The Socialist/Communist advance in last week’s New York primary elections confirms that the U.S. political system is systematically rigged against good policy and sound economics. Two reforms are needed: a property franchise, to ensure that those without a stake in the economy cannot vote themselves handouts, and an end to the tax benefits for charities – the rich have the constitutional right to support Marxist rubbish with their wealth, but they should not be subsidized for doing so. With those reforms, political and intellectual balance can be regained, giving better economic outcomes.

The win of the quasi-Communist Darializa Chevalier in the Democrat primary for NY-13, for example, was not caused by the oppressed rising up against the capitalist system. Her opponent Adriano Espaillat, the incumbent Democrat, won majority Hispanic precincts by 17 points, and lower-income areas by 9.5 points and broke even in majority Black precincts, but Chevalier won majority college-educated areas (mostly in very affluent Manhattan) by almost 25 points. To be fair, even Espaillat is a thorough leftie whom you wouldn’t want even as a Democrat President, but the fact remains that the vote for pure Marxism was from the over-educated rich, doubtless with massive college debt but also with million-dollar trust funds or incomes far into six figures.

The problem of welfare recipients voting to grant themselves more welfare is well known. Less studied has been the problem of the over-educated deliberately voting for candidates who want to bring down the economic system. But consider: what stake do many of them have in that system? If they rent in New York, they may well live in a rent-controlled apartment (on which the New York Rent Guidelines Board has just voted to freeze rents for two years despite substantial inflation). Many of them derive their income from their parents or student loans which they are unlikely to repay (like Ms. Chevalier, in her 7th year of a PhD at the age of 32) or from jobs at “nonprofit” political or charitable institutions whose very existence is an affront to free market principles, being based largely on charitable tax deductions and exemptions.

Of course, there are always some who work at Goldman Sachs and whose Marxist vote derives from youthful rebellion or sheer eccentricity. However, given that the rest of our welfare depends on a sound economy, such frivolity ought also to be discouraged. The lady who lost her diversity job at J.P. Morgan for stealing a filthy used New York City trash can with a Knicks logo on it was symptomatic of their worldview and their ability to survive usefully in the modern world.

A property franchise, whereby the ownership of a modest property was required to have the right to vote, was used in all the countries that industrialized rapidly in the 19th century. Britain, famously, had the “40-shilling freehold” franchise before the Whig gerrymandering 1832 Reform Act raised the property qualification to £10, a rampant act of class legislation that over time reduced the quality of Britain’s government, causing it to lose its initial industrial lead. Bismarck’s Germany had a property franchise in the Prussian Landtag, far more important in his time than the pan-German Reichstag, which was made constitutionally impotent. Most significantly, the Meiji government of Japan, home of the most impressive march to industrialization of the 19th century, also had a property franchise for almost 40 years from 1889 – the abolition of the property qualification in 1925 turned Japan’s governments towards militarism and folly.

A property franchise gets the incentives right. Welfare recipients who own no property are unable to vote themselves additional welfare. Ideologues who cannot hold down a proper job or buy a property are reduced to waving placards at us, rather than being able to vote their nonsense into Congress. With congressional districts based on eligible voters, not population, the biggest cities, with their excess of welfare recipients and ideologues and where property is excessively expensive get a lower representation relatively than outer suburban and rural areas where property is cheap and most people own their dwelling. To the extent that the franchise encourages renters to buy their own property, this is a good thing; by owning their dwelling they become more stable members of society, more secure in their old age and in the long run happier.

The other much needed reform is to remove all the nonprofit tax loopholes, both on the donors and the charities themselves. Nonprofits consume around 6% of US GDP and are increasing their relative size rapidly, which is not surprising as they do not have to pay any of the taxes from which the rest of us suffer. The revelation this week that Mackenzie Scott (formerly Bezos) has spent $26.3 billion of her divorce-court fortune, not on helping the homeless or alleviating world hunger, but on funding a huge number of subversive leftist NGOs is unsurprising and indicates the rot in the system. Ms. Scott of course should be able to spend her money however she likes (you can argue whether it should really have been hers under a sensible divorce court system) but she should not receive a subsidy of about 40% of the amount she spends on her subversive leftist fantasies; both she and the fantasies should be taxed at the full normal tax rate, like ordinary citizens and businesses.

This should apply also to subversion routed from China through tax havens, like that of Neville Singham. If Singham’s money is given to U.S. organizations, whether directly or indirectly, it should be fully taxed at the recipient level, whether or not Singham has paid tax in China, the U.S. or anywhere else. Of course, it should also be registered as foreign-sourced subversion, under the appropriate laws; if our adversaries wish to subvert us, they should at least disclose their activity and pay tax to the U.S. fisc for doing so. Overall, the status of “non-profit” should be abolished, so that at both the donor and organization level, those entities pay full U.S. taxes. Only in that way can their inexorable growth be stymied; otherwise in a decade or two they will represent 20% of U.S. GDP, with consequent permanent unbalancing of the budget and turbocharged subversion. With full taxability, nonprofits or the for-profit corporations that succeed them after their death will contribute some 2% of GDP ($700 billion annually) towards closing the U.S. Budget deficit, help it very much needs.

It may be argued that genuine charities, which today represent only a small percentage of “non-profits” would be grievously harmed by this tax change, but consider the reality. The local dogs’ home, surviving on charitable donations from those who adopt dogs and others, generally operates at close to break-even, so would pay little or no tax if it were fully taxable. While its donors would be disadvantaged by the tax changes, that could be solved by putting a low cap on charitable tax deductions, so that middle class donations to their churches and dogs’ homes would remain tax-deductible. The dogs’ homes could also apply for modest grants from their states, whose income would be swollen by the abolition of charitable tax-deductibility, thereby receiving state tax payments from their local nonprofits.

It would not hurt to tax Harvard and its endowment; if Ivy League colleges are going to devote themselves full-time to subversion rather than education, as currently, they should at least pay full tax for doing so.

There are other reforms that are badly needed. Birthright citizenship has to go, as in almost all other countries – it is a relic of 18th century travel times and costs. The Senate filibuster and the U.S. budget process both need root-and-branch reform, to remove the damage done by the pernicious 1970s. Overall, immigration policy needs iron-clad Constitutional protection against the policy of Vortigern, the 5th century British King who invited a few Saxons to stay and triggered an overwhelming tsunami of foreign immigrants who massacred his countrymen and sent them fleeing into the Welsh hills. Hopefully President Biden-Vortigern has finally retired from U.S. politics.

However, the two reforms proposed above: a property franchise and full taxability for the nonprofit sector, are most fundamental. With them, the incentives to bad policy will be eliminated, the Budget will be closer to balance and other reforms will follow in due course.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)