America’s economic growth under Barack Obama was anemic, and the economy would have been even worse had the Democrats enjoyed control over Congress during his two terms. Were the Democrats to return to the White House in 2020, all the economic gains under Trump would vanish. All of the potential Democratic presidential nominees favor flirtations with economy-sapping socialism of one kind or another.
In a recent Wall Street Journal op-ed, Axel Kaiser, a scholar at Adolfo Ibañez University in Santiago, warned Americans that Chile’s collapse could be theirs if they too consume socialism’s poisonous cocktail of high taxes, increased government spending, and excessive regulation.
“How a stable and prosperous Chile fell so dramatically in such a short period is a lesson for every Western democracy,” Kaiser writes. Chile’s economy was humming along until a Elizabeth Warren–like figure, Michelle Bachelet, plunged it into policies hostile to the free market, he writes:
The economic pain started with the antimarket reforms of the previous government under Socialist President Michelle Bachelet, from 2014-18. Ms. Bachelet increased corporate taxes by 30%; signed a law banning the replacement of workers on strike, thereby dramatically increasing the costs of labor; increased public spending at three times the economic growth rate; and unleashed armies of regulatory bureaucrats on the private sector.
Capital investment fell in each year of her term. Such a consistent reduction in investment hasn’t happened since data was first collected, in the 1960s. Economic growth collapsed from an annual average of 5.3% under the previous government of Mr. Piñera (2010-14) to 1.7% under Ms. Bachelet. Real wage growth took a 50% hit.
What precipitated the shift in Chile from pro-market to anti-market policies, Kaiser argues, was a self-defeating egalitarianism popular with elites and academics:
The policies result from a profoundly false narrative Chilean elites tell themselves about the country. Over the past 20 years, intellectuals, media personalities, business leaders, politicians and celebrities in this Latin American nation have marketed the myth that Chile is an extreme case of injustice and abuse. It began at the universities, where progressive ideologues spread the idea that there was nothing to feel proud about when it came to Chile’s social and economic record. According to this aggressively egalitarian narrative, “neoliberalism” had created a society of winners and losers in which neither group deserved the position in which it found itself.
Sound familiar? This is the same toxic intellectual culture the Democrats are using in their attempt to jump-start socialism in America. Notice that they never talk about the rising stock market, rising wages, and low unemployment. No, they simply focus on “inequality” and stoke envy, even as a rising economic tide lifts all boats.
Latin America’s experience shows that pols who focus on “inequality” instead of growth for all only deliver one kind of equality — equal poverty. In Chile, Kaiser notes, the free market didn’t fail; the elites did:
The central problem is that a large proportion of the elites who run key institutions — especially the media, the National Congress and the judiciary — no longer believe in the principles that made the country successful. The result is a full-blown economic and political crisis. Other nations should take note: This is what elite self-hatred can do for you.
Underneath all the gauzy rhetoric from the Democrats lies that same self-hatred, which leads to the same dire future: a future not of freedom and growth, which are inevitably unequal, but of serfdom and stagnation, which produces an “equality” of misery no sane society can long endure.
Unable to resist the demagogic temptations of socialism, Democrats are resorting to class warfare even at a time when economic growth within the lower and middle classes is improving. They treat the rich — excluding themselves, of course — as automatically bad, and the poor as automatically good, instead of asking how the economy can benefit everyone.
The answer to that question has never been found in socialism, whether soft or hard. Sometimes socialism comes at the end of a rifle, and at other times it comes in subtler forms, through this or that regulation aimed at eliminating “inequality.” The outcome, nevertheless, is the same: the loss of economic freedom followed by the elimination of other freedoms. The socialists of old and the Democrats of today share a common distrust of religion, family, and property, as they all serve the individual as a shield against the state. In Chile, public order has collapsed under that distrust, and its economy is sinking into oblivion. Beware of socialists who makes promises. Life becomes very costly when it is “free.”