Bernie Sanders is on his way to victory in the race for the Democratic party nomination. There are plenty of trip hazards along the route to challenging Donald Trump in November, and Sanders will need to joust with the billionaire Michael Bloomberg after he finally shows up in the Super Tuesday primary on 3 March, when about a third of all delegates will be allocated from the votes of 14 states.
Yet Sanders’s radical programme looks like it will excite enough party members to secure the Democrat nomination in a field of candidates where the more moderate wing, while larger in vote share, is badly split between Pete Buttigieg, Amy Klobuchar, Joe Biden and Bloomberg, and where his leftist challengers – among them Elizabeth Warren – have fallen away.
The Sanders plan to redress economic wrongs perpetrated over decades is extensive. In length and scope, his proposals surpass the manifesto put forward by the Labour party in last year’s general election.
Notably, he wants to impose taxes that will halve the wealth of America’s many multimillionaires. More precisely, he will apply a wealth tax on the roughly 300,000 people with a net worth of $32m or above, leaving 99.9% of Americans untouched. The measure should raise an eye-popping $4.35 trillion over 15 years, he estimates.
Much of that money will be channelled into low-cost housing. Around 10 million affordable homes will cost $2.5tn, he says. A $200bn green investment fund can be added to writing off $81bn worth of medical debts owed by thousands of households.
“Medicare for all” is an uncosted commitment in the manifesto, but bringing 30 million people into any national health scheme is not going to be cheap and will probably eat up whatever remains of the wealth tax he plans to levy. It’s no wonder he describes himself as a socialist.
There are economists in the US who say Sanders’s tax plans are modest, justified and just what any social democrat should support. The Nobel laureate Paul Krugman is one. His problem with the Vermont senator is not his leftist ambition, but his simplistic approach to reforms and his misguided determination to call himself a socialist; Krugman fears his opponents will quickly substitute that term for “communist” once battle is joined. Sanders’s punishment is to be omitted altogether from Krugman’s latest book – Arguing with Zombies.
Yet the sheer size of Sanders’s aspiration transports him beyond what any social democrat would believe electorally possible, which is why much of the Democratic party is so uncomfortable.
Liberal economists who argue for radical leftist policies, and there are a small band in the UK, support financial raids on the top 1%. It stands to reason, they say, that voters would support such a move when it only comes at the expense of someone else’s yacht.
Thomas Piketty is a leading light in this cause. He says in his new book, Capital and Ideology, that the broad mass of people can be persuaded to support radical redistributive policies as inequality rises: it just depends on the arguments deployed.
His analysis is based on a deep dive into the wealth statistics of a broad range of countries, including Britain and the US. He found that the bottom 50% of the UK’s households own only 5% of the country’s wealth in the form of property, shares and pensions. The US figure is even lower.
In this valuable effort he rejects the “misleading” figures offered by the UK’s government data agency, which fails to capture much of the stored wealth held by the super-rich. The Office for National Statistics’ wealth and assets survey for 2016-18 shows the bottom 50% of households owned not 5% but 24% of the UK’s net wealth.
There is a sense that this doesn’t matter when almost three-quarters of UK adults over the age of 65 own their homes outright. This staggering figure trumps all others when looking for a reason why so many older UK voters back the Tories. Voting patterns tell us that it doesn’t matter how relatively meagre property wealth is for the baby-boomers of Barnsley or Redruth; it is a stake in society their forebears could only have dreamed of (94% of Britons lived in rented housing in 1901).
Piketty pays little attention to intergenerational divides or the attachment low- and middle-income homeowners and pension savers have to their financial assets. He urges the likes of Sanders and the Labour party to stick with their radical agenda. Sadly, a banking collapse is not the same as a war. And averages disguise how unevenly wealth is distributed across the age groups as much as they show class divides. In other words, beware ivory-tower economists fancying themselves as political pundits.
