurship, and put barriers in the way of people like the minimum wage that are keeping minorities and individuals with disabilities out of the labor force, or occupational licensing requirements that is keeping lower income individuals from becoming entrepreneurs and realizing their version of the American dream using their skills and talents. That is wrong. So we are then for a new way, a freer way, where control and choice rests with individuals and communities instead of government bureaucrats and cronies. Because in the end, this battle over socialism versus capitalism is really a battle over individual freedom versus subservience to the state. Let’s make sure we fight for people. Thank you.

Sutherland Institute is pleased to present content from our Congressional Series and other events. Perspectives expressed by guests and participants may not reflect those of Sutherland. The Institute does seek to provide a civil forum to express those views.

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