Les Rubin, writing at Fox News Opinion, has rediscovered Friedrich Hayek and decided the rest of us need a lecture: “incentives” are the most powerful force in the world, Sweden is one bad policy away from Moscow, and any government provision of healthcare is the road to serfdom. His piece runs from Road to Serfdom to Adam Smith’s invisible hand and concludes, with magnificent confidence, that any meaningful collective provision of healthcare, child care, or retirement security is a one-way ticket to the Soviet Union. The conflations in that paragraph are doing a lot of work. Let me take them apart.
Concede the easy half first, because I’m tired of waiting for the rebuttal. Central planning — the Soviet version, the Maoist version, the Kim-family version — was a catastrophe. The Holodomor happened. The Great Leap Forward happened. The gulag happened. I’m not here to relitigate any of that.
But the Soviet Union is not the Swedish welfare state. They are not even close. And conflating them is the entire move Rubin’s column makes, so let me name it. Hayek’s Road to Serfdom was published in 1944. The Nordic model was being built in 1944. Private property: kept. Markets: kept. Trade: aggressive and export-led. What those countries added was universal healthcare, universal childcare, paid parental leave, strong unions, a 40-to-45-percent tax burden (versus America’s 26), and — in Norway’s case — a sovereign wealth fund that at one point owned about 1.5 percent of every listed company on earth, currently worth over $2 trillion. The result was higher living standards, lower inequality, longer life expectancy, more small businesses per capita, and — the part Hayek actually cared about — more individual freedom. The Nordic record politely declines to confirm the thesis.
Start with what the “incentives” framework is actually producing in the country Rubin claims to be defending. A private-equity firm buys the hospital down the road with borrowed money, loads the debt onto the hospital’s books, sells the building to a related party, then rents it back. The rent comes out of the budget for nurses and equipment. Steward Health Care did exactly this before collapsing into bankruptcy and leaving patients without care. The incentive here was not the rewards of labor. The incentive was to extract cash from a working hospital and walk away. Markets do not punish this. They reward it.
Or look at the drug store. Americans pay more than twice what Germans pay for the same pill — Humira, insulin, the list is long. The price is set by what the market will bear, and the American market will bear more because Congress wrote the rules that way and won’t rewrite them. The CEOs running these companies take home three hundred times what the worker on the factory line makes. Three hundred to one. That is the ratio the “incentives” framework produces and protects. Calling this the power of incentives is technically accurate. The incentive is to charge as much as possible to people who cannot say no.
Now flip the lens. The expanded Child Tax Credit passed in 2021. Child poverty fell by 46 percent in a single year, the largest one-year drop on record, according to the U.S. Census Bureau’s Supplemental Poverty Measure. Then the credit expired. Child poverty shot back up. The incentive there was a check from the government that let a parent buy groceries and pay rent. When the check stopped, the poverty came back. Hayek’s warning about distorted incentives did not predict this. He could not have, because his framework treats the family budget as an abstraction rather than the place where the rubber meets the road.
You don’t even need the Nordics to make the point, because the United States already does most of the things Rubin is warning us about — and has been doing them for decades, without producing a single bread line. Medicare is single-payer healthcare for everyone over 65; nobody calls it socialism; nobody wants to abolish it. Social Security is universal social insurance; the most popular government program in the country. The Bank of North Dakota has been state-owned and continuously profitable since 1919 — nobody ever called Bismarck the Kremlin. Rural electric co-ops — about 900 of them — have been member-owned utilities serving roughly 42 million Americans since the New Deal. Credit unions — member-owned, not-for-profit financial cooperatives — have more than 140 million American members. Your local grocery co-op, your Ace Hardware, your Land O’Lakes butter, your REI membership: all cooperatives. The list of “socialist” institutions already woven through American life without producing serfdom is, at this point, most of the country.
I’m not, by the way, anti-market. I’m anti-extraction. There’s a Grand Canyon between the two, and Rubin’s whole piece is built on pretending the canyon doesn’t exist. Markets are spectacular at allocating sandwiches and catastrophic at allocating chemotherapy. Sick people don’t price-shop an ambulance, which is why every other rich country treats healthcare as a thing a civilized society just provides. The same logic applies to childcare, retirement, and the period after a layoff. You cannot make these things efficient in the sense Rubin means. You can make them available, and you can make the absence of them expensive in ways that show up later as hospital bills, bankruptcies, and kids eating cereal for dinner because nobody can cover a babysitter.
The freedom point is load-bearing, because the whole column rests on conflating “collective provision” with “loss of individual freedom.” Hayek’s actual argument was about central planning, not high taxes and well-funded public services. Denmark makes it easier to fire you than the United States does — that’s the part of “flexicurity” American conservatives tend to skip past — and the security comes from the safety net, not from making the job permanent. You lose your job in Copenhagen, you get most of your salary for up to two years while the state retrains you and helps you land the next thing. You lose your job in Cleveland, you get a prayer and a GoFundMe. Both countries are called “free.” One of them treats a layoff as the end of the world. The other treats it as a Tuesday.
The Sweden-equals-Moscow move also has a useful side effect: it lets the author skip the actual diagnosis of what’s wrong with American capitalism. Productivity per hour has roughly doubled since the 1970s; the typical paycheck has barely moved. The gap between those two facts is enormous and somebody is catching the difference. It is not, on the available evidence, the Swedish model. It is more plausibly the playbook Rubin won’t name: an economy where the gains flow to monopoly platforms, leveraged buyouts, and the people who already own the assets. Calling any of that “incentives working” requires not looking at where the money actually went.
So — to state the obvious — yes, central planning was a catastrophe. Also, every serious country with a private economy has decided, by democratic choice, to provide a floor of healthcare, child care, retirement, and unemployment insurance, and none of them have ended up in serfdom. Several of them are running rings around us.
What to build instead. Three things, in order of speed.
First, kill the deductions and loopholes that reward extraction. The carried-interest loophole lets private-equity managers pay the capital-gains rate on income that is clearly compensation for managing other people’s money. Close it. The current law gives the wrong incentive. A simple statutory fix corrects it.
Second, expand the things that have already proven they work. Make the expanded Child Tax Credit permanent. Use the negotiating leverage of Medicare to bring drug prices in line with what other rich countries pay. Codify the right to organize so the worker on the line has a counterweight to the executive in the corner office.
Third, open the doors the “incentives” framework keeps locked. A serious sovereign wealth fund for the United States — built not from oil but from the returns on public infrastructure, the broadcast spectrum, and the mineral rights on federal land — could fund universal childcare, two-year college, and a real safety net for workers displaced by automation. Norway did this with petroleum. Alaska has been mailing every resident a slice of the dividend since 1982, in one of the reddest states in the union, and nobody there is queuing for bread.
The choice on the menu is bigger than “Hayek’s nightmare” or “do nothing.” It has always been bigger. Between the gulag and the strip-mine, there is a country that looks more like Copenhagen than Caracas, and we could, if we wanted, build a version of it here. Rubin ends by quoting Hayek: “once you understand economics, you will never be a socialist.” Fine. The economics he is describing — the one where workers get a 300-to-1 ratio and the rent on the hospital building goes to a related party — is not the only economics available. There is another one, where the incentives are designed rather than inherited, where the gains from a country’s resources are shared rather than concentrated, and where a worker at the bottom of the ladder can see a path up. That one is not serfdom. It is the mixed economy Hayek spent the rest of his career arguing for — the one with a floor under wages, a minimum income for those who fall, and rules written by democratic choice rather than inherited. The author is simply refusing to read it.