Is This Socialism?

In order to understand the premises of socialism, we need to understand two words: “from” and “to.” Specifically, socialists believe that justice is served when societies observe the following rule: From each according to his abilities; to each according to his needs.

On the face of it, this sounds just. Who would quarrel with the idea that people should get what they need? It is the “from” part that get us into trouble. If life were a matter of us all standing around a pre-existing barrel of goods–food, clothing, shelter, and other necessities–and taking what we needed, one might justify this distribution rule.

Of course, we all know that is not how the things we human beings need come to exist. Except for air, basic necessities have to be created by someone. Socialism presumes it is right to take from the creators and give to others. Is that what our economic system has become?

You bet it has, but not in the way you may think.

The complexity of our economic system has allowed us to take from people who don’t exist yet. How can that be? It is called debt. Debt is en extremely useful tool. If someone lends you money to buy something you could not purchase with cash, say a house, many people benefit. You benefit because you are able to use something valuable before you pay for it completely. The seller benefits because he/she can sell to someone who otherwise could not purchase. The lender also makes money.

If we had no system for borrowing and lending money, it would be nearly impossible to own anything like a house or car. Here is the problem. Not only can regular people and private businesses borrow money, so can the government. The difference is that the government borrows from future generations.

One way the government does this is to borrow money literally. It essentially issues IOUs to its citizens. The government can also print money. In the first case, debt can build until the present generation cannot pay it all off. In the second, government spends money it has “printed” and hopes no one notices that the resulting inflation has robbed citizens of buying power.

Either way, the system makes chumps of us. If we live frugally, save our money, and teach our children to do the same, we wind up feeding the government’s insatiable appetite for spending at our own expense. At some point, the system has to break down. Either our children and grandchildren will have to pay absurd tax rates or the value of our currency will diminish to zero. Maybe both.

And this brings us back to socialism. If the government tried in the present to take the amount of money it needs to sustain its orgy of spending, citizens would revolt. If they hide their theft by passing it on to its future citizens, we who are right here right now may grumble, but we won’t revolt.

Is this how we want to live? If so, let’s be honest about it. Socialism advocates taking from the “able” and giving to the “needy.” If you believe that, are you willing to look future generations in the eye and tell them that we gave and gave and gave and that by the way, they owe the bill?

I didn’t think so.

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Filed under currency, economy, entrepreneurship, financial crisis, infllation, investing, money, retirement

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