Ruminations, March 15, 2009

The Fabians

The terms “socialism” and “socialist” have been anathema to most Americans throughout our country’s existence. Naturally enough, President Obama seemed to take umbrage at being asked by a New York Times reporter if he were a socialist — so much so that he followed up his reply with a call to the Times on the next day.

Obama replied that a look at his record and program would indicate that he is not a socialist and that he is, in fact, promoting many private industries. Should that get him off the hook for the socialist label? Maybe we should consider the Fabians.

The Fabian Society is a socialist think-tank established in England in 1884 and named for Roman General Quintus Fabius Maximus. Fabius was nicknamed the “delayer.” The Fabian Society aptly selected Fabius as its namesake because the Society favored introducing socialism to the English economy not overnight or by revolution but slowly – a piece here and a piece there and eventually, over the course of years, the economy would become socialist. (For more on the Fabian Society, go here http://fabians.org.uk/.) Fabians refer to their agenda as gradual socialism; its critics use the more pejorative term, “creeping socialism.” Since its founding, all Labor Party Prime Ministers (including Tony Blair and Gordon Brown) have been members.

So, an early Fabian in Great Britain might have said, “First, we’ll nationalize the railroads. Then, we’ll do the mines. Having accomplished that, we’ll do health care and then the banks.”

There is no American Fabian Society. But, if there were, it might choose to target industries that are currently vulnerable, and step by step – over a period of years – move to a government-run economy. It could look to socialize health care, nationalize the banking industry, nationalize the railroads, the automobile and steel industries, and then it could use the BBC model to keep the newspaper industry afloat.

Of course, it is silly to speculate what policies a mythical organization like American Fabians would have – since a formal organization doesn’t exist. Nonetheless, it could be instructive to look at Obama and to wonder if he is a spiritual Fabian.

Wages of sin

Sin has always been with us and, whether a church-labeled sin or a political labeled vice, as a society we generally agree that sins are bad and should be discouraged. Except maybe when we ourselves are the sinners or can make some money from sin. To profit from sin is, individually, a human failing or perhaps a crime; to profit from sin as a society is, at best, bad policy.

A couple of months ago, Congress provided funding for State Children's Health Insurance Program (or S-CHIP) by adding a tax of $0.61 to each pack of cigarettes. Not only does that tax fund a program for children, it has the additional advantage of increasing the cost of cigarettes, which will, over time, reduce the incidence of smoking – worthy goals. But wait a minute – what if so many smokers quit smoking that they, in effect, defund S-CHIP? Will we scrap an ongoing program that benefits children? Not likely. We’ll just have to raise the money through other taxes. So, whether or not S-CHIP is a worthy program, the taxing mechanism introduced to fund it will probably end up being a commitment to further taxes down the road.

Extensive alcohol use is a sin or vice, and most will agree, society should not encourage its use. Yet, to raise money, the state of Connecticut is considering doing just that. Right now, Connecticut is one of three states prohibiting the sale of alcohol (except by the drink) on Sundays. There is an argument that people should be allowed to buy alcohol anytime they want, but that is not the argument that is carrying weight in the state legislature; earning more revenue in alcohol taxes carries weight. While some tax revenue would accrue from Connecticut residents who would no longer cross state lines to purchase alcohol on Sundays, a significant part of the tax revenue would come from those who will be afforded the opportunity to purchase and drink more. Is that good public policy?

A couple of generations ago, gambling was considered a vice and illegal as well as discouraged in most places. Some argued that people will gamble anyway so why not legalize it and (here’s the kicker) tax it? Why not indeed? So we legalized gambling and guess what? Apparently, enough people weren’t gambling so we had to promote it. New York’s lottery used the slogan, “You can’t win if you don’t play.” Powerball periodically decreases that chance of winning any jackpot by increasing the range of numbers — and that action increases the chance that the jackpot will increase in size more often and, as a result, more people will gamble.

And that ain’t all. The state of Connecticut also considered a proposal that would permit the round-the-clock serving of alcohol at the state's two casinos because that would generate an estimated $1.3 million in new gambling tax revenue. Promoting two sins (gambling and alcohol consumption) with one law – pretty clever.

When Prohibition was repealed some 75 years ago, one of the arguments for its repeal, seldom mentioned today, was tax revenue. In the Depression era of reduced government revenues and increased government programs, ending Prohibition provided some $500 million in tax revenue annually. To many opponents of Prohibition, the tax revenue was the most important even at the cost of additional alcohol consumption.

Why not, if we want to help states’ balance sheets, make money on murder. Since people have always murdered other people and no laws have stopped it, why not legalize it and tax it? That sounds like a stupid idea but it’s not too far from some of the proposals making their way through some state legislatures. Debates on capital punishment are most often centered on moral grounds; opponents say that the taking of life is immoral and proponents say that capital punishment serves as a deterrent and saves other lives. Lately, what we hear is that if we do away with capital punishment, we will save money by not going to the lengths that states do to ensure the rights of the convicted are fully exercised. If you hold the view that capital punishment is a deterrent, then the current argument, to reduce state expenses, is monetary issue and close to a kind of like a reverse tax on murder.

Allowing people to use alcohol when they want to, to gamble or to use drugs – in essence make free choices – is a libertarian argument; you can disagree with it but it is an argument based on principle. Promoting vices or sins in order to gain revenue puts the state in the company of Al Capone. Capone once said, “When I sell liquor, its called bootlegging; when my patrons serve it on Lake Shore Drive, its called hospitality;” he might have added, “And when the government does it, it’s for the children.”

Quote without comment

Muhammad Hussein Fadhlullah, Hezzbollah’s spiritual leader, in a recent interview: “America is not ruled by a person. It is ruled by institutions. The question is what is the influence of Congress and others on the president. Can the president, if he has private opinions, can he carry them out facing institutions and conditions challenging the administration? We, in the Arab countries or in the East, we don’t have institutions. The ruler is one person or one family. Therefore, the people cannot object.”

Robert J. Kulak

West Hartford, Connecticut