Socialism vs. Capitalism: Which is the Moral System?

http://www.ashbrook.org/publicat/onprin/v1n3/thompson.html

The extraordinary level of material prosperity achieved by the capitalist system over the course of the last two-hundred years is a matter of historical record. But very few people are willing to defend capitalism as morally uplifting.

It is fashionable among college professors, journalists, and politicians these days to sneer at the free-enterprise system. They tell us that capitalism is base, callous, exploitative, dehumanizing, alienating, and ultimately enslaving.

The intellectuals’ mantra runs something like this: In theory socialism is the morally superior social system despite its dismal record of failure in the real world. Capitalism, by contrast, is a morally bankrupt system despite the extraordinary prosperity it has created. In other words, capitalism at best, can only be defended on pragmatic grounds. We tolerate it because it works.

Under socialism a ruling class of intellectuals, bureaucrats and social planners decide what people want or what is good for society and then use the coercive power of the State to regulate, tax, and redistribute the wealth of those who work for a living. In other words, socialism is a form of legalized theft.

The morality of socialism can be summed-up in two words: envy and self-sacrifice. Envy is the desire to not only possess another’s wealth but also the desire to see another’s wealth lowered to the level of one’s own. Socialism’s teaching on self-sacrifice was nicely summarized by two of its greatest defenders, Hermann Goering and Bennito Mussolini. The highest principle of Nazism (National Socialism), said Goering, is: "Common good comes before private good." Fascism, said Mussolini, is "a life in which the individual, through the sacrifice of his own private interests…realizes that completely spiritual existence in which his value as a man lies."

Socialism is the social system which institutionalizes envy and self-sacrifice: It is the social system which uses compulsion and the organized violence of the State to expropriate wealth from the producer class for its redistribution to the parasitical class.

Despite the intellectuals’ psychotic hatred of capitalism, it is the only moral and just social system.

This is one of the clearest, simplest, and most thorough essays on the difference between Capitalism and Socialism I have ever read. It also is an excellent defense of the morality of Capitalism - a defense that few intellectuals have ever proposed (other than Ayn Rand).

Celebrating Income Inequality

http://capmag.com/article.asp?ID=5005

Democrat and Republican candidates for President are debating one another on nearly every issue--but nearly all are united on one thing: America faces a crisis of "income inequality." The rich are getting richer, the refrain goes, while the poor and middle class are held back by stagnating wages, lousy schools, and growing healthcare costs. The solution, we are told, is more government intervention: spend more on education, provide "universal healthcare," and force employers to raise wages through minimum-wage increases and union protection legislation.

But all of this outcry is based on a false premise--that income inequality is bad. While some of the problems critics point to are legitimate concerns, income inequality is not. Income inequality is a natural and desirable part of a free, prosperous society.

In America, equality should mean only one thing: freedom for all. If business and wages were deregulated, we would see a dramatic rise in economic opportunity. If education and medicine were left free, with America's businessmen, doctors, and educators liberated to offer education and medicine at all different price points, we would see quality and price improvements like those for computers or flat-panel television sets. But these benefits of freedom require that we recognize the moral right of each individual to enjoy whatever he produces--and recognize that none of us has a right to something for nothing.

Great essay from Alex Epstein of the Ayn Rand Institute. I love topics like this that catch people in the contradiction of their thoughts. Most people instinctively condemn "inequality", but in this case, when they apply their minds to why that inequality exists and what is being proposed to "fix it", they find some difficult pills to swallow. This is yet another example of the two paradigms: one that is risk averse, wanting protection from one's own weakness, and the other that embraces risk and the responsibility that comes with it (and its ensuing rewards).

Too many people see only the rewards gained by some, and covet them. Not understanding why they have those rewards (e.g. proof of their profitable actions), they take on the mentality of the victim, saying that they were unfairly gained, either by unfair competitive circumstances or at the expense (exploitation) of the poor victim.

AMA is Wrong About Medicare

http://capmag.com/article.asp?ID=4793

Under current restrictions, it is illegal for the doctor to accept a patient's payment for any amount over the government's approved reimbursement for a service covered by Medicare.
The government also prohibits the patient from being reimbursed by Medicare if the patient chooses to privately contract for services with a doctor who does not accept Medicare.

This is a textbook example of why it's wrong for the government to be the middleman for your dollars. If you were freely exchanging your dollars for medical services, you would be within your right to choose which services, which provider (and thereby, what cost) you prefer. But it's not your dollar anymore, it's a dollar that has passed through the hand of government, somehow "sanctifying" it from the taint of profit or greed before being handed to the provider of services you desire.

Unfortunately for you, because you are not the one exchanging the dollar for services anymore, you no longer have the power to negotiate the terms of that exchange (unlike your ability to choose which breakfast cereal you purchase - ironically a real factor in your health). Your options for exchange consist of trying to game the tax system to your benefit, and punching a ballot every now and then to decide who will be your personal benevolent tyrant for a season.

Also working against you is the fact that since your money has been pooled together with everyone else's before reaching this point of medical services, it falls upon the representatives of the People to make sure your best interests (as they define it) are served in this exchange. Unsurprisingly, every incident that brings harm to one becomes a reason to legislate for all - since the only way, in this situation, to keep harm from coming to the one again is to codify the incident into preventative law, transferring the effects of that exchange from one to all. How else could a victim be protected if the terms of their exchanges are dictated by government?

The thousands of pages of directives and regulations dictating the use of what has now become "public money" on your behalf is no different than a hypothetical "government-sanctioned grocery list", posted on the doors of every store, specifying the items you may buy, at what price, and from whom. It would also be illegal in this bizarro world for the grocer to accept any of your personal dollars for his business with you would be funded by the state. Only a selfish, greedy rich person would ever need or want more than the benevolent tyrants had provided.

Would you be surprised to see the shelves eventually sparse and then empty for lack of products to sell? (as all the producers of products chose to do business elsewhere where they could set their own prices with the buyers) Would you be surprised to see lines of disgruntled shoppers, each carrying their apportioned groceries through the "free checkout line"?

We can't forget that medical products and services are not intrinsically different from any other product or service. They must to be bought and sold, and replacing personal choice with government fiat doesn't "wash the (supposed) stain of profit" from the product one buys. That doctor must choose to provide a service, just like the hairdresser - or he is a slave. Those drugs must be manufactured by human beings, who, devoid of the right to choose their incentive, will cease to do so and seek other means of providing for themselves. Treating medical care any different than "food care" results in a world where food is cheap (for the poor), plentiful (for the multitudes), and profitable (for the producers) - while medicine is expensive, scarce, and undesirable to produce.

And don't tell me health care is different because we need it to survive. Starvation is worse than dying from cancer on my list...

Bill Gates Needs an Econ Course

http://www.realclearpolitics.com/articles/2007/06/bill_gates_needs_an_econ_cours.html

At Harvard, Gates said, "We can make market forces work better for the poor if we can develop a more creative capitalism -- if we can stretch the reach of market forces so that more people can make a profit, or at least make a living, serving people who are suffering from the worst inequities."

He misses the point. Gates faults the free market for problems caused by governments. What constricts the reach of the free market is the state. Gates seems oblivious to all the ways that governments here and abroad cripple enterprise. In poor countries, corrupt bureaucracies smother entrepreneurship while enriching cronies. The lack of formal property rights and stable law keeps average people from accumulating capital. So the poor stay poor. That's what causes "scarcity of clean water" and kills "children who die from diseases we can cure."

John Stossel takes Gates to task for confusing the root causes of poverty. Once again, the only-somewhat-informed public debate looks at free markets, looks at suffering, and then determines that the free market has failed, and therefore the State should intervene (or more accurately, since it has been intervening already, it should improve its intervention).

Gates' statement at the end of this article, "We also can press governments around the world to spend taxpayer money in ways that better reflect the values of the people who pay the taxes" is especially telling. The idea that somehow problems would be solved if we just did the wrong thing in a better way is futile. Ignoring the underlying truth that individuals know best how to spend their money does the poor a disservice. The arrogant assumption that the poor - or anyone - would be better off if a benevolent dictator would take their resources and then wisely dispose of them for the greatest benefit of their former owner is a gross deception. I'm baffled that such an idea is so widely accepted...

Freedom and Benevolence Go Together

http://www.realclearpolitics.com/articles/2007/07/freedom_and_benevolence_go_tog.html

I interviewed Michael Moore recently for an upcoming "20/20" special on health care. It's refreshing to interview a leftist who proudly admits he's a leftist. He told me that government should provide "food care" as well as health care and that big government would work if only the right people were in charge...

Moore followed up with a religious lesson. "What the nuns told me is true: We will be judged by how we treat the least among us. And that in order to be accepted into heaven, we're gonna be asked a series of questions. When I was hungry, did you feed me? When I was homeless, did you give me shelter? And when I was sick, did you take care of me?"

I'm not a theologian, but I do know that when people are ordered by the government to be charitable, it's not virtuous; it's compelled. Why would anyone get into heaven because he pays taxes under threat of imprisonment? Moral action is freely chosen action.

This is textbook socialist thinking - first, that government control is the best solution to the society's ills, when lead by the "right people"; second, that because it is right to do something, people should therefore be forced to do so. While people will argue about the results (charity doesn't cover everyone / civilized society should be like this / etc.), they ignore the moral contradiction of being compelled to do what's right. The first attack on those who stand on principle and advocate individual freedom and responsibility is that such people are cold-hearted and unsympathetic of other's suffering. They champion the "charity" of their forced programs and claim the lover of liberty has no love for his fellow man. Unfortunately, many people believe this rhetoric and end up believing that to advocate freedom is to be against charity. Nothing could be farther from the truth...

Health Care Is a Business - or Should Be

http://www.capmag.com/article.asp?ID=4948

Ultimately all health care is paid for by business activity. Business provides the wages, the return on investment, the insurance, the taxes that pay directly for health care, and the insurance and taxes that fund government programs. When the government manages to provide services at all, it can give you nothing that it does not take from you or others, or from your employer and other employers. The total added value the government creates for your benefit is nothing.

The government now uses your money to pay for 50 percent of health care. That is up from less than 10 percent, forty years ago. The increase in health care costs that has accompanied this process is largely caused by government—the actual origin of the "health care crisis," discovered and proclaimed by Richard Nixon and Edward Kennedy in 1971. Their proposed solution was more government. They got it.

The "crisis" was created by government, not just through its own reckless spending, but through the consequent destruction of much of the free market.

Economic Inequality: Process and Results

http://www.capmag.com/article.asp?ID=4803

... many people erroneously use income inequality as a measure of fairness. Income is a result. As such, results cannot establish whether there is fairness or justice.
... For the most part, income is a result of one's productivity and the value that people place on that productivity. Far more important than income inequality, there is productivity inequality. That suggests that if there's anything to be done about income inequality, we should focus on how to give people greater capacity in serving their fellow man, and we should make sure there's a climate of peaceable, voluntary exchange.

A good lesson about the real reasons why some people have a greater income than others (they create more value), and a very plain argument for why redistribution of income is morally unjustifiable.

Springtime for Taxes

http://www.realclearpolitics.com/articles/2007/04/springtime_for_taxes.html

Twelve years ago, Estonia became the first country to tax everyone -- companies and individuals -- at the same flat rate. It started at 26 percent, dropped to 22, and will go to 20 in 2009. There are a few deductions for things like mortgage interest, educational expenses, and charitable donations. Very low incomes are exempt.

Unsurprisingly, Estonia is booming. The former Soviet republic used to be poor, with an average income 65 percent below its European neighbors. Today, Estonians are almost as rich as their neighbors, and their economy is growing more than 11 percent a year.

Corporations like a tax system that is low and simple, too, and that leads them to do more business in flat-tax countries. American companies such as Microsoft, Colgate, 3M, Bristol-Meyers Squibb, and Johnson & Johnson opened businesses in Estonia after the flat tax was adopted. Twelve years ago, foreign investment in Estonia made up only 5 percent of GDP, but today, it's up to 20 percent. That means there's more money in the Estonian economy to tax. So while the tax rate dropped, government revenues actually increased.

So why can't we do that here?

Great essay from John Stossel. Not only does it make a case for a flat tax system, but it shows why our politicians are loathe to change the status quo. Our tax code may be obtuse, but it's not hard to understand why such a system gives politicians lots of leverage. If you think you're a victim, you can lobby for a special exemption for whatever unfair burden you suffer from. Nothing looks better on election day than a politician who can claim to have "relieved the burden" of the american taxpayer. How easy would it be to curry favor with voters through tax manipulation if we adopted a flat tax - and eliminated all the exceptions?

I haven't heard anyone yet make a good case for why we shouldn't adopt a flat tax that doesn't hinge upon the idea of redistribution of wealth. Everyone agrees that taxes shouldn't be so hard to file. Most people would agree (except those who depend on it for influence and power) that removing the incentive for politicians to manipulate the tax laws would be a good idea. Of course, most people would hope to pay less taxes under any proposal to change the status quo. Personally, I'm less concerned with how much I'm paying than I am with how clearly the current tax system violates principle and the consequences of such violation.

As for those who would complain about the unfair or disproportionate burden a flat tax would impose on the poor, who prefer a system where the rich would pay a greater portion, I would ask - what is your moral and rational justification for taking by force the wealth of one man to give to another, by virtue of his having less? By what criteria will you make the distinction between rich and poor? What does it do to society to reward failure, and punish success?

How long do you think such a system can sustain itself if it takes from those who have demonstrated their capacity to produce and gives to those who have demonstrated only their capacity to consume?