expansion of their central governmentrnand relinquished the rights of states,rncommunities, and individuals.rnSince this social transformation wasrnvoluntary (democratic government, atrnleast in theory, is controlled by the ballotrnbox), we must ask: Wliat would persuadernAmerican citizens to surrender theirrncherished freedoms, heritage, and institutions?rnThe answer lies in the geireralrnbody of myths upon which socialism wasrnfounded, particularly its economic myths.rnSocialism’s unifying economic mythrnposits that inequality of income andrnwealth is unjust and socially inefficient.rnThis requires us to disregard the fact thatrnthe free market has been the source ofrnthe superior material well-being of democraticrnsocieties, and that inequality ofrnwealth is the necessary incentive andrnconsequence of the entrepreneurial successesrnthat generate this bounty.rnThe socialist goal of economic equalityrnhas been a powerful recruiting toolrnamong the less fortunate. It has led to anrnunprecedented concentration of powerrnin the hands of self-appointed elites whornpropose to distribute other people’s moneyrnand property in the name of “socialrnjustice,” an oxymoron which simplyrnmeans government confiscation andrnplunder of productive citizens’ rights,rnproperty, and income.rnThe myth that capitalist profits are thernfruits of the exploitation of labor enabledrnsocialists to organize the labor movementrnand recruit soldiers for the left. Yet thernUnited States had the highest wages inrnthe world before unionization.rnThe percentage of productive value receivedrnas wages has been remarkably stablernin the private sector of the U.S. economyrn(outside of manufacturing). Whilernunions have been successful in raisingrnemployees’ share of the wealth in manufacturing,rnthey have lost jobs as exportrnmarkets shriveled and lower-priced foreignrngoods replaced domestic products.rnBefore the imion movement, the UnitedrnStates had a sizable export surplus inrnmanufacturing. Today, it has a hugern(and growing) trade deficit in manufacturedrnproducts.rnThe rapid disappearance of the middlernclass is considered further proof of inequalityrnand exploitation of labor. But anrnanalysis by Robert Rector and Rea Hedermanrnof the Heritage Foundation showsrnthat these income statistics are misleading.rnTheir study, “Income Inequality:rnHow Census Data Misrepresent IncomernDistribution,” argues that if vou take intornaccount non-cash welfare benefits, taxation,rnwork-force participation, and workweekrnvariations, the purported incomerninequities disappear. To the extent thatrn”hollowing-out” is a reality, it is due primarilyrnto the decline in high-wage manufacturingrnjobs, lost to overseas producersrnas a result of high-wage union jobs andrnexcessive income taxes.rnPerhaps the most persuasive economicrnmyth of socialism is the inherent instabilityrnof the capitalist system. While Americansrnsuffered relatively brief recessionsrnand banking panics before the 1930’s, thernGreat Depression caused a crisis in nationalrnconfidence. This made the leftistrnmyth believable.rnJohn Maynard Keynes argued that thernGreat Depression was due to the factrnthat, during periods of rising income,rnconsumers save too much and spend toornlittle, causing subsequent economicrndownturns. This provided the justificationrnfor the socialist claim that only centralizedrneconomic planning and regulationrncould ensure continued prosperit)’.rnThe prescribed cures were economic stabilizersrnsuch as monetary controls, progressiverntaxation, deficit spending, everrisingrngovernment expenditures, andrninflexible union wages.rnIn fact, the excessive expansion andrnthen relentless contraction of the moneyrnsupply by the Federal Reserve precipitatedrnthe Great Depression and broke thernbanks, resulting in economic collapse.rnThe plethora of New Deal programsrncould not restore prosperity nor end thernDepression without employing the economicrnsolution of last resort: war,rnLong-term consumption versus savingsrndata does not confirm the heart ofrnKeynesian mythology. Even Keynes’rnshort-term analysis was myopic. Thernfoundations of Keynesian economics arernthus seriously misleading. The marketrnmechanisms of free enterprise will ensurerneconomic prosperity; governmerrtrnintervention cannot.rnA further corollary of the inequalityrntheory is the myth that exploitation causesrnpoverty, and poverty causes crime.rnSuch was the motivation behind LyndonrnJohnson’s Great Society, which transformedrnAmerica into a socialist welfarernstate.rnWhat the Great Society programs inrnfact proved was that subsidizing singlernmotherhood broke down the family,rnthereby increasing poverty. Marriagernrates dropped by a third, and crime rosernas a result of family breakdown. Only thernelderly showed real reduction in poverty,rnand that was because, by 1993, governmentrnsocial-welfare expenditures averagedrnan absurd $20,000 for every seniorrncitizen, regardless of means, adding seriousrnweight to the crushing burden of taxationrnon families.rnCrime is primarily an economicrnchoice; to the extent that it is cultural, itrncan only be remedied by two-parent families,rnwork, and individual responsibility.rnGrime is not the result of povert}’; rather,rnit is a principle cause of impoverishment,rnas criminal young males do not qualifyrnfor good jobs or become married fathers,rnas businesses flee high crime areas, andrnas drugs and gangs rule the streets andrnschools.rnSocialism holds that government canrnremedy social injustice by playing RobinrnHood. “Justice” is the philosophical defensernfor the progressive income tax, capital-rngains taxes, estate taxes, and doublerntaxation of corporate incomes. But withoutrnoutright government confiscation ofrncapital, capital cannot truly be taxed.rnThe econometric studies of Gary and AldonnarnRobbins have shown that returnsrnon all U.S. capital after taxes and inflationrnhave been reasonably constant overrnthe post-World War II period, despiternwide swings in tax rates and inflation.rnVirtually all taxation of capital is paid forrnby those who purchase goods and services.rnA wide range of econometric studiesrnconclude that inflation, taxation, andrndeficit spending reduce potential investmentrncapital, resulting in lower incomesrnfor all Americans.rnThe inescapable conclusion is thatrngovernment robs from all to beggar thernmiddle class and to worsen the poverty itrnproposes to cure. Predictably, only governmentrnand its lackeys prosper.rnAnother widely accepted socialistrnmyth is that the state is the most efficientrnprovider of social services. Since governmentrnusually allows no competition andrnsubsidizes the services it provides fromrngeneral tax revenues, this illusion is hardrnto dispel. In addition, our governmentrngoes to great lengths to hide taxes fromrnthose who pay them (as with half of thernSocial Security tax). Thus, government’srnservices are perceived to be free or lowcost.rnAll of these m)i:hs are but subsets of thernultimate goal of socialists: the perfectionrnof mankind through an equalit}’ of outcomesrnsocially engineered by government.rnSocialists believe that equality ofrnprosperit}’ can be attained by the noblernSEPTEMBER 2000/45rnrnrn