Posted tagged ‘Wealth Redistribution’

Does Socialism Make People Selfish?

July 26, 2016

Since the Democrat convention starts this week, I thought I would talk about the guiding principle of their Party which is Socialism. Although I probably could have posted this last week judging from some of the “highlights” I saw from the Republican convention.

As a coach, my most difficult task is to get each member of our team to think of the team first and himself second. Have you heard the old adage, “there is no I in TEAM? It’s an adage because it’s true! The reason it’s difficult to mold a group of people into a team is because humans are selfish by nature.

The video below, by Prager University, is titled “SOCIALISM MAKES PEOPLE SELFISH”.

I’m going to disagree a little bit with the title, although this may be just a distinction without a difference.

If people are selfish by nature. And socialism incentivizes selfish behavior. Than socialism doesn’t make people selfish as much as it allows their natural selfishness to flourish.

Here is a quote that sums up the differences between capitalism and socialism.

Capitalism is an economic system for devils, of which there are many. Socialism is an economic system for angels of which there are few.”

In a free market capitalist system selfish individuals have to first produce something that other people want in order to receive what they want in return. Give before you receive. Free market capitalism incentivizes the golden rule.

Watch the video narrated by Dennis Prager.

 

In this article, The Problem With Socialism, Thomas DiLorenzo states the definition of socialism as “government ownership of the means of production“. Government politicians and bureaucrats figured out that production was a difficult task that is best left to entrepreneurs. So “the means to the socialist end evolved into government enforcing redistribution of income through the welfare state and the progressive income tax“. So in Robin Hood fashion, they decided to rob the producers of their property and redistribute it to the poor. Even though Robin Hood actually reacquired and gave back the property the tax collectors stole from the producers.

Here is an excerpt from the article: “As Mises wrote in his own classic on Socialism, socialists have always employed a dual strategy: 1) nationalize as much private property as possible: and 2) “destruction” or the destruction of as much of the private property/ free enterprise society as possible with taxes, regulation, inflation.

 

Related ArticleWhy Socialism Won’t Work? Human Nature, at austrianaddict.com.

Related ArticleMilton Friedman – Socialism Is Force, at austrianaddict.com.

Related ArticleSocialism Sounds Great, at austrianaddict.com.

Some Econ Homework

May 11, 2016

How You Don’t Cure Poverty, by Henry Hazlitt, at mises.org. Here are some excerpts from the article:

From the beginning of history sincere reformers as well as demagogues have sought to abolish or at least to alleviate poverty through state action…..The most frequent and popular of these proposed remedies has been the simple one of seizing from the rich to give to the poor…… The wealth is to be “shared,” to be redistributed,” to be “equalized.” In fact, in the minds of many reformers it is not poverty that is the chief evil but inequality….. all schemes for redistributing or equalizing incomes or wealth must undermine or destroy incentives at both ends of the economic scale. They must reduce or abolish the incentives of the unskilled and shiftless to improve their condition by their own efforts, and even the able and industrious will see little point in earning anything beyond what they are allowed to keep. These redistribution schemes must inevitably reduce the size of the pie to be redistributed. They can only level down. Their long-run effect must be to reduce production and lead toward national impoverishment.”

This brings us to the subject of minimum-wage laws. It is profoundly discouraging that in the second half of the twentieth century, in what is supposed to be an age of great economic sophistication, the United States should have such laws on its books, and that it should still be necessary to protest against a nostrum so futile and mischievous. It hurts most the very marginal workers it is designed to help…..I can only repeat what I have written in another place…… We cannot make a man worth a given amount by making it illegal for anyone to offer him less. We merely deprive him of the right to earn the amount that his abilities and opportunities would permit him to earn, while we deprive the community of the moderate services he is capable of rendering. In brief, for a low wage we substitute unemployment.

We come now to the final false remedy for poverty to be considered in this article—outright socialism. By “outright socialism” I refer to the Marxist proposal for “the public ownership and control of the means of production”…..Now the word “socialism” is loosely used to refer to…….the redistribution of wealth or income—if not to make incomes equal, at least to make them much more nearly equal than they are in a market economy. But the majority of those who propose this objective today think that it can be achieved by retaining the mechanisms of private enterprise and then taxing the bigger incomes to subsidize the smaller incomes.”

Why Private Investment Works & Government Investment Doesn’t, at Prager University.

When government tries to pick losers and winners, it typically picks losers. Why? Because in the free market consumers pick winners to leave the losers to Government.”

Another reason Government can’t out perform the free market is because it doesn’t have a tenth of the knowledge that exists in the free market. Also, in the market, when the individual takes the risk he knows he takes the loss if he is wrong. When the Government picks a loser it tries to keep it propped up by subsidizing it with tax dollars. The wasting of scarce resources is kept at a minimal level in the market, because the risk taker stops the unprofitable activity before too long. Resources are liquidated and put toward a more productive use according to consumers desires. Government has no such incentive to stop the nonprofitable activity. They continue wasting scarce resources long after the activity had proven unproductive. If Government bureaucrats were truly in the venture capital business, they would have gone bankrupt years ago.

Economics: It’s Simpler Than You Think, by David Gordan, at mises.org.   From the article:

“…. Skilled entrepreneurs succeed, but many in business fail. The market operates by sorting out of the successful from the failures by the test of profitability. Given this fact, it is as essential that the failures be allowed to fail as it is that those who succeed be allowed to keep their profits. Attempts to prop up failures disable the market.

This vital point can be used to answer a common objection to free trade. Many people object to free trade because, in some cases, foreign competition drives domestic companies out of business, causing unemployment. To the response that expanded trade creates jobs elsewhere in the economy, the reply often given is, what about the workers who do lose their jobs? They are often unable to secure new jobs as good as those they had previously. The fact that others are better off is small solace to them.”…….“In a free economy, capital migrates to talented entrepreneurs eager to pursue profitable opportunities. Innovations like the automobile, computer, and online retail services destroy jobs, but the process leads to better, higher-paying jobs … to create jobs in abundance, we must allow the free marketplace to regularly annihilate them.”

” According to Ben Bernanke, Timothy Geithner, and many others, only the massive bailouts of financial institutions in response to the collapse of the housing market saved the economy from disaster…in the financial crisis of 2008….. but it is essential to the proper working of the market to allow the businesses that had acted recklessly to fail. Had this been done, the economy could have quickly readjusted. “Capitalist societies can rebound from anything. In particular, they can bounce back from bank failures that do not exterminate human capital or destroy their infrastructure. An interfering government is the only barrier to any society’s revival, and that is why the global economy cratered amid all the government intervention in 2008.

 

Related ArticleHere is Some Econ Homework, at austrianaddict.com.

Related ArticleYour Economic Homework, at austrianaddict.com.

Wealth Can’t Be Redistributed If It Doesn’t Exist!

June 25, 2015

The simple concept that production comes before consumption must not be as simple to understand as I think. Since before the tech bubble popped in 2000, our Government and the Federal Reserve have tried to spend, and electronically print, our way to prosperity. Government spending and money printing are not just consumption activities, they also work to distort the production process. We have been consuming more than we have been producing for about a decade or more. We have essentially been eating our seed corn.

Government’s wealth distribution policies are put forth by politicians as charitable activities. But, since Government doesn’t produce anything, it must first confiscate what it redistributes. That is theft not charity.

Here are three short articles from Mises.org that address the above topic.

1)  Technology Needs Capital To Produce Economic Growth, by Frank Shostak. Here are some excerpts from the article.

“Most modern theories that emphasize the importance of new ideas and new technologies give the impression that these ideas and technologies have a “life of their own.” Many experts hold that because of the limited amounts of capital and labor, without technological progress, the opportunities for growth will eventually run out.”

“So regardless of how clever we are and regardless of various technological ideas, without an adequate pool of funding nothing will emerge. It is through the expansion in the pool of real savings that an increase in the stock of capital goods is possible. And it is the increase in the capital goods per worker that permits economic growth to emerge.”

2)  Wealth Must Be Created Before We Give It To The Poor, by Steve Patterson. Here are some excerpts from the article.

“Charity is seen as ethically superior to business. After all, what could make a greater impact on the world than giving to the needy?”

“This view of the world is shortsighted. While it’s true that charity helps people, business makes a far greater contribution to humanity. Virtually all of the increases in society’s standard of living are because of simple commerce, and it’s the poor, in particular, who benefit the most…”

“In the developed world, it’s easy to forget that poverty is the default state of human existence. Wealth is not found in nature; it must be created, and this is precisely the role of businesses and entrepreneurs. They are the force which takes us out of the state of nature. All cases of poverty have the same solution — not wealth distribution, but wealth creation. This is not merely a theoretical argument. It’s witnessed everywhere around the globe.”

“… Not everybody has the skills necessary to create a new invention or become a successful businessman. But that doesn’t preclude them from making a positive difference in the world. However, we should be realistic: a donation of furniture to Goodwill does not create the same ripple effect as selling affordable food or power tools to everyone.”

“Many economic truths work this way. We’re quick to praise what’s easily seen…… but we overlook or even condemn what happens behind the scenes….. The farmer, the butcher, the truck driver, the cook, the engineer, and the businessman should also be praised for their work. Without them, there would be no surplus food for the charity worker to give away.

3) Let’s Hope Machines Take Our Jobs: We Want Wealth Not Jobs, by Peter St. Onge.

When we use technology and machines to become more productive it destroys jobs, and this is a good thing. This article explains this abstract concept that I have found to be difficult to get people to understand. The article starts with the thought experiment that a machine is created that is capable of producing everything with a push of a button. Its creation puts a lot of people out of work. Now what happens? Read the article it will make you think which is a good thing.

Related ArticleWhat Comes First, Production Or Consumption, at austrianaddict.com.

Related ArticleCapital Consumption, aka Eating Our Seed Corn, at austrianaddict.com.

Related ArticleReal Savings = True Credit, Printed Savings = False Credit, at austrianaddict.com.

Related ArticleProducing Capital Goods, Requires Restricting Present Consumption, at austrianaddict.com

Related ArticleWhy Do People Think The Government Is The Economy? at austrianaddict.com.

Related ArticleEntrepreneurship Can Be A Stinky Business, at austrianaddict.com.

Gov. Kasich: God Wants Ohio To Expand Medicaid. Seriously?

June 20, 2014

File:Way-of-salvation-church-militant-triumphant-andrea-di-bonaiuto-1365.jpg

When I heard what Governor Kasich said about Medicaid expansion, all that went through my mind was John McEnroe’s famous proclamation, “You cannot be serious”. I found what Kasich said in this article, Gov. Kasich: God Wants Ohio To Expand Medicaid, by Jason Hart, at redstate.com. The article quotes him as follows, “….. I had a conversation with…… one of the members of the legislature the other day. I said, ‘I respect the fact that you believe in small government. I do too. I also happen to know that you’re a person of faith. Now, when you die and get to the, get to the, uh, to the meeting with St. Peter, he’s probably not gonna ask you much about what you did about keeping government small, but he’s going to ask you what you did for the poor. Better have a good answer.’”  Kasich’s statement sounds like the social justice canard that “people of faith” use as a bludgeon to shame people into conceding before there can be any rational argument about a policy.

First of all society can’t be charitable, only individuals can be charitable. Individuals own the goods and services they produce. Individuals also own their labor and therefore own what they receive in exchange for their labor.  Individuals decide whether they will consume, save, exchange, or give away what they’ve produce. Charity is simply an individual deciding to giving away what he has come to own because of  his production.

Government can’t be charitable because it is not an individual. Individual politicians and bureaucrats in Government cannot be charitable because what they give away they neither produced nor owned. Individuals in Government have to first steal, through taxation, the wealth that they distribute. Redistributing what has been stolen, after pocketing a portion of it, is not charity. I’m willing to bet God doesn’t think theft is charity, based on his commandment, “Thou shall not steal”.

God gave each of us free will, which allows us to do what we please. If God doesn’t force us to accept him, or his word, why would a man of faith, like Gov. Kasich, think he knows more than God when it comes to charity being voluntary or forced. This violates his commandment, “Thou shall have no other gods before me”.

I don’t think Gov. Kasich’s meeting with St. Peter will go as well as he thinks based simply on theft and hubris.

One more observation: Why isn’t the left hammering Kasich for forcing his morality on them? Probably because the left always forces their morality on everybody through Government power, and in this case they want Government to expand.

Whats the difference between John McEnroe and John Kasich?  John McEnroe isn’t sanctimonious.

 

Related ArticleWe Can’t Recreate The Garden Of Eden, by austrianaddict.com.

 

 

A Tornado vs.The Fed, Which Is More Destructive?

May 27, 2013
Shamrock Texas Tornado

(Photo credit: Wikipedia)

DESTRUCTION DOESN’T CREATE WEALTH.

It’s been a week since the tornado went through Moore Oklahoma and I have yet to see an article or comment by an “economist” saying that the destruction by the tornado will help the economy and create jobs. This is what was said after Hurricane Sandy hit New Jersey and New York, read here and here. We showed the errors of this analysis in this post titled, Hurricane Sandy and the Broken Window Fallacy. But like all shallow thinking,  this fallacy will never be put to rest once and for all, so let’s be ready to shoot it down when it rears its head again.

Let’s look at the similarities and the differences between the destructive power of this tornado, and the destructive power of the Fed and the Government. It’s a version of the broken window fallacy. (more…)

Why Do People Think The Government Is The Economy?

February 17, 2013
leech

leech (Photo credit: KCBIO)

PRODUCTION AND EXCHANGE

Government can only exist if it is funded. In the market, people produce a good or service, and exchange it for a good or service that someone else has produced. You might think that through this exchange process each of us funds each other, but that would be incorrect. Each person funds himself from what he produces. If I don’t produce anything, not only would I have nothing to use for exchange, I would have nothing to consume. If I decide not to produce, I would have to depend on other people’s generosity, or I would have to steal someone’s production (more…)

Walter E. Williams Speaks About The Economics Of Liberty.

December 7, 2012

This is a video by one of the great communicators on liberty and economics, Dr. Walter E. Williams. He talks about what money represents, redistribution of income by Government, or what he calls it legalized theft, and how capitalism raised the standard of living of the world. He never fails to deliver a great message.

Read this short article titled, The Fantasy of Wealth Redistribution by Lorenz Kraus at Mises.org, for further analysis.