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Monday, February 9, 2009

A Word on Capitalism vs Socialism

In his book "Capitalism and Freedom" (1962) Milton Friedman (1912-2006) advocated minimizing the role of government in a free market as a means of creating political and social freedom. Above is an excerpt from a 1979 interview with Phil Donahue.

Thirty years later, Newsweek has declared America a socialist country and The New York Times (a la The New Republic) has proclaimed conservatism dead.

In a time when the media is not only pushing for socialist policies, but boldly proclaiming its triumph over capitalism, Americans would do well to see past MSM Bush Derangement Syndrome and recall the economic principles which have made this country the wealthiest, most charitable country in the world with perhaps the best average standard of living relative to its population.

America has the 13th highest average quality of life in the world, but it also has the 3rd largest population. Apparently, most Americans have forgotten how outstanding these figures are.

Allow me to put these statistics into perspective for you; of the other 12 countries with a higher average quality of life than the USA, Italy is the largest. Italy is just the 23rd most populated country in the world, with about the same population as the number of people who voted for McCain in the 2008 election. Chew on that.

No country is as populated as the US with as high a quality of life. America achieved this high standard of living with capitalism. The current recession seems to have bludgeoned the commonsense out of many Americans, and Democrats are taking advantage of this short-sighted silliness to push through trillions of dollars of pork barrel spending and pet projects.

Not only is the US the wealthiest country in the world with arguably the best average standard of living relative to its size, it's also the most charitable country on the planet, offering twice as much development assistance as the United Kingdom (who ranks second in total international donations). "Development Assistance" is defined by the OECD as a "flow of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective."

The US also had more non-governmental donations than any other country (nearly $100 billion).

The Bush administration alone gave more funding to Africa and AIDS research than any person, group, or country in history. So, this notion that capitalism leads to greed and a widening of the gap between the wealthy and the poor is a misguided, if not inherently false, premise. The fact of the matter is that America donated more to international charities than any other country on Earth, and America's poor are quite advantaged when compared to even the standard of living in most other countries.

It's also worth noting that America already have several socialist tenants in its economy today. Social Security and the "progressive" tax structure are, for all intents and purposes, socialist by nature. The wealthiest 5-10% of the American population pay 90-95% of all federal taxes. The wealthiest tax brackets pay a percentage of their income three times larger than the poorer tax brackets. That's a graduated, socialist tax structure no matter how you slice it. The United States has the second highest capital gains tax in the world - which is a socialist policy set to drain money from big business to the poor. All it really does is force corporations to outsource which, in turn, leads to higher unemployment.

When talking about American economics, we're not talking about whether or not socialism should be introduced into our system - because it's already intertwined in our most fundamental policies. What's at issue, rather, is how large we're willing to let the federal government become. The more we allow government to collectivize our wealth, the more we begin to rely on government. As this cycle perpetuates itself, a democracy loses its voice because the people come to rely on their government for everything (health care, education, retirement, welfare, etc.) This is why socialism almost always falls on its face, or converts into a form of communism. No socialist country has ever experienced the level of economic success America has.

Let us not forget, Obama promised to "fundamentally change America." Well, my friends, his level of socialism would indeed "fundamentally change America."

For some reason, people seem to have the misguided belief that socialism equates to less poverty and a higher standard of living. We've already shot down the standard of living argument, so let's look at the poverty claim.

(US Census and Wikipedia)

These poverty rates have remained very steady under the Bush administration - disproving the myth that overly "progressive" tax structures are better for maintaining low poverty.

In terms of the demographic breakdown of Americans below the poverty line:

Among married families: 5.8% of all people including
5.4% of white persons,
8.3% of black persons, and
14.9% of Hispanic persons (of any race) were in poverty.
(US Census and Wikipedia)

Among single parent families: 26.6% of all persons, including
30% of white persons,
44% of black persons, and
33% of Hispanic persons (of any race) were in poverty.
(US Census and Wikipedia)

Among unrelated individuals and people living alone: 19.1% of all persons, including
18% of white persons
27.9% of black persons and
27% of Hispanic persons of any race lived in poverty
(US Census and Wikipedia)

With a poverty rate of 12.6%, how do the European socialist countries measure up to America? The rate of poverty varies between 10% and 23% in the countries of the European Union. The American poverty rate is equal to, or lower than, almost every other European nation and the US is more populated than all of them. Given that America has a comparable poverty rate to even the best performing socialist countries, it donates more in economic aid, and the poorest 40% of the country pay NOTHING in federal income taxes while the richest 5-10% pay 90-95% of all taxes... I fail to see how, exactly, anyone can take any arguments for a more socialist America seriously.

America has performed better in unemployment, poverty, charity, and job creation when taxes are reduced and Americans are allowed to spend their own money. The idea that you need the government to pay for your basic needs in order to make ends meet is not only silly but it is not conducive for a thriving democracy. America became the strongest country in the world through capitalist principles - any suggestions to cast aside the ideals which made us great are foolhardy.

Socialism and liberalism are grounded in the emotional belief that the American people need government to hold their hand. This is fallacious and dangerous. As Presidents Ronald Reagan and Gerald Ford once stressed, "A government that is big enough to give you everything you want is also big enough to take everything you have."

In this country, any child can succeed on his/her merit alone, without the government's help. Obviously, being born wealthy makes life easier; but if an American wants to succeed, s/he can. Barack Obama is a wonderful example of how a child born into poverty can make his own success. Obama's parents were dirt poor, and now he's the millionaire President of the United States. If Obama doesn't serve as a perfect refutation of the emotional appeal for socialist policies, I don't know what possibly could.
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