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What the World’s Richest Country Can’t Afford
Undermining the principles that made America wealthy is no way to fix poverty.
Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., recently participated in a CNN town hall. Sanders appears to be passing the socialist leadership torch to AOC. Don’t expect her to support collective ownership of that prize.
You shouldn’t discount her ability to one day win the presidency either. As seen by the ascension of Zohran Mamdani, the Democratic Party is increasingly comfortable with socialism. Many young people are, too. During their town hall, Sanders articulated the appeal.
“We’re living in the richest country in the history of the world, right?” Sanders said. “All right, you tell me why we’re the only nation not to guarantee health care to all people, the only nation not to guarantee paid family and medical leave, why we have a $7.25-an-hour minimum wage [and] why we have 800,000 people sleeping out on the street.”
On the surface, this makes sense. If Peter has $20 and Paul has $1, you can temporarily make Paul richer by robbing Peter.
But it doesn’t make sense when you think about it more deeply. First, you have to ask: What is natural—poverty or wealth?
America is so rich that many assume wealth and abundance are normal. But look throughout human history. Most people lived in grinding poverty. Even kings and queens 300 years ago didn’t have the things that many poor individuals now take for granted.
Acknowledging the reality of scarcity leads to the second question. If poverty is normal, why is America the richest country in the history of the world?
There are several factors, including property rights, the rule of law, and reliable electricity. But let’s take a closer look at this one: the free market. Think about what happens when you buy a $6 Double-Double from In-N-Out. Who wins that transaction—you or the company? It’s a trick question, because you both do.
You valued the burger more than the $6, while the company valued your cash over its product. That win-win transaction is mutually beneficial. You’re both better off.
In capitalism, people become rich based on their ability to provide things people want. Even the most selfish person is incentivized to serve others. This is why—in a free market—a billionaire’s wealth doesn’t threaten your financial position. We aren’t stuck fighting over a fixed amount of stuff. People make money by creating additional value for others. The proverbial pie keeps expanding.
Capitalism is distinct from cronyism, which is where people co-opt the power of government to enrich themselves. That doesn’t make people better off. Additionally, government regulations can stifle economic growth by interfering with the ability of entrepreneurs and companies to create mutually beneficial transactions. In a free market, wage growth happens naturally because companies have to compete to attract workers. As workers gain experience and skills, they become more valuable.
Now you can see the paradox in Sanders’ statement. The United States is the world’s richest country because it has fewer regulations and redistributionist programs than other countries.
Sanders’ plan is like telling a professional athlete that he can afford to eat junk food and stop working out. An elite athlete can “get away with it” in the immediate term. But continuing to do so would destroy the very habits that made him a professional athlete.
The free market gave poor Americans today better material possessions—like electric lights, air conditioning, and cellphones—than the royalty of centuries past. Instead of celebrating this, socialists seek to undermine the ideas and institutions that made America so wealthy.
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