“The problem with socialism is that you eventually run out of other people’s money.”
This will sound un-American to some, but, unlike the former Prime Minister of the UK, I think the real problem with socialism is that it has a bad rap here in the U.S. Americans confuse socialism with communism.
Socialism refers to a broad set of economic theories about social organization, theories advocating public ownership and administration of critical sectors of the economy such as education, energy, public utilities, health care, and finance — theories which, when put into practice would ostensibly result in a society characterized by fairness and equity. These theories, and there are many variations on the theme, seek to slow or minimize the concentration of wealth within a small, privileged class of citizens as is the propensity for capitalism to do. According to one government source, the top one percent of Americans enjoy thirty-three percent of the nation’s wealth while the bottom eighty percent have less than sixteen percent. It is this kind of inequity that has historically caused revolutions. However, most socialist theories do not advocate massive “redistribution” of wealth. Quite the opposite; reward and compensation in countries like Sweden, Norway, France and Germany, countries that many Americans consider to be socialistic, are based on the value and amount of effort individuals expend in production. Interestingly, Norway, perhaps the most socialistic of the western democracies, boasts the largest number of millionaires per capita of any country in the world.
Communism, on the other hand, depending on how it is wrapped around the political system that adopts it, is a political ideology that promotes the establishment of an egalitarian, classless, stateless society and an economy based on common ownership of everything with centralized control of the means of production. Communism is totalitarian, either oligarchic or dictatorial, incorporating a branch of socialistic theory in the extreme, where it still survives (in North Korea). All other communist states, to include China, Vietnam and Cuba, are going through a process of reform — adopting market concepts to achieve mixed economies.
The confusion between socialism and communism is perhaps a lasting legacy of the Red Scare that took hold of America following the Second World War and the Cold War that lasted for decades. The Cold War is over now; we should put it behind us, I think, and move on.
I have a good friend who can’t quite seem to decide whether, because of his intellect and his understanding of Christian doctrine (love your neighbor as yourself), he should subscribe to and support liberal political philosophy or, because of his more conservative friends’ influence, subscribe to and support conservative political philosophy. He recently forwarded to me a copy of the viral disinformation email that follows asking for my opinion about it. I suspect that it was one of his other friends who sent it to him. Anyway, I had seen it before myself, several times. Perhaps you have too; it’s been making the rounds in various forms for years.
An economics professor at Texas Tech said he had never failed a single student before but had, once, failed an entire class. The class had insisted that socialism worked and that no one would be poor and no one would be rich… a great equalizer. The professor then said ok, we will have an experiment then on whether socialism makes for good economic policy.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.
The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away; no one will try or want to succeed.
Could it be any simpler than that?
As a teacher of economics, I can’t say that I have never failed a student. Hard as I try to get the basics of economics across to some of my students (that it is a body of both knowledge and opinion with conflicting ideas and theories — a soft rather than a hard science), they just can’t or won’t get it. According to John Maynard Keynes, “Economics is an easy subject at which few excel.” But people who don’t understand the nature of this “dismal” science persist in trying to simplify it — or so it seems. The above tale of the economics professor who would fail an entire class for not agreeing with his particular beliefs is a perfect example. If there ever was such a professor and I were his dean, I would fire him for not getting it either.
The problem with trying to justify economic or political points of view with analogies like this story (comparing wage and salary competition with competition for grades) is that they are overly simplistic. They are flawed — rife with logical fallacies of composition and causation. Students do not compete for grades in the same way that people in the workplace compete for pay or promotion. Neither does socialism, except in the most extreme applications of theory (and I can think of none in actual existence), equalize reward among all participants as the economics professor’s experiment did. Sure, the Soviet Union’s brand of socialism (communism) failed, and a large part of the reason for its failure was diminished incentive. But Soviet-style communism, Chinese-style communism, and Cuban-style communism (each is/was unique) do not equal socialism as reconciled today with market economies in Western Europe. In fact, all communist states, save for North Korea and Cuba, have incorporated elements of market forces to become mixed economies, and Cuba’s new president, Raul Castro, has indicated that he intends to start doing the same.
The economies of the world’s other industrialized nations are flourishing. All are still small compared to ours, but they are coming on strong. In 2008, our real gross domestic product (GDP) (GDP adjusted for inflation) grew at just 1.4 percent. Sixty-six other countries outpaced us and they have been doing so for years. The world average was 3.8 percent. So, in the years ahead, if we do not become more socially responsible by investing more in education, health care, energy and infrastructure, we may well be left behind. Call me a socialist if you wish, but that is how this economics teacher sees it.
I invite your comments whether you agree with me or not.