Democratic socialism is in the news again. Following Alexandria Ocasio-Cortez’s stunning victory, helping her become a darling of the mainstream media, Americans are becoming interested in democratic socialism again – a philosophy that involves voting to steal your stuff. Two key planks of democratic socialism are to rail against the rich and promise everything for free, which then leads to the next question: Who’s going to pay for all that free stuff?

Building upon her national spotlight, Ocasio-Cortez recently appeared on The Late Show with Stephen Colbert to discuss her political brand and a wide array of issues important to her and socialists everywhere. But there was one moment in the interview that opened a can of worms.

She told the alleged comedian:



Ocasio-Cortez, may be a politician with good intentions. But that's the most dangerous type of politician. She suggested two interesting things: the poor are destitute, and poverty can be cured with even more government.

Let’s explore further.

What Is Poverty in America?

There are three points that the left likes to make: the poor are getting poorer, the U.S. has the highest childhood poverty rate, and 32 million Americans are impoverished – higher than when the first bullet in the War on Poverty was fired.

How dare the U.S. create such horrific conditions that are reminiscent of Charles Dickens novels.

If you’re indigent in the U.S., then you’re better off than most people in the world. A hipster sporting a Che Guevara t-shirt and drinking a Starbucks latte would scoff at this assertion, but it is the truth.

Income inequality is a myth , while income mobility is still a thing. Yes, it is true that the top 1% are getting richer, but the poor and middle-class are becoming prosperous, too. Why is this a debated fact? The problem is with how the data is compiled and analyzed.

When we study Census Bureau data or any other information emanating from the government, we simply compare rich Americans to poor Americans in one year and the next. The better route is to examine the data over an extended period. When you do, the bottom 20% witness their incomes rise, and most Americans will see their income status change throughout the years – half of the country will be in the top 10% of incomes for at least one year, while two-thirds of Americans will park themselves in the top 20% for at least two years.

Now, are American children worse off than Asian and European kids? Not quite. When Sanders and others make that claim, it can easily be disputed if you take a look at Organisation for Economic Co-operation and Development (OECD) figures. The U.S. is ahead of Russia, Israel, China, Spain, and several others – Denmark and Finland have the lowest.

But how could the biggest economy in the world not eradicate poverty for both adults and children?

Well, perhaps it is time to examine what being poor in America is like compared to other places.

It is correct to state that the U.S. has a higher poverty rate than other developed nations. However, the American poor have higher median incomes than in other countries, and the poverty income in the U.S. matches the median income in Spain, the U.K., and Japan. Plus, American living standards are higher for the poor than the impecunious residing in the U.K., New Zealand, France, and Japan.

Let’s look at what it’s really like to be poor in the Land of the Free:

80% have air conditioning.
94% have Internet access.
75% have an automobile – a third have two or more vehicles.
Half of poor families have a video game system.
66% have cable television.

What about the basic essentials, like food and housing? That’s easy enough:

83% of poor households reported having enough to eat.
96% of underprivileged families reported their children were never hungry at any time.
42% of poor households own their homes.

Moreover, the average poor American has more living space than the average middle- or high-income person in the U.K., France, and Sweden. Also, consumption of vitamins and minerals is the same as the those in the wealthier brackets.

Should an American fall on hard times, they have access to a generous welfare system, paid for by the private sector. Despite claims that the U.S. allows the impecunious to perish on the streets or starve in their homes, the government has spent trillions of dollars over the last 50 years on entitlements, healthcare, and social-benefits programs.

The rectitude and efficacy of welfare can be debated, but the government gives citizens money to purchase unhealthy food and smartphones – and a basic income guarantee is all but inevitable . That’s how wealthy the U.S. is.

In his second inaugural, Abraham Lincoln declared that "if God wills that [the Civil War] continue until all the wealth piled by the bondsman's 250 years of unrequited toil shall be sunk…as was said 3,000 years ago, so still it must be said, 'the judgments of the Lord are true and righteous altogether.'"

It is a noble sentiment. Yet the economic idea implied—that exploitation made us rich—is mistaken. Slavery made a few Southerners rich; a few Northerners, too. But it was ingenuity and innovation that enriched Americans generally, including at last the descendants of the slaves.

It's hard to dispel the idea embedded in Lincoln's poetry. TeachUSHistory.org assumes "that northern finance made the Cotton Kingdom possible" because "northern factories required that cotton." The idea underlies recent books of a new King Cotton school of history: Walter Johnson's River of Dark Dreams (Harvard University Press), Sven Beckert's Empire of Cotton: A Global History (Knopf), and Edward Baptist's The Half Has Never Been Told: Slavery and the Making of American Capitalism (Basic Books).

The rise of capitalism depended, the King Cottoners claim, on the making of cotton cloth in Manchester, England, and Manchester, New Hampshire. The raw cotton, they say, could come only from the South. The growing of cotton, in turn, is said to have depended on slavery. The conclusion—just as our good friends on the left have been saying all these years—is that capitalism was conceived in sin, the sin of slavery.

Yet each step in the logic of the King Cotton historians is mistaken. The enrichment of the modern world did not depend on cotton textiles. Cotton mills, true, were pioneers of some industrial techniques, techniques applied to wool and linen as well. And many other techniques, in iron making and engineering and mining and farming, had nothing to do with cotton. Britain in 1790 and the U.S. in 1860 were not nation-sized cotton mills.

Nor is it true that if a supply chain is interrupted there are no possible substitutes. Such is the theory behind strategic bombing, as of the Ho Chi Minh trail. Yet only in the short run is it "necessary" for a good to come from a particular region by a particular route. A missing link can be replaced, as in fact it was during the blockade of raw cotton from the South during the war. British and other European manufacturers turned to Egypt to provide some of what the South could not.

Growing cotton, further, unlike sugar or rice, never required slavery. By 1870, freedmen and whites produced as much cotton as the South produced in the slave time of 1860. Cotton was not a slave crop in India or in southwest China, where it was grown in bulk anciently. And many whites in the South grew it, too, before the war and after. That slaves produced cotton does not imply that they were essential or causal in the production.

Economists have been thinking about such issues for half a century. You wouldn't know it from the King Cottoners. They assert, for example, that a slave was "cheap labor." Mistaken again. After all, slaves ate, and they didn't produce until they grew up. Stanley Engerman and the late Nobel Prize winner Robert Fogel confirmed in 1974 what economic common sense would suggest: that productivity was incorporated into the market price of a slave. It's how any capital market works. If you bought a slave, you faced the cost of alternative uses of the capital. No supernormal profits accrued from the purchase. Slave labor was not a free lunch. The wealth was not piled up.

The King Cotton school has been devastated recently in detail by two economic historians, Alan Olmstead of the University of California at Davis and Paul Rhode of the University of Michigan. They point out, for example, that the influential and leftish economist Thomas Piketty grossly exaggerated the share of slaves in U.S. wealth, yet Edward Baptist uses Piketty's estimates to put slavery at the center of the country's economic history. Olmstead and Rhode note, too, from their research on the cotton economy that the price of slaves increased from 1820 to 1860 not because of institutional change (more whippings) or the demand for cotton, but because of an astonishing rise in the productivity of the cotton plant, achieved by selective breeding. Ingenuity, not capital accumulation or exploitation, made cotton a little king.

Slavery was of course appalling, a plain theft of labor. The war to end it was righteous altogether—though had the South been coldly rational, the ending could have been achieved as in the British Empire in 1833 or Brazil in 1888 without 600,000 deaths. But prosperity did not depend on slavery. The United States and the United Kingdom and the rest would have become just as rich without the 250 years of unrequited toil. They have remained rich, observe, even after the peculiar institution was abolished, because their riches did not depend on its sinfulness.

The virtue of liberty did matter. The magic world is liberalism, the liberalism of Adam Smith and Mary Wollstonecraft and Henry David Thoreau. The explosion of ingenuity after 1800 came from the gradual inspiriting of millions of liberated people to have a go. Thoreau ran his father's pencil factory, and made it flourish. Liberalism liberated first poor white men, then, yes, former slaves, then women, then immigrants, then colonial people, then gays. Liberation and innovation dance together.

To cast enslavement of some as requisite for the wealth of others is bad economics, then, and bad history. But it is also a toxic ideology. The left has long regarded any employment as slavish exploitation. The phrase wage slave is defined coolly by The Concise Oxford Dictionary of Current English as "a person who is wholly dependent on income from employment," with the notation "informal"—but not "ironic" or "jocular" or, better, "economically illiterate." By such a definition, you and I are slaves, even though we are paid the traded value of goods and services we produce at the margin for others.

The other Marx, Groucho, at the height of his success in movies during the hungry 1930s, was approached by an old friend, whom Groucho knew to be a communist. As the perhaps apocryphal story goes, the friend said, "I desperately need a job. You have contacts." Groucho, whose sense of humor was often cruel, replied, "Harry, I can't. You're my dear, dear communist friend. I don't want to exploit you." Ha, ha. But no employee in a capitalist economy owes coerced or unpaid service to any boss.

Well, except for our boss the state, through taxation by payment or draft or eminent domain. Taxation is a slavery admired by most of the left and much of the right. Its defenses echo Southern rhetoric in 1860. "Citizens are children who need to be protected, yet forced to work." "Liberty is dangerous." "The defense of property depends on a big government." "God ordained it."

We need to stop using the history of slavery to bolster anti-capitalist ideology. Ingenuity, not exploitation by slavery or imperialism or finance, is the story of the modern world.