Democrats keep boarding the presidential hopeful bus, but they all want the same seat… the one all the way to the left. Whatever the topic, make it free, make it angry, and make it a “right.” The word socialism is getting new life, as even beer-brewer John Hickenlooper can’t bring himself to own the label “capitalist.”

I can’t help but notice that the call for more stuff, at the cost of others, comes from many who have never created said “stuff,” with Hickenlooper and Howard Schultz being outliers. Many of those aboard the President Express currently sit on the perch of a taxpayer-funded job, like a senator or governor. They get steady pay and benefits, including pensions, no matter what happens on their watch.

Must be nice.

Back in the real world, we have to run our businesses and do our jobs, where we hopefully contribute to profits, and pay the taxes to support all that stuff, which is decidedly not free. Contrary to how it seems when described by those calling for greater contributions, running a business takes effort… and perseverance.

Renting Golf Carts to Boomers

As a demographic play and another side hustle (to use a hip term), I recently started a golf cart rental business at the local beach. To be fair, my contribution is cash, as well as business acumen. My business partner is doing the heavy lifting. Many boomers want to see the beach and enjoy the atmosphere, but aren’t up for the walk. The business has great promise… if we can get there.

Beyond the regulations and permits required to start a business, we have to deal with site regulations for the properties and historical district restrictions on where golf carts can park… really. One struggle has been educating the police on where the carts can legally travel. They’ve been receptive, and we’re making progress.

We just received a nice note from the city asking for a list of business inventory so they can tax it, which adds to the list of payments that go out the door for everything except running the business.

I’m guessing the clarion call for higher taxes, while about me and millions like me, isn’t aimed at me. Instead, those hoping for the highest office (excluding the current occupant) are trying to get the votes of a younger generation. Axios just released a survey showing that 73.2% of Millennials and Gen Z-ers (the even younger set) want the government to provide health care. 67.1% believe education should be free. 49.6% want to live in a socialist society.

Socialism or Fantasyland?

I wonder if they’ve confused socialism – where the government owns the means of production and exists in garden spots like Venezuela and Cuba – with Fantasyland, where everything is free but exists nowhere beyond your parent’s home?

It could be that many of them are ignorant of the different forms of government and markets, and are confusing capitalism (good) with cronyism (bad). Given the current state of education, that makes sense. In a capitalist society combined with a republic, we have rules that apply equally to everyone, and all are allowed to pursue our own interests. We’re supposed to have equal opportunities in the eyes of the government, which is not the same as having equal backgrounds and support. We don’t have such a thing, but we come close.

In cronyism, the powers of nepotism, position, and wealth determine your status and path. Judging by the latest college admissions scandal, it looks like some of the highest profile college students got their spots through cronyism instead of merit and effort, so perhaps we can forgive them for their lack of knowledge.

I’ll say this about the scandal: It’s fabulous to see it exposed and the perpetrators facing charges.

I’ve always thought socialism has wonderful aspirations but no path for achievement, because it involves people. We humans are fallible beings, so we end up making a mess of such wonderful plans. As Lord Acton noted, “Power tends to corrupt and absolute power corrupts absolutely.” So far, capitalism has lifted billions of people out of poverty and improved the lot of most of the world.

I’ll take capitalism for $1,000, Alex. And by the way, we’re all with you in your fight against cancer.

The Sobering Act of Watching Your Paychecks Shrink from Gross to Net

Maybe the younger generations will gain a better appreciation for capitalism as they move out of their parents’ basements and work toward a life of their own. As they watch their paychecks shrink from “gross” to “net,” they’ll better understand the tax bite and begin to wonder where it all goes, and who gets to decide.

The worst part will be that, even though the current clamoring for more spending is leading to greater national debt today, it will morph into a lower standard of living tomorrow, just as our newest adults are trying to build their lives and their fortunes.

The misplaced idea that a nation can borrow all it wants as long as it borrows in its home currency misses the fatal flaw. This only works until it doesn’t, meaning one day foreign investors won’t be interested in lending to you in your own currency, but you’ll still have to repay them. That will require higher taxes, inflation, or both, which will damage the very voters who are being courted with socialist policies today.

In a weird way, I want our financial house of cards (as Harry describes) to crash as soon as possible so that we can begin the true rebuilding. This would be the sorting process we didn’t go through after the financial crisis of 2008, when we merely papered over productivity losses and other problems by printing money and issuing more debt. Better the debt bubble burst soon, both here and around the world, than continue to grow.

When the bottom does fall out, many calling for socialist policies will get their wish: We’ll have much greater income and wealth equality in our population.

But it won’t happen because we all got richer. Instead, it will come about because so many rich people suddenly became poorer.

And then the government will really need to raise taxes.

I hope that people still go to the beach to forget their troubles during tough economic times. And I hope they want to rent a golf cart.

Rodney

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Rodney Johnson
Rodney works closely with Harry to study the purchasing power of people as they move through predictable stages of life, how that purchasing power drives our economy and how readers can use this information to invest successfully in the markets. Each month Rodney Johnson works with Harry Dent to uncover the next profitable investment based on demographic and cyclical trends in their flagship newsletter Boom & Bust. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. Along with Boom & Bust, Rodney is also the executive editor of our new service, Fortune Hunter and our Dent Cornerstone Portfolio.