- Politics and Social Issues
Socialism Defined for Millennials
Recent news claim 43% of millennials support Socialism over Capitalism in poll. That is shocking. How did we come to this? I'm not so sure about the poll and polling in general. Just to be safe, I want to explain what is socialism in case some people have a misconception. By the way, it has nothing to do with social media.
What Is Socialism?
Socialism is an economic and political philosophy proposed by Karl Marx. The main idea is "From each according to his ability, to each according to his needs." Think about that, it is profound. It sounds so great doesn't it? However, the problem is, it doesn't work! It has been tried for the last 100 years in various form and they have all failed miserably.
Why It Failed?
It failed because it is contrary to human nature. Man does not have the natural instinct to live in communal society. It failed in Plymouth when the first Pilgrims came to America. It failed in the former Soviet Union. It failed in East Germany and Venezuela and Cuba. It is failing in Greece.
As Margaret Thatcher said famously, "the problem with socialism is sooner or later you run out of other people's money."
A Personal Scenario
Let me explain it another way. On a personal level that everyone can relate to. Recently, Bernie Sanders, presidential candidate on the Democratic ticket, proposed 75% income tax for the 1% super rich, and free college education for all.
Just look around you and see how our society functions. We have Doctors and lawyers and engineers and accountants but we also garbage collectors, electricians, plumbers and cooks and dishwashers and a whole range of professions from the highly skilled to the entry worker. They are all needed to keep our society running smoothly. Just assume if we could afford to offer free college to everyone. How will that change the distribution of work? who will want to work as a welder if he can go to college and work in a clean office?
The reason we need a variety of workers is because we have a variety of tasks. Some will require high skills and they will be compensated equally. It is the free market system that ultimately determine the price of labor. Supply and demand works every time.
As regard to tax rates, a higher progressive tax rate will only discourage the high performers to either cut back or seek tax loopholes to minimize their personal tax liability. In the extreme, some have moved out of countries that implement high tax rates. The State will ultimately loose revenue with a high tax rate - just the opposite what they intended. It is simple economics.
French Actor Move to Russia to Avoid Tax
What About Inequality? and Wall Street?
Socialism claims equality for all as the best way. However, that is not what our Constitution guarantees. Our Constitution is based on equality of opportunity, not equality of outcome. That's a huge difference.
I do agree with Bernie Sanders when he charges Wall Street with cronyism. I just don't agree with his solutions.
How to Fix It?
The way to fix inequality on Wall Street is by leveling the playing field. The job of the SEC is to crack down on insider's trading. Investment vehicles should be transparent. All people should have equal access to investments. There should not be a special class of investments available only to the rich and powerful. What is proposed by Bernie Sanders of taxing income at 75% rate will not work. It has been tried in France and even the French rejects it. A high tax rate is a disincentive. The rich and powerful will find ways around this and the revenue will not materialize.
Crony Capitalism at it's Worst
What about Denmark?
Bernie Sanders uses Denmark as a shining example of a Democratic Socialist government succeeding. But here is the truth, Denmark is not a socialist nation. Hear it from the source - the Prime Minister of Denmark. He explained Denmark has a free market economy.
The Constitution and Conservatism
The solution is very simple. Our Constitution of limited government and free enterprise is the best path to prosperity. It is not a perfect system but it is the best among all current systems. Conservative principles are the best to address many of our societal problems. Unfortunately, many of our schools today do not teach basic civics as they should.
Here is a simple math explanation using pies. It is a simple illustration of economic systems.
In ideal Socialism, suppose there are 100 pies and 100 people. Equal distribution will mean each person gets 1 pie. (group A)
In practice, socialism has a ruling class (B) and the masses (C). Assume 10% are group B and 90% are group C. The 90 people in group C will each get only half a pie while the 10 people in group B will get approx. 5 pies each.
In Capitalism, because of the profit motive and incentives, the pie is bigger. Let me just use 400 pies as an example. The same 100 people can be divided into 2 groups D and E. D is the risk takers and capitalist who create the businesses that build things people want. Group E are the consumers and the working class. In this scenario, assume there are 1 D and 99 E. Each member of E will get 0.5% which is 2 pies, while D gets 200 pies. Talk about income inequality. In addition, members of group E are free to become member of D by taking risks and working hard and inventing new ideas...(free enterprise)
In summary, which group do you want to be in?
A - 1 pies
B - 5 pies
C - 0.5 pie
D - 200 pies
E - 2 pies
For me, I want to be in group D but will settle for being in group E.
Socialism Described By a Person Who Lived It
The following youtube video is an interview conducted by John Stossel with Gloria Alverez.
A Modern Experience - Venezuela
This oil rich South American country is in turmoil having been led to socialism by Hugo Chavez. Here is their story.
For the millennials, who thinks socialism is the answer, I would suggest you go back and read our Constitution. It is a simple and short document but it is the right framework to govern a democracy.
The other suggestion is to go back and study some of our history. You will find that the current debate has been fought many times before and Capitalism was the clear winner.
Finally, I suggest reading two important books. George Orwell's "Animal Farm" and Milton Friedman's "Free to Choose." Both will explain how freedom and democracy will win over socialism in all its many forms.
Some Related Info
- Ronald Reagan Explains In 60 Seconds Why Socialism Doesn't Work | Mark Simone | 710 WOR
Don't miss out on the latest local, sports, political & national news for the greater NYC area from WOR 710.
- Get Rid of Capitalism? Millennials Are Ready to Talk About It - Bloomberg
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- Denmark Tells Bernie Sanders It's Had Enough Of His "Socialist"; Slurs
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- Poll: Millennials Pick Socialism Over Capitalism - Breitbart
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A Simple Poll
After reading this hub, are you convinced Capitalism is better than Socialism?
© 2016 Jack Lee