S
Point # 1,
DISINCENTIVATION: As you read on, keep in mind this one word,
disincentivization
Point # 2, WEALTH
REDISTRIBUTION: Late in his 2008 presidential campaign, Obama was caught
unawares on an open-mike and during a discussion with “Joe the Plumber”, Obama
said his overall intention, if elected President, is wealth
redistribution.
Point #3, IT WON’T PENCIL:
Senator Bernie Sanders and his protégé, Representative Alexandria Ocasio-Cortez
are passionate about their version of socialism for the US, but the real
question is, did they fail 4th grade math? It would appear so.
Part 4, BOTTOM LINE: we cannot afford socialism.
One thing many Republicans
have wrong about Bernie/Alexandria, is that the United States may end up
looking like Venezuela. Venezuela’s President
Maduro is a combination of socialism and extreme ignorance. Probably not where
the US is headed.
What Bernie/Alexandria are
advocating for is actually the European model of socialism. For the past few decades most of the European
nations and their Social Democratic political parties (or Democratic
Socialists, a slight distinction between the two) have adopted many socialist underpinnings.
This is France today: tax
the rich, big centralized government, stifling regulation, weak military
capability, nationalized programs with health care as the centerpiece, welfare
state, extreme labor unions, a 35-hour work week and policies that discourage
incentive/initiative. Thank you, Barak
Obama. We hear you Bernie. Welcome
aboard Alexandria. Not Venezuela, not Cuba, not the defunct Soviet Union, Obama/Bernie/Alexandria,
although unstated, advocate for this French model.
France optimizes the
results of years of European political movement to the far left. France has arrived; they are the poster
child. And they are in BIG trouble on
all fronts because that socialist chicken has finally come home to roost.
Conversely, capitalism
works. It works amazingly well
especially when combined with a democratic form of government. That’s where we are today. Leader of the world. Envoy of the world. Hundreds of millions want to immigrate
here. Why? To work hard and strive for
the American dream.
My description of French
socialism, three paragraphs up, and its failure, can be summarized by one
word. Disincentive. There is no part of socialism that makes you
jump out of bed in the morning, wanting to get to work as quickly as possible
and make things happen. Innovate—willingly
work hard—produce—prosper—achieve—become a model, a mentor and live the
dream. That is exactly what is happening all over America today and we should
change all that to a one-word description of our future; Point # 1,
DISINCENTIVIZED? Yes, according to
Bernie and Alexandria, we should.
The Wall Street Journal
recently had a graph showing nations’ tax burden as a percent of its Gross
Domestic Product, GDP. This is a valid
way to illustrate the comparative tax burden among nations. France is # 1 on that list because 48% of the
goods and services the individuals produce goes back to the government as
taxes. By comparison the US tax burden
relative to GDP is only 27%. The top
twelve nations in terms of the extreme tax burden are Social Democratic
European nations.
There are, unfortunately,
tens of millions of American Democrats/Liberals/Socialists/Progressives (take
your pick) who are willing to take that risk and shift to socialism. Why not, they argue, maybe it is a good idea.
We will get a “free” college education, “free health care”, some nice
government bureaucrat to oversee our largest corporations, some government committee
will select the Boards of Directors for our large, successful, profitable
corporations. The list is long. The government will “run” things so we don’t
have to worry about doing it. We can
just sit back and enjoy the fruits, not of our labor, but the fruit the
government chooses to give us.
Capitalism works. We didn’t just invent the idea a few decades
ago. It is what this county IS and
always has been. Is it a nice
comfortable straight line slightly tilted upward forever? No, capitalism can be a bumpy ride but in the
end initiative, ingenuity, grit and confidence ALWAYS wins out. Not sometimes, ALWAYS. Post-Obama confidence in the economy and in
the country are high, there is a surge in new small businesses, wages are up,
new jobs are up and former welfare junkies are back in the marketplace competing
for good-paying jobs.
Let’s take a look at those
rich folks, who Democrats/Liberals/Socialists/Progressives are asking to pick
up the socialist tab. Generally
speaking, other than a few trust-fund kids, the rich folks work very hard. They are risk-takers because no one tells
them they can’t. They don’t always win
but they learn and move on and move up. And up. And up. And then they have more
money than they can spend. They have
become part of the “top one percent.” What to do, put their excess money under
the mattress? No, they invest it.
Capitalism doesn’t just
“happen”. It has to be continuously fed
and nurtured. the fuel for capitalism is, quite naturally, capital; principally
money.
Let’s say you are the
proud owner of a growing, so far successful, company because you can be. No
one, including the government, is telling you that you cannot or that you
should not or that you must get permission; “Mother, may I?” It’s just you with
a good idea, initiative, ingenuity, know-how and good energized employees. This is the antithesis of disincentivized.
You have your company in
position to expand, be bigger, be better; you have everything except
capital. What a bummer. You could go to the bank but they are
generally pretty conservative with their money and your plan has some risk
involved. Also, there are those darned
interest payments always coming due. So,
instead of borrowing from a bank, you print some paper stock certificates and
sell them. On the certificate is a serial number and a “value” which is really
the “price”. This piece of paper comes
with no guarantees of success. Also, no
interest due and no due date for redemption.
Who, in God’s name, would
ever buy such a thing? Aha, someone who
has more money than they need. Those
rich guys and gals; those “one per centers.” They take a look at you and your
company and, in reality, bet on the come.
They buy your pieces of paper with absolutely no guarantee of a dime in
return. You say thanks and tell them you
promise to work hard, be smart, and do everything you can to make a lot of
money. And when you do, out of
gratitude, you will pay dividends and, oh by the way that $100 piece of paper
might someday be worth $1000 or $10,000 and you didn’t have to lift a finger.
Ain’t that a great
story? Bernie and Alexandria would call
it a fairytale. We call it capitalism at
its best. We call it the American
way. We call it success, we call it our
future.
That brings us back to the
beginning and Point # 2, WEALTH REDISTRIBUTION.
There are two vastly different ways to go about wealth
redistribution. People and corporations
produce goods and services which equals a nation’s gross domestic product,
GDP. People and corporations are then
heavily taxed by the government and the money is redistributed back into the
welfare state; socialism.
An alternative is to keep
corporate and individual taxes as low as possible and let the rich folks
“redistribute” their wealth in order to “feed” corporate growth. When corporations grow, the economy grows which
promotes higher employment, more high-paying jobs and higher wages (exactly
what is happening today). Ultimately,
this formula can generate even greater tax revenue for the government. But instead of using the revenue to support
welfare, it can be used for positive purposes.
Back to the
Bernie/Alexandria model of government, paying for everything, free tuition,
health care, etc. etc. etc.
Let’s begin with
Bernie/Alexandria idea to tax the rich at or above 70% like the French do and
see how that might work out. In the US
in 1920 the top marginal tax rate was 73%, 90% during the 1950s and 69% in
1981. It may have seemed like a good idea at the time but it wasn’t. It went away because it didn’t work. It did not generate the trillions of dollars
Bernie/Alexandria need to finance their pipe dreams.
Bernie/Alexandria talk
continuously about taxing the top one percent, the wealthiest folks in the US,
to pay for all their “free” programs. If you define the “top 1%ers as the top 1% in
annual income earned, that would be about 1,275,000 households earning an
AVERAGE of $440,000 a year totaling about $560 billion dollars. Fully taxed at 70% provides tax revenue of
about $392 billion. The cost of the socialist’s government-run “Single Payer
Health Care plan (free health care for all) is estimated to average about $3
trillion a year for the first ten years.
Sorry Alexandria, the 1%ers come up about $2.6 trillion short just for
the one program (if their entire income was fully taxed at 70% which, of
course, it would not be). As they say
in Montana, Point #3. “IT WON’T PENCIL”.
What does “free” mean when
applied to programs that support the entire population, such as free health
care for all. One thing that is not free
is your freedom. You want a free
education, free health care, a guaranteed monthly stipend? We could try it but there is ALWAYS a
price. Bernie’s/Alexandria’s price is
your freedom. Freedom to “be all you can
be”. Give up your freedom and you will
be all the government tells you you can be and no more. What is the incentive to even go to
work? What is the incentive to think of
a better way? What is the incentive to
work harder? Under socialism, “free” equals disincentivization of the entire society.
Come on America, WAKE THE
HELL UP! Do you want to be in the
streets every weekend with your yellow vest like the French are, protesting
against everything their government has become and what it has done to that
one-proud and prosperous nation?
In a few months, yes
months, the democrats/Liberals/Socialist/Progressive party will hold its first
2020 Presidential Campaign debate. Mark
my words, what we are going to hear is how one candidate can “out-free” the
others. You will not be able to
recognize the real Democratic party, it’s gone.
WAKE THE HELL UP AMERICA.
Point #4, BOTTOM
LINE. Notwithstanding what has been said
above, Socialism is, at its core, about economics, not politics. That begs the question, if Bernie/Alexandria,
et al believe socialism is so great, why don’t we see any economists in the US
writing or speaking about is virtues?
Answer, because it has no virtues.
Please stay tuned for
SOCIALISM, PART II, perhaps next week
Marv Covault