Some hear the words “socialism” and “America” together and automatically think it is an exaggeration or a manipulation of terms with partisan interests. But no, within the nation’s vanguard of freedom, the free market and capitalism, there are clear and notorious examples of administrations with socialist and statist policies that have generated debacles in some states and cities of the United States.
The most notorious case, for example, is that of the historic city of Detroit. For years phantasmagoric, but now slightly recovered after the Federal Government acted to monitor the dire public finances of the City Hall.
Detroit, a socialist experiment that failed
It all began with racial problems, mismanagement of migration, and the lack of decentralization of an economy dependent on the automotive and industrial sectors. Later, for decades, the great city of Michigan was subjected to highly interventionist economic policies, where regulations and high taxes greatly limited private investment. This led to the city’s collapse.
The social policies promoted by the Detroit City Council, mostly populist, did not serve to end any kind of social gap they supposedly enacted to fight. On the contrary, their subsidiary plans required high public spending; and the city collected little and badly. The private sector was hurt too much, and the consequences were there for all to see: high insecurity, emigration, empty houses, little economic development, and ghost streets until the economic adjustment and the boosting of the economy after the Default of 2013.
What does that have to do with socialism? Well, the Democrats in Detroit promoted economic measures similar to leftist politicians in Latin America: statism. Public office for racial minorities and impoverishing economic policies – such as subsidies – were some of them. Eventually, far from taking advantage of the migrants of past decades to stimulate the economy or make Detroit a much more decentralized city, they ended up turning their citizens into rentiers of the state.
While the case is not as radical as that of the great pearl of Michigan, California faces fairly similar problems, starting with the decisions and actions taken by its progressive politicians, which are causing increases in the number of poor, insecurity, energy problems, and internal migration.
California’s similarities to countries where socialism rules
When one thinks of socialism, automatically, the mind goes to Venezuela, Cuba, Nicaragua, Zimbabwe, Argentina to cite some examples. All of them are countries with severe economic problems, where poverty reigns, underdevelopment is undeniable, basic services are useless, and emigration is the only way to achieve survival.
In that sense, perhaps California does not suffer hunger, nor is it economically devastated like Caracas, Managua, or Havana. But it does have some similar problems, even though it is within the most prosperous nation on the planet.
Socialist problems in a capitalist country
1. Electrical problems: you don’t have to go far. During the month of August, the progressive governor of California, Gavin Newson, received criticism after he admitted that the authorities could not foresee a drought, hot flashes, and fires that would impact the electrical system. “We could not predict and plan for this (energy) shortage,” the governor said, “and that is simply unacceptable,” he added. According to USA Today, on August 21, more than 410,000 people had their power cut, and half of that number suffered the same fate the next day. Since then, there have been scheduled power outages because the California Independent Power System Operator (ISO) cannot guarantee demand for electric service. In other words, the city considered the “fifth-largest economy in the world” cannot supply its citizens with electricity due to high temperatures and system problems.
2. Migration to other states: many Californians have decided to leave their state for Arizona, one of the primary receivers along with Texas, the second state that receives more migrants within the US after Florida, according to a study by Yardi Systems. Last year, more than half a million Californians left the state, making it the seventh consecutive year that more people left the Golden State than those who moved there.
3. Water shortages in certain areas: although there is no talk of a destroyed water system, there are places like the city of Dos Palos where systematic water cuts have been occurring for a couple of years. Even in the midst of a pandemic when handwashing is simply essential to prevent the spread of the coronavirus.
4. Homelessness, tramps, rising poverty, and crime: there is a documentary by Christopher F. Rufo, “Chaos by the Bay,” available on YouTube, which details some of San Francisco’s failed policies for homeless people. A truly tragic situation. According to the video, the city has more than 18,000 homeless people. These people suffer from addiction and mental health problems even though the city spends about one billion dollars annually on this population. This is another chapter in “The Aid that Kills,” since the subsidiary policies of its progressive leaders, far from solving problems of poverty, are generating more and more homeless people and state rentiers.
5. Long and unusable quarantines to control the coronavirus: as with Argentina, California has been a health failure regarding the control of the virus. Its very long lockdown did not prevent it from being one of the most contagious states within the United States. Moreover, after implementing an inefficient state plan for economic opening, the protests that took over the streets of San Francisco and other California cities did nothing but further damage the economy and increase the health crisis, all under the complacent gaze of the authorities who decided not to act against the demonstrations organized by Black Lives Matter, following the stance of Democrats across the country.
The obvious must be said: California has a free market and competitive system, a thriving economy – much stronger than hundreds of countries around the world. And that’s precisely the main reason why the major cities of Northern California don’t follow in the footsteps of the city of Detroit.
To understand the context of the situation, one must look at it geographically: there are Northern California and the South, the former being where the main housing problems, high cost of living, destitution, and insecurity exist. In the South, life is much quieter.
This is because the greatest concentration is in the valley, the high-income zone, which is where technology companies and startups are located. In this place, life is frankly expensive for those workers who are outside the tech industry. Last year, rents averaged 3,600 dollars a month in San Francisco, while the valley’s cheapest is in Oakland, about 2,000 dollars, and this is due to insecurity.
The housing problem in San Francisco, for example, is a long-standing one. The city does not build housing, and this is for the excuse of not wanting to “lose the essence” of the historic facades. As a result of this decision, there was a simple problem: the population (demand) grew, and the supply remained the same. Result? Housing shortages and rising costs.
To combat the plight of the homeless, the city, instead of implementing proactive policies to get these people off the streets, into rehabilitation, and to assert authority against the crimes they commit, let all of San Francisco be filled with homeless camps, easing law enforcement for crimes against drug possession, prostitution, and even defecation on the streets. The permissive measures for homeless people have created a structural problem that is difficult to repair in the short or medium term.
Progressive ideas usually try to sell an alternative reality where the increase in crime is not linked to the increase in poverty, but the fact is that it is. The rise in homelessness – where many of the homeless have addiction problems – has gone hand in hand with the rise in punishable acts such as drug trafficking or shootings. “An analysis by the Marshall Institute, in collaboration with the Los Angeles Times, shows that between 2014 and 2017, violent crime increased by 12% in California. Meanwhile, the national average increased by 3% over the same period,” according to an EFE article.
This situation, coupled with the problems of housing costs is causing a migration of Californians to other states, which is not at all positive for California. The state also has the highest poverty rates in the country. And the increase in the number of poor people is not the result of “inequalities in the economic system,” as progressive representatives often suggest but rather, a series of mistaken measures where attempts have been made to keep these people in a state of comfort by forming state-dependent citizenship. So it is not surprising that the Democrats are still in charge in California. The popular narrative blames technology corporations and hardworking tech people “for making the cost of living go up,” although the reality is different.
The new socialism, it is worth emphasizing, is no longer the violent one of the 20th century. It is a much more “friendly” one, disguised as progressivism, where politicians promote very high taxes, many economic barriers, statist measures, and promote collectivist ideas that have little respect for private property and individual liberties.
In fact, it is quite hypocritical to blame “the richest” for California’s structural problems. Especially when these millionaires, who represent 1% of the state’s tax population, are responsible for 46% of the state’s revenue. “Specifically, the top 1% — with 24% of the earnings — paid 46% of state income taxes in 2018, the last year for which there is complete data. The bottom 90% paid only about 22%; the bottom 60%, 2.4%,” reads one column in the Los Angeles Times. What does this mean? The social policies that Democrats pursue are financed by citizens with higher incomes, but also by the middle class.
The water problems, while not recurrent, are unacceptable for the state with the best economic indicators in the US. And this is because the sense of compensation is not serving to provide quality service to the citizens who are paying their taxes.
And beware, because faced with some problems of public finances and fiscal deficit, the state of California is finding no better solution than to increase taxes on its citizens. For example, they are trying to carry out Proposition 13, “a bill to be voted on that seeks to allocate millions of dollars to school districts in California,” according to Univision. From increased taxes.
There’s another proposal called Proposition 15 that has to do with increasing property taxes. Something that is at stake in the November 3 elections as you can read in a Wall Street Journal article titled California’s Next Big Tax Gulp.
And when one speaks of power cuts, it is impossible not to think of Chavismo in Venezuela, a country with a completely destroyed electrical system thanks to the socialist system implemented for decades.
What many do not know, even within Venezuela itself, is that electricity problems are not just problems of the moment. Already in 2007-2008, when Hugo Chávez was still alive, in the interior of the country, in states such Bolívar and others, electricity supply was regulated due to the serious shortcomings of the system. The regime blamed drought and high temperatures, as do the authorities in California, but the reality is that the power cuts were the result of state inefficiency and maintenance failures.
California’s energy problems are also longstanding. We must go back to the year 2000 and mention a key player: Enron, the company that manipulated the market and prevented the privatization of the electricity system that subsequently led to a crisis. Enron’s price manipulation, along with state inefficiency, was the cause of the 2000 energy crisis. After Enron’s bankruptcy, the state of California opted for the recipe of greater presence and intervention, and to this day, has not resolved the problems in many areas of California.
Although many don’t want to see it, California has implemented socialist-style economic and social policies disguised in progressive discourse and rhetoric. These fainthearted measures adopted, even though they are in the U.S. territory and the state with the best economic indicators, have been sufficient to deconstruct a state that should be an example of the quality of life and, on the contrary, is succumbing.
Americans should look closely at the cases of California and Detroit, as they are clear examples that, within the United States, statist policies can be implemented that result in poverty and failure.