How to properly understand this system
S.G. Cheah writes: Have you ever wondered why, despite the continuous systemic failures of socialistic, communistic or fascistic regimes, -as evidently proven by the observable catastrophes of 2018’s Venezuela, Mao’s China, and the Soviet Union — this idea of the Utopian collectivist commune never seem to die? Witness the popular resurgence of this idea in today’s celebratory praise of Alexandria Ocasio-Cortez’s push for Democratic Socialism.
The secret to the existence and survival of these ideas is far more sinister than you may have realized.
George Orwell, who was a Democratic Socialist himself, anxiously warned us about this in his book ‘Nineteen Eighty Four’. Ayn Rand laid out their calculated plans in ‘The Fountainhead’. Friedrich Hayek illustrated the imminent dangers of what’s to come if they succeed in his ‘Road to Serfdom’.
Literature is brimmed with thinkers who had alerted us to the dangers of this idea throughout history. What they would have warned us today, which they did in the past, is how Democratic Socialism is simply slavery re-branded.
If you make the argument that Democratic Socialism is slavery, you will likely be accused of exaggerated fear mongering. But are you wrong? Read on to know why Socialism is essentially slavery.
Socialism does away with property rights.
It is a basic tenet of life and liberty that without property rights, no other rights are possible. The problematic error of which most of us tragically hold today is to view property only as inanimate matter because this materialistic view classifies property as being separate and apart from man’s life.
The truth is, property is the implementation to life and liberty. It is crucial to understand how the bond between private property and political freedom is an indissoluble one, because an individual’s property is an extension of his own life.
Why property rights is essential to freedom
It is important for people to learn the connection between property rights as being directly protected by liberty, and how this connection ensures life. To help picture this clearly, think of yourself as Robinson Crusoe. Or Tom Hanks in Cast Away. Or if you’re talking to the very young, Matt Damon in The Martian.
These fictional characters illustrate this bond between property and life. When these castaways were shipwrecked alone, the only choices presented to them is either to survive or to perish. In order to live, they will have to employ the use of their mind and direct their body to produce the necessary requirement of survival: shelter, water, food.
Socialist guilt tripping
A socialist will bring up the example: imagine if a year later, another castaway is stranded on the same patch of land as you. Don’t you have the moral obligation to share your shelter, water and food with him? The answer to this is not “yes you’re obligated morally to share” nor “no, you’re not obligated morally to share”, but rather, the correct answer is: “you shall decide”.
Why is “you shall decide” the right answer? It is because the shelter, water and food you’ve created is a product of your mind and body, which is an extension to your very life. Read the rest of this entry »
How free is your state? Find out! The Freedom in the 50 States 2015-2016 index from the Cato Institute measures freedom across a range of over 200 policies and across personal, regulatory and fiscal dimensions.
Source: Cato Institute
Much rent-seeking is redistributing the surplus of one group of the middle class to another group of the middle class via the government. Although there might be great incentives for one group to seek another’s surplus, there is no added value for society as a whole
David John Marotta writes: Voluntary trade benefits both sides. Unless both parties believe they will benefit from the exchange, they will not consent.
In most exchanges both parties can produce the item they are trading more efficiently than they can produce what they are receiving. Producing a surplus of one item provides each party something to trade for someone else’s surplus. Having more than your family needs opens the opportunity to trade the excess for profit.
“In the public sector, for example, government lobbyists are hired to sway public policy to benefit their companies and punish their competitors. Although hiring lobbyists clearly benefits the company they represent, the work of lobbyists does not add value to the larger marketplace.”
Unfortunately, when property rights are weakened and the ownership of someone’s wealth or goods is debatable, people can gain more by trying to appropriate that wealth than by producing themselves. This behavior is called rent-seeking.
Rent-seeking frequently requires spending your own resources so you own someone else’s surplus in the end. In the public sector, for example, government lobbyists are hired to sway public policy to benefit their companies and punish their competitors. Although hiring lobbyists clearly benefits the company they represent, the work of lobbyists does not add value to the larger marketplace. If property rights on the surplus the company seeks had been more stable, such roles for lobbyists would never have been created.
Rent-seeking doesn’t add any national value. It is coerced trade and benefits only one side. Rent-seeking can include piracy, lobbying the government or even just giving away money.
“Imagine a thriving sea trade in which ships carrying cargo receive a 20% profit on the value of the goods. Now imagine the first pirate who arms his boat with cannons and rent-seeks the profit. The pirates are not producing any value of their own but are spending their own resources to capture the surplus of the shipping trade.”
If the pirate ship captures just one in every hundred ships, the average profit for the traders will drop to 19%. Meanwhile the pirate ship is seizing a 100% profit. There is incentive to join the rent-seeking pirate trade. By the time 10 pirates are competing for plunder, the profit of honest merchants has dropped to just 10%. At 20 pirates, there would be no profit remaining and no incentive to engage in the shipping trade.
The rent-seeking of pirates motivates merchants to spend their resources to prevent the theft. They sail with an armed escort. They pay privateers to capture the pirates. Even if these efforts cost 15%, they will still preserve a 5% profit. If the effort costs much more, however, shipping will simply cease. All of this expense could be avoided if incentives to be a rent-seeking pirate were somehow eliminated.
“If the pirate ship captures just one in every hundred ships, the average profit for the traders will drop to 19%. Meanwhile the pirate ship is seizing a 100% profit. There is incentive to join the rent-seeking pirate trade.”
When I (David John Marotta) was applying for college, I was told that hundreds of scholarships, many based on merit, were available. After hours of research I found very few for which I qualified. I found one scholarship for a student of Italian-American ancestry. It was worth $1,000 and required me to submit an essay. It took me three hours to write the essay. I was engaging in rent-seeking.
“By the time 10 pirates are competing for plunder, the profit of honest merchants has dropped to just 10%. At 20 pirates, there would be no profit remaining and no incentive to engage in the shipping trade.”
You might think that giving away money is free, but it is not. Even if you hold a random lottery, potential winners still need to take the time to enter. At my $5 hourly wage, my entry cost me $15. I learned later they received 450 entries. If my experience was typical, the rent-seeking cost of all the applicants was $6,750 just to win a $1,000 scholarship. If you add the time to judge the competition and send return letters, the waste gets even greater.
“Rent-seeking never encourages productivity. The production of valuable goods and services is maximized with strong property rights when little is wasted in efforts to seize the surplus of others or to prevent others from seizing our surplus.”
During a strong economy there are fewer incentives for rent-seeking because production is highly rewarded. But when economic times make it more difficult to produce, it becomes more attractive to rent-seek someone else’s surplus.
This situation can create a downward spiral because the rewards of rent-seeking are often constant, whereas the surpluses available in a market economy are more variable. When the economy is poor, the burden of fixed rent-seeking costs on producers drives surpluses even lower. This makes rent-seeking relatively more attractive, which in turn further burdens those who try to remain productive.
“Any efforts to subsidize or bail out struggling businesses are rent-seeking. When some banks take excessive risks to gain excessive returns, they are risking that the returns will be worth the hazards involved.”
Much rent-seeking is redistributing the surplus of one group of the middle class to another group of the middle class via the government. Although there might be great incentives for one group to seek another’s surplus, there is no added value for society as a whole. Read the rest of this entry »