Wednesday, December 05, 2007

For The Common Bad

In the world today, there are two predominant economic schools of thought, capitalism and socialism. Both, in their purest forms, are diametrically opposed to each other. And while neither exists (in their purest forms), the argument will always exist on which is the most efficient and which truly meets the needs of the people, best.

If you missed it, John Stossel wrote a brilliant piece at Thanksgiving, detailing the failing of socialism as it applied to the pilgrims in the new world. You can read it, here.

In a follow-up to that piece, he has written a sequel that really carves out a solid argument against the ideology that many progressives see as a panacea to everything that is wrong with capitalism.

I recommend reading both essays in their entirety. But if I had to pick one part that really makes the entire idea of "for the common good" seem flawed, it would be this:

(Emphasis is mine)

I believe in sharing. But when government takes our money by force and gives it to others, that's not sharing.


Now, you may have somewhat of a problem with my emphasis here. You may ask yourself, how does the government take our money by force?

When we earn and receive a paycheck, take a look at the withholdings. Pay close attention to the section on the check stub that says, federal tax. That is the amount that the federal government has taken from us, before we even see a dime of our earnings. It's the law. And if you really want to see where the force comes in, try being an independent contractor where no tax is withheld, and don't pay the taxes on those earnings.

Let's continue (again, emphasis is mine):

And sharing can't be a basis for production -- you can't share what hasn't been produced. My point is that production and prosperity require property rights. Property rights associate effort with benefits. Where benefits are unrelated to effort, people do the least amount necessary to get by while taking the most they can get. Economists have a pithy way of summing up this truth: No one washes a rental car.


This all boils down to incentive. Without it, human beings will be human beings.

Take a good look at the experiment in New Harmony (Indiana) in the 1800s and you will see that pure socialism failed on the smallest of scales. Imagine the outcome of such measures, should they be applied on a macro level. The USSR and China are the two that quickly come to mind. Both failed miserably under socialism and both now sport free market economies, with much greater success.


5 comments:

Greg said...

No one believes in communism over captitalism anymore (at least, not anyone that anyone takes seriously). Still, I would characterize the US economy as "socialist" in the modern sense of the word, which ascribes the status of "necessary evil" to free markets and asserts that controls are needed to offset its negative aspects. In fact, most economies are "socialist" in that they have removed certain freedoms from the market in order to accomplish "social justice." Examples are rules that restrict firing employees, regulations about product safety, increased taxes on "bad" products. (As an aside, I note that many of the people most in favor of heavily restricting freedom of trade are people against restricting other freedoms - like habeus corpus for mass murderers - even if those restrictions are for the greater public safety. But I digress). While people reject capitalism, most are perfectly comfortable with the modern socialist economic model, even here in the US.

You might be interested in this study on comparative economic freedom across the globe. I personally question it b/c I find the US economy highly regulated. Try opening a convenience store - the head spins at all the required permits. Just to sell chips and lottery tickets. Anyway, I also saw a show on how the old soviet republics' economies are way more open than America's. So, FWIW....

http://www.heritage.org/research/features/index/countries.cfm

BTW, a little OT, but did LAS notice that Huckabee supports the Fair Tax, and will this influence LAS' vote?

Greg said...

Oops - sorry 'bout that.

http://tinyurl.com/5sbhk

LASunsett said...

//but did LAS notice that Huckabee supports the Fair Tax, and will this influence LAS' vote?//

As much as I am a proponent of the Fair Tax, I have never voted for someone based on one issue. And, it's not likely I will do so in 2008.

But, all things remaining equal as they are today, there are some circumstances where I would sacrifice some things for better border security, better national security, better foreign policy, and certainly better military strategies for future endeavors (should they be necessary).

If a person were to persuade me they could/would make specific and marked improvements in these areas, I would sacrifice the Fair Tax (for now).

LASunsett said...

Greg,.

BTW, I posted on the EFI, back in September. For all of our over-regulation, we still rank up there, don't we? People look at making money as some kind of criminal act, but when you get down to the nitty- gritty of it all, it's money that feeds hungry mouths.

Some will say that not all hungry mouths are being fed. To which I would reply: Correct, but a lot of them are.

Greg said...

BTW, I posted on the EFI, back in September.

Hehe. I'm one of those "glad I thought of that" guys.... lol