Imagine an economic system in which government pays the wages of workers, but the businesses where they work remain privately owned, and profits accrue to the owners. Could this fairly be called free-market capitalism? It sounds more like socialism, even Soviet-style communism: Workers are maintained at public expense, while the commissars line their own pockets. Yet this is the system that Conservatism, Inc. and supposedly libertarian economists have lately been defending against attacks from Tucker Carlson.
At the end of August, Carlson spoke a damning truth about some of America’s largest firms: namely, that they use the welfare state to depress wages. Workers at Amazon and Walmart who would not be able to live on what those companies pay are able to make ends meet thanks to food stamps and other poverty programs. Amazon is not a company hurting for profits; it could afford to pay its workers better. But why should a company pay more to its employees when it can offload the expense onto taxpayers instead? In a perfect world for Jeff Bezos and the Walton family, they would pay their workers absolutely nothing, and the public would foot the bill for 100 percent of the workforce. But since the United States has not yet reached that point, the owners of Amazon and Walmart will take what they can get in the meantime, with a workforce subsidized by whatever programs happen to be available. Needless to say, one should not expect lobbyists for these companies to be at the forefront of efforts to trim down the welfare state.
The reaction to the August 30 segment on Tucker Carlson Tonight was revealing. James Pethokoukis of the American Enterprise Institute tweeted,
First, this is a bad policy argument. Second, it’s a bad faith argument since I’m pretty sure Tucker is really not this is [sic] dumb. Third, more evidence the populists of the left and right drink from the same toxic well.
Various libertarians on social media piled on. A columnist for the Washington Examiner failed to address the point Carlson had made about subsidized labor and simply argued that it was absurd to suggest that “nobody who works 40 hours a week should be living in poverty.” Such a sentiment, the Examiner’s Becket Adams wrote, was one he “liked . . . better when Sen. Bernie Sanders, I-Vt., said it.” As far as Beltway opinion was concerned, anyone who objected to public expenditures for private profits could only be a democratic socialist.
That, of course, is exactly backward: Many a democratic-socialist state in Europe has historically used generous welfare benefits as a way to give businesses a competitive edge—and in those cases, too, U.S. taxpayers were partly on the hook, as it was their tax dollars that subsidized security for welfare-statist allies who would otherwise have had to devote more of their own resources to self-defense.
Carlson’s argument was not new—the symbiosis between welfare statism and low-wage big business has been frequently remarked upon in recent years, though rarely in as influential a medium as Carlson’s top-rated FOX News program. Defenders of subsidy capitalism or private-profits socialism—whatever one might call this system—trot out a few stock arguments. But even their apologias have a self-incriminating quality. In 2015, for example, Pe thokoukis quoted his AEI colleague Michael Strain as saying,
I don’t want those workers to not [sic] have enough food . . . But I want more than McDonalds and more than Wal-Mart to be responsible for making sure. . . . I want the Koch brothers to be responsible. I want the Walton family to be responsible. I want me to be responsible, even though I don’t employ low wage workers. And so the way to do that is to tax people who have a lot of money and to redistribute it to people who are working hard and playing by the rules and who aren’t earning what we deem socially as an adequate standard of living.
Again—is that capitalism? Is the only possible critic of such redistribution for the sake of big business a Bernie Sanders clone?
A second argument made by Bezos socialists—perhaps the best name for them—is that if Amazon or Walmart were not paying workers so poorly, they would not be paid at all. They would be laid off, and the burden on the welfare rolls would be even greater. But presumably the likes of Amazon do not employ these underpaid workers as an act of charity: Bezos needs their labor. And with a personal fortune of around $150 billion, he can afford to pay them enough that they could put food on their tables. But again—why should he, when he can have the taxpayer do it for him? Capitalism is not the only system in which people make rational decisions—in this case, a decision to socialize the cost of doing business.