Tuesday, August 7, 2018

Week 2: Why Socialism is Not What America Needs

Hello everyone, and welcome (or welcome back)! I hope you have all had a chance by now to read my introductory post, as well as my bio! If you have not, both of those pieces are still available to view. This week's topic is one that I am both excited and apprehensive to write. I am excited because economics and philosophy are some of my favorite topics, but also apprehensive because this topic is quite contentious. Hopefully I can make it through this without pissing too many people off, while also kindling conversation and education. 

To start this, I feel that it is necessary to give some context, and "fine print"; as a matter of personal beliefs, I feel that neither socialism nor communism are inherently evil constructs. Also, since I brought up both of those in the same sentence, it would probably be advantageous to explain the difference for those who may not know. The primary and distinguishing difference is that socialism is solely an economic system, and communism is both a political and economic system. With that cleared up, neither system is inherently evil, and both could theoretically be designed to work ethically. As an amateur economist, I have a preference toward socialist concepts, but also recognize its practical failures. Economics is a lot like many other disciplines, in that there are two ways of thinking about an economic system. In the "design" stage, the system can be thought out and created without actually being subscribed to real-world complications, governments, businesses, and....well...people! This allows for the creation of systems like socialism and capitalism. The second "step" implementation, and research is usually where the majority of the problems are fully realized, in other words, once the concept has been applied to real-world complications, governments, businesses, people etc. To bring this to a closing point, I believe in socialism as a theoretical concept, and think that it is not inherently evil, but I think that implementing socialism in the United States would be disastrous.   

Now that I have gotten my personal opinions out of the way, let's get into the meat of the topic. Socialism is NOT good for America, and it will not serve as a successful solution to the problems that we face. To clarify, I mean to say an overhaul/shift toward an entirely socialist economy is not what America needs. This is wholly different from integrating certain socialist principles into an otherwise wholly capitalist economy. Things such as: social security, medicaid, medicare, etc. are all examples of socialist principles in action. So, why would the overhaul be terrible? My initial response is, where do I begin? The biggest concern, is that it would fail to appropriately alleviate one of the biggest crises facing most Americans: poverty. Now, before continuing, I can already hear my fellow left-leaning friends talking about the Scandinavian countries and how beautifully socialism works there. We must realize three things when we try to bring those countries into this conversation: 1. They are entirely different than the U.S. on a lot of core levels- culture, population size, industry, etc. 2. They are social democracies, not socialist (commonly referred to as the Nordic Model which usually refers to a high percentage of unionized labor, heavily funded and far-reaching social programs, and FREE MARKETS and TRADE)  3. The problems faced in these countries are different, and in different scope than the problems we face in the U.S. That being said, it is actually a logical fallacy to compare the two in this kind of conversation. Back to the previous point, pure socialism would not fix income inequality in the United States, and therefore, would fail to fix the poverty crisis. Most people argue that if we took all the money in the United States and redistributed it equally, that it would fix the poverty crisis, but this is a fallacy. Unlike communism, socialism is solely an economic system and allows for personal property ownership, this means that this system would allow for most non-liquid assets to be retained.  While it is commonly said that billionaires should pay for the plights of the middle class, it should be remembered that most of their wealth is tied up in non-liquid assets, and stock holdings. A great is example is Mark Zuckerberg, while he tops many lists for his wealth, the vast majority of his wealth is directly related to his +/-29% holding in Facebook. This means that if the value of a Facebook stock drops, so does Mark's net worth, which just happened recently. As a result of a heavy plummet in Facebook stock, Zuckerberg "lost" about 18.8 billion dollars overnight. So, to add figures to my argument, would the redistribution of all liquid assets fix the poverty crisis? In the United States, it is roughly estimated that all "spendable" cash and cash equivalents (and short term investments, to be generous) total 9.5914 trillion dollars.  Now let's divide that by the 129 million households that are in the United States, we get 74,351.93. This may seem like an impressive sum of money, but let's consider this: the average salary in America is $59,000. According to the standard deviation, 80% of people between $41,000 and $72,000. That means that each person's "payout" would be barely more than their regular yearly salary. This also fails to consider the fact that we have reallocated the top-earner's liquid wealth. This would have enormous consequences on business growth and sustainability, and therefore jobs and personal career growth and retention. This means, that in one year's time (if not sooner) the US would be reeling from a far greater poverty crisis than we could have ever imaged.

In the last section I was addressing a commonly voiced concept to fixing poverty: perfect redistribution. While I successfully demonstrated the devastating effect something like that would have, it was (I must confess) kind of a straw man argument, because socialism doesn't really dictate  perfect redistribution. Socialism has state ownership of and worker's self-management of the means of production. This means that the wages are usually determined by productivity, not unlike what exists in the U.S. today. This means that, there wouldn't likely be any real re-distribution at all, and the status quo would be maintained. The big difference would be lack of competition. With private ownership within a properly operating free market, there is a high-degree of competition which helps to drive down costs. Within a socialist system, the government owns the means of production and can set costs, there is no competition. While this can be good, if you have a fair and benevolent government that believes in equity, and fair prices, it can also be detrimental and cause prices on goods to skyrocket. In general, the question we must ask ourselves is, how much do we trust the government to regulate industry, prices, etc.? Currently, we are given the privilege to vote for most of our public officials yet we have one of the lowest voter turnouts of all democratic nations (57%). But this is the same country where there is a growing portion of the left-leaning population that is advocating for socialism.  While the failure of a socialist system is not only likely, but demonstrable, the only scenarios where circumstances were improved were related to a high degree of civilian involvement. My proposal, which I will address in the next section, is to utilize our civilian voices to fix our current system, not bring in something new.     

In the United States we have something which is truly one-of-a-kind. We are a nation of immigrants that has grown into one of the most successful nations on Earth. We, in all of our diversity, and through all of our hardships have grown into something that is beautiful. But like many beautiful things, sometimes we become tainted by the ugly aspects of life: greed, fear, hatred, etc. Right now, our country must reconcile our beliefs with our practices. We are supposed to be a country of opportunity where ANYBODY who has the will, and the desire, can come and have a satisfying, fulfilling life. However, more and more, it seems that this country caters to the wealthy and the corporations and the...white men. The opportunities for the immigrant, the middle class, the African American, are fleeting, and it is time for us to stand-up and say that enough is enough! We all need to rise up together, and use our voice to call for the change we need. Whether it be higher wages, or humane treatment of those entering across the border, or equality for our African American brothers and sisters, WE have to speak up, we have to VOTE, and we have to fill the streets when they don't listen. The problem with America is NOT that we are capitalist, it is that we have allowed the very wealthy to use their money to buy influence, to buy legislation, to buy politicians. We alone can put a stop to this, and it starts with using our own influence...influence that is afforded to us by our beautiful democratic system. Lets build the America we want, the America we know we can have! 

Thanks for reading, I hope you enjoyed this! 

1 comment:

  1. Super intriguing read. I have never personally advocated for complete redistribution of wealth but I do agree with your remark on higher wages. I had read some things closely tied to the wealth possessed by billionaires but I had no idea that stocks housed THAT much of their income. Enlightening read, keep it coming!


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