Thursday, February 11, 2016

Defining Socialism

We spent some time recently defining conservatism, which is a path to freedom, prosperity, and thriving civilization. I thought it might be useful to define the opposite: socialism.

It goes by other names: liberalism, progressivism, communism. There may be some slight flavor differences among these, paid attention to by those who prefer a certain appellation over another. But in Spherical Model terms, they are all southern hemisphere: some far away authority decides how to spend the wealth created by individuals, and may decide what work individuals may do. In some varieties (USSR Communism, for example) private ownership and private means of production (business ownership) are eliminated.

The Soviet Union fell about 2 ½ decades ago. That means that young people have grown up unaware of what that enemy of the United States (and enemy of freedom around the globe) meant. Now, here we are with a democrat party choosing a nominee who will be either an Alinskyite covert socialist calling herself a progressive or a curmudgeonly old guy who boldly labels himself a socialist. And they are treated by media as if they are mainstream.

So maybe we need a lesson. Let’s be clear: socialism is incompatible with freedom, prosperity, and civilization. Socialism will—it always has and always must—lead to tyranny, poverty, and savagery.
And then this hypothetical conversation happens.

“No, no,” you say; “We just want to even things out, so the system is fair for everyone.”
You want freedom, you say, equality before the law?
“Well, but the way things are, there are people who game the system, and the little guy gets screwed. That’s why there’s such an income gap.”
And by income gap, you mean that’s a bad thing, that people should have the same amount of money?
“Yes, pretty much. The rich are only rich because they’ve exploited other people.”
And poor people are only poor because…?
“Because they haven’t had the same opportunities. Everybody should get the same education advantages, and good job opportunities, and health care so they don’t get wiped out by some accident or illness.”
OK, so, no poor people are poor because they do less valuable work than people who make more money?
“Are you trying to blame the poor?”
No, I’m just asking. So, what if you’re someone with a valuable skill, and you think up something really brilliant that everyone wants. Should you be allowed to profit from it, or share any profits equally with everyone else who didn’t think it up?
“You’re just not getting it.”
No, I’m not. Because I’m aware of how much misery a controlled economy has caused in the world.
“That’s just because it wasn’t done right. We would do it right.”
And how is it you can be sure of that?
“We just would. We’re smarter.”
Among the current Berners (Bernie Sanders fans), they fail to think of forced labor camps, rationing toilet paper (happening in Venezuela currently), the millions starved to death, not to mention the millions killed outright for being unwilling to submit, or trying to escape. No, they think about northern European socialist countries, like Sweden or Denmark, which they think is a utopia we should emulate.

They seem unware that those countries are becoming less controlling—because they have run out of money. As Britain’s Margaret Thatcher accurately said, while opposing socialist in her own country, “The problem with socialism is that you eventually run out of other people's money.”

And how do you make money? Or build wealth? You create something of value beyond what is necessary for survival. Someone needs to do the wealth building, the work.

Recently I came across a piece written by a young man in Denmark, sharing what free stuff feels like there.

Denmark, photo from here

It starts out,

I have noticed a lot of well-meaning Americans praising Denmark for our happiness and our welfare system. We’re praised for our free education, free healthcare, free childcare, short workweek and all the other things that the goodness-industry is proclaiming to define us Danes.
Then he goes on to talk about what “free” means:

“Child- and healthcare is free and students are paid to study in Denmark!” That’s a line I’ve heard a lot. It’s a truth that needs a lot of modification. A lot!
If by ‘free’ you mean ‘paid for by someone else’ you are right in the assumption that healthcare, childcare and education are almost free of charge.
He spends the rest of the article talking about where the money comes from.

Denmark, he points out, built up original wealth from Viking plunder and slavery. So they had a wealth base to draw on. And the rest of the “free” stuff comes from taxes. It’s not a simple thing to just say everyone pays X% in taxes. It depends on a lot of variables. But the writer takes us through a basic example of an ordinary working class Dane who makes $25,000 DKK a month (about $4,000, which would be $48,000/year).

Income tax is deducted automatically, before you see your money (like our withholding). These include 8% Arbejdsmarkedsbidrag, loosely meaning “labor market.” You pay this amount because you’re in the labor market. That’s 2,000 DKK.

Then subtract bundfradrag, or “bottom deduction.” This is, if I’m understanding, a tax on the part of your income that isn’t taxed. This differs year to year, but in 2015 was 41,400, which is 3,433 monthly. You subtract this from the 23,000 DKK you have left to spend in the month, which is 19,567 DKK.

Now come the Communeskat, or county tax. Counties differ, but the average is 24.9%. Which means you take away 4,872.18 from 19,567, leaving you 14,694.81 DKK.

Then comes Topskat, or “top tax bracket.” This is on over 37,000 DKK per month, or an additional 15% on anything over 449,100 DKK per year. Our example doesn’t have to subtract this, since the gross is 25,000 DKK per month.

Next comes the Sundhedsskat, or “health tax.” It changes annually, but in 2015 was 4%. That’s 782.68 in our example, leaving 13,784.32 DKK.

That’s the total of the “income tax,” that is deducted before you see your money. Our example paid 11,215.68, or about 44%.

Then come the many other taxes from various places.

Every time you pay a bill, you pay the government 25%. That means, if you buy something for 100 DKK, it will cost you 125 DKK, for the government to allow you to make the transaction. But you don’t really notice, because the price would read 125, with the tax already included, and the vendor collects and pays the tax, paying quarterly.

In essence, sales taxes, direct and indirect, mean you pay 25% of your remaining income. That’s 3,446.08 in our example, leaving 10,338.24.

Utilities have an additional Afgift, or tax. The writer’s recent 3-month electric bill was 994.64 DKK. Of that bill, 111.96 was what the electric company charges for 358 kilowatt/hours, and 30 DKK for membership (membership?), and a sales tax of 176.33 DKK. There are sales taxes involved to make the exchange, and additional taxes for use of the state-owned network, which I think is the electrical grid. In the end, out of 994.64, 853.58 DKK goes to the government—divided by 3 for 284.53 per month.

We’ll subtract that, leaving us with 10,053.71 DKK.

If you buy a TV, phone, computer, or radio, you can do so—with the usual 20% tax. (The writer sometimes says 20% sales tax, and sometimes 25%, so I’m confused, and that will mess us our numbers. But we’ll plow ahead and try to get an estimate anyway.) But if you own a device that can access some kind of transmission, you pay a Licens, or license to use Dansmarks Radio, the government-controlled media. If you own a device and don’t use it, someone will come to your door and force you to register the device. The license is 205 DKK per month. (It’s unclear to me whether that’s an additional 205 DKK per device, or a single license for all devices in the household.)

The writer refuses to own anything that needs licensing; he uses his mother’s computer and his friend’s phone. But for our purposes, let’s say you pay the license fee. That leaves you 9,848.71 DKK.

That is 39.39% of your original. You have paid 60.61% of your income. If you were wealthier, you would add 15% earlier in the process. Not far off from what Bernie Sanders thinks those terrible rich people ought to be paying here. But note that in Denmark everybody pays, no matter how little they make.

Socialism isn’t about getting free stuff; it’s about spending 60%  or more of your income on those “free” things, without market choice. Everyone pays it. There’s no getting away from it. If you’re healthy and would rather pay for minimal health care, so you can save up for a down payment on a house, you don’t get that choice. If you want faster internet or more media options than the single media company offers, you don’t get that choice.

But for all the lack of choice, you work until mid-July or later for the government and can only use what you make the rest of the year to support your food, shelter, clothing, transportation, and entertainment choices.

Meanwhile, the government is telling you how happy you must be, because of the good way the government takes care of you.

That’s the utopia. It’s also the country where Islamists went on a rampage because someone drew some cartoons they didn’t like.

Sweden has similar stories, as I wrote about in January. The solution seems to be to turn away from overtaxing and turn toward free market. Otherwise these utopian economies will collapse.

The real way to avoid tyranny, corruption, unfairness, and other aspects of oppression is to go in the exact opposite direction from socialism. Like we have in our US Constitution, guaranteed God-given rights, with free market economics, among a righteous people that take care of each other, rather than depending on government to do what charity should.

I had planned to write this piece on socialism for a couple of weeks. But this morning I found there are plenty of others who think it’s time we did some informing on the subject. One, linked today by Glenn Beck, is this 37-year-old video of economist Milton Friedman telling TV host Phil Donohue the difference between socialism and capitalism in under three minutes:

It includes this key point:

In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history are where they have had capitalism and largely free trade.
If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.
Another piece that showed up today is this post by United Families International, giving a primer on the difference between socialism and capitalism. It offers this summary:

Socialism is the Big Lie of the twenty-first century. While it promises prosperity, equality, and security, it delivers poverty, misery, and tyranny. Equality is achieved only in the sense that everyone shares equal misery.
Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.
All I can do here is skim the surface of the definitions. You might also read this post and this post, and it’s second part.

The deceived young people seem unaware that voting for socialism is voting to place yourself under tyranny of elected elites and their appointed bureaucrats. They need to be informed. Now. While there is time.

There’s growing data showing the failure of the so-called successes in northern Europe. There are books full of details about socialism. If you haven’t read Animal Farm since you were assigned it in school, it might be time for a reread, now that you’re old enough to understand it. And pass it along to someone who hasn’t read it yet.

No one should be allowed to vote for a socialist if they’re still so uninformed that they think it’s all about being social and about getting free stuff. The rest of us don't deserve to suffer because of their ignorance.

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