Thursday, August 11, 2011

Social Capitalism and the USA: America, You Have Socialism, You Just Don't Know It

Who "owns" the Internet? The U.S. government! How is that possible? Does America have socialism? Of course it does, cloaked as "Social capitalism", which the Wikipedia defines as:
"[A] theory or political or philosophical stance, [that] challenges the idea that the goals of socialism and the existing system of capitalism are inherently antagonistic.[1] The essence of social capitalism is that markets work best and output is maximized through sound social management of the macroeconomy. Social capitalism posits that a strong social support network for the poor enhances capital output. By decreasing poverty, capital market participation is enlarged. Social capitalism also posits that government regulation, and even sponsorship of markets, can lead to superior economic outcomes, as evidenced in government sponsorship of the internet or basic securities regulation.[2]"
How about "Socialism for the Rich?" That is one American socialism being defended by the Republican right wing in arguing that a small portion of the population should be able to keep the spoils of wealth produced by all.

But there are also socialisms of the Democratic left wing in taxation and in the redistribution of wealth for the common good, and everything between. Socialism itself is defined at the Wikipedia as:
"an economic system in which the means of production are publicly or commonly owned and controlled cooperatively, or a political philosophy advocating such a system."
What of any consequence in America is not publicly or commonly owned, even on a private basis? All institutions, government bodies and all corporate bodies have group ownership and the entire "capitalistic" idea of stocks and bonds is based on cooperative control and ownership. One should not confuse the term "socialism" with "Communism", a tyrannical, inhuman and inefficient system where the State owns and controls everything. Communism and its logical extension Stalinism does not work. But Social capitalism does work and that is what most industrialized countries have today.

Many may think that the American system of government and finance is not "socialist" but in fact, it is VERY socialist, even permitting the rich to "socialize" their wealth and their risk of loss of wealth. See in this regard the earlier post by LawPundit -- also reproduced below in this posting: Laughing All the Way to the Bank - Dwight Garner reviews I.O.U.: Why Everyone Owes Everyone and No One Can Pay - by John Lanchester.

As political centrists, we are not against the accumulation of wealth, which is necessary for economies of scale, e.g. for corporations or for governments. For example, you need a lot of money to put a satellite into orbit, set up worldwide GPS (technology all financed originally by the government through the military, NASA and the Moon program) or to manufacture commercial motor vehicles via the automobile industry.  Indeed, if we did not permit some forms of wealth accumulation, such large government and economic enterprises would not be possible.

By the same token, there is no pervasive economic reason to permit -- as a government financial policy -- immense and sustained accumulations of wealth solely in private hands, where many owners of such wealth use that wealth to buy or finance more and more playthings for themselves -- i.e. luxury goods and services, products which are economically not necessary for anyone: for example, gigantic yachts and that kind of thing.

One can say generally that the more money people have privately, the more useless and expensive junk they buy, to the detriment of the serious needs of the economy. If everyone else is prospering, no one really cares, but when national economies are floundering, private wealth is rightly under fire.

That is why taxation should be progressive toward the upper end of the scale.

In a society of 100 citizens, for example, it is rather foolish to have 99 citizens working to finance a 1-million-dollar yacht for 1 of them: a very socialistic practice, i.e. THAT is the socialization of wealth, "all" for one in the worst sense of the saying.

It is usually better for society to have 100 citizens each of whom has a boat, costing only ten thousand dollars, rather than a million.

Do you doubt that? That is in fact how we finance education. We no longer permit the existence of a society in which only the children of the emperor are educated, but we promote universal education, which, in the long run, is better for everyone. I for one do not want idiots to roam the streets. It is better to have an educated citizenry. We all have to pay for that and we still have a long way to go, since many idiots still roam the streets. Imagine our modern corporate world without publicly-financed education? And even if that education is "private" it is always nevertheless a "socialistic" group effort. Few people have the funds to hire a fleet of tutors, so they pool resources, and pooled resources are the basis of "socialism".

Why should 1 man in a 100 be healthy only because we allow him to accumulate all society's wealth, and the rest, who produce that wealth, live in illness? That is what those persons who oppose national health care apparently want. It is a kind of selfishness that is hard to understand.

Socialism is always two-sided. On the one hand, you have all of the benefits that men -- acting together -- produce, i.e. the goods and services of the modern world. Note here that modern manufacture is "socialistic" -- one man alone can not produce a modern automobile. Its manufacture depends on human teamwork on a grand scale, and yet, some people out there want all those "socialistically" produced goods and services for themselves only.

On the other hand, and at the same time, those same people often do not want to finance the socialistic teamwork system that produces the goods and services that they want AND use. What do they care about the producers? Well, they should, or the house ultimately comes tumbling down, also on THEM.

Those were the conditions when the industrial revolution began. Child labor. Terrible working conditions. Pestilence and disease. Non-existent hygiene. Totally smogged cities. Uncontrolled socialism of the haves is deadly. It has to be controlled for the benefit of all. That is the purpose of taxation.

Imagine a world with only PRIVATE roads and only PRIVATE property. You could go nowhere and do nothing. PUBLIC property such as streets and parks make modern life bearable and all public property belongs to governments as "pooled resources". How about large government dams or lakes or other installations that help to provide our electricity and our water supply? That is also "socialism" in the broadest sense. All pitch in for the greater good.

Smart and knowledgeable people who have money and who pay taxes know that they pay taxes FOR THEIR OWN BENEFIT. The more they have to protect, the happier they are to have taxpayer-financed police and similar institutions to protect their life, property, investments and belongings. Someone who has nothing needs little police protection of the things he does not own. Taxes finance the system. Taxes finance the system! Are you benefiting?? 

The more someone is benefiting from a society, the greater should be his interest to make sure that he pays the taxes necessary to sustain the system that is permitting him to prosper!

In any case, whether the money of society is all in one hand -- it used to be in the days of absolute rulers, whether it is in the hands of the few -- this used to be the norm in oligarchic societies, or whether it is spread among all the citizens -- which is a development only of the modern age -- and imperfectly so, the nature of society remains socialistic at its core, because it is the mass of citizens who produce the wealth that is enjoyed by the one, the few or -- in democratic societies -- by everyone. No man who has a gigantic yacht ever built it himself, or could. He has it only because of the "socialistic" teamwork efforts of his fellows.

Indeed, ponder how many people have worked to bring you the breakfast you enjoy each morning: planting the coffee, tea, fruits, and grains, harvesting the coffee, tea, fruits and grains, transporting, packaging, and transporting the coffee, tea, fruits and grains, raising and feeding the animals that produce the milk products, raising and feeding the hens that lay the eggs, and all of the processes inbetween to get all of these products to your breakfast table. Some alleged "self-made men" say without a blush while sitting at a socialistically world-produced breakfast that an end to all this freeloading must occur. Are they speaking of themselves?

Ponder how much of the work of other humans YOU as a freeloader enjoyed as an infant before learning to walk or speak.

Ponder how much of the work and efforts of other humans, living and deceased, past and present, YOU as a freeloader enjoy in the course of your day in availing yourself of goods and services that at some time never existed and that others invented and developed.

Ponder the value to YOU of miraculous inventions like antibiotics which are capable of saving the life of a man or woman completely independent of their social, political or monetary status. How many people did it take to get where we are today in terms of medical advances? What did YOU do to make them? Or are you freeloading here too?

Medicines? For example, the price of antibiotics is socialistic. The risk and cost of making antibiotics are spread across the breadth of society. If a rich man had to pay what an antibiotic is actually worth to him when deciding between life and death, no man alive has enough wealth to actually pay what that antibiotic is objectively worth in terms of the cost of its development. YOU as freeloader are permitted to pay only a few dollars -- the rest of the cost of its development is paid socialistically by others using that same medicine.

So, why should we strive for a system that rewards only the one or the few? For that, there is no good reason, economic, political, or social. On many levels of our socialistic society, we are all freeloaders.

Below is the reposting of an original LawPundit post:

Laughing All the Way to the Bank - Dwight Garner reviews I.O.U.: Why Everyone Owes Everyone and No One Can Pay - by John Lanchester

Laughing All the Way to the Bank
a NY Times review of
I.O.U.: Why Everyone Owes Everyone and No One Can Pay: by John Lanchester

Let's get this straight, with a hat tip to CaryGEE:

In his book "I.O.U", Lanchester writes at p. 55 about the famed late economist John Maynard Keynes:
"As Keynes - he who made himself and his college rich by spending half an hour a day in bed playing the stock market - once observed, there is nothing so disastrous as a rational policy in an irrational world. Keynes was preoccupied by the difference between risk in the sense of the mathematical calculation of probabilities and uncertainty, the more profound unknowabilities of life and history... Confuse risk with uncertainty, and you have dug a tank trap for yourself."
Dwight Garner reviews Lanchester's book at the New York Times in Laughing All the Way to the Bank:
"If you wanted to try to make sense of the global banking crisis, instead of merely weeping openly at your A.T.M. balance, 2009 was a very good year. Bookstores were filled with volumes that, with expert 20-20 hindsight, explained how capitalism went to hell....

Few if any of these books will be as pleasurable — and by that I mean as literate or as wickedly funny — as John Lanchester’s “I.O.U.: Why Everyone Owes Everyone and No One Can Pay.”
“I.O.U.” crosses over into black satire when Mr. Lanchester describes how bankers used their new tools to make money from poor people, the worst credit risks, by prying their cash loose through predatory lending, then pooling this money and selling it off. Who cared if these people defaulted on their mortgages? The risk had already been passed along to others, and ultimately, when banks failed, to taxpayers. Mr. Lanchester calls this “a 100 percent pure form of socialism for the rich.” [emphasis added by LawPundit for the benefit of all those honest but misguided people out there who think socialism is something going from rich to poor - not true]

With steam shooting from his ears, he summarizes: “So: a huge, unregulated boom in which almost all the upside went directly into private hands, followed by a gigantic bust in which the losses were socialized. That is literally nobody’s idea of how the world is supposed to work.”
Our comment to that last paragraph is: BRILLIANT!

Read the full review here. And you might consider reading the book.

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