Corruption, not communism, is the real threat to economy
On July 3, President Trump spoke at Mount Rushmore, 25 minutes from my house. He warned of a resurgence of the “communist menace” in this country and called communism “a mortal threat to American liberty.”
Afterward, a friend asked me, “Should I move to cash before the communists take over?” He was joking—mostly. His question also deserves an answer.
If the United States ever became a purely communist system, would investment portfolios become worthless? Actually, yes. Building financial security through investing depends on two conditions. You have to be allowed to own things, and prices have to be set by buyers and sellers rather than by an official. Remove either one, and stocks, bonds, and real estate lose their value.
This does not mean communism is a threat to our economic freedom. Communism, as Karl Marx described it, is a society with no state, no social classes, and no money. No nation has ever been that, not even Communist-led countries like the Soviet Union, China, Cuba, and North Korea. Lenin said the state had to seize everything first and would wither away later. It has never withered. Those governments took one-party control of the economy and kept it under a form of state capitalism.
Socialism is a different system. Under socialism the workers or the state owns the means of production, the factories, the land, and the capital. Money, wages, and the state still exist. No nation has operated under pure socialism, either.
Nor has there ever been a purely capitalist nation. In the US, we insure bank deposits, subsidize farmers, provide Social Security and Medicare, and let a central bank set interest rates.
In reality, every country runs a mixed economy. The exact mixes vary, and they often overlap. The candidates that President Trump calls communists are proposing rent regulation, expanded public services, and higher taxes on high earners. That describes the Nordic countries, which are not socialist. Denmark, Norway, Sweden, and Finland leave the means of production in private hands. They have stock exchanges, private property, and billionaires. They tax the results heavily and spend the money on public services. That is social democracy.
Interestingly, the socially democratic Nordic countries rank as more capitalistic than the United States. This is according to the Heritage Foundation, the conservative movement’s leading think tank, which publishes an annual Index of Economic Freedom. It is based on 12 measures in four categories: rule of law, government size, regulatory efficiency, and open markets. In the 2026 edition, the United States ranks 22nd. Denmark ranks 7th, Norway 8th, Sweden 11th, and Finland 13th. These “socialist” systems we are being warned about finish ahead of us in economic freedom despite their higher tax burdens and government spending.
What brings the American ranking down is government integrity. We score 77.1 there, against 91.6 for property rights and 76.4 for judicial effectiveness. Transparency International ranked the United States 29th out of 182 countries on its 2025 Corruption Perceptions Index, our lowest score on record. It pointed to the pause on foreign bribery investigations and weakened enforcement of the Foreign Corrupt Practices Act.
The word communism still carries much of its Cold War charge, which helps it loom larger in our minds as a potential danger than it realistically is. Dire warnings about a communist menace are not a reason for investors to worry.
The decline in our government integrity ranking, however, is a red flag for a potentially more damaging threat—corruption. Investors cannot rely on markets shaped by influence and manipulation. No matter what label it may be given, a free market system depends on stability and the rule of law.
Rick Kahler, CFP®, CFT™, is a pioneer in financial therapy and a 2026 inductee into the Financial Therapy Hall of Fame. He is the founder of The Financial Therapy Podcast and Kahler Financial Group, and co-author of “Coupleship Inc.” and “The Financial Wisdom of Ebenezer Scrooge.
The information provided is for educational purposes only and should not be construed as investment advice. The views expressed are subject to change based on market or economic conditions. Past performance is not indicative of future results. Any reference to potential benefits is illustrative and may not apply to your individual circumstances. You should consult with your financial adviser before making any investment decisions. KFG, LLC is an SEC-registered Investment Adviser.
Photo: public domain, wikimedia commons
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