The Fallacies of Bernie Sanders

https://mises.org/blog/fallacies-bernie-sanders

“Bernie often says out loud what others are privately thinking.” (p.13) The middle class and the poor are not doing well, he says; and the fault lies in a “rigged’ system.  “The economy becomes rigged because the rich, primarily represented by ‘greedy’ billionaires and corporations, use their wealth to subvert the political process and take command of government.”

Lewis finds much truth in Sanders’s accusation.  In a manifestly corrupt way, for example, failed banks and businesses were “bailed out” after the financial crash of 2008. “[Hank] Paulson, former CEO of Goldman Sachs, was one of the architects of the Wall Street bailout of 2008 which not only rescued Wall Street, but also rescued his own firm, along with all the shares he still retained in that firm.” (p.132)

If Sanders has correctly identified a major problem, his proposed solution to it would only make matters worse; and in Lewis’s careful pressing home of this claim against Sanders lies the principal contribution of his book.

Sanders wants to end the rigged system by, among other measures,  increasing government control over corporations and redistributing income and wealth  from the rich to the poor. In these proposals, he overlooks a vital distinction; and this vitiates the rationale for what he suggests.  Sanders blames capitalism for the rigged system, but what we have today is not a free market economy but rather “crony capitalism.” “It does not seem so much a capitalist system  in the United States as a crony capitalism in which individuals get rich, not by supplying good products and services at the lowest possible cost for consumers, but rather by getting monopoly protections or other favors from government or by otherwise benefiting from government actions or connections.” 

By neglecting to distinguish crony capitalism from genuine capitalism, Sanders is led to propose “cures” that would only intensify the disease he diagnoses. “Bernie proposes to solve the problem of political corruption and a rigged economy by giving government even more power. How will this help? Surely an expanded and even more powerful government, ever more deeply involved in running the economy, will become an even more tempting target for the wealthy subverters?”