An oldie but a goodie:
Father-Daughter Talk...
A young woman was about to finish her first year of college. Like so many others her age, she considered herself to be a very liberal Democrat, and among other liberal ideals, was very much in favor of higher taxes to support more government programs; in other words, redistribution of wealth.
She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed. Based on the lectures that she had participated in, and the occasional chat with a professor, she felt that her father had for years harbored an evil, selfish desire to keep what he thought should be his.
One day, she was challenging her father on his opposition to higher taxes on the rich, and the need for more government programs. The self-professed objectivity proclaimed by her professor had to be the truth, and she indicated so to her father. He responded by asking how she was doing in school.
Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying, which left her no time to go out and party like other people she knew. She didn't even have time for a boyfriend, and didn't really have many college friends either because she spent all her time studying.
Her father listened, then asked, "How is your friend Audrey doing?" She replied, "Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She's always invited to all the parties, and lots of times she doesn't even show up for classes because she's too hung over."
Her father asked her, "Why don't you go to the Dean's office and ask him to deduct a 1.0 off your GPA and give it to your friend Audrey, who only has a 2.0? That way you will both have a 3.0 GPA, and certainly that would be a fair and equal distribution of GPA."
The daughter, visibly shocked by her father's suggestion, angrily fired back, "That's a crazy idea! How would that be fair? I've worked really hard for my grades! I've invested a lot of time, and a lot of hard work. And she's done next to nothing toward her degree. She played while I worked my tail off!"
The father slowly smiled and said gently, "Welcome to the Republican Party."
While I feel that in many ways the Republican Party has abandoned their party members and their conservative ideals in favor of being closer to the "middle," I do enjoy the sentiment here... at least this part is still true.
Oh, and for the record, this is NOTHING like any conversation my father and I every had... as he definitely tends to be more liberal than myself.
Showing posts with label Democrats. Show all posts
Showing posts with label Democrats. Show all posts
Friday, January 9, 2009
An Uneducated Public and a Biased Media
Wednesday, November 19
An interesting poll from Zogby (below). It is a bit sad regarding the lack of knowledge of the general public other than on the sensationalized, tabloid-ish information. Does this mean that the current media groups are basically advocates for chosen political parties and candidates?
As has become quite evident, I am sure, I certainly tend toward the right, and call myself a conservative (Why? Because I believe in business, small government, the Bill of Rights, and the American Dream). I also consider it a personal obligation for all Americans to vote and to be at least moderately educated on their government. There are still people out there that do not understand that the Congress can be controlled by one party and the President be from an opposing party (though both will be under Democratic control come January). I'm not saying everyone should or does have the time, energy and motivation to do the listening, watching and reading that I do, but a simplistic, loose understanding of the 3 branches of government, who controls them and what their basic jobs are should be a personal responsibility of American citizens. It is not about who has the worst information about them out there... I don't think a completely "clean" politician even exists anymore, but why are both sides not evenly reported is the question...
http://www.zogby.com/news/ReadNews.cfm?ID=1642
Zogby Poll: Almost No Obama Voters Ace Election Test
Survey finds most Obama voters remembered negative coverage of McCain/Palin statements but struggled to correctly answer questions about coverage associated with Obama/Biden
UTICA, New York -- Just 2% of voters who supported Barack Obama on Election Day obtained perfect or near-perfect scores on a post election test which gauged their knowledge of statements and scandals associated with the presidential tickets during the campaign, a new Zogby International telephone poll shows.
Zogby Statement on Ziegler poll
Only 54% of Obama voters were able to answer at least half or more of the questions correctly.
The 12-question, multiple-choice survey found questions regarding statements linked to Republican presidential candidate John McCain and his vice-presidential running-mate Sarah Palin were far more likely to be answered correctly by Obama voters than questions about statements associated with Obama and Vice-President–Elect Joe Biden. The telephone survey of 512 Obama voters nationwide was conducted Nov. 13-15, 2008, and carries a margin of error of +/- 4.4 percentage points. The survey was commissioned by John Ziegler, author of The Death of Free Speech, producer of the recently released film "Blocking the Path to 9/11" and producer of the upcoming documentary film, Media Malpractice...How Obama Got Elected.
"We stand by the results our survey work on behalf of John Ziegler, as we stand by all of our work. We reject the notion that this was a push poll because it very simply wasn't. It was a legitimate effort to test the knowledge of voters who cast ballots for Barack Obama in the Nov. 4 election. Push polls are a malicious effort to sway public opinion one way or the other, while message and knowledge testing is quite another effort of public opinion research that is legitimate inquiry and has value in the public square. In this case, the respondents were given a full range of responses and were not pressured or influenced to respond in one way or another. This poll was not designed to hurt anyone, which is obvious as it was conducted after the election. The client is free to draw his own conclusions about the research, as are bloggers and other members of society. But Zogby International is a neutral party in this matter. We were hired to test public opinion on a particular subject and with no ax to grind, that's exactly what we did. We don't have to agree or disagree with the questions, we simply ask them and provide the client with a fair and accurate set of data reflecting public opinion." - John Zogby
"After I interviewed Obama voters on Election Day for my documentary, I had a pretty low opinion of what most of them had picked up from the media coverage of the campaign, but this poll really proves beyond any doubt the stunning level of malpractice on the part of the media in not educating the Obama portion of the voting populace," said Ziegler.
Ninety-four percent of Obama voters correctly identified Palin as the candidate with a pregnant teenage daughter, 86% correctly identified Palin as the candidate associated with a $150,000 wardrobe purchased by her political party, and 81% chose McCain as the candidate who was unable to identify the number of houses he owned. When asked which candidate said they could "see Russia from their house," 87% chose Palin, although the quote actually is attributed to Saturday Night Live's Tina Fey during her portrayal of Palin during the campaign. An answer of "none" or "Palin" was counted as a correct answer on the test, given that the statement was associated with a characterization of Palin.
Obama voters did not fare nearly as well overall when asked to answer questions about statements or stories associated with Obama or Biden -- 83% failed to correctly answer that Obama had won his first election by getting all of his opponents removed from the ballot, and 88% did not correctly associate Obama with his statement that his energy policies would likely bankrupt the coal industry. Most (56%) were also not able to correctly answer that Obama started his political career at the home of two former members of the Weather Underground.
Nearly three quarters (72%) of Obama voters did not correctly identify Biden as the candidate who had to quit a previous campaign for President because he was found to have plagiarized a speech, and nearly half (47%) did not know that Biden was the one who predicted Obama would be tested by a generated international crisis during his first six months as President.
In addition to questions regarding statements and scandals associated with the campaigns, the 12-question, multiple-choice survey also included a question asking which political party controlled both houses of Congress leading up to the election -- 57% of Obama voters were unable to correctly answer that Democrats controlled both the House and the Senate.
An interesting poll from Zogby (below). It is a bit sad regarding the lack of knowledge of the general public other than on the sensationalized, tabloid-ish information. Does this mean that the current media groups are basically advocates for chosen political parties and candidates?
As has become quite evident, I am sure, I certainly tend toward the right, and call myself a conservative (Why? Because I believe in business, small government, the Bill of Rights, and the American Dream). I also consider it a personal obligation for all Americans to vote and to be at least moderately educated on their government. There are still people out there that do not understand that the Congress can be controlled by one party and the President be from an opposing party (though both will be under Democratic control come January). I'm not saying everyone should or does have the time, energy and motivation to do the listening, watching and reading that I do, but a simplistic, loose understanding of the 3 branches of government, who controls them and what their basic jobs are should be a personal responsibility of American citizens. It is not about who has the worst information about them out there... I don't think a completely "clean" politician even exists anymore, but why are both sides not evenly reported is the question...
http://www.zogby.com/news/ReadNews.cfm?ID=1642
Zogby Poll: Almost No Obama Voters Ace Election Test
Survey finds most Obama voters remembered negative coverage of McCain/Palin statements but struggled to correctly answer questions about coverage associated with Obama/Biden
UTICA, New York -- Just 2% of voters who supported Barack Obama on Election Day obtained perfect or near-perfect scores on a post election test which gauged their knowledge of statements and scandals associated with the presidential tickets during the campaign, a new Zogby International telephone poll shows.
Zogby Statement on Ziegler poll
Only 54% of Obama voters were able to answer at least half or more of the questions correctly.
The 12-question, multiple-choice survey found questions regarding statements linked to Republican presidential candidate John McCain and his vice-presidential running-mate Sarah Palin were far more likely to be answered correctly by Obama voters than questions about statements associated with Obama and Vice-President–Elect Joe Biden. The telephone survey of 512 Obama voters nationwide was conducted Nov. 13-15, 2008, and carries a margin of error of +/- 4.4 percentage points. The survey was commissioned by John Ziegler, author of The Death of Free Speech, producer of the recently released film "Blocking the Path to 9/11" and producer of the upcoming documentary film, Media Malpractice...How Obama Got Elected.
"We stand by the results our survey work on behalf of John Ziegler, as we stand by all of our work. We reject the notion that this was a push poll because it very simply wasn't. It was a legitimate effort to test the knowledge of voters who cast ballots for Barack Obama in the Nov. 4 election. Push polls are a malicious effort to sway public opinion one way or the other, while message and knowledge testing is quite another effort of public opinion research that is legitimate inquiry and has value in the public square. In this case, the respondents were given a full range of responses and were not pressured or influenced to respond in one way or another. This poll was not designed to hurt anyone, which is obvious as it was conducted after the election. The client is free to draw his own conclusions about the research, as are bloggers and other members of society. But Zogby International is a neutral party in this matter. We were hired to test public opinion on a particular subject and with no ax to grind, that's exactly what we did. We don't have to agree or disagree with the questions, we simply ask them and provide the client with a fair and accurate set of data reflecting public opinion." - John Zogby
"After I interviewed Obama voters on Election Day for my documentary, I had a pretty low opinion of what most of them had picked up from the media coverage of the campaign, but this poll really proves beyond any doubt the stunning level of malpractice on the part of the media in not educating the Obama portion of the voting populace," said Ziegler.
Ninety-four percent of Obama voters correctly identified Palin as the candidate with a pregnant teenage daughter, 86% correctly identified Palin as the candidate associated with a $150,000 wardrobe purchased by her political party, and 81% chose McCain as the candidate who was unable to identify the number of houses he owned. When asked which candidate said they could "see Russia from their house," 87% chose Palin, although the quote actually is attributed to Saturday Night Live's Tina Fey during her portrayal of Palin during the campaign. An answer of "none" or "Palin" was counted as a correct answer on the test, given that the statement was associated with a characterization of Palin.
Obama voters did not fare nearly as well overall when asked to answer questions about statements or stories associated with Obama or Biden -- 83% failed to correctly answer that Obama had won his first election by getting all of his opponents removed from the ballot, and 88% did not correctly associate Obama with his statement that his energy policies would likely bankrupt the coal industry. Most (56%) were also not able to correctly answer that Obama started his political career at the home of two former members of the Weather Underground.
Nearly three quarters (72%) of Obama voters did not correctly identify Biden as the candidate who had to quit a previous campaign for President because he was found to have plagiarized a speech, and nearly half (47%) did not know that Biden was the one who predicted Obama would be tested by a generated international crisis during his first six months as President.
In addition to questions regarding statements and scandals associated with the campaigns, the 12-question, multiple-choice survey also included a question asking which political party controlled both houses of Congress leading up to the election -- 57% of Obama voters were unable to correctly answer that Democrats controlled both the House and the Senate.
Socialism = Fail
Thursday, October 23, 2008
As the discussion heats up regarding the United States' march towards socialism, particularly in the plans of Obama (and our ridiculously left-leaning and controlled Congress) I felt obligated to share some information on the failure of socialism...:
The first article I'm sharing was written in 1995. While the US has maintained "socialized" policies for decades (particularly starting around and after the Great Depression) moving closer to that system would destroy the hope that we offer to the world.
http://www.fee.org/publications/the-freeman/article.asp?aid=4014
The Freeman: Ideas on Liberty - June 1995
Features:Why Socialism Failed
By Mark J. Perry
In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.
A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. 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.
In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory
Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.
that incentives matter!
Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don't matter!
In a radio debate several months ago with a Marxist professor from the University of Minnesota, I pointed out the obvious failures of socialism around the world in Cuba, Eastern Europe, and China. At the time of our debate, Haitian refugees were risking their lives trying to get to Florida in homemade boats. Why was it, I asked him, that people were fleeing Haiti and traveling almost 500 miles by ocean to get to the "evil capitalist empire" when they were only 50 miles from the "workers' paradise" of Cuba?
The Marxist admitted that many "socialist" countries around the world were failing. However, according to him, the reason for failure is not that socialism is deficient, but that the socialist economies are not practicing "pure" socialism. The perfect version of socialism would work; it is just the imperfect socialism that doesn't work. Marxists like to compare a theoretically perfect version of socialism with practical, imperfect capitalism which allows them to claim that socialism is superior to capitalism.
If perfection really were an available option, the choice of economic and political systems would be irrelevant. In a world with perfect beings and infinite abundance, any economic or political system--socialism, capitalism, fascism, or communism--would work perfectly.
However, the choice of economic and political institutions is crucial in an imperfect universe with imperfect beings and limited resources. In a world of scarcity it is essential for an economic system to be based on a clear incentive structure to promote economic efficiency. The real choice we face is between imperfect capitalism and imperfect socialism. Given that choice, the evidence of history overwhelmingly favors capitalism as the greatest wealth-producing economic system available.
The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.
Prices
The price system in a market economy guides economic activity so flawlessly that most people don't appreciate its importance. Market prices transmit information about relative scarcity and then efficiently coordinate economic activity. The economic content of prices provides incentives that promote economic efficiency.
For example, when the OPEC cartel restricted the supply of oil in the 1970s, oil prices rose dramatically. The higher prices for oil and gasoline transmitted valuable information to both buyers and sellers. Consumers received a strong, clear message about the scarcity of oil by the higher prices at the pump and were forced to change their behavior dramatically. People reacted to the scarcity by driving less, carpooling more, taking public transportation, and buying smaller cars. Producers reacted to the higher price by increasing their efforts at exploration for more oil. In addition, higher oil prices gave producers an incentive to explore and develop alternative fuel and energy sources.
The information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.
The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price.
Look at what happened during the 1970s when U.S. gas prices were controlled. Long lines developed at service stations all over the country because the price for gasoline was kept artificially low by government fiat. The full impact of scarcity was not accurately conveyed. As Milton Friedman pointed out at the time, we could have eliminated the lines at the pump in one day by allowing the price to rise to clear the market.
From our experience with price controls on gasoline and the long lines at the pump and general inconvenience, we get an insight into what happens under socialism where every price in the economy is controlled. The collapse of socialism is due in part to the chaos and inefficiency that result from artificial prices. The information content of a controlled price is always distorted. This in turn distorts the incentives mechanism of prices under socialism. Administered prices are always either too high or too low, which then creates constant shortages and surpluses. Market prices are the only way to transmit information that will create the incentives to ensure economic efficiency.
Profits and Losses
Socialism also collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses.
By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.
Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated.
Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives the results are a spiraling cycle of poverty and misery. Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
Private Property Rights
A third fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a "tragedy of commons" on a global scale.
The "tragedy of the commons" refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource.
When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement.
Since socialism, by definition, is a system marked by the "common ownership of the means of production," the failure of socialism is a "tragedy of the commons" on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.
As Peruvian economist Hernando de Soto remarked, you can travel in rural communities around the world and you will hear dogs barking, because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries are just now starting to recognize the importance of private property as they privatize assets and property in Eastern Europe.
Incentives Matter
Without the incentives of market prices, profit-and-loss accounting, and well-defined property rights, socialist economies stagnate and wither. The economic atrophy that occurs under socialism is a direct consequence of its neglect of economic incentives.
No bounty of natural resources can ever compensate a country for its lack of an efficient system of incentives. Russia, for example, is one of the world's wealthiest countries in terms of natural resources; it has some of the world's largest reserves of oil, natural gas, diamonds, and gold. Its valuable farm land, lakes, rivers, and streams stretch across a land area that encompasses 11 time zones. Yet Russia remains poor. Natural resources are helpful, but the ultimate resources of any country are the unlimited resources of its people--human resources.
By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned economies deprive the human spirit of full development. Socialism fails because it kills and destroys the human spirit--just ask the people leaving Cuba in homemade rafts and boats.
As the former centrally planned economies move toward free markets, capitalism, and democracy, they look to the United States for guidance and support during the transition. With an unparalleled 250-year tradition of open markets and limited government, the United States is uniquely qualified to be the guiding light in the worldwide transition to freedom and liberty.
We have an obligation to continue to provide a framework of free markets and democracy for the global transition to freedom. Our responsibility to the rest of the world is to continue to fight the seductiveness of statism around the world and here at home. The seductive nature of statism continues to tempt and lure us into the Barmecidal illusion that the government can create wealth.
The temptress of socialism is constantly luring us with the offer: "give up a little of your freedom and I will give you a little more security." As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.
Programs like socialized medicine, welfare, social security, and minimum wage laws will continue to entice us because on the surface they appear to be expedient and beneficial. Those programs, like all socialist programs, will fail in the long run regardless of initial appearances. These programs are part of the Big Lie of socialism because they ignore the important role of incentives.
Socialism will remain a constant temptation. We must be vigilant in our fight against socialism not only around the globe but also here in the United States.
The failure of socialism inspired a worldwide renaissance of freedom and liberty. For the first time in the history of the world, the day is coming very soon when a majority of the people in the world will live in free societies or societies rapidly moving towards freedom.
Capitalism will play a major role in the global revival of liberty and prosperity because it nurtures the human spirit, inspires human creativity, and promotes the spirit of enterprise. By providing a powerful system of incentives that promote thrift, hard work, and efficiency, capitalism creates wealth.
The main difference between capitalism and socialism is this: Capitalism works.
Some history of the failure of socialism in America (for a variety of reasons):
http://www.socyberty.com/Politics/Why-Did-Socialism-Fail-to-Flourish-in-America.136410
An interesting piece on "Risk Socialism" and Wall Street (interestingly written in April of this year... well before the recent "bail-outs"):
http://www.huffingtonpost.com/kevin-phillips/why-wall-street-socialism_b_96772.html
Yes, I have recently called people "socialists" (some are offended by this, some take it in stride, others with pride). The most accurate definitions for the current tendencies of our government seems to be: social democrats or democratic socialism (both with heavy Marxist influences and often work in the same political party)
Democratic Socialism: refers to all forms of socialism that follow an electoral, reformist or repath to socialism, rather than a revolutionary one... often tied to: strong welfare state, fiscal redistribution, some nationalization as well as class struggle
Social Democracy: often include support for a democratic welfare state which incorporates elements of both socialism and capitalism.
(details from Wikipedia)
Just some food for thought.
Side note on socialism: I just don't understand why one person has a right to the fruits of another's success...in the form of a check from the federal government, from another person's tax dollars.
Capitalism (yes, even imperfect capitalism) feeds innovation, drive, creativity and desire to succeed. No, success is not guaranteed, it is a goal (like pursuit of happiness is a right, happiness is not guaranteed). Systems, organizations, etc must be allowed to FAIL without the government propping them up every time.
I am going to butcher this quote, as I heard it and did not write it down, but the basics were this: Those who fail are not losers. Those who fail and do not get up and keep going are losers. (Glenn Beck)
As the discussion heats up regarding the United States' march towards socialism, particularly in the plans of Obama (and our ridiculously left-leaning and controlled Congress) I felt obligated to share some information on the failure of socialism...:
The first article I'm sharing was written in 1995. While the US has maintained "socialized" policies for decades (particularly starting around and after the Great Depression) moving closer to that system would destroy the hope that we offer to the world.
http://www.fee.org/publications/the-freeman/article.asp?aid=4014
The Freeman: Ideas on Liberty - June 1995
Features:Why Socialism Failed
By Mark J. Perry
In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.
A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. 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.
In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory
Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.
that incentives matter!
Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don't matter!
In a radio debate several months ago with a Marxist professor from the University of Minnesota, I pointed out the obvious failures of socialism around the world in Cuba, Eastern Europe, and China. At the time of our debate, Haitian refugees were risking their lives trying to get to Florida in homemade boats. Why was it, I asked him, that people were fleeing Haiti and traveling almost 500 miles by ocean to get to the "evil capitalist empire" when they were only 50 miles from the "workers' paradise" of Cuba?
The Marxist admitted that many "socialist" countries around the world were failing. However, according to him, the reason for failure is not that socialism is deficient, but that the socialist economies are not practicing "pure" socialism. The perfect version of socialism would work; it is just the imperfect socialism that doesn't work. Marxists like to compare a theoretically perfect version of socialism with practical, imperfect capitalism which allows them to claim that socialism is superior to capitalism.
If perfection really were an available option, the choice of economic and political systems would be irrelevant. In a world with perfect beings and infinite abundance, any economic or political system--socialism, capitalism, fascism, or communism--would work perfectly.
However, the choice of economic and political institutions is crucial in an imperfect universe with imperfect beings and limited resources. In a world of scarcity it is essential for an economic system to be based on a clear incentive structure to promote economic efficiency. The real choice we face is between imperfect capitalism and imperfect socialism. Given that choice, the evidence of history overwhelmingly favors capitalism as the greatest wealth-producing economic system available.
The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.
Prices
The price system in a market economy guides economic activity so flawlessly that most people don't appreciate its importance. Market prices transmit information about relative scarcity and then efficiently coordinate economic activity. The economic content of prices provides incentives that promote economic efficiency.
For example, when the OPEC cartel restricted the supply of oil in the 1970s, oil prices rose dramatically. The higher prices for oil and gasoline transmitted valuable information to both buyers and sellers. Consumers received a strong, clear message about the scarcity of oil by the higher prices at the pump and were forced to change their behavior dramatically. People reacted to the scarcity by driving less, carpooling more, taking public transportation, and buying smaller cars. Producers reacted to the higher price by increasing their efforts at exploration for more oil. In addition, higher oil prices gave producers an incentive to explore and develop alternative fuel and energy sources.
The information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.
The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price.
Look at what happened during the 1970s when U.S. gas prices were controlled. Long lines developed at service stations all over the country because the price for gasoline was kept artificially low by government fiat. The full impact of scarcity was not accurately conveyed. As Milton Friedman pointed out at the time, we could have eliminated the lines at the pump in one day by allowing the price to rise to clear the market.
From our experience with price controls on gasoline and the long lines at the pump and general inconvenience, we get an insight into what happens under socialism where every price in the economy is controlled. The collapse of socialism is due in part to the chaos and inefficiency that result from artificial prices. The information content of a controlled price is always distorted. This in turn distorts the incentives mechanism of prices under socialism. Administered prices are always either too high or too low, which then creates constant shortages and surpluses. Market prices are the only way to transmit information that will create the incentives to ensure economic efficiency.
Profits and Losses
Socialism also collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses.
By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.
Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated.
Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives the results are a spiraling cycle of poverty and misery. Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
Private Property Rights
A third fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a "tragedy of commons" on a global scale.
The "tragedy of the commons" refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource.
When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement.
Since socialism, by definition, is a system marked by the "common ownership of the means of production," the failure of socialism is a "tragedy of the commons" on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.
As Peruvian economist Hernando de Soto remarked, you can travel in rural communities around the world and you will hear dogs barking, because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries are just now starting to recognize the importance of private property as they privatize assets and property in Eastern Europe.
Incentives Matter
Without the incentives of market prices, profit-and-loss accounting, and well-defined property rights, socialist economies stagnate and wither. The economic atrophy that occurs under socialism is a direct consequence of its neglect of economic incentives.
No bounty of natural resources can ever compensate a country for its lack of an efficient system of incentives. Russia, for example, is one of the world's wealthiest countries in terms of natural resources; it has some of the world's largest reserves of oil, natural gas, diamonds, and gold. Its valuable farm land, lakes, rivers, and streams stretch across a land area that encompasses 11 time zones. Yet Russia remains poor. Natural resources are helpful, but the ultimate resources of any country are the unlimited resources of its people--human resources.
By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned economies deprive the human spirit of full development. Socialism fails because it kills and destroys the human spirit--just ask the people leaving Cuba in homemade rafts and boats.
As the former centrally planned economies move toward free markets, capitalism, and democracy, they look to the United States for guidance and support during the transition. With an unparalleled 250-year tradition of open markets and limited government, the United States is uniquely qualified to be the guiding light in the worldwide transition to freedom and liberty.
We have an obligation to continue to provide a framework of free markets and democracy for the global transition to freedom. Our responsibility to the rest of the world is to continue to fight the seductiveness of statism around the world and here at home. The seductive nature of statism continues to tempt and lure us into the Barmecidal illusion that the government can create wealth.
The temptress of socialism is constantly luring us with the offer: "give up a little of your freedom and I will give you a little more security." As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.
Programs like socialized medicine, welfare, social security, and minimum wage laws will continue to entice us because on the surface they appear to be expedient and beneficial. Those programs, like all socialist programs, will fail in the long run regardless of initial appearances. These programs are part of the Big Lie of socialism because they ignore the important role of incentives.
Socialism will remain a constant temptation. We must be vigilant in our fight against socialism not only around the globe but also here in the United States.
The failure of socialism inspired a worldwide renaissance of freedom and liberty. For the first time in the history of the world, the day is coming very soon when a majority of the people in the world will live in free societies or societies rapidly moving towards freedom.
Capitalism will play a major role in the global revival of liberty and prosperity because it nurtures the human spirit, inspires human creativity, and promotes the spirit of enterprise. By providing a powerful system of incentives that promote thrift, hard work, and efficiency, capitalism creates wealth.
The main difference between capitalism and socialism is this: Capitalism works.
Some history of the failure of socialism in America (for a variety of reasons):
http://www.socyberty.com/Politics/Why-Did-Socialism-Fail-to-Flourish-in-America.136410
An interesting piece on "Risk Socialism" and Wall Street (interestingly written in April of this year... well before the recent "bail-outs"):
http://www.huffingtonpost.com/kevin-phillips/why-wall-street-socialism_b_96772.html
Yes, I have recently called people "socialists" (some are offended by this, some take it in stride, others with pride). The most accurate definitions for the current tendencies of our government seems to be: social democrats or democratic socialism (both with heavy Marxist influences and often work in the same political party)
Democratic Socialism: refers to all forms of socialism that follow an electoral, reformist or repath to socialism, rather than a revolutionary one... often tied to: strong welfare state, fiscal redistribution, some nationalization as well as class struggle
Social Democracy: often include support for a democratic welfare state which incorporates elements of both socialism and capitalism.
(details from Wikipedia)
Just some food for thought.
Side note on socialism: I just don't understand why one person has a right to the fruits of another's success...in the form of a check from the federal government, from another person's tax dollars.
Capitalism (yes, even imperfect capitalism) feeds innovation, drive, creativity and desire to succeed. No, success is not guaranteed, it is a goal (like pursuit of happiness is a right, happiness is not guaranteed). Systems, organizations, etc must be allowed to FAIL without the government propping them up every time.
I am going to butcher this quote, as I heard it and did not write it down, but the basics were this: Those who fail are not losers. Those who fail and do not get up and keep going are losers. (Glenn Beck)
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