What Leftists Don’t Understand About Economics

Much has been said recently about California becoming the most impoverished state in America. California has diminished the middle class so badly that one in four people are now living below the poverty line. The leftists have done this with the big government policies (I.e. high taxes and lots of regulation) they claim are good for the working class. When Trump slashed business regulations and lowered taxes for working people and corporations on the federal level, the left cried out that it was “trickle-down” economic policy. Sadly, “trickle-down” is essentially the only economic concept they know.

 Leftists in California, and across the country, are convinced that the only way to benefit the working class is through the government’s confiscation and redistribution of wealth. Whenever there is a problem in the economy, they invariably call for higher taxes and more regulation. They believe in a zero-sum game, where someone’s success means another person’s loss. The truth is, market-based economics has lifted huge portions of the world out of poverty at breakneck speeds.

 California’s political ideology has pushed them away from markets and towards a centrally planned, socialist system. In their minds, government knows how to run the economy better than private companies and individuals. They have some of the highest corporate and income taxes in the country so that they could fund their massive government expansion.

Apparently, California’s high tax rates have not stopped the government from mismanaging their budget. California’s credit rating is substantially below the country’s average. This means that creditors trust California less than most states to pay back their loans. Even though California has one of the highest tax rates, it hasn’t helped them reduce their debt. They have one of the largest debt piles in the country.

The socialist policies that leftists argue for aren’t translating into positive economic outcomes. The left complains about “trickle-down” economics, but they do not understand that is what they are advocating for. Instead of wealth trickling down from large corporations, it trickles down from large, highly inefficient government institutions. They also fail to realize that big government and big business have become inseparable. Not only is government inefficient, it puts corporate interests above the interests of individuals. A perfect example of this would be Kamala Harris, former California Attorney General and current superstar of the Democratic Party, helping lending institutions break foreclosure laws after the housing crisis. Large governments don’t work for you. So, why trust them to run your economy?

Some critics of my assessment may say that California still isn’t even close to representing the social democracies of the Nordic region. I would agree, but the solution is not to centralize economic power even further. The key is decentralization. California has 13 million more people than all the Nordic countries combined. The Nordic system is based on very small communities paying taxes to spend it almost directly on themselves. Most of their taxes are on the county level, which can be as small as 10,000 people. There will inevitably be less corruption when you know exactly who your regulators are.
California is so big that we have no idea who are regulators are or exactly how they spend our money. With such a “black box” system, corruption becomes commonplace because average people simply don’t know what’s going on. Now, imagine if someone like Bernie Sanders got his policies through on the federal level. It would immediately become a cesspool of waste, mismanagement and corruption. The federal government is already at that point, but more centralization would make it even worse.

We’ve seen leftist economic policy fail time and time again. We can see it on the state level and the federal level. The left does not understand that empowering the government to make economic decisions is also “trickle-down” policy. It’s partly because they believe the fantasy that government is benevolent. If we want a better economic system, we should be focused on decentralization first and foremost.