“We are from the government and we are here to help you.”

Tue, Jun 23, 2009

Capitalism, Socialism, Welfare

It’s very trendy amongst lovers of central power and big government (especially socialists and communists) to state that capitalistic free market economies cause the need for welfare programs.

When we hear this from people, we have to be prepared to respond with logical correction.  This wrongheaded thinking – that centralized state control “cures” welfare whereas capitalism causes it – is sometimes found in our workplaces and communities and needs correction.

In fact, in response to the last blog post someone replied, “Capitalism is the only system that has welfare. Not Communism or National Socialism. Only Capitalism. This is because the freer market as we are now seeing, deliberately creates a larger pool of unemployed to keep the wages down. As this drives down wages, more people become dependent on welfare through top ups.”

Aside from the “interesting” logic in this piece, (hey, why not deliberately fire EVERYONE [what’s 10% unemployment, let’s go for 100%!]  that will really get the wages down and that way we can hire them back and then fire them again and keep doing it forever!!!), let’s just take a look at this claim that Communism and National Socialism are systems that “don’t have welfare”.

Could it be that Communist and National Socialist systems are welfare? Group member and commenter Jack Foster says yes and gives us all some sound arguments and logic to add to our mental store.

Here’s his comment in its entirety:

“Communism is a theoretical economic system characterized by the collective ownership of property whether you work or not. It other words, the whole system is a Welfare System.

National Socialism is a vague and ambiguous political term that typically refers to Nazism.

Socialism is an economic system characterized by the state ownership of the mean of production and distribution. In other words and put simply, the government is the only employer. If you are out of work, it is the government’s responsibility to provide you with work since they are the only employer. That makes this whole system a variation of the Welfare System.

Capitalism is an “economic system” characterized by the privately owned means of production and distribution. Development is proportionate to the accumulation and reinvestment of profits gained in a free market. In other words, compensation is relative to a work’s value and usefulness to someone else.

In truth, capitalism is not an “economic system,” but the natural economic order of our world. When two children—who have no knowledge of economic systems—decide to trade baseball cards on the playground, they do so under capitalism’s inherently understood rules. Each card has a perceived value dependant on its scarcity and usefulness. A trade is not performed until both sides agree to the price. That is capitalism.

Capitalism even has a method by which the poor and downtrodden can be lifted and supported. Through charities, one can pool their monies to help those in need. If that charity loses the public good graces (through scandal, misappropriations of funds, high overhead costs, or inappropriate recipients), its funds will dry up. It will eventually fail and a new charity will emerge to take its place. This is the self correcting ability that underlies the whole of capitalism.

The Welfare System (the idiom) is not really related to any economic system. It is a wholly own subsidiary of the government. The Welfare System relies on the government to take from those that “have” and give to those that “have not.” The governments top down approach lacks the self correction of the capitalist charities and quickly evolves into the aforementioned stories of fraud and abuse.

The lack of self correction is not the only problem within the Welfare System. Firstly, it strives to replaces the goodness of the individual with the false goodness of the government. Whereas an individual may have morality, the government does not (and should not.) After convincing its governed of its “goodness,” the government will then muscles charities out of the market by unfairly regulating them and then drying up their funds.

Secondly, the government mandates the taking of funds from the wealth creator for the government’s coronated “welfare recipients.” The wealth creator cannot control who receives these funds. As such, these funds are directed to those with the strongest government lobby, not to those in the greatest need or to those that have more compelling goals.

Thirdly, the government agency, who distributes these funds, neither knows nor cares who receives them. For it, the measure of its worth is not in whom they help, but in how much distribute. This model is fraught with fraud, for the bureaucrat will feel no pain (though job loss, reduce authority or decrease of funds) when these frauds are discovered. This notion will always lead to the aforementioned inefficiencies. 25% distribution of fund is appalling but inherent.

Fourthly, the welfare system is a faceless entity that engenders a sense of entitlement. Many think that because it is their government handing out “free” money, they are entitled to it. After all, they are apart of the governed. Eventually, this will lead to the thought that they must “get these free funds before someone else takes it from them.” But what they refuse to acknowledge is that those fund do not come from the government—for the government can only gain money by first taking it—and that money is most unsurely not free.

The statement, “We are from the government and we are here to help you.” should send a shiver down every spine of freedom loving citizen, for the government will only help those that will give it more power; and the Welfare System is it biggest tool.”

Thank you, Jack, for your astute contribution.

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- who has written 71 posts on Small Business Against Big Government.

7 Responses to ““We are from the government and we are here to help you.””

  1. Charlie Davis Says:

    Great thoughts from Jack. Thank you for quoting him, and thank you, Jack, for taking time to write this and share.

  2. Jack Foster Says:

    Thank you for posting my comments.

    Now that it has been promoted from “post” to “article,” I do have to add the citation for the economic definitions. The first sentence of the first four paragraphs were adapted from their individual dictionary entries at Anwsers.com.

  3. Warren Taryle, CPA Says:

    I remember when I am here from the government and I am here to help was the punch line to a joke not a way of life!

  4. Jack Foster Says:

    So, true Warren! It is too bad that that punch line is now the current administrations maxim!

  5. Joseph Foster Says:

    “In other words and put simply, the government is the only employer.”

    In business, the company that expands to products and services outside its core competency fails. They end up consuming their time and talents with tasks that don’t allow them to do what they do best. Such is the case with the government, they can’t possibly have a core competency in EVERYTHING. Socialism leads to inefficiency, which leads to higher unemployment and underemployment.

  6. Mark Murphy Says:

    I have agreed with this sentiment ever since Ronald Reagan stated “The most terrifying words in the English language are: I’m from the government and I’m here to help. “

  7. Greg Hallock Says:

    I always dislike hearing the word “Communist” in libertarian discussions.

    To a large portion of the up and coming voting population “Communists” were defeated in 1991, before they were even old enough to vote, and hearing the term in anachronistic. Further, Marxian communism can never work on a large real-world population. It makes the basic assumption that people are innately good, and will, when offered the choice, work for the good of the community rather than just personal promotion. In other words Real World communism is a failed experiment, and Marxian Communism is an Ivory Tower concept that simply doesn’t work outside the Ivory Tower.

    Likewise, bringing up the Nazi party has similar issues, in addition to immediately Godwinning the conversation. (To Godwin a conversation means to bring up either Hitler or the Nazis. It comes from the old Newsgroups, and essentially means the side that Godwinned “lost” the conversation/arguement/discussion.)

    I find it more effective, as well as more relevant, to use more current examples. Rather than talking about “communism” refer to the nationalization of industries, in places like Venezuela. Venezuela has significant oil wealth which is getting piddled away by President for Life Hugo Chavez.

    I find that “socialism” and “socialist” are terms that are generally used poorly as well. Every “modern” government is socialist to some degree or another. The problem is that the bigger the government gets, and the more “socialist” programs it institutes, the more removed it makes itself from the common person.

    From a responsible, libertarian point of view, one should look at the “solutions” that various forms of “wellfare” are supposed to supply, and determine suitable small government, non-ivory tower solutions.

    Health Care: What are the biggest costs involved in healthcare? I can say with some authority (couple doctors in the family) that currently the biggest cost in health care is Malpractice insurance for the doctors. Revamping US Tort law (Civil lawsuit law.) could go a LONG ways to redressing this issue. There are far too many examples to list of our courts being abused by frivilous lawsuits. Tort Law NEEDS reforming, needs to be streamlined and fixed so that our tax dollars aren’t being pissed away by people looking for a payday. Having strict limits on ANY suit short of gross misconduct or negligence would go a long way. This would also help the small buisiness that has an idiot slip on the ice outside and gets into a liability lawsuit. Better, it helps by shrinking government, and making it harder to abuse those portions of our government that are appropriate.

    Unemployment: Unemployment is a FACT, one that occurs regardless of economic or governmental system, and is in fact important for maintaining the economy, regardless of the model you are on. Frankly I would LOVE for “unemployment insurance” to be privatized. I work in an extremely volatile field that I absolutely love. Due to my love of my work I have been unemployed for extended periods a couple times. As a responsible person, I have never ONCE touched a cent of .gov “unemployment” dole. I can’t say it won’t ever happen, but it won’t happen until things get SIGNIFICANTLY worse than they are. However, if there were good unemployment insurance I’d be happy to set aside a chunk of my paycheck to provide against those lean times when I don’t have work. (At the moment all I can really do is put money into my Rainy Day fund.) Also, if you are working a more stable job, with lower risk of “fluctuations” you don’t need to opt into the insurance, and thus end up with a larger take home paycheck.

    Food: This one I consider to be part of “Life, Liberty, and pursuit of happiness” (Or property if you’d rather go with a different founding father.) Ensuring every one of its citizens has a meal is a respectable thing for a government to do. . . but there is no reason to spend too much money on it. “Beggers can’t be choosers.” Cheap and nutricious. That said, I consider the current “food stamps” program to be ludicrous.

    “Too big to fail”: Um. . . excuse me? By saying that certain companies are “too big” or “too critical” to fail is a slap in the face to all small-business owners. It sends a message of “Get big enough and you can stop being responsible for your poor decisions.” Take a look at some of the industries that are failing. How did they get there? What choices were made to put them in the position they are in now? If I may I’ll use an example of the Big Three (american) Automakers.

    Prior to ~1980 the Big Three’s reputation was unempeachable. Then in the 80s, several foreign companies started releasing small cars with a level of fit and finish you only found in the high-end american cars. These companies started rapidly gaining inroads on American companies. For most of this period The big 3 rested on their laurals, until they put a roof over a pickup’s bed and came up with the SUV, the big moneymaker for them in the 90s. That was the limit of their innovation during that timeperiod.

    Then you have Katrina. Gas prices in many places in the country shot up $1-2 overnight, and stayed that way for an extended period of time. Smaller cars shot off dealer floors. There was a wait-list several MONTHS long for Priuses. After a full year, things had normalized again. The Big 3 moved back to their 90s mix, heavy on SUVs. Most foreign companies expanded their inventories down one notch. (Toyota introduced the Yaris, Honda the Fit, Nissan the Versa, VW GTI etc) You COULD get a ford Fusion or Chevy Aveo, but both were utterly inferior to the three japanese cars I mentioned, and often more expensive as well. These cars are AMAZINGLY successful in the US, with the Fit having waiting lists of several months. Then comes the summer of 2008. Gas prices go even higher than the Katrina disaster. With the majority of their lineup being terrible gas guzzlers, the big 3 simply weren’t selling cars. Further their union follies from years past came to a head as well. . .

    And I’m supposed to pay for their idiocy? Katrina was a wakeup call that was heard in much of the world. You had police departments and cab companies buying Saturns for their fuel efficiency, but the VAST majority of American companies just pushed their SUVs even harder. And rather than bring in their excellent small/efficient european/japanese offerings, the Big 3 just shoveled more of its shite. (The European ford fusions are actually GOOD.)

    And again, they’re “too big to fail”?

    Wellfare, beit personal or corporate is, by and large, an insult to the responsible tax payers.