A 2012 Pew Research Center poll regarding positive versus negative reactions to the terms “capitalism” and “socialism” revealed that 40% of respondents had a negative reaction to capitalism while 31% had a positive reaction to socialism. If we shift our view only to millennials, a Harvard University poll of millennials (ages 18 to 29) showed that a whopping 51% do not support capitalism, while only 33% claim to support socialism.
In the interest of fair journalism, I should point out that worded differently the polls would suggest that most millennials dislike socialism more than they dislike capitalism. So I’m not here to convince you that all, or even most, millennials are socialists – only that we have a very interesting view of the terms in this country.
I fear that a major problem here is that so few people in general understand the theories behind the terms they hear from sound bites from the media that public outcry has become lost in zealous ignorance. To further complicate things, I would argue that many of the problems inherent in American businesses are a result of quazi-socialist agendas. That is, our youth is blaming capitalism for the failures of socialism.
I think it’s pretty clear that we don’t have anything close to a free market in this country, and here’s why:
The “Trickle-Up” Economy
You’ve probably all heard of trickle-down economics, where the idea is that the more money the wealthy have (for instance, by having tax cuts and other incentives), the more money they have to invest in their businesses, and hence the more jobs they can afford to create.
Conversely, in trickle-up economics, wealth is believed to flow from the bottom up. This is because notice that the consumer is the one who drives the economy, and that a striking portion of the consumer base is under or barely over the poverty line. This includes our poor as well as our lower middle class.
It should take no convincing to recognize that the more money the lower classes have, the more money they have to spend. The more money they spend, the more money goes to the business owners, and thus the more people they can hire. The more people they can hire, the more money more people are able to make, thus generating the economy.
While this is a valid premise to build on, the “how” question is just as important as the “what” question. The liberals tend to see the solution to this as being: jumpstart the economy by throwing money at the problem.
Great. Here we go. Here’s where the problem lies. Not in the “what,” but in the “how.” So we take a portion of tax revenue and give it to the poor and lower middle class. Then what? Hopefully they’ll spend wisely? Certainly the sale of alcohol, cigarettes, and diapers may go up. But then what? We’re still taxing these businesses to oblivion anyway! And with all the roadblocks (i.e., taxes, regulations, etc.) businesses must drive over to make their businesses profitable, job growth gets stifled, meaning we have to keep throwing money at the wrong part of the problem while doing little – if anything – to solve the actual problem.
But hey, at least it’s easier for the politicians to look like they’re doing something useful with our money. And further, keeping the problem existing keeps them employed, which brings us to our next problem.
The Broken Window Fallacy
The Broken Window problem refers to a parable by 19th century French economist Frédéric Bastiat as an example of the problem with society’s view of employment. In the parable, Bastiat tells of a shop owner who’s window is broken accidentally by a little boy. In attempts to console the shop owner, townspeople tell him that they’re sorry it happened, but then again if windows didn’t get broken, then window glaziers couldn’t stay employed.
In other words, disaster creates jobs! The problem that Bastiat points out though is that with that line of thinking, what’s to stop the glaziers from paying kids to go around breaking windows so they could remain in business? Well, this is actually sort of happening by our government.
- Cash for Clunkers
A recent example would be the government’s 2009 Cash for Clunkers program, where the government has paid people money for their old cars so that those people will spend the money on a new car. The idea was that because people were tending to keep their cars longer, their cars had to be junked in order for them to buy new ones to stimulate economic growth in the automobile industry that we had just spent billions bailing out.
The old models turned in were then junked (to be fair, some were sold for parts, but the value was negligible). So the government literally broke a bunch of windows (along with the rest of the cars) to artificially stimulate job growth.
The liberals hail this, and plans like it, as a fantastic way to stimulate job growth. Except that
- GM and Chrysler failed on their own accords. Giving handouts to failing businesses just teaches businesses that they can be as irresponsible as they want since they’ll just be bailed out every time. It’s basically corporate welfare.
- The old cars still had value. They got their owners from point A to B and were still reasonably reliable. So the government destroyed items that had value to create… value.
- The money spent on new cars people didn’t need yet was money that could have been invested elsewhere. Maybe people were saving to buy a new car in the future. Maybe they were saving for something else. Just because someone else was employed by the destruction of someone else’s car doesn’t mean that there was necessarily any real net gain.
Manipulating wealth by destroying value to create value is not sound. The liberals seem to equate savings to money lost. Sure, money in savings isn’t stimulating the economy at that moment, but suppose the shop owner in the parable had been putting money into savings to invest back into his company in the future to create jobs – even to build additions to his building, requiring the work of glaziers for more windows – but now that he has to spend savings on a new window, he has less to invest into the business.
And as long as we’re destroying things to create wealth, why stop at just the window? Why not destroy entire homes!? Why not go nuts and bomb entire cities!? Which leads me to my next point:
It’s no surprise that war creates jobs. This is why our politicians have decided to funnel so much money into the military. And it’s not even just the liberals in the White House. Some of our very own are buying into the scheme under the guise of “national security.” Please, our nation is plenty secure. We spend more on our military than the next 8 super powers combined. National security my ass. Something else is at play.
For one, part of why we spend so much more than other nations is because according to NATO, all allied nations have to contribute 2% of their GDP into their respective militaries. Well, since much of Europe doesn’t believe in that rule apparently, we’ve taken it upon ourselves to spend more on a bigger military to compensate for those poor nations. How nice of us.
But then we also create conflicts overseas by funding rebels of various countries. This practice is great for our economy though! American firearms manufacturers see more work; military supplies contractors stay gainfully employed. We’re creating so many jobs… by funding terrorists.
Hell, we even go above and beyond the call of duty by funding military supplies we don’t even need! In 2014, we spent $120 million on Abrams tanks for the army that army generals repeatedly said they had no use for (and it’s in particularly been pushed by two Ohio senators. The tanks are manufactured in Ohio. Go figure).
We’ve added $1.33 billion in our recent budget on 11 F-35’s – a stealth plane that’s already years past its due date and riddled with systematic problems. $1.33 billion on planes we can’t even use yet. Proponents of the expenditure claim that we’ve already spent too much on the project over the past several years to quit now. A gambler’s fallacy if I’ve ever heard one.
I could go on and on with examples. Just last year we spent $640 million on a ship in Mississippi for the Coast Guard that the Coast Guard assured us we don’t need (Mississippi senator Thad Cochran was the main advocate of this bill). The same year, $1 billion was allocated to build a Naval ship in Maine that the Navy never did ask for (Maine senator Susan Collins pushed this bill). We’re keeping numerous bases open that serve no real purpose.
And of course with all the destruction of cities in the Middle East, our great nation is able to hire so many American contractors to deploy and rebuild those cities.
With our treating of excessive military spending and funding rebels to destroy places so we can build them back up, I’d hate to see what would happen if peace were to ever break out.
Bastiat used the term “Sisyphism” to describe such systematic destroying value to create value, named after the Greek titan Sisyphus who was punished by being forced to roll a boulder up a hill, only for it to fall back down, causing him to have to start back over rolling the boulder back up (only for it to fall again) for all of eternity. But hey, according to the liberals, at least Sisyphus will always be employed!
The “Free Market”
The free market isn’t a thing that’s ever truly existed in America, and the market has only shifted further and further away from the notion of being free. We make start-up costs for businesses super high, and this mainly affects small businesses.
Up until recently, Louisiana required florists to pay thousands of dollars for classes and state licensing before they could legally sell flowers (it physically pains me to write this). Beautician licenses are required just for braiding hair for profit in some states. It’s illegal to sell lemonade on your own property without having a vender’s license, business license, filing business taxes, etc.
You need licenses and registrations for just about everything. If you want to hire employees, that’s yet another license. Want to open up a bar? Not with the price of liquor licenses you don’t. It’s a wonder anyone starts up small businesses anymore. If we got rid of these licenses and regulations and people were allowed to engage in free exchange among consenting individuals, more people could sell items and services, open up small businesses, and hire more employees. Talk about stimulating the economy.
But the government doesn’t believe in the people’s ability to control the economy themselves without falling to disaster, so the government has taken over control of industries by artificially driving economies by a host of means – to include, ironically, disaster.
They claim all these regulations are to protect the consumer and employees. But the best regulator of businesses is the consumer. The government requires so much red tape to get anything done. Meanwhile, if the consumer finds that your product isn’t safe or friendly or whatever, then they stop doing business with you immediately.
In the words of L.N. Smith, “Every dollar you spend . . . or don’t spend . . . is a vote you cast for the world you want.” Except that even if you don’t spend your money in certain ways, the government will just bail out those failures and find ways to force – or “incentivize” – you to spend money at those businesses. And if too many votes – or dollars – are cast to businesses who are doing too well, the government will punish them.
The government tries to make everything about equality. But equality can’t be artificially created. It won’t be respected then. The economy is an organic living and breathing thing. The success and failure of businesses is evolution at play. The things that work stick around, while the things that don’t go away. It’s survival of the fittest. But not when the government intervenes. We’re not livestock. We can’t just be herded a certain way. But then if that is what’s happening, I suppose we can be after all.
So… Are We Already Socialist?
Is the US a socialist state? This is a tricky question. In socialism, every business is owned by the state and everyone is employed, since the state can open as many jobs in public businesses to accommodate everyone, whether their job is particularly useful or not.
One could argue that when the US bails out businesses that they have a stake in that company. After all, the Obama administration used the automobile bail out as leverage to get the companies on board with certain emissions practices, and the government had the businesses as collateral until they paid it off.
The US government also owns some other public industries, as well as funds industries that are run by private entities so as not to give the impression of being socialist. The government artificially manipulates the economy, seeking to even out the playing field, even if it means stifling business. The government spreads wealth amongst individuals so that everyone has what they need, regardless of whether they provide anything useful back to the system or not.
Socialism might look great on paper; everyone is employed and everyone is more-or-less classless and equal. But in practice, certain executives running certain enterprises (private or public even) might have ties to certain public officials. Connections such as these may allow their enterprise to grow at the expense of others, all while being funded by we, the tax payers. At the same time though, their profits are all theirs to keep.
So we, the people, get to fund their businesses while seeing nothing in return, and they get to keep whatever profit they make. This is the worst kind of socialism, and it leads the public to have negative views of businesses and of business people. They don’t realize that this sort of crony capitalism only exists because of socialism.
While this is going on, the working class becomes more and more complacent. Why try when the nanny state is going to take care of you? Even if you are so inherently inclined, why try to succeed when the state is just going to shut down your every attempt? After all, in socialist America, one person’s destruction is another person’s value.
Pew Research Center. “Little Change in Public’s Response to ‘Capitalism,’ ‘Socialism’”. http://www.pewresearch.org/daily-number/little-change-in-publics-response-to-capitalism-socialism/
The Washington Post. “A majority of millennials now reject capitalism, poll shows”. https://www.washingtonpost.com/news/wonk/wp/2016/04/26/a-majority-of-millennials-now-reject-capitalism-poll-shows/
Stockholm International Peace Research Institute (SIPRI). “Trends in world military expenditure, 2014”. http://books.sipri.org/product_info?c_product_id=496#
Military.com. “Pentagon Tells Congress to Stop Buying Equipment it Doesn’t Need”. http://www.military.com/daily-news/2015/01/28/pentagon-tells-congress-to-stop-buying-equipment-it-doesnt-need.html
Institute for Justice. “Louisiana Florists (new challenge)”. http://www.ij.org/case/chauvin-v-strain/
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