What you need to know.

The pitch is fevered, and social media is ablaze. AOC is lighting it up, waxing poetic and shaking her fist in violent lecture as Beto and Bernie ready their pitchforks.

The tax-the-rich revolution is coming.

(The government, you know, just needs more funding, because they’re so great at allocating resources and fixing social problems, right? Right guys? Anyone?).

As the new democratic-socialists of America gear up for the 2020 run, they fight for high-ground in the free college, free healthcare, free-everything debate. The bumbling republicans (and their orangutan-in-chief) prefer instead to bypass more taxes and spend only with borrowed money.

No party for small government, we get two equally giant, equally steaming piles of elephant dung, both enabled by what is now – alarmingly – a confused Central Bank.

For those who understand history, liberty and real (not pseudo-) economics, only the doves cry. No candidates campaign for our voting bloc.

We’re just too small a constituency.

The economy, meanwhile, spits and stirs like an old steam engine with gum in the gears, teetering wildly between bubble and bust (as credit-issuance rams head-on into the law of diminishing marginal returns).

Questioning capitalism

The do-gooders whining for others to “pay-their-fair-share” blame capitalism for our problems. How else could the gap grow so large between haves and have-nots?

Even billionaires like (hedge-fund-titan) Ray Dalio are calling for reformation, pointing to the many economic problems cropping up mostly since the 1970s.

Our readers know the real culprit. That’s when gold-convertibility was removed from the US Dollar, the bedrock yanked from the global monetary system, teetering now only in sand.

Thought exercise: What would happen – “hypothetically” – if a special, privileged group had the ability to create money from nothing, while everyone else had to work or trade for it?

Picture likewise that unlimited credit is made available at low interest for those with collateral (big corporations and the wealthy) to borrow printed money and buy up assets?

Might that cause the problems we’re all bitching about? In that scenario, does wealth get concentrated in the hands of the few? Um, duh.

Might it be better, more fair, if instead of giving anyone the ability to get money from nothing, we used an element from the Earth, dug up already, intrinsically valuable and limited in supply, that had just the right mix of qualities, proven successful in the role for 3,000 years?

Everyone had to earn it, fair and square. No one had special access. That sounds like a better, more equitable system to serve the masses, right?

Alas, the government is no longer run for the masses.

When the system is rigged, and laws are written to favor the powerful class, to stifle competition and protect incumbents, we can safely say it is no longer capitalism.

And the answer, unfortunately, isn’t socialism (assuming you have any regard for history).

Socialism is central planning through force. It shrinks the pie, and misallocates resources, ending in shortages and collapse.

If the USSR wasn’t example enough, how about the perfectly executed experiments of East vs West Germany or North vs South Korea?

Look at Venezuela today. Hugo Chavez’ socialist paradise is a ruined, starving dumpster fire, where people kill-and-eat street rats and stray dogs just to stay alive. And it only took 20 years of socialism.

Why do you think China is heading the other direction?

No matter though, with petty details like the historical record. The hooters and cacklers, liking, sharing and reposting, are not looking backwards. Viewpoints are formed on soundbites alone.

Feeling (not thinking) is what we do now, especially in groups (credit: Doug Casey).

And aren’t we lucky, to get our groupthink from the comfort of home with cute little emojis and a special mix of advertising/media designed only to exploit our biases?

But I get why they’re mad, the hooters and cacklers. I know why they want change. Something’s not right.

Something isn’t fair.

Wealth and power are too concentrated, far from the people. Socialism feels like the answer, if you can’t diagnose the problem. The feeling is-

      • Trump equals capitalism.
      • Massive debt equals capitalism.
      • War equals capitalism.
      • Favoring the rich equals capitalism.
      • Price gouging, expensive tuitions and medical care, equal capitalism.
      • Corporatism equals capitalism.

Meanwhile, socialism is easily positioned as altruistic, so you can feel good about yourself, even while demanding handouts (the perfect combination, like pepperoni and sausage, a clever marketer’s dream).

The problem is that none of those bullet points are even accurate. Those ills are products of the state, and socialism is even more brute force. Capitalism, conversely, is about voluntary exchange.

But both have been successfully rebranded, capitalism scapegoated to shift blame and protect the powerbase. What we have today is almost purely cronyism.

And you know what?

Those holding the most wealth and power are okay with calls for more socialism and the vilifying of capitalism, since they obfuscate the real problem.

They will gladly tolerate a higher degree of redistribution on W2 income as long as they can maintain special access to freshly printed money, to buy up and depreciate the assets while charging you rent, variable interest rate spreads, and inflating away their debt burdens.

Thus, the hooting and cackling will continue, from those who are mad, and rightly so, but wrongly directed – misdirected – by the powerbase whose objective at all costs is to preserve the con.

Now to Part II, when we explain what this will mean for your kids, and how to position your family accordingly. Join our list to never miss an update. 

Better information, for free-thinking parents.

Yes, please send me the monthly column.

 

Want more on this subject? Try The Father’s Day Dilemma.

  • By admin
  • Apr 2019 at 12:29 pm
  • 6

6 Replies to “Capitalism vs. Socialism, Part I”

  1. Well written and spot on. I’d like to make a bit of a distinction regarding socialism. There really are two versions, and to use some geography we can call version one: Scandinavian countries and version two: Venezuela, North korea, Cuba …and some other misguided places. Furthermore socialism can be an economic system which is what you see in Scandinavia or socialism can be more of an ideology which version two countries has converted into what really amounts to communism – that is, the state has taken complete ownership and seized private property.

    Socialism in version one is nothing more than an economic model, socialism in version two, attempts to socialize not just the economy but the press, the party system, property rights, even religion in the sense that the party and its doctrines / leader becomes the only accepted model of thinking.

    Version one socialism is prevalent in all industrialized nations, but on a sliding scale. One can argue that you cannot talk of a “nation state” without a degree of socialism. For instance in the U.S we have socialized education K-12 and we have socialized health care 65+ (roughly speaking) – now take a Scandinavian country, here the only difference is that its economy is “socialized” to a higher degree – so Scandinavians have K-university and 0-end of life covered on the healthcare side.

    So socialism as an economic model is not either or, its to which degree. Here I will argue that in the Scandinavian version there are some societal benefits when full healthcare and education is included in the tax package (remember we are going to pay no matter what) – for one, it makes healthcare and education cheaper because the middle layers of profit, insurance and lawsuits are cut out . Here countries adopting socialized medicine usually spends 8-12% of GDP to cover everyone where America spends 17-19%, and still leaves millions out. On the education side, you also end up with a higher percentage of the population educated, which in turn increases innovation and export, and might add makes the inhabitants score very high on happiness indexes.

    Socialism as an economic model – is not much different from a small community of farmers deciding to pool their resources and build their own diary in order to save money and have full control versus paying a profit driven third party. However, when a highly socialized economy works so well in Scandinavia – based on high scores of happiness and measured by debt to GDP ratios 1/3 of the U.S – it is because they are very homogeneous populations with governments that are transparent and non-corrupt. As a Danish citizen, living in the U.S for 17 years I don’t see that happening here. The U.S population is too diverse (on cultural measures too) and the government too corrupt – not at the street level where you can bribe a cop, but unfortunately at the highest offices where special interest has been allowed to buy influence for the short term benefit of their sector versus the long term benefit of the country.

    I hope that when we discuss socialism in the future, we can distinguish between the extreme versions of the ideology versus the economic and reasonable argument for its benefits.

    1. Great comments, Tom, and thank you for reading (and writing). I agree with most of what you said, especially regarding special interests buying influence in rule-making. Somehow it’s been completely sanitized at almost all levels of government, carefully positioned (marketed) as safeguards for us plebes. Thanks again!

    2. Theft is never ok.

      Taking what i earned because you voted for it is never fair or moral.

      You want something, go earn it like i did. You do not have a right to what i own..

      1. Amen, Jason. If people want to “do good”, that’s great. Open up your wallet and give to charity, or spend the afternoon volunteering. Voting for government handouts is a good way to destroy the golden goose, and most of them are pilfered anyway by lobbyists and bureaucrats. Thanks for reading!

  2. Tom – As i reading this article I was going to make comments exactly similar to yours, but you’ve said it much more eloquently. I don’t think there are any US candidates currently lobbying for the second style of socialism that you mention, however, that is what the press picks up on. There is already so much socialism in US today, but it’s never discussed that way. Look at public utilities.

    And to all those saying to go out and earn it yourself, that’s just not possible for everyone. Every society is going to have a certain subset of the population that needs additional help and should be supported by the collective populace. Sure, there are some bound to be some freeloaders and they get elevated in conversation, but they are literally on the margin and are a tiny fraction of the whole. But everyone is so bought into the idea of fairness that they can’t see past that.

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