Distribution of Wealth
An examination of the socialist argument
ll men are equal, but some are more equal than others. Orwell's observation of the equality of man is as true today as when he wrote it over half a century ago. All men may be created
equal, but they sure don't seem to stay that way for long. Some people meet with success, and are permitted to amass great wealth. Some take comfort in mediocrity, and are permitted to life comfortably. And still others embrace failure, and have a hard time making ends meet. It's a simple fact of life that most people accept - the fact that some people have more stuff than others. But have you ever wondered exactly how much
In a capitalistic society, success is largely measured by a person's wealth. The more useful to society you are, the more you are allowed to take from society. If you discover a "need" in society and find a way to fill that need, you can count on being rewarded handsomely. On the other hand, if you can't find a way to contribute to society, society will reward you accordingly. People that don't find a way to be useful to society can expect to receive very little in return for their labors, while those who take on greater responsibilities are allowed to reap greater rewards.
Of course, there are those that view this system as vastly unfair. They believe that no one person can possibly
be more important than another, and that every person is an integral part of society. We call these people, liberals
. The liberal takes the Thomas Jefferson's basic premise of equality to mean that all men are
equal. Equal in every possible way - mentally, physically, and most importantly - economically
. And if they discover any
inequity - no matter how small - they see it as their job to make
The primary motivation behind liberal economic theology is the basic premise that the poor are too
poor and the rich are too
rich. They see a world in which upper class is enriches themselves of the backs of the poor. They see a world in which workingmen are slaves to their capitalistic masters - that is, those lucky enough to have a master. The unfortunate ones are doomed to a life of homelessness, starvation, and criminality. A true free market society is rife with inequity -- Those who can figure out how to get it, get it - and those who don't, don't -- and those who don't get it are mad as hell.
Above all of this chaos they see Government - a knight in shinning armor. They believe that the government - the largest corporation in the country - should step into the capitalistic fray and bring equality to everyone's wealth. In a sense, they work to morph government into a sort of "Robin Hood" - a all-powerful entity that taxes the rich in order to feed the poor. This is what is commonly referred to as "Redistribution of Wealth".
There are various levels of socialist thought, from the die-hard communists to democratic socialists to progressive liberals. The methods for achieving economic utopia vary from group to group, but they all employ the same basic principles. They all want to use the power of government to take goods and services from the 'haves', and transfer their plunder to the 'have-nots'. They all strive towards the same goal - economic equality. They only differ in the level of government supremacy they believe will be required in order to achieve their goal.
Every nation of the world has toyed around with socialist concepts. Some of the poorer nations of the world decided to base their entire government on Marxists theory - we call them communist
. In these countries, there is no "private" ownership of property - everything is owned by the state. The only businesses that weren't owned by the state were small shops run by "tradesman" - bakers, blacksmiths, etc. - any business that could be run by one person or a small family. These business had to remain small, since it was illegal
for any private citizen to "enslave" a fellow citizen through employment.
On the other hand, the wealthier industrialized nations opted to enact some
of these "redistribution" schemes to help "patch-up" the flaws in their free-market economies (which hopefully will be enough keep their own
subjects from revolting). These "social democracies" use government to impose tax schemes which rake in cash from the "haves", and use this money to create government programs to give to the "voters"... I mean.. the "have-nots".
Socialism dominates the political discussion in virtually every free society. As a result, there exists in each country two political parties - One that favors increasing the number of such programs, and another party that opposes them. Of course, the particular politics of each nation may vary, but versions of these two parties can be found in every democratic country - A "conservative" party that seeks to maintain the capitalistic system, and a "liberal" party that pushes the system slowly towards socialism. This is the crux of the argument between the two prevailing economic theologies. The "left" (socialist) believes that the poor deserve more, and the "right" (capitalist) believes that those who do the most work deserve the most profit.
We have heard both sides of the argument time and time again. The Democrats (the 'liberal party' of the US) argue in favor of increasing minimum wage, and the Republicans (the 'conservative party' in the United States) counter that it will raise the cost of goods. The Democrats argue that we need to create more programs to help the poor, and the Republicans counter that we shouldn't be taxing our citizens to death. The Republicans want to eliminate the death tax since it destroys businesses, and the Democrats want to keep it because it eliminates "family wealth", and allows them to redistribute this wealth to the masses.
Both sides are mostly correct ... from their own point of view. The Democrat's programs will
succeed in shifting wealth from the top to the bottom - but there is no thought given to how this will effect the economy as a whole. These programs take money from the middle & upper classes, and hand it over to the lower caste. But by stealing money from the "haves", they will in effect be punishing people for success. Economic expansion will be hindered in the absence of the "profit motive" that is lies at the heart of most business ventures. And without entrepreneurs the economy cannot expand, and in the end everybody suffers.
But apart from the economic consequences of socialist policies, there lies several social consequences as well. Such programs by their very nature require the forcible taking of wealth - A policy that is anathema to most democratic principles. Theft does not cease to be theft simply because an elected body is the entity which is perpetrating the act. "Forced Charity" is not charity at all - it is theft.
And in the end, such policies cause a large segment of the population to become somewhat "dependant" on the government - another concept shunned by cultures which cherish freedom.
But the other side of the coin isn't without its flaws either. Republican actions will
help stimulate the economy and help increase production. And even though fair portion of this increase will "trickle down" to the masses, most will end up going those at the top. The Republicans will argue that the rich deserve this wealth for working so hard to build new businesses and increase production. But without the social "safety nets" that the Democrats have put in place, many of our nation's citizens will be left in the cold.
Somebody once noted, that Democracy is akin to "three wolves and a sheep voting on what's for dinner."
That is to say, that in a democratic society, it is the will of the masses which ultimately prevails. And, since the "have-nots" will invariably outnumber the "haves", you can bet that "have-nots" will eventually elect to eat the "haves" for breakfast.
In virtually every nation in the world there exists a gradual shift towards more and more of these socialistic programs. On the whole, European nations seem to be accelerating towards this economic nirvana a little faster than their American counterparts. But you can rest assured that unless the "opposition" parties can find a way to shift this trend into reverse, we will all arrive in the same place eventually - back in the old USSR.
Now, any intelligent examination of the economic state of any communist nation should be enough to scare people away from this outcome. I mean - can anybody point to one successful communist nation? Sure, the USSR wasn't without its achievements (They were
the first country to launch an artificial satellite into orbit - and they did
create one hell of a military), but most of their "achievements” were a direct result of competition
with the west ("competition" being a fairly "capitalistic" concept).
But in the end, they failed in their goal of raising the proletariat out of poverty, and eventually crumbled. And sure, not every communist nation on the planet has crumbled like the old Soviet Union, but can you actually say that the proletariat in China and Cuba are really
better off than the "poor" of the United States? Sure, everybody has a job, but they are all poor -- Really poor. The average McDonald's employee makes more in a month than these people see in a year.
So you might ask - why is everybody complaining? The reason is because American's simply expect more. We have a higher standard of living than most nations in the world. This is not to say that American aren't ever broke - Just that none of us a starving. Not to sound to cold, but just what exactly are the poor complaining about?... That they don't have a new car?... That they don't own a house?... That they don't have access to the best health care?... That they can afford a new pair of Air Jordan's?.
The only way to become really poor in this country in to not work. It's real easy to do - you just sit around and not do anything. But Americans are kind enough to take care of everybody - even the lazy. Many of these people are overweight (obviously not starving), most are provided with free housing (a place for them to sleep when they aren't busy not-working), and they are even provided with spending cash so they can purchase all of the bare necessities (you know, things like Air Jordans, Tommy Hilfiger Shirts, Gold Jewelry, Crack, and a color TV).
I know that all of this may seem very cold to you, but it's the truth. Everyone in this country is for the most part taken care of. Sure, there are those with too much pride to get assistance - and others that are just too lazy to walk up to the welfare office - But most of society's bottom rung is taken care of. It seems that the real complaint on the part of the "poor" is that they just aren't as "rich" as the rest of their countrymen. What America considers to be poverty would be a considered a "step-up" for most of the people on this planet. The simply act of being born
in this or any other industrialized nation guarantees you a spot in the "world-wide" middle class.
There all already enough social programs in place to take care of those who are truly "in need". The bottom 5% that have trouble affording food are fed with food stamps. Those that are too poor to pay for shelter are provided with public housing - complete with heating, clean water, and most with air conditioning. Retired Americans are kept out of poverty by social security. And, despite what the Clinton's will have you believe, poor Americans have
access to health care through either private insurance, or Medicare and Medicaid.
We seem to have all the basics covered. Yes, there are people that have more stuff than others - people that have better health care, eat better food, drive better cars, and have enough wealth to enjoy a better retirement. But, what business is it of yours. You shouldn't just sit there being envious of everybody else. And you shouldn't increase the power of a politician just because they promise to steal other people's stuff for you. They aren't "feeling your pain" - they are rich, and they want more power. And they are counting on your vote to aid them in their ascension.
Or maybe the real problem is that you're not greedy enough. If you were, you would get off your ass and try to find some way make yourself useful to society so society will have a chance feed your appetite for greed in a more productive and civilized way.
If you produce more, you will have more - Pure and simple. If at the end of the day, you are unable to point to one solitary productive act you've accomplished, what makes you think you have the right to steal the fruits of another man's labor? What would you do if it weren't for the rest of us? What if the farmers, truck drivers, businessmen, and cooks of the world spent their entire day as you spend yours? If it weren't for us, you would have to spend your entire day hunting food, gathering fruits and mending clothes. But in truth, if it weren't for the rest of working society, you would have starved to death years ago because you would have been too lazy to get off you fat ass a catch yourself a damn squirrel.
My apologies... I seem to have gotten off on a rant. I'll try to get back on course.
But first I must take time to note the distinction between the true welfare cases and another group whom are commonly referred to as the "working poor". The latter may lack the skills to do anything more than the most mundane tasks, but at least they are trying. They perform tasks which, although unappreciated, are still vital to society as a whole. I mean, I don't know what I'd do if McDonalald's was ever unable to find enough people willing to flip burgers for minimum wage. If it weren't for them, I'd have to eat bologna sandwiches for lunch everyday - ACK! Many of these people work very hard at these shitty-ass jobs, and for that I think society should cut them some slack.
The whole point is, when do we say, "enough is enough"? How much of our nation's wealth do the unproductive and under-productive have a "right" to? How much government tax-and-spendation
will be necessary in order to "make it all better".
Anybody have any idea?
Most people seem to want to find some "happy median" - generally, a free market society with a progressive tax system sprinkled with a few "welfare" programs that allows the government to assist those who fall through the cracks. Nobody wants to see their fellow man starving. But on the other hand, when you're busy dodging rush-hour traffic on the way to your daily 9to5, and you happen to pass by the projects and glimpse a welfare queen relaxing on the porch preparing herself for an exciting day of not doing jack-shit, one can't help to get the urge to walk up to her, throw her from her EZ-chair, hand her your keys and make her
ass go to work while you
enjoy a day off. Not that anybody would want to take her place permanently
. I don't mind working a little if it means that I get to live better than the welfare queens of the world. Give me a decent house, a decent car, and a decent amount of stuff, and the fact that I have to wake up at 6:30 becomes almost bearable.
In the United States, we basically have a capitalistic society with a few "safety nets" thrown underneath. The Democrats believe that we need to add more of the welfare programs, and the Republicans believe we have too many. The Republicans complain that some people are using the "safety nets" as hammocks - using them to rest their overweight bodies while they sit around the "projects" all day watching Ricky Lake and Oprah. - While the rest of us a busy working - working to provide the goods and services that these lazy fucks claim to have some "right" to.
We can argue these noble concepts back and forth until we are blue in the face, but we will not gain a clearer understanding of what exactly "fair" is. The liberal argues that people don't have enough - so the question is...
How much money would everybody have to make in order for them to be happy?
What is a "fair" wage? Have you ever heard anybody put a dollar value on "fairness"?
Lets find out. First, let's get an idea of how "fair" our current system is. You can get a good idea of how our nation's wealth is being distributed simply by looking at how much each working man (and woman) takes home.
Think of an individual's income as a measure of how of our nation's GDP that person is allowed to take home. It is important to remember that money, in and of itself, has no value. If congress were to pass a bill which forced employers to pay employees 10 times their current wages, people would have more money in their pockets but they wouldn't be any richer. A person making $10,000 would now make $100,000, but if everybody's wages went up, inflation would run rampant as everybody ripped all the consumer goods off the shelves. Prices would rise in order to put a restraint on demand. In the end, each person would still receive the same percentage
of goods as they did before, even though they technically had more money.
Money is more like a "share" of our nation's output. The only way to make somebody in the lower class "richer" is by either increasing the total GDP of the nation (thereby giving everybody more), or by redistributing these shares so that those at the bottom receive a larger portion of the pie.
For right now, let's concentrate on the latter. (This is an analysis of socialist theory, after all). And the most disturbing fact to a liberal is not the actual "Standard of living" of all the classes, it is the difference between the classes - the fact that some have more then others. Nobody would argue that the poor today have it better off than they did 50, 100, 300 years ago. Everybody's standard of living has increased. But, the thing that bugs liberals is the fact that some people's standard of living has increased faster than others. It has nothing to do with what the poor actually "have". It has everything to do with the fact that they don't have as much as everybody else.
So, let's assume a "zero-sum game" in which the only way to increase the wealth of the poor is by taking from the rich. Let's assume that people will work just as hard as they are now, even though they have no hopes in getting any richer. (I know I'm asking a lot, but humor me)
Under these constraints, the only way to give a one person more "stuff" is by taking from another. In order to achieve equality, it will be necessary for some people's wages to go down so that other's can be raised. If the proletariat was to rise up against their masters and use government to place restraints on everybody's pay, how much could each person reasonably expect to receive? Have you ever wondered exactly how much wealth is out there to be had?
Have you ever heard anybody explain exactly what
our "fair share" is? Democrats argue that we need this program or that, but they never specify how many of these programs will be necessary to bring us to "equality". What magic number are they shooting for? 30k a year? 50k? 80k?
Actually, there are some simply ways to get an approximation out what each persons "fair share" is. The most common number thrown around is Per Capita GDP
"GDP" is the acronym for Gross Domestic Product
It is a measure of goods and services produced by labor and property in a given country. Basically, it tells us how much "stuff" our country produced in a given year, thereby telling us how much "stuff" there is to redistribute.
To figure per capita income you simply divide the GDP of a country by its population, and that should tell you how much each person's "fair share" is... (Well, sort of - I'll go into more detail later).
The U.S. GDP in 1999 was 8.7 trillion dollars, which places the per capita income at $33,836. If one was looking for "fairness", you might find it in the fact that the median income in 1999 was about $38,700, which is $5000 above our nation's per capita GDP.
But you must bear in mind that we divided GDP by the entire
population - men, woman, children - the elderly & disabled. Not everybody in this country works. And nobody would suggest that a 3 year-old should make $38k a year. Per capita income can serve as rough approximation of the minimum
the average wage earner should expect, but the average worker should expect to receive a little more.
To get a better picture, let's divide GDP by the number of people which actually work
for a living. There are approximately 270 million people in this country, but only about 40% of them have a job (roughly 104 million people). This gives us a per worker
GDP of $87,252.
Now, this figure of $87,252 per worker should be considered the maximum
extremity of what any socialist regime in this country could possibly accomplish. But before you hoist the red flag and call for the expulsion of the blood-sucking bourgeois, let's put that figure in perspective. This figure of 87k gives us an obsolete maximum, but in reality, the figure will be much lower. The are a few other facts we must take into consideration.
For one, this figure leaves out payments to retired and disabled workers. To get an idea of how many people this would include, we need look no further than the US Social Security Administration. They claim that 48 million
people received benefits in 1999 alone. This would take a huge chunk out of our 87k. (If we decided our nation's 8.7 Trillion Dollar GDP between all the workers PLUS all retired and disabled persons, each person would get about $57,200 a year.)
And beyond that, if every worker were to take his entire percentage home, there would be nothing left over for re-investment. By that I mean that there would be no new factories - No research and development - No new technologies - No Improvement in GDP what-so-ever - Only a gradual decline in wages caused by an ever increasing population, and a constantly deteriorating industrial machine.
If our socialistic utopia is to maintain the same level of growth as or current system, we would need set aside some of our GDP for re-investment and growth - But the question is, "How much?" The easiest solution would be to not pay out any more of GDP than we do now. And to figure out how much that is, we simply have to look at what percentage of GDP we are taking home under the present system.
To keep things simple, let's set the questions of retirees and children aside for a moment. Let's focus specifically on the wages each American worker receives, just to get a rough idea of how America's wealth is being divided up amongst the people actually doing the work.
Take a look at the following table. This is a brief breakdown of our entire economy. In it, I have broken down all of society's "producers" into equal fifths, so we can get an idea of their piece of the GDP pie.
||Distribution of Income
||0 - 20%
||20% - 40%
||40% - 60%
||60% - 80%
||80% - 100%
||95% - 100%
||99% - 100%
||Share of Income
||% of Equity
Allow me to explain what all of this means.
1. The classes
- Each group represents 20% of the workforce, with additional breakdowns of the top 20%. Each of the main groups represents about 21 million workers. (The "Top 5%" represent are nation's richest 5 million people, and the top 1% include the one million people at the top.)
2. "Mean Income"
- The average income of each group.
3. "Upper Limit"
- The top wage earned in each group. (For the top 1% and 5%, the lowest wage is shown. For the highest wage, see Bill Gate's income tax statement.)
4. "Share of income"
- This is meat of this entire chart. This shows how much of our country's total income each group receives. This figure is derived by summing all of the wages paid to everyone in the country, then track what percentage of that total went to each group. (i.e. The chart shows that the lower 20% of wage earners get 3.6% of all the wages that are paid in this country)
5. "Percentage of equity."
- This percentage shows the percentage of the socialist "dream wage" that each group is actually receiving. In a perfect socialist utopia, everybody would be paid the same - so each 20% of society would receive 20% of incomes. This line shows the percentage of that "dream wage" which each group is currently allotted. (i.e. - the lowest fifth is only receiving 18% of what they "should" be getting - according to socialist theory)
So now that we have an idea of how our wealth is currently being divided up, let's take a look at how should
we divided up all our wealth. Take a look at the following scenarios.
6. "Share of Income (Socialist Dream)"
||Distribution of Income
||0 - 20%
||20% - 40%
||40% - 60%
||60% - 80%
||80% - 100%
||95% - 100%
||99% - 100%
||Share of Income
- If we lived in some sort of socialist utopia, each group would get 20% (Everybody would be paid the same wage)
7. Pay (Socialist Dream)
- If we actually split all of the wages up evenly, this is what each person would get... about $55,000 a year. This figure is achieved by taking each groups average wage (line #2) and correcting it according to the value given in line #5.
The difference in figures is due to the fact that the "Share of Income" percentage only has one or two significant digits. This just reminds us that these figure are only estimates, and not to take any of these figures as gospel.
8. Raise (Socialist Dream)
- This is how much each group's pay would need to be adjust to bring us all to "Equality".
The previous section, like the name suggests, is only a sort of socialist "dream". It is based on the theory that everybody should be paid the exact
same wage - a theory which realistic socialist would admit to being difficult to enforce.
If such a system were enacted, a CEO would make as much as a janitor - a construction worker would make as much as a senator - a bad artist would make as much as a good one - a 16-year-old living with his parents would make as much as a 30-year-old with three kids and a mortgage - an entry-level clerk would make as much as accountant with 20 years of experience under his belt.
While this all may sound good to a 16-year-old living at home, the rest of us have some problems with this. Kids should
make less than adults, simply because they are less experienced and have fewer expenses. Some jobs simply are worth more than others, and some people need more money than others.
Now, somebody currently making $12,000 a year will probably take issue with this. I mean, who doesn't want to make more money? Even Bill Gates
still manages to roll out bed every morning - even though neither he nor anybody even remotely related really needs
to work another day in their life. He has more money than he will ever need, yet even he
At this point, it is important for me to note what kind of people are most likely to be reading this rant ... college students. A quick look at my current site statistics indicates that a good portion of my hits come from colleges. (Yes, Big Brother is watching you) College kids usually work part time for $6 or $7 an hour - I'm sure a lot of you probably think that a "flat pay" system is a great idea, since it would amount to a pay increase of 300%-400%. (This probably explains why some may "young" people vote for Democrats - they consider themselves poor)
I have news for you guys. You are not "the poor". You are just young. In a few years you will probably be in the middle class, or better. It really isn't very hard to do. Just the fact that you will have a college degree is usually enough to secure you a $30,000 a year as soon as you leave college, and most of you will make more than that.
When I was 19, I made about $12,500 a year. By the time I was 24, that amount doubled. Now that I'm 27, that figure has almost doubled again. That's the way this game works. As soon as you get some experience under your belt and learn how to actually be productive, society will reward you by giving you a bigger chunk of the pie.
You will probably only be in college for 4 years - you will be working in the workforce for the next 40 years. So please, stop being so selfish and take the time to think this "flat pay" thing through. Don't vote for boneheads like Clinton, just because they are promising to give you free-health care right now
, when you are going to be paying for it through higher taxes for the rest of your life
All that aside, any government that tried to enact a "Flat Pay" system would invariably run into certain difficulties. For one, it would be difficult to fill certain positions. Some jobs slots would remain empty because nobody would be willing to do certain types of work if they could make the same amount do something else. Nobody would want to take the "Dangerous" or "Dirty" jobs, when there are plenty of "cushy" jobs to be had. But somebody
has to take these jobs. In order to fill all of these positions, it would be necessary to force
people to take these jobs. With such a system in place, it would be government
which would decide what career would be best for you. Want to be a nurse?... Too bad - We need clerical workers. Want to be a writer?... Too Bad, we need construction workers. Want to be a construction worker?... Too bad, we need policemen.
And what do you do with people that refuse to take these new jobs?... Imprison them? Kill them? Half our of population would
be forced to become policeman -- just to keep the other half of society working.
Is this your idea of Utopia?
Another problem is that some people need
more money than others. Of course we all want
more money, but the amount you need changes over the course of your life.
A teenager living at home has little or no bills, and generally only needs a job to get extra spending cash. Plus, they have little or no experience, which means the jobs they perform for society will have less importance. Somebody in their 20s has to take care of themselves, and therefore needs a little more than a teenager. Somebody in their 30s and 40s probably has a few dependants, and a pile of bills. They deserve the most. And in the latter part of a person’s life, you only have to care for you and your spouse. The house is probably paid off, and the bankruptcy has wiped out all of your bills. This, including the fact that you are retired (i.e. not working), means you should get less - about the same amount that you made in your late 20s.
So in reality, even in a socialist system it would be necessary for there to be some
pay inequity. It would allow you to value jobs according to their difficulty, and would allow market forces to direct people to decide what career is best for them. Of course, some government agency would be in charge of setting these rates, but you wouldn't have to force
people to take the undesirable jobs -- You just keep raising the pay until they become desirable.
And that is why the next section is called the socialists reality. If everything isn't spit up evenly, how should it be split up? If you believe that our nation's wealth should be divided up differently than it is today, exactly how would you do it?
||Distribution of Wealth
||0 - 20%
||20% - 40%
||40% - 60%
||60% - 80%
||80% - 100%
||95% - 100%
||99% - 100%
|Socialist Reality #1
||Share of Income
|Socialist Reality #2
||Share of Income
So in lines 9-12
I test two scenarios. In both sections, I start with the middle class (the 3rd
percentile) taking home their "fair share" of pay - 20% percent of all wages paid. This means that anybody that currently makes $40,879 would get a $13,992 raise. (woo-hoo!)
From there, I slope down on either side and figure out what their pay under my governmentally-regulated socialist utopia would be.
In reality #1, I have the bottom 20% taking home half of the "full amount" - 10% of wages. This would give somebody making $10,000 a year a $17,600 raise. And on the high end, I give them 50% more than the "standard pay" - 30% of all wages paid. This would cut their $135,000 a year down to $82,000 a year.
In reality #2, I take a more realistic approach. (Do high school kids really need 27k a year?) I have the bottom 20% taking home a third of the "full amount" - 6% of wages. This would give somebody making $10,000 a year a $6,600 raise. And on the high end, a give them 70% more than the "standard pay" - 34% of all wages paid. This would cut their $135,000 a year down to $93,000 a year.
I believe reality #2 is the more realistic of the two scenarios, and is a fair representation of what most liberals are shooting for - A 66% raise for the "poor", a 31% cut for the "rich"
Of course, all of this is still a utopian dream. There is no guarantee that our nation would still produce as much if it were under the control of government. On the contrary, there is some evidence that production would actually decline in the long run.
If one actually looks at real-world socialist systems, you will see that in general, equality is achieved by bringing everybody's wages down - not up. The fact that free-market systems are almost always more productive (and therefore, wealthier) than socialist systems should be enough to force any socialist to take pause and re-examine their beliefs. If the top 40% of society destroyed so that the bottom 20% can get a fat paycheck, is it worth it?
Your answer to this question most likely rests solely of how close to the top 40% you are.
The capitalists will argue the primary reason for the failure of socialism is the fact that such systems kill the "profit motive", and production is harmed as a result. When a government nationalizes all of its industry, it basically turns every business into government agency - An entity that has no fear of going out
of business, and therefore lacks any real incentive to meet societies needs, much less expand
their services to keep up with the growth of society. Why should anybody want to do more work if they don't have to? Without millionaires, there would be no venture capitalist. Without venture capitalist, the only way to start a new business (thereby increasing the amount of "stuff" produced by society) would be by an act of congress. Basically, the entire economy is turned into a gigantic DMV.
Greed is one hell of a motivator. Without it, Bill Gates would never have created Microsoft, and the PC industry would probably be years behind its current level -- That is, if the PC industry existed at all. Just look back to the 1970's - back before the PC market existed. The idea of "personal computers" seemed pretty damn silly to most people back then. I mean, what the hell would the average person do
with a computer? At that time, computers were only used for calculating artillery trajectories, counting census information, and performing scientific calculations. The "average Joe" would have no use for this, right? Can you imagine
walking up to your local congressman and asking him
to allot funds for the production of computers for the masses? They would have locked you away!
If you think I'm being too harsh, just look at all the technological advancements that communist counties have made. You can probably count them on one hand - except of course for military
advances. But as I stated before, these were a direct result of competition
with the west - the kind of competition which occurs naturally in capitalistic societies.
Men are inherently lazy. A person will only expend as much energy as is necessary for them to survive. It is human nature. In order for them to produce more, a person must be enticed. There must be some sort of "reward" for hard work. There has to be a reason
for a person to do any more. If a person already has everything he needs and has no hope of obtaining more, why should anybody expect him to work at all? If you don't reward people for hard work, people will direct their energy towards finding ways to work less.
The only motivating force in a communist country is the love of the motherland - a desire to improve the condition of your fellow man. That same sense of "patriotic duty" exits in capitalistic nations as well. But capitalism has an additional "carrot" to wave in front of the masses - MONEY. And the only way to obtain money (legally) in a capitalistic country is to provide goods or services to your fellow man... And the more productive you are, the more money you get. Communism lacks such an incentive. And their economies suffer because of it.
The socialist may counter that the reason communist countries are poorer is because most communistic countries started off
poorer. The less you have, the more attractive socialism becomes. Only an extremely poor person has anything to gain under such a system. And the more unhappy people there are, the more likely revolution becomes. So the claim that socialist revolutions generally only take place in countries that were extremely poor to begin with does have some merit.
But when you look around the world, you see that by-and-large, people are worse off after the revolution than before it began. The only people that seem to be helped are the poorest of the poor - the unemployed and homeless. The rest of society is brought down into poverty just so these people can be guaranteed a job - but in the end, they are still
poor. And if socialism doesn't bring people out of poverty, what is the point? Yes, it is true that there is a huge disparity between the top and bottom classes in capitalistic societies. But I would rather be a lower class American making 17k a year, than a middle class Russian making 4k a year.
Class envy is the basis of all socialist theory. It has nothing to do with how well off you actually are
. It has everything to do with the fact that some other guy has more stuff than you do. Nobody is starving in this country. In fact, a large percentage of "poor" people are overweight. The poor in this nation aren't crying for bread, they are crying for more of the other guy's stuff. They are tired of being degraded by being forced to drive "used' cars and to live in old houses. They only have one VCR, only one pair of $150 tennis shoes, and a couple old TVs. They probably have a washer and dryer to do their laundry, but they may be too poor to buy a dishwasher. My guitar gently weeps.
I may sound cruel and inhumane for saying this, but all this clamoring by the poor is not based on their needs, but their wants. They aren't starving. They simply see that 80% of this country has more than they do, and elect politicians that will promise to steal some of it for them. "If they have great health care, why can't we?"
Of course, you can't really blame them. With the exception of any Buddhists monks who may be reading this, we all want more stuff. It is simply human nature. But the thing that gets my goat is the fact that other 80% of us have learned that you need to contribute something to society in order to expect something back. Socialists are looking for a shortcut to wealth - by simply confiscating what others have produced.
Now, to review...
Statistics show that the 'average' worker in this country makes about $41,000 a year. Using the simple techniques shown above, we can calculate that if all wages distributed evenly, the average person would make about $55,000.
But as I pointed out before, these figures ignore many facts. Plus, the amount of government regulation necessary to achieve the 'equality' would devastate all of our freedoms. I cannot stress this point enough - That this increase in wages would come at a tremendous price. You would no longer be able to start a business. (All businesses would be run by the state) You would no longer have the freedom to choose your own career. (You would be forced to work wherever you were needed) And in the end, you're grandchildren will be worse off because of it. (No increase in production)
With that being said, I must to admit that this analysis is full of flaws. Any rational person will see that it is far too simplistic to explain the entire economy. This analysis is only based on the income that people claim on their income taxes, and does not include all incomes. It does not include the other 40% of GDP that is not
paid out in wages. It does not examine current "redistribution" programs (Taxing and spending, unions, and government workers). And, most importantly, just because somebody made $500,000 last year does not mean that he kept $500,000. After taxes, the figure was probably more like $300,000.
This brings up one other point. Under our current system, the upper classes bare an extraordinary percentage of the tax burden. So if we wish to spread to reward
of income equally, it would also be necessary to spread the burden
of taxes in an equal manner as well. So let's take a look at what kind of effect this would have on our "equal" pay.
Facts and Figures
||"Facts and Figures"
||Tax Dollars Collected
||Per Capita GDP (Min)
||Per Worker Income (Best Guess)
||Per Worker GDP(Max)
||Per Capita GDP - Tax
Income - Tax
||Per Worker GDP - Tax
||Per Capita GDP - After Tax
||Per Worker Income - After Tax
||Per worker GDP - After Tax
- The numbers used to calculate the items below
- The sources of these income have already been described in this essay.
- 'A' - Per Capita GDP - This number is derived by dividing total GDP (line3) by the total population (line 1). This is the figure I gave earlier as the "minimum" pay that a socialist regime would be able to offer its subjects.
- 'B' - Per Worker Income - This figure given in this line is derived by dividing total income (line 4) by the total working population (line 2). This number is similar to the "55k" average income described in the tables above, but is based on slightly different figures. (Did I mention that all of this was only a guesstimate?)
- 'C' - Per Worker GDP - This number is derived by dividing total GDP (line3) by the total working population (line 2). This is the figure I referred to earlier as the "maximum" wage that a communistic society could offer.
- How much taxes each wage earner would have to pay in order to maintain our current level of government. Line 'A' is derived by dividing total tax dollars collected (line 5) by the total population (line 1). Lines 'B' and 'C' are calculated by dividing total tax dollars collected (line 5) by the total working population (line 2).
- These lines examine what kind of effect 'equal taxation' would have on our 'equal wages'
As you can see, even though every wage earner would make about $52k
under a socialist system, each person would have to pay about $17,000
in federal taxes, thereby reducing their take home pay to about $34,500
Let's put these figures into perspective. As I stated earlier, under our current system the average worker earns about $41k
a year. The current federal income tax on somebody that earns $41k a year is about $3,600 with an additional 'social security' tax of about $3,100. This reduces the take home pay of our average wage earner down to about $34,300
a year - only $200 lower than the average wage under a socialist system!
But as I stated earlier, socialist aren't concerned with the well-being of the middle and upper classes. All they care about is the position of the poor, which of course, would
see increase in wages, despite being more heavily taxed. And to a poor socialist, this is all that matters.
Even though this essay ignores most socialistic 'redistribution' schemes (i.e. welfare) currently in place, it is not entirely representative of a "true" capitalistic society either. There is no doubt that millions of laborers have had their standard of living increased through "socialistic" labor unions - And these figures do
include the biggest welfare program of all - government employment. The Federal government employs about 4 million people and state & local governments employ 15 million more. That's about 20% of the entire workforce, and that's only people employed directly by the government. It doesn't include all of the leeches whose livelihood is dependent on government in some way (Tax Accountants, Lobbyists, Trial Lawyers, Drug-War Crusaders, Drug Dealers, Prison Guards, and Political Theorists). Without these jobs, those workers would either be unemployed (bad), or would be busy providing a valuable service for society (good) -- but it is difficult to say what the net effect would be.
Although most of these people provide a valuable service to society (Teachers, Firemen, etc.), many do nothing but push paper around. Paper-pushers do not produce anything but paper. They feed no-one. The house no-one. Sure, they may create the food stamps that allow some to eat, but they don't actually labor
to create more food -- they simply steal it from somebody else. Yet they are allowed to suck-up a portion of our GDP for the tasks they perform.
Don't get me wrong. I'm sure most IRS agents and Tax Accountants are really hard-working people. But, it's like paying one person to dig a ditch and another to come along and fill it in again. One person creates tax codes, which allows countless other people to make a living by finding ways to get around the law. It doesn't matter how hard they work. In the end, nothing is produced and society as a whole is a little poorer because of it. Say all you want about welfare recipients, but at least they don't waste everybody's time with regulation and red-tape.
Yet, it is extremely difficult to say what our economy would look like without
all of this socialistic influence. I'm sure a good number of these people would find employment elsewhere - jobs which allow them to actually be productive members of society - but, many more would probably end up unemployed. Again, more capitalism would allow the rich to get richer and cause the poor would get poorer. Again, society would produce more as a whole, but that wealth only go to the one who produced it - those with a job.
Would that be a bad thing?... I guess it depends on whether or not your were one of the people that had a job.
So, yes - this study is only a guess. Were I an academic, I would be laughed out of the business. But a guess is closer than having no idea at all. We can see that even if we were to go all out and redistribute all of the wealth evenly, most people would see little change in their income at all. At least now when we hear liberals talk about "fairness", we will at least have some
idea of what they have in mind. We can see that if the liberals got their way, that the average worker's 'share' of the GDP pie would increase from about $41k to about $55k - a $14,000 a year raise. But as I pointed out earlier, most of this 'raise' would be lost due to 'equal taxation'. And this $14,000 a year raise also assumes that politicians are even capable
of creating a perfect system... And when was the last time any
government agency actually delivered what it promised? An evaluation of any government agency currently existence should caste doubt in anyone’s mind of the likelihood that our government is even capable
of creating an economic utopia.
But now that we have an actual dollar amount, each of us can all do our own 'cost-benefit analysis' of a socialistic system. Of course, others may come to a different conclusion, but for me the promise
of an additional $200 - $14,000 a year is poor compensation for the freedoms I will most certainly
have to surrender to the state in order to achieve this utopia.
Of course, this is primarily due to the fact that I am part of the 80% of society that would see little if any increase in pay under such a system.
You, on the other hand, may see thing differently.
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