Socialism in America – Part III
Under the title “Economics for Ignorant Socialists,” this blog was published for the first time on this site 5 years ago in 2020. This ‘encore’ fits the socialism theme.
Recent polls indicate Gen Z-ers and millennials are more likely to embrace socialism over capitalism.
The media is currently awash in proposals by Democratic presidential candidates and many in Congress who are pushing for a needed and desired change to socialism in this country.
For those of us who know the difference between the two theories, those polls are scary. What they indicate is many younger people don’t understand the differences – apparently buoyed by teachers and professors who portend and pretend to know that socialism is better.
In simple terms, there’s a world of difference between capitalism and socialism.
Socialism
There is no private property. Everything is owned “collectively” – meaning by the government.
Therefore, all means of production and distribution of goods and services are owned by the state – and assumes responsibility for anything produced and the people who work to produce it. Work, production and the distribution of goods and services are determined by the government.
Goods and services are produced directly for use – meaning there are no economic resources “wasted” on unimportant things – such as “choices” of products, aka competition. Consumers have no choices, no decisions – there’s just one product, one price on various categories of products – based on “efficiency” – use.
Cuba remains an example of a socialist nation. Its economy is state run and it lacks a stock exchange. Healthcare and education are also completely managed and administered by the government.
All plans and decisions regarding the economy are made centrally – by the government. Careers of people and the work they do are ofttimes determined by the government – dependent on what the leaders think is needed in their economy/country.
A socialist economy is still dependent on the resources and manpower it has available – or can generate – including its human capital.
Socialists also initially believe their approach is highly democratic. Theoretically, the workers decide on how their workplaces operate. They also “elect” their governmental leader.
Theoretically, “it’s a one for all and all for one” idea. It appeals to some people because it sounds like something good – for everyone.
In today’s rhetoric, income inequality would disappear.
Capitalism
It’s actually more descriptive to use the term “free market” rather than capitalism – but capitalism is what it’s commonly called.
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.
Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets.
Capitalism recognizes self-interest. It relies on and embraces it.
Self-interest for financial profit and/or well-being and the ability to pursue those objectives provide the incentive to work, to innovate, to take risks. Capitalism breeds entrepreneurs who in turn develop new ideas for products and run production at maximum efficiency to generate maximum profit.
Profit generates capital – the money to start and maintain production – and to distribute goods and services to people who want them.
The key is capital. An economy has to generate and have access to enough capital to grow.
Capitalism recognizes government does not generate capital. The money the government receives comes from the people who do. In capitalism, the profit from one endeavor often generates capital for another.
Summarizing the Differences
Simple.
Under socialism, government controls the marketplace for goods and services.
Under capitalism – aka,” free markets” – the consumer of goods and services decides what will be purchased and what will be less so or not. Competition drives prices and consumer decisions.
Under socialism, competition is not desired. Consumer choices and decisions are made by the government for the “collective good” of all.
Note: It’s important to recognize that unlimited capitalism results in monopoly. Monopoly eliminates competition and inhibits new ideas and the entrepreneurial spirit. That’s why we have laws – like the Sherman Anti-Trust Act – to ensure no one company dominates the market in any industry. A socialist economy is a government monopoly.
The Other Major Difference
Socialism, while being espoused as democracy, has never ended up that way.
The reason is because dissent and disagreement cannot be tolerated in a “collective” society. If you express some thought outside the “socialistically acceptable,” you are the enemy. At best you will be silenced by social and/or physical isolation, perhaps “re-training” in some place/manner/camp. At worst, you will be eliminated. That’s what happened with Hitler, Lenin/Stalin and Mao – millions were terminated. There could be no tolerance of any thinking or expression outside the new, dominant norm. That’s what’s scary about “Political Correctness.” It’s intolerant of dissent and a harbinger of the conformity required by socialism.
All socialism/communism states that lasted at all became/become dictatorships. It’s the only way to ensure total societal compliance.
While socialism proposes equality, it relies on the subjugation of the individual to the tyranny of those in control. Individual freedom is a bad word – along with free speech, compromise and compassion.
Russia and China have moved on from socialism to partially embrace some key elements of capitalism – private property and private enterprise. Prior to the change they were poverty-stricken countries.
Once rich Venezuela is the latest example of failed socialism. 577 companies were nationalized – became properties of the state, aka, the people. At first the people loved the “free stuff” and the dream of embracing and living in a country promising equality for all. It didn’t happen that way – it couldn’t.
On the other hand, is capitalism perfect? Of course not. But capitalism can only succeed in a democracy – when human values and rights are guaranteed.
In a speech on Nov. 11, 1947, Sir Winston Churchill reminded the UK’s House of Commons that “democracy is the worst form of government, except for all those others that have been tried.” In a similar fashion, capitalism is the worst economic system, except for all the others.
The Green New Deal – A Comment
The “deal” is the government would start off by owning all energy resources and the health care system. Fossil fuels would be eliminated. College would be “free” – and in order to make that work the government must own all those things. The economy would nosedive.
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Individual responsibility and freedom are necessarily suppressed for socialism to survive.
Our young people – Millennials and Gen Z-ers – need to understand the world ‘has been there, done that’ unsuccessfully – and that “Democratic Socialism” is an oxymoron. They don’t want to live in that society – without choice or freedom.
Ignorance is not bliss when reality steps in. Hopefully it doesn’t need to be proven again – here.
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Have a great and prosperous week.
Hug somebody.
References:
https://examples.yourdictionary.com/examples-of-socialism.html
SPIDER Bytes
This week’s trivia question is: What is the world’s longest mountain range? The answer to last week’s question re the English name given to Pocahontas after she was baptized: Rebecca. The daughter of an Indian chief, Pocohontas was baptized a Christian in 1614, the same year she married John Rolfe at the age of 17. Rolfe would become famous for introducing the cash crop tobacco to the settlers in Virginia. Pocohontas had numerous encounters with John Smith, the founder of Jamestown, and helped him often with her father. (Several readers quickly and wittingly answered last week’s question with “Elizabeth Warren!”)
A rare seismic 8.8 earthquake occurred off the far east coast of Russia last week. The tsunami in both Alaska and CA. was 1.6 feet or less. Hawaii saw 4.9-foot waves. Everyone dodged a bullet.
July saw the 3rd consecutive month for no illegal immigrants to be released into the country. Obviously, the previous administration’s admonitions saying it needed Congress to pass more laws to stem the tide of illegals was bad information. (That’s in lieu of calling it lies)
Will you miss Stephen Colbert starting next May? If your answer is ‘no,’ – no surprise because few people are/were watching the late-night show anyway.
The impending merger of Norfolk Southern and Union Pacific will make it the first transcontinental railroad operator in the U.S. The $85 billion cash-and-stock transaction deal will need approval from anti-trust regulators. Between the two companies, they own some 55,000 miles of track.
The Bureau of Economic Analysis on Thursday reported gross domestic product (GDP) grew a healthy annual rate of 3% in the second quarter. Coupled with low levels of unemployment, steady job growth and a 3.7% increase in average hourly earnings, it should put to bed any talk of a recession anytime soon.
Marion Country shows year-to-year June home sales increased by over 22% at 732. The average price of homes sold was up 5% over the year at $354,290. The area is bucking the trend in the rest of Florida that showed home sales down slightly by 1% from a year ago.
Congressional passage of the “One Big Beautiful Bill” (OBBB) threatens to eliminate solar tax credits, accelerating the sector’s decline. The U.S. has several hundred companies that are being affected, but none have achieved the 23% efficiency of solar panels made in China – and which sells the overwhelming bulk of solar panels bought in this country.
Starting in 2026, the OBBB also allows the 90% of taxpayers who file using the standard deduction v. itemized, a limited deduction of up to $1,000 for single fliers, $2,000 for joint filers for cash donations to one or more charities. This one is right after my heart. Bring back the community involved charities – take the government out!
The major revisions of previous month(s)’ numbers resulted in President Trump firing the Dept. of Labor statistics director Friday. Businesses count on the numbers being right – and when they are reported consistently wrong and later revised, the government might as well forget about doing them at all.
