Social engineering 101: In order to get the people to beg for socialism and government handouts you must first bankrupt the country through crony capitalism convincing the people its true capitalism failing. First bankrupt the country, consolidate as much property and assets as possible, stripping the people of ownership and independency and then they will be begging for government assistance.
Is how regulated capitalism got branded as socialism and how real socialism got sold to the people as the solution to improperly regulated capitalism/crony capitalism is kind of complicated but I’ll try to explain it in layman’s terms.
Having a centralized government properly and ethically regulate industry and prevent monopolies in order for competition to thrive thereby creating better products and services at reasonable prices is not socialism. Its well-regulated capitalism. The discussion of socialism keeps coming up because back in the days in America when child labor was accepted, no building codes were in place, OSHA was not formed yet, worker’s rights weren’t put into place yet, so on and so forth, there were community organizers and good politicians that wanted to regulate the marketplace to make it a more safe and prosperous body. But the major corporate/industry leaders fought against putting these proper regulations in place and demonized it as socialism when in fact it was not socialism at all, it was just sensible regulations.
Similar things still happen to this day. However, we now primarily have issues of trillions of wasted capital through over-regulation, biased regulation, and improper regulations. We have a corrupt system that has lobbyist/corporations that pay for our politician’s campaigns so that when they get elected into office they will deregulate or over regulate a particular industry to appease their lobbyists so as to allow their lobbyists to monopolize and or corner their particular market. This has many labels including the term crony capitalism. Or the term that I have coined and prefer, ‘lobbyism.’
We are witnessing crony capitalism failing not true well-regulated capitalism (remember, well does not mean over-regulated, it means sensible intelligent regulations). Our system is beginning to have major financial and social issues as a result, and instead of people being educated about what the true fight is, which is to restore and form a well-regulated capitalistic system based in Austrian economics as opposed to Keynesian economics, people are being sold the philosophy that we must centralize the decision-making on every aspect of the market and form a monopoly of force to be administered by the federal government. Which is known as authoritarianism and or socialism. The most extreme form of this kind of governing (micromanaging) is referred to as communism. We must put sensible regulations into place and we also need campaign reform to do something about lobbyists. And very importantly, we need to reject politicians that promote true socialism. There is a lot of work to be done and we need to educate people about what true socialism is vs true capitalism.
Can socialism ever work, even in a world with nothing but hard workers and heavy production? Let’s Entertainment the notion just for a moment…
1st of all, you must be producing more than you’re consuming. Which is the opposite in the US. We consume far more than we produce. That’s in part why we have huge debts and deficits. Specifically, the trade deficit. We consume and buy a lot of products from other nations and produce very little products here in the US to sell back to the world.
2nd socialism depends heavily on hard working people with very little to no bums and leeches that bleed the system. Which unfortunately in the US, we have created an entire welfare class that has grown exponentially since the 60’s, filled with uneducated low-skilled lazy individuals that contribute very little to society. Also in the US, we allow uneducated low-skilled immigrants to flood our job markets. Which has a huge negative impact on capitalism as well. But with capitalism at least if you’re a hard worker you can still get ahead without having to subsidize the weak.
If you have a relatively small country that is producing a large amount with primarily highly educated skilled hard-working individuals, some aspects of socialism would appear to be plausible. But even with that platform, it still fails because of many reasons. Socialism depends on a failed philosophy about the human species as a whole. Socialism always ultimately fails for basic reasons, and unforeseen complex reasons as well. It’s not practical, nor desirable once you study it further.
With a capitalist economy, incentives are very important. 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 philosophy that incentives matter.
With socialism, incentives typically play a minimal to no role at all. A centralized governing body with a monopoly of force dictates their “plan” for the economy without true free market prices or profits. And property is typically primarily or only owned by the state. It is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a philosophy inconsistent with human nature and is therefore doomed to ultimately fail, as it has done time after time throughout history. Socialism is based on the philosophy that incentives don’t matter.
As for as European countries that socialist love to yap about all the damn time. There’s a reason why they don’t turn into totalitarian nightmares immediately. It’s because many of them were capitalist countries before their capital got looted by socialists. Therefore, they had plenty of capital to exploit for a period of time. But it only lasts for so long. Typically they tend to wise up and go back to capitalism, but if not, their Empires crumble
– Michael Vincent –
Myth-Busters: No To “Democratic Socialism”…
Here are some strengths of capitalism in terms of incentives…
- Prices determined by market forces: The price system in a market economy guides economic activity so beautifully. Unfortunately, many people don’t appreciate or understand 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.
- A profit-and-loss system of accounting & 3. Private property rights: Without the incentives of market prices, profit-and-loss accounting, and well-defined property rights, socialist economies stagnate and die. The economic atrophy that occurs under socialism is a direct consequence of its neglect of economic incentives.
Incentives Matter! Socialism neglects incentive-enhancing components. No amount of natural resources can ever compensate a country for its lack of an efficient system of incentives.
When one works, one expects remuneration that is equal to their effort and skill level. That’s what capitalism does; it incentivizes people to work harder because they know that their efforts will be rewarded monetarily or otherwise.
Socialism, on the other hand, disincentives people because their work isn’t valued individually; it’s valued as a collective. When someone knows that the value of their individual work will be lumped together with every other employee, rather than evaluated separately, they tend to work less, and produce less. They work less because they know that at the end of the day, everyone will get the same paycheck, regardless of the value they add to the company.
“In practice, socialism didn’t work. But socialism could never have worked because it is based on false premises about human psychology and society, and gross ignorance of human economy.”