by Glenn Rogers
Could Nozick be on to something with his entitlement theory? Could it be that when someone earns or acquires something legally that no one, including the government, has a right to take it from him against his will? How would that be any different from a robber taking your money at gunpoint? And what about the constitutional guarantee (the 14th amendment) of equal treatment under the law? Treating people differently for tax purposes in not equal treatment under the law no mater how you try to justify it.
Is a Robin Hood tax system a fair and just way to fund a society? Seems to me that if we are going to be a society of equals, one of the things we need to be sure of is that we have equal treatment under the law for everyone in all things, including taxation. At present, we do not.
But what has this got to do with our topic—which socioeconomic system is best for helping people achieve their potential, capitalism or socialism? The answer is simple. It is the point Adam Smith (in Wealth of Nations) made a couple of centuries ago. Human beings are self-interested. We work harder and more creatively when we know our industry, our drive, our imagination and our inventiveness is going to produce something that will benefit us and/or our family. Take away or minimize through heavy taxation the incentive of profit, and you deflate the human spirit of creativity and drive. Unfair taxation that penalizes hard work and creativity is not good for society, not good for the wealthy who do not enjoy equal treatment under the law, and not good for the people on the receiving end of social programs because they are not encouraged to be self-sufficient—a trait that is not much appreciated in this day and age.
Many years ago my family and I lived near Redlands, California. At that time, Norton Air Force Base was one of the strategic bases for our missile defense program. I knew the commander of the base, a colonel who attended the same church we did, and he invited me to visit the base. He gave me a private tour, which was an honor for me … and which was also really cool. As we walked, he pointed out some of the missiles on display and asked me if I knew how we won the cold war, defeating the Soviet Union. I said I wasn’t sure. He said that we bankrupted them. We kicked the American capitalistic industry machine into high gear and produced so many missiles and other weapons that the Soviets with their socialistic system simply couldn’t keep up with us. They tried. They spent themselves into bankruptcy trying to keep up. But in the end, they collapsed under the weight of American productivity.
I’ve thought about that often over the years. What he was saying is that because of the way we work, because of the free enterprise system we have, a system that encourages and rewards hard work and creativity, industry and productivity, we out produced our enemy, and in doing so defeated him. That says a lot about the value of a free enterprise system that rewards hard work that provides an incentive for achievement. But what does it do (or what will it do) to that incentive when the government comes along and takes so much of the money we (and businesses) have earned so they can give it to people (via social programs) who did not earn it?
This is not to say that we should not care about people who need help. We should. But how we help them is an important question.
Helping People Help Themselves
Sometimes people need help. Sometimes things happen to a person through no fault of their own, and they need help. Sometimes they have made a bad decision or a series of bad decisions, and now need help. Okay, let’s help them. But how? What kind of help will be the most beneficial? The old Chinese proverb is helpful here: Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for the rest of his life. The best way to help people is to teach them how to take care of themselves, and then require them to do so.
The best way to help people is to educate them so they can get a job and take care of themselves. We provide a basic education (K-12) to everyone in America. Not everyone takes advantage of it. High school dropouts are usually the ones who have the most difficulty getting a job that pays enough to live on. Some suggest that the government make companies pay at least $15 to $22 dollars an hour for every job (even working the fry station at fast food restaurants) so that people can live above the poverty line. That’s the wrong approach. That would drive up the cost of production so that companies would have to raise their prices, sometimes dramatically, to maintain a profit margin. Paying people a lot of money for a job that isn’t worth a lot of money is not the answer. The answer is educating and training people so they can get a good paying job. But how?
Whatever the details might end up being, the government should not be involved. At least, not directly. Every time the government gets involved, they make a mess of it—regardless of what it is. Look at the educational system in America. We used to have one of the top educational systems in the world. Now, depending on which study you consult, America ranks 14th or lower. Why? Because the government got involved. Whenever the government gets involved in business, education, or healthcare, things go right down the tubes. The government should not be involved in helping people with their education and job skills.
Who, then, is going to help the people who need help? Since the issue is people being able to get a good-paying job, and the good-paying jobs exist in the American business complex, American business need to be doing the training and educating. But American business isn’t in the education and training business. They are busy doing what they do. Do they want to begin educating and training people? They might. One of the challenges businesses have is getting qualified people for the jobs they are trying to fill. Suppose XYZ company has jobs to fill. What if the government gave XYZ company a tax break if XTZ set up a training program for people so they could train potential employees to do the kinds of work they do at XYZ company. The company could hire trainers/teachers who could educate potential employees. Or, the government could provide the tax break to XYZ and a dozen other companies who could then fund a school where potential employees could be educated and trained to do the kinds of work those companies do. Training centers could be set up all over the country.
This is only one suggestion. There might be other options. But the point is that there are a number of ways to educate and train people for jobs so they can work and make enough money to live on without the government being directly involved. The best people to train people for jobs in American industry, big and small, is American industry.
The people who need help ought to receive the help they need. But it should be connected to job training. When the person receiving help is trained, there should be job placement assistance. When the person has a job, the additional help should end. Help the person get a job; then require him or her to be self-sufficient, which will be one of the nicest, most helpful things anyone has ever done for that person.
What’s the point of all this? The United States of America is one of if not the most successful capitalistic countries in the world. Capitalism is good for people because it provides an incentive for hard work and expects people to be self-sufficient. But self-sufficiency is learned. It is an acquired skill. If parents do not teach their children to be self-sufficient, they may encounter challenges in relation to life in America. The answer is not tax funded, government-managed social programs that simply give people what they need. The answer is American industry offering training programs so they can teach potential employees how to do what they need to be able to do. That way, people who want to work can get the training they need and the job they need. Capitalism can be compassionate and still be capitalism.
Confusion About Terms
As noted earlier, one of the problems we have in America right now regarding capitalism vs. socialism is a confusion of the meaning of each word. I wonder if Bernie Sanders actually understands what the term socialism means. He is obviously confused about the Nordic countries being socialist. They are not. The government does not own or control the means of production and distribution. The Nordic countries that are often referred to as social democracies are not socialistic in any way—at least as far as what the term s
ocialism actually means. They are capitalistic countries with very high tax rates so they can fund social programs. Basically, they take money from people who have earned it and give it to people who have not earned it in the form of social programs. But having social programs does not make a country socialist. When Mr. Sanders says he is a socialist and wants the United States to become socialist, does he mean he wants the government to take over the ownership and management of all industry? That’s what socialism is—government ownership and control of business and industry. When Alexandria Ocasio-Cortez says she is a social democrat and wants America to become socialist, does she mean she wants to do away with free enterprise and have the government own and control all business and industry? Because that’s what socialism is. I suspect that each of them would say, No, that’s communism. I’m not talking about communism. But socialism and communism are the same thing. People who say they are not are the same things are using the word socialism incorrectly. Not long ago the actor Jim Carrey was on a television program advocating what he called socialism. He said, We have people in this country who need help, and we ought to help them. To him that seemed to require that we become socialists. But does he believe that the government should take over all the business and industry so that they control and manage it? I don’t know what he believes because he did not make himself clear. But for America to become socialistic would require that the government own and control the means of production and distribution. I suspect that Mr. Carrey is simply confused and is saying one thing when he really means something else. I suspect Mr. Carrey would be happy to see some programs put in place to help poor people. Maybe that’s what Bernie and Alexandria mean as well. If that’s what they mean, then they are not really socialists. They simply want to take money from people who earned it and give it to people who did not. That is not socialism.
However, 2020 presidential candidate, Elizabeth Warren, recently suggested that corporations apply for a federal charter which would mean that the government would then have control over what that corporation can and can’t do. In other words, if XYZ company wanted to build widgets, by applying for and being granted a federal charter, they would be giving the federal government control of their business so that the government could tell them what they could and could not do as they make and sell widgets. What does this mean? It means that Warren and others like her really are advocating socialism where the government controls business in America. She actually is a socialist. Which makes one wonder if Alexandria and Bernie are as well. Why not just invite Vladimir Putin over and let him take over?
In one of his books, Aristotle wrote that one of the most important things we learned from Socrates is the importance of definitions. He was right. When words are not clearly defined, misunderstanding always follows. There are people in America who need help. Let’s help them. But we do not need to become a socialist country to help them. We do not have to give up the right to private property, allowing the state to own and manage the means of production and distribution in order to help those of our society who need help. The socialist experiments of the 20th century proved that socialism doesn’t help anyone. The best way to help people is to have a vibrant capitalistic economy with plenty of money flowing throughout society, teaching and training people to be self-sufficient and providing them with a profit incentive for working hard and smart, creatively and productively.
Reasons Why Capitalism is Better than Socialism
Since the title of this book includes the idea that capitalism is better than any form of socialism, it is probably a good idea to be very specific about that claim. The following list is not meant to be exhaustive but representative of some of the reasons capitalism is better than socialism. The list includes ten reasons.
1. Capitalism is better than socialism because capitalism is the basic economic system humans have always chosen to use. In chapters two and three, I presented evidence from archeologists and historians who describe the economic system of a number of ancient societies. Capitalistic free enterprise in its simplest form is the economic system those societies used. If one were inclined to disagree, I would simply remind him of the definition of capitalism: the means of production and distribution are owned and controlled by the individual owner. So if Ahmad, living in ancient Mesopotamia, owns some goats, milks the goats, and makes the milk into goat cheese to sell in the local village market, he is engaging in capitalistic free enterprise. It may not be a very sophisticated form of capitalism, but it is still capitalism, not socialism. And except for a couple of brief flirtations with different socioeconomic forms (the feudalism of the Middle Ages and 20th century socialism) capitalism is the way people throughout history have chosen to do business. Obviously it is a better system. Why? Because it is the best way to do business.
2. Capitalism is better than socialism because capitalism helps one develop a greater sense of self-sufficiency and individualism. Socialism generates dependence on the state. In a socialistic state, the government controls and provides pretty much everything. People become dependent on it. A dependent person is not self-sufficient. A dependent person is not a strong individual who thinks and does for himself. Socialism, through its creation of dependency, robs the individual of his or her sense of self-esteem and ability to say, I can do this. Capitalism, however, since it is rooted in the idea of self-determination, independence, and personal responsibility, motivates a person to prepare himself for life and meet it head-on, earning his way, taking pride in his ability to take care of himself and his (or her) family. In other words, the psychological environment of a capitalistic society versus a socialistic society is better. Capitalism generates stronger, more capable people. Why? Because capitalism is a system of personal responsibility, of earning and acquiring, where socialism is one of personal acquiescence, of expecting and accepting a handout.
3. Capitalism is better than socialism because capitalism provides people with an incentive for hard work and productivity. Socialism does not. When I was still in the classroom, I would ask my students if they would like to be in a class with the following grading structure. Everyone in class would be required to read the assigned text, complete the thinking and writing assignment associated with each chapter, take three exams, read an additional assigned text, and write a ten-page book report on that text. Each assignment would be worth a given number of points. I would grade the assignments and give students their points. Then, I would take points from those students who had worked hard enough to earn an A or a B and give those points to the students who had earned a D or an F. This way, everyone in the class was assured of “earning” a C in the class. The students looked at me as if I were insane, and when I asked how many would remain in the class if I structured it that way, most of them said they would drop the class. There were always a few slackers on the back row, usually with silly grins on their faces, who said they would stay in the class. Why would a grading system where everyone was guaranteed to earn a C make so many students unhappy? Because it removed their incentive for hard work, accomplishment, and excellence. The smart, determined students did not want a C. They wanted an A. If there was no way for them to earn an A, why should they stay in the class and work hard?
This is the way things work in a socialistic society. The government determines how much money you earn, and that’s how much you get. No matter how hard you work—unless, of course, they set up some kind of an incentive system like the USSR did in the 1960s and 70s for their athletes. Russian athletes who earned Olympic medals got all kinds of rewards and perks. A few others did as well: scientists, for instance, who came up with brilliant ideas. But everybody else got what they got. In a socialistic society there is no incentive for the average person. So why even make the effort? Good old-fashioned capitalism, though, provides people with an incentive. As noted earlier, in Adam Smith’s work, Wealth of the Nations, he argued that since people are basically self-interested (and self-interest is a normal and healthy human trait), we do better work when
there is an incentive involved—a bonus, a raise, a promotion, recognition, something of value to us. Socialism offers little in this regard. Capitalism offers a great deal.
4. Capitalism is better than socialism because capitalism, since incentive is inherit in the system, encourages creative and inventive thinking. There are still a few truly socialistic countries in the world: Vietnam, Laos, North Korea, Cuba. Remember, socialism and communism are the same things. What have these societies contributed to the world? Can anyone name a single important contribution they’ve made? No. They have contributed nothing. Look, however, at what the capitalistic West has contributed: longer life expectancy, greater personal wealth, technological advances that will soon put us on Mars, cure cancer, and develop energy sources from outer space. We have computers, cell phones, and much more—specifically because of capitalism. None of the amazing things that make the world a better place came from socialistic societies. Why not? Because socialism provides no incentive for creativity and inventiveness. If Steve Jobs and Bill Gates had lived in socialist societies, neither Apple nor Microsoft would exist. The same can be said for thousands of other companies that provide us with advanced technology.
5. Capitalism is better than socialism because it requires people, if they want to be successful, to be personally responsible and accountable. Socialism does not. How does capitalism encourage personal responsibility and accountability? It encourages both because in a capitalistic system, no one gives you free stuff. You work, you earn, you acquire. You are responsible for yourself. If you don’t take responsibility for yourself, you end up in a bad situation. If you want to make it in a capitalistic society, you have to accept responsibility, learn how to compete, and go out there and make it happen. Get an education. Find a job or start a business. Work hard. Work smart. Earn. Save your money. Buy a house. Save your money. Invest. Save your money. Work, work, work. Earn, earn, earn. Save, save, save. So you can take care of yourself and your family. A capitalistic society requires this of you because no one is going to give you much of anything. If you want it, earn what you need so you can buy it. The system is beautiful in its simplicity. You don’t have to take care of me; I don’t have to take care of you. We each take care of ourselves and our family. It’s not that we don’t care about each other. We do. And if you got into a tough spot I would help you. If I needed help, you would probably help me. But generally speaking, everything just works better if you take care of you and yours, while I’m taking care of me and mine. Capitalism encourages this kind of personal responsibility and accountability. Socialism does not.
