I've written plenty of good things about socialism recently, hence it's time to be "balanced" and bash it. With "bad" people running a socialist nation, it will tend to become more and more centralized and the bureaucrats will become more and more inefficient and corrupt. Promotion will depend on who one knows, not how well one does a jobs. That's been the path for Venezuela as the thug and Fidel wannabe, Hugo Chavez, has grabbed more and more power.
Today's WSJ has a story that exemplifies such socialist regimes.
WSJ: "CARACAS—Venezuelan authorities discovered nearly 1,200 shipping containers full of rotten food at a state-run warehouse and have arrested a former top official in the government's food distribution network.
"The discovery of the 30,000 tons of out-of-date milk, rice and wheat flour at the warehouse in the port city of Puerto Cabello is seen as an embarrassment for President Hugo Chávez, who has been blaming opposition forces and private industry for a recent rise in food shortages.
"President Chávez, addressing the issue late Tuesday, said the food was left to go bad due to "mistakes, inefficiency" and "bureaucracy" within the government, but also said corruption was likely involved. He promised his administration would prosecute those responsible. "
Food shortages exist, yet what does thug Hugo do ? He just wants more victims for his police and kangaroo courts. The more power Chavez grabs, the more injustice, hardship and waste occurs. He's destroying that once prosperous nation. Rather than perform real reform to help the common man, all Hugo does is grab more power. He exemplifies a major downside risk to socialism, that the gangster types tend to take power.
Markets
Machine extreme stock sports continued - aka "MESS". Why bother to delve for rational reasons. It's all machines running technical algorithms. Krypto is waiting for a solid more up, then will sell more s-l-o-w-l-y.
Word of the Day
"Rebarbative" - adjective [$10] literary
Rebarbative means repellent, unattractive.
Sentence: The rebarbative Chavez regime simply reeks of gangsterism.
Showing posts with label socialism. Show all posts
Showing posts with label socialism. Show all posts
Thursday, June 3, 2010
Friday, April 9, 2010
The Optimal Political Economic System
In Socratic dialectics, a dialogue between two sides occurs and over its course it may be resolved with new insights. Aristotle argued for the correct, virtuous optimum as being a balance between two extremes. In Hegelian dialectics, a thesis gives rise to its reaction, the antithesis. The two conflict and are resolved in a new synthesis. And then ... Bunkerman in his two posts on "The Way the World Works" (see October 27, 2009 and January 28, 2010) argues the world - microscopically and macroscopically - is an optimal combination of two or more states optimized considering all possible paths in space and time and ... people.
After four days of posts that critically analysed Capitalism and Socialism by examining and describing the Good and the Bad parts of each system, now is the time to synthesize the findings into a golden mean - a virtuous system that is created by combining the two systems into one that can optimize the aggregate happiness of all people. That is the object.
By breaking down Socialism and Capitalism into their extreme good and bad parts, the reconstruction of a better system is rather easy. We simply take the good parts and eliminate bad parts. As the old Bing Crosby song goes, "... accentuate the positive, eliminate the negative ..."
1. Start with Capitalism - we extract its pure Libertarian core as a starting system. This gives us its economic freedom to find the best way to do & combine resources of people and things, and its motivational and innovational strengths. The Good of Capitalism is kept.
2. Add governmental restrictions - limits, taxes, intergenerational (temporal) transfers - on the wealth and power of persons (natural and corporate) at some high level. This firmly prevents aristocracies from forming. The Bad of Capitalism is eliminated.
3. Use the funds & resources from #2 to fund help to the poor, unlucky or marginalized persons and for limited common shared benefits. This gives us the Good of Socialism: a sense of community support and reduced the risk for all.
4. Add hard, legal - including constitutional limits - on the power of government and its ruling classes. This eliminates the Bad of Socialism.
That is the optimum system of political economics - and lo and behold, we see it matches Fraternal Libertarianism as derived independently from simple axioms - see blog post of January 29, 2010. The robust nature of the superiority of Fraternal Libertarianism to both Capitalism and Socialism is strongly supported by the fact of our having derived this system from two different, independent techniques.
Fraternal Libertarianism is the goal we all should work toward ... bit by bit ... incrementally. Fraternal Libertarianism is complete freedom for the common man, tough restrictions on the rich & powerful ruling classes, and support for the poor, unlucky and marginalized people - a strong safety net - and limited common shared benefits. If we can get momentum and keep it towards national and worldwide Fraternal Libertarianism, the US and the world will become a better place for humanity and all its peoples.
Word of the Day
"Conflate" - verb [$10]
Conflate means to combine into one whole (two variant texts for examples).
Sentence: Conflation of the Capitalism and Socialism and concomitant nullification of their Bad parts, leaves the Good parts of both; the resultant unified system is the optimal system for human political economics: Fraternal Libertarianism.
After four days of posts that critically analysed Capitalism and Socialism by examining and describing the Good and the Bad parts of each system, now is the time to synthesize the findings into a golden mean - a virtuous system that is created by combining the two systems into one that can optimize the aggregate happiness of all people. That is the object.
By breaking down Socialism and Capitalism into their extreme good and bad parts, the reconstruction of a better system is rather easy. We simply take the good parts and eliminate bad parts. As the old Bing Crosby song goes, "... accentuate the positive, eliminate the negative ..."
1. Start with Capitalism - we extract its pure Libertarian core as a starting system. This gives us its economic freedom to find the best way to do & combine resources of people and things, and its motivational and innovational strengths. The Good of Capitalism is kept.
2. Add governmental restrictions - limits, taxes, intergenerational (temporal) transfers - on the wealth and power of persons (natural and corporate) at some high level. This firmly prevents aristocracies from forming. The Bad of Capitalism is eliminated.
3. Use the funds & resources from #2 to fund help to the poor, unlucky or marginalized persons and for limited common shared benefits. This gives us the Good of Socialism: a sense of community support and reduced the risk for all.
4. Add hard, legal - including constitutional limits - on the power of government and its ruling classes. This eliminates the Bad of Socialism.
That is the optimum system of political economics - and lo and behold, we see it matches Fraternal Libertarianism as derived independently from simple axioms - see blog post of January 29, 2010. The robust nature of the superiority of Fraternal Libertarianism to both Capitalism and Socialism is strongly supported by the fact of our having derived this system from two different, independent techniques.
Fraternal Libertarianism is the goal we all should work toward ... bit by bit ... incrementally. Fraternal Libertarianism is complete freedom for the common man, tough restrictions on the rich & powerful ruling classes, and support for the poor, unlucky and marginalized people - a strong safety net - and limited common shared benefits. If we can get momentum and keep it towards national and worldwide Fraternal Libertarianism, the US and the world will become a better place for humanity and all its peoples.
Word of the Day
"Conflate" - verb [$10]
Conflate means to combine into one whole (two variant texts for examples).
Sentence: Conflation of the Capitalism and Socialism and concomitant nullification of their Bad parts, leaves the Good parts of both; the resultant unified system is the optimal system for human political economics: Fraternal Libertarianism.
Thursday, April 8, 2010
The Good & Bad of Socialism & Capitalism. IV
As promised, today I will write about what's bad about Capitalism. I'll also include at the end a "PS" on a bad element of Socialism that I inadvertently omitted (OK, I forgot).
What's Bad about Capitalism ?
Unfettered Capitalism over time tends to lead to the creation of aristocracies. The many dimensions of freedom in Capitalism conflated with the many dimensions of human differences, and both then perturbed by simple luck (good & bad) and the world environment, tend to create powerful aristocracies (merited and unmerited) with great economic power. These people can then use that power to obtain more economic power and political power to get ... MORE.
The economists miss this in their theories which mostly use static, equilibrium methods. For an astronomical analogy, Kepler solved the problem of the shape of the orbits of planets around the sun in static equilibrium (they are ellipses). BUT Newton's theory of gravitation provided the insight to understand what happens when a stray asteroid (or more distant planet) perturbs those orbits at some time. Time is the key added dimension to the analysis. The dynamics in Newton's time-dependent equations of motion let Herschel discover Neptune from its perturbation on the orbit of Uranus.
Dynamics of Capitalism matter hugely. When firm goes bankrupt, it often disappears. Zero is zero and hitting zero causes the firm to be zeroed out. Huge (and successful) firms in dynamic Capitalism gain more market power and profits. A big firm can usually borrow money at less cost, negotiate larger price discounts and buy more political protection and thus gain a larger advantage over smaller rivals. The owners (if concentrated as in the 19th Century gilded age) and / or the rulers (CEOs and top management in today's large public firms) gain more and more wealth and money and then begin to act like Dukes & Earls & Barons. The popular press call them Barons of industry with good cause.
Like mafia dons, the Barons buy more and more political power and protection through legions of lobbyists and contributions, and purchase subsidies and rights from the politicians. All this feeds on itself more and more. It's a dynamically unstable process. Yes, purely unfettered Capitalism is a dynamically unstable process leading to more and more concentration of wealth and power into an aristocracy of wealth and power.
We know from numerous historical examples that powerful and growing aristocratic class leads to the fall of a nation over a few hundred years. Simply put, the aristocracy takes more land and power and wealth from the common people AND from the central government. The common people who truly give the nation its military and economic power get weaker and weaker as a class, losing any stake in the success and life of the nation. Eventually the process bursts into an ugly revolution or the nation is so weakened that external enemies can overwhelm it.
Examples of nations destroyed by aristocracies are ancient Rome, the later Eastern Roman empire, the Mameluke empire, the Commonwealth of Poland-Lithuania, and the kingdom of France.
In a democracy, a populist force of stabilization can arise. The US saw this in the "Square Deal" of Theodore Roosevelt which led to changes that curtailed the power of the Robber Barons. Later his distant cousin's "New Deal" brought forth other legal forces of stabilization that reduced the power of the money barons and the large corporations of that era, such as fair union organizing rules, the Investment Company Act and the SEC. The common man needs a fair deal in his relations with the economically stronger units of Capitalism that must arise. Some limits are need to protect the crucial common man from being ground into serfdom.
That great economist Friedrich Hayak missed this other Road to Serfdom. At the time (1940), it was not on the world's "radar screen" - not a big problem - so he had a good reason to not dwell on it. Today, however, we see this grotesque creature again. In the late 1990s, the technology barons grabbed huge amounts of wealth and power in the technology stock bubble. In the first decade of the 2000s, the financial barons (hedge fund managers, Street leaders and traders) grabbed huge amounts of wealth and power. In both periods the CEO club members have grabbed more wealth and power. Yet in this 15 year period, the common man in the US has gotten NOTHING extra after taxes and inflation. Nothing. Why ?
The budding aristocracies in the US are taking all the growth and profits for themselves. The common man sees his pension cut, his wages stagnate, gets laid off and or more work piled onto him. He works longer hours for the same or less. He has to take a second job. Etc., etc., etc. The ruling class in DC does nothing as they enjoy their own perquisites of office They even conspire to give more power to the large corporations was the expense of small business and the common man.
Demagogues like Obama use this discontent to grab more power for the State. That's no good for the common man either. We need new leadership to get the common man a 21st century "Square Deal".
Tomorrow I will write about what I see as the solution - the optimal political economic system.
PS: More on "What's Bad about Socialism ?"
If Socialism evolves to create a larger and larger state sector of the economy (and not simply regulate or transfer wealth), those well-connect groups will gain more political power and use that to grab more and more wealth for themselves to the detriment of those outside the State tent. The sector then acts like the powerful under Capitalism to grab more and more for themselves. We see this process in Socialist Greece now. And we see it stick its head up in Britain, France and other nations with more Socialist dimension to their economies. We also see it in the US public sector now. The same dynamics that lead to Robber Barons in unfettered Capitalism leads to a preferred class in Socialism.
Word of the Day
"Vitiate" - verb, transitive [$10] an oldie from the card file
Vitiate means to make faulty or defective often by the addition of something that impairs. Alternate definitions: 1. to impair the value or quality of; 2. to corrupt morally, debase; 3. to make ineffective, invalidate.
Sentence: The powerful forces that make Capitalism a good, hugely beneficial system also vitiate it by leading to aristocracies over time.
What's Bad about Capitalism ?
Unfettered Capitalism over time tends to lead to the creation of aristocracies. The many dimensions of freedom in Capitalism conflated with the many dimensions of human differences, and both then perturbed by simple luck (good & bad) and the world environment, tend to create powerful aristocracies (merited and unmerited) with great economic power. These people can then use that power to obtain more economic power and political power to get ... MORE.
The economists miss this in their theories which mostly use static, equilibrium methods. For an astronomical analogy, Kepler solved the problem of the shape of the orbits of planets around the sun in static equilibrium (they are ellipses). BUT Newton's theory of gravitation provided the insight to understand what happens when a stray asteroid (or more distant planet) perturbs those orbits at some time. Time is the key added dimension to the analysis. The dynamics in Newton's time-dependent equations of motion let Herschel discover Neptune from its perturbation on the orbit of Uranus.
Dynamics of Capitalism matter hugely. When firm goes bankrupt, it often disappears. Zero is zero and hitting zero causes the firm to be zeroed out. Huge (and successful) firms in dynamic Capitalism gain more market power and profits. A big firm can usually borrow money at less cost, negotiate larger price discounts and buy more political protection and thus gain a larger advantage over smaller rivals. The owners (if concentrated as in the 19th Century gilded age) and / or the rulers (CEOs and top management in today's large public firms) gain more and more wealth and money and then begin to act like Dukes & Earls & Barons. The popular press call them Barons of industry with good cause.
Like mafia dons, the Barons buy more and more political power and protection through legions of lobbyists and contributions, and purchase subsidies and rights from the politicians. All this feeds on itself more and more. It's a dynamically unstable process. Yes, purely unfettered Capitalism is a dynamically unstable process leading to more and more concentration of wealth and power into an aristocracy of wealth and power.
We know from numerous historical examples that powerful and growing aristocratic class leads to the fall of a nation over a few hundred years. Simply put, the aristocracy takes more land and power and wealth from the common people AND from the central government. The common people who truly give the nation its military and economic power get weaker and weaker as a class, losing any stake in the success and life of the nation. Eventually the process bursts into an ugly revolution or the nation is so weakened that external enemies can overwhelm it.
Examples of nations destroyed by aristocracies are ancient Rome, the later Eastern Roman empire, the Mameluke empire, the Commonwealth of Poland-Lithuania, and the kingdom of France.
In a democracy, a populist force of stabilization can arise. The US saw this in the "Square Deal" of Theodore Roosevelt which led to changes that curtailed the power of the Robber Barons. Later his distant cousin's "New Deal" brought forth other legal forces of stabilization that reduced the power of the money barons and the large corporations of that era, such as fair union organizing rules, the Investment Company Act and the SEC. The common man needs a fair deal in his relations with the economically stronger units of Capitalism that must arise. Some limits are need to protect the crucial common man from being ground into serfdom.
That great economist Friedrich Hayak missed this other Road to Serfdom. At the time (1940), it was not on the world's "radar screen" - not a big problem - so he had a good reason to not dwell on it. Today, however, we see this grotesque creature again. In the late 1990s, the technology barons grabbed huge amounts of wealth and power in the technology stock bubble. In the first decade of the 2000s, the financial barons (hedge fund managers, Street leaders and traders) grabbed huge amounts of wealth and power. In both periods the CEO club members have grabbed more wealth and power. Yet in this 15 year period, the common man in the US has gotten NOTHING extra after taxes and inflation. Nothing. Why ?
The budding aristocracies in the US are taking all the growth and profits for themselves. The common man sees his pension cut, his wages stagnate, gets laid off and or more work piled onto him. He works longer hours for the same or less. He has to take a second job. Etc., etc., etc. The ruling class in DC does nothing as they enjoy their own perquisites of office They even conspire to give more power to the large corporations was the expense of small business and the common man.
Demagogues like Obama use this discontent to grab more power for the State. That's no good for the common man either. We need new leadership to get the common man a 21st century "Square Deal".
Tomorrow I will write about what I see as the solution - the optimal political economic system.
PS: More on "What's Bad about Socialism ?"
If Socialism evolves to create a larger and larger state sector of the economy (and not simply regulate or transfer wealth), those well-connect groups will gain more political power and use that to grab more and more wealth for themselves to the detriment of those outside the State tent. The sector then acts like the powerful under Capitalism to grab more and more for themselves. We see this process in Socialist Greece now. And we see it stick its head up in Britain, France and other nations with more Socialist dimension to their economies. We also see it in the US public sector now. The same dynamics that lead to Robber Barons in unfettered Capitalism leads to a preferred class in Socialism.
Word of the Day
"Vitiate" - verb, transitive [$10] an oldie from the card file
Vitiate means to make faulty or defective often by the addition of something that impairs. Alternate definitions: 1. to impair the value or quality of; 2. to corrupt morally, debase; 3. to make ineffective, invalidate.
Sentence: The powerful forces that make Capitalism a good, hugely beneficial system also vitiate it by leading to aristocracies over time.
Wednesday, April 7, 2010
The Good & Bad of Socialism & Capitalism. III
After writing about what's good about both Socialism and Capitalism, now it's time for the bad side of them. Today it's Socialism's turn.
What's Bad about Socialism ?
The fundamental problem with Socialism is both practical and theoretical, and can be summed up with the simple question, "Where Do You Draw the Line ? "
Once a governmental system begins to re-allocate resources according to a principle of equality, does it go all the way to total equality ? If so, that goal conflicts with the observable facts that people are different and have different wants, needs, desires, abilities and motivations. The US Declaration of Independence proclaimed that "All men are created equal", not that "all men are and shall be equal at all times."
That conflict CAN drive Socialism to become a system of envy and jealousy as inherent differences in human beings conflict with the principle - and the principle of equality applies only to some situations; it is NOT a universal law for all times, places, events, and persons.
This conflicts leads to the big, bad, dirty part of Socialism, that it is very, very susceptible to attracting the ruthless and power seekers. The re-allocation of resources and wealth that Socialism must do to help the poor and unlucky can become a force used by ruthless cliques to drive human mobs and ruthless cliques to let them seize power. Masses of humans under stress are known to be susceptible to mass delusions. Ruthless cliques use this nature to drive the mobs. The inherent differences in people become icons of hate and envy for the mobs as they seek revenge for past slights. "Equality" becomes a slogan and means of getting even, not a means to move to a higher plane of happiness.
Examples of this in the 20th century are profound: Mussolini's fascism in Italy, Nazism, Bolshevism, and Mao's Red China. If you don't realize how the ruthless gain and seize power in times of stress using Socialism as a force to drive mobs, read a past Book of the Week, "My Life as a Rebel", by Angelica Balabanoff. She was personally involved in the Bolshevik revolution, personally knew both Mussolini and Lenin well, and was a leader in the true Socialist revolutions; she maintained her belief in its principles. The ruthless did not.
Modern examples are Chavez's Venezuela, Castro's Cuba, and North Korea. All proclaim forms of Socialism as their system, but all are just dictatorships of a clique or family. Socialist doctrines are just propaganda to drive the masses.
When the force that binds the community and creates workable Socialism is not sufficiently strong to prevent a clique from seizing power, then history seems to show that is exactly what will happen. In the old Russian empire, there was little common ground among the people of that huge empire. Bolshevism took over, and evolved itself into rule by a bureaucracy -nomenklatura - of selected high Party officials. Nazism operated similarly: a decentralized system of Gauleiters subject to the edicts of the Führer. Red China today operates similarly in the political sphere, but permits (for now) rough economic freedom.
I don't need to reiterate the monstrous evils of these natural mutations of Socialism: one example will suffice. Today there is a ceremony marking the massacre of thousands of Polish officers in the Katyn forest under Stalin's orders and conducted by his killers in the old NKVD, the direct predecessor of the KGB. Stalin wanted to incorporate Poland into his evil empire operated under the guise of Socialism. Getting rid of potential leaders of Poland furthered that goal. Humanity means nothing to the ruthless persons that unfettered Socialism attracts to its leadership. Rule of the ideology leads directly to Totalitarianism and its evils exemplified in the 20th century.
Friedrich Hayak wrote about this in his famous book, The Road to Serfdom, written around 1940. He was right, as events proved over time. Socialism without true community bonds is a very risky system.. The force of the community bonds that help Socialism work also can repel the ruthless when they seek to divide the masses and use envy and jealous to gain power over the mobs. The same forces that help Socialism work also help to maintain and stabilize it.
Can Socialism work in a multicultural nation ? That is neither proven nor obvious nor even theoretically likely. Examples of where socialism work are homogeneous nations: the individual Scandinavian nations, Germany, France, Italy, etc. But cracks and tension are evident in France as the Muslim minority does not assimilate into French culture. Germany dealt with its large Turkish minority of "guest workers" by expelling them. As nation cannot do that to its own citizens with stepping closer to, and risking, genocide.
For Europe, a federalist system might let Socialism rule in the individual nations, and a true federal government might provide a means for the cooperation and coordination of nations. Time will tell if it works. I hope it does.
PS: Tomorrow I'll write about what is bad about Capitalism.
Word of the Day
"Transmogrify" - verb, transitive [$10]
Transmogrify means to change or alter with grotesque or humorous effect.
Sentence: Without strong community bonds, Socialism seems to tend to transmogrify into a ruthless totalitarian system. That transmogrification can happen very quickly and even the earliest transition phase into Socialism can go beyond it directly into totalitarianism.
What's Bad about Socialism ?
The fundamental problem with Socialism is both practical and theoretical, and can be summed up with the simple question, "Where Do You Draw the Line ? "
Once a governmental system begins to re-allocate resources according to a principle of equality, does it go all the way to total equality ? If so, that goal conflicts with the observable facts that people are different and have different wants, needs, desires, abilities and motivations. The US Declaration of Independence proclaimed that "All men are created equal", not that "all men are and shall be equal at all times."
That conflict CAN drive Socialism to become a system of envy and jealousy as inherent differences in human beings conflict with the principle - and the principle of equality applies only to some situations; it is NOT a universal law for all times, places, events, and persons.
This conflicts leads to the big, bad, dirty part of Socialism, that it is very, very susceptible to attracting the ruthless and power seekers. The re-allocation of resources and wealth that Socialism must do to help the poor and unlucky can become a force used by ruthless cliques to drive human mobs and ruthless cliques to let them seize power. Masses of humans under stress are known to be susceptible to mass delusions. Ruthless cliques use this nature to drive the mobs. The inherent differences in people become icons of hate and envy for the mobs as they seek revenge for past slights. "Equality" becomes a slogan and means of getting even, not a means to move to a higher plane of happiness.
Examples of this in the 20th century are profound: Mussolini's fascism in Italy, Nazism, Bolshevism, and Mao's Red China. If you don't realize how the ruthless gain and seize power in times of stress using Socialism as a force to drive mobs, read a past Book of the Week, "My Life as a Rebel", by Angelica Balabanoff. She was personally involved in the Bolshevik revolution, personally knew both Mussolini and Lenin well, and was a leader in the true Socialist revolutions; she maintained her belief in its principles. The ruthless did not.
Modern examples are Chavez's Venezuela, Castro's Cuba, and North Korea. All proclaim forms of Socialism as their system, but all are just dictatorships of a clique or family. Socialist doctrines are just propaganda to drive the masses.
When the force that binds the community and creates workable Socialism is not sufficiently strong to prevent a clique from seizing power, then history seems to show that is exactly what will happen. In the old Russian empire, there was little common ground among the people of that huge empire. Bolshevism took over, and evolved itself into rule by a bureaucracy -nomenklatura - of selected high Party officials. Nazism operated similarly: a decentralized system of Gauleiters subject to the edicts of the Führer. Red China today operates similarly in the political sphere, but permits (for now) rough economic freedom.
I don't need to reiterate the monstrous evils of these natural mutations of Socialism: one example will suffice. Today there is a ceremony marking the massacre of thousands of Polish officers in the Katyn forest under Stalin's orders and conducted by his killers in the old NKVD, the direct predecessor of the KGB. Stalin wanted to incorporate Poland into his evil empire operated under the guise of Socialism. Getting rid of potential leaders of Poland furthered that goal. Humanity means nothing to the ruthless persons that unfettered Socialism attracts to its leadership. Rule of the ideology leads directly to Totalitarianism and its evils exemplified in the 20th century.
Friedrich Hayak wrote about this in his famous book, The Road to Serfdom, written around 1940. He was right, as events proved over time. Socialism without true community bonds is a very risky system.. The force of the community bonds that help Socialism work also can repel the ruthless when they seek to divide the masses and use envy and jealous to gain power over the mobs. The same forces that help Socialism work also help to maintain and stabilize it.
Can Socialism work in a multicultural nation ? That is neither proven nor obvious nor even theoretically likely. Examples of where socialism work are homogeneous nations: the individual Scandinavian nations, Germany, France, Italy, etc. But cracks and tension are evident in France as the Muslim minority does not assimilate into French culture. Germany dealt with its large Turkish minority of "guest workers" by expelling them. As nation cannot do that to its own citizens with stepping closer to, and risking, genocide.
For Europe, a federalist system might let Socialism rule in the individual nations, and a true federal government might provide a means for the cooperation and coordination of nations. Time will tell if it works. I hope it does.
PS: Tomorrow I'll write about what is bad about Capitalism.
Word of the Day
"Transmogrify" - verb, transitive [$10]
Transmogrify means to change or alter with grotesque or humorous effect.
Sentence: Without strong community bonds, Socialism seems to tend to transmogrify into a ruthless totalitarian system. That transmogrification can happen very quickly and even the earliest transition phase into Socialism can go beyond it directly into totalitarianism.
Tuesday, April 6, 2010
The Good & Bad of Socialism & Capitalism. II
Yesterday I wrote at length about, "What's Good about Socialism?", and as promised, today I write about ->
What's Good about Capitalism ?
The proper name for the political economic system commonly called Capitalism is the free, private economic system [see blog post of July 28, 2008]. Yes, it's clumsy, so I'll reluctantly use the Marxist term, Capitalism, and will assume a "perfect" form for today's exposition, unmodified by what has happened in modern, mixed systems or how pure Capitalism can - and has - mutated on its own.
The freedom inherent in Capitalism permits each person individually to pursuit his maximum happiness derivable from the material world. That person is maximally motivated to work hard and innovate as he keeps everything he can realize from his efforts. He is completely free to form associations with others, such as limited liability corporations or partnerships or any other beneficial form, and to work jointly with them on new endeavors that seem profitable.
The private ownership inherent in Capitalism provides for free movement from farm, town, city, region or even nation. He owns his property and factories himself in fee simple title, unfettered by governmental rules or regulations. He can move himself, move his factory and / or his money anywhere he thinks he can achieve more. He can alter, adjust, divide, or combine all those resources of money and property however possible to increase his profits and wealth as he freely desires.
Capitalism creates optimal prices of exchange of goods and services completely internally and self-consistently. No government determines the prices - the Capitalist system creates them and changes them as needed to maximize wealth. Capitalism internally prices the transfer of money and resources over time self-consistently: the value of consuming now versus saving for the future is determined by Capitalism. No government specifies it. This emphasis I make on self-consistence is crucial: only a self-consistent system can operate and evolve on its own without external support. By optimally pricing the transfer of goods and money over time, Capitalism becomes a dynamically optimal system, meaning it will seek own its own to increase wealth over time. The simple individual motivation and freedom of the free persons comprising a free, private enterprise system - Capitalism - will tend to do that.
One can mathematically prove under very general conditions that under this system of pure freedom and private ownership that the pure sum of linear wealth over each person in a Capitalist society can be a maximum. Yes, Capitalism can produce more wealth.
Examples from the world support this. Under a fairly unfettered form of Capitalism, the United States grew from zero to become the richest nation in the world in just about 250 years, surpassing the Old World which had 5,000 or more years to create wealth. China under Mao was a poor nation. By adopting much of the system of free, private enterprise to liberate the Chinese peoples as individual persons to create wealth, China has rocketed past many other developing nations which are still burdened by Old World ideas of socialism, such as India.
Capitalism motivates innovation. Persons with good ideas can start businesses, raise money, operate as they see fit, sell or market their goods and services anywhere they wish for whatever prices they can charge. With the maximal freedom that Capitalism offers, again, one can mathematically proves that such a firm would be able to create more wealth in the system of Capitalism than in any other system. Of course the US provides innumerable examples of this innovation and massive wealth creation.
Old Europe also provides examples of the success of moves toward Capitalism from the older systems: England in the 19th century and Netherlands of the 17th century come to mind.
Capitalism - the free, private enterprise system - is provably superior to all other systems for the creation of wealth and does work in systems of human beings to produce massive wealth from nothing.
Notice I used the conditional "can" and "would" in describe the provable superiority of Capitalism. Person are free - they have free will - and do not necessarily always make the correct decisions to maximize that wealth.
Tomorrow I will write about what's bad about Socialism.
Markets
I will check later to see if Krypto has any sell orders. Also I point out that the price for TIPs is approaching my initial level (102 is my first level) to move some cash to TIPs. [TIPs are Treasury inflation protected securities. I invest in those in tax-free IRA accounts.]
Word of the Day
"Puissance" - noun & adjective [$10] archaic & modern & literary
Puissance means (noun - archaic) strength, power; (adjective - literary) having great power or influence, mighty; (noun - modern) a test of a horse's ability to jump large obstacles in showjumping.
Sentence: The puissance of Capitalism for creation of wealth is incontestable and unsurpassed by any other political economic system.
What's Good about Capitalism ?
The proper name for the political economic system commonly called Capitalism is the free, private economic system [see blog post of July 28, 2008]. Yes, it's clumsy, so I'll reluctantly use the Marxist term, Capitalism, and will assume a "perfect" form for today's exposition, unmodified by what has happened in modern, mixed systems or how pure Capitalism can - and has - mutated on its own.
The freedom inherent in Capitalism permits each person individually to pursuit his maximum happiness derivable from the material world. That person is maximally motivated to work hard and innovate as he keeps everything he can realize from his efforts. He is completely free to form associations with others, such as limited liability corporations or partnerships or any other beneficial form, and to work jointly with them on new endeavors that seem profitable.
The private ownership inherent in Capitalism provides for free movement from farm, town, city, region or even nation. He owns his property and factories himself in fee simple title, unfettered by governmental rules or regulations. He can move himself, move his factory and / or his money anywhere he thinks he can achieve more. He can alter, adjust, divide, or combine all those resources of money and property however possible to increase his profits and wealth as he freely desires.
Capitalism creates optimal prices of exchange of goods and services completely internally and self-consistently. No government determines the prices - the Capitalist system creates them and changes them as needed to maximize wealth. Capitalism internally prices the transfer of money and resources over time self-consistently: the value of consuming now versus saving for the future is determined by Capitalism. No government specifies it. This emphasis I make on self-consistence is crucial: only a self-consistent system can operate and evolve on its own without external support. By optimally pricing the transfer of goods and money over time, Capitalism becomes a dynamically optimal system, meaning it will seek own its own to increase wealth over time. The simple individual motivation and freedom of the free persons comprising a free, private enterprise system - Capitalism - will tend to do that.
One can mathematically prove under very general conditions that under this system of pure freedom and private ownership that the pure sum of linear wealth over each person in a Capitalist society can be a maximum. Yes, Capitalism can produce more wealth.
Examples from the world support this. Under a fairly unfettered form of Capitalism, the United States grew from zero to become the richest nation in the world in just about 250 years, surpassing the Old World which had 5,000 or more years to create wealth. China under Mao was a poor nation. By adopting much of the system of free, private enterprise to liberate the Chinese peoples as individual persons to create wealth, China has rocketed past many other developing nations which are still burdened by Old World ideas of socialism, such as India.
Capitalism motivates innovation. Persons with good ideas can start businesses, raise money, operate as they see fit, sell or market their goods and services anywhere they wish for whatever prices they can charge. With the maximal freedom that Capitalism offers, again, one can mathematically proves that such a firm would be able to create more wealth in the system of Capitalism than in any other system. Of course the US provides innumerable examples of this innovation and massive wealth creation.
Old Europe also provides examples of the success of moves toward Capitalism from the older systems: England in the 19th century and Netherlands of the 17th century come to mind.
Capitalism - the free, private enterprise system - is provably superior to all other systems for the creation of wealth and does work in systems of human beings to produce massive wealth from nothing.
Notice I used the conditional "can" and "would" in describe the provable superiority of Capitalism. Person are free - they have free will - and do not necessarily always make the correct decisions to maximize that wealth.
Tomorrow I will write about what's bad about Socialism.
Markets
I will check later to see if Krypto has any sell orders. Also I point out that the price for TIPs is approaching my initial level (102 is my first level) to move some cash to TIPs. [TIPs are Treasury inflation protected securities. I invest in those in tax-free IRA accounts.]
Word of the Day
"Puissance" - noun & adjective [$10] archaic & modern & literary
Puissance means (noun - archaic) strength, power; (adjective - literary) having great power or influence, mighty; (noun - modern) a test of a horse's ability to jump large obstacles in showjumping.
Sentence: The puissance of Capitalism for creation of wealth is incontestable and unsurpassed by any other political economic system.
Monday, April 5, 2010
The Good & Bad of Socialism & Capitalism. I
This is part one of a four part blog to summarize what's good and bad about socialism and similarly, what's good and bad about capitalism. I'll use those Marxist terms for both, even though in prior posts I've pointed out how inaccurate and pejorative they are in both directions.
Why this subject ?
The Panic of 2008 has created a huge wave of talk about changing "capitalism" with little true thinking about what it is, what is being changed and to what object is the change made. Without good theoretical and practical thinking, all this talk becomes blather and often a insidious power grab by bureaucrats and politicians. I will employ simple analysis of the basics of both and draw on actual examples of successes and failures as proofs for what I call the "good" and the "bad".
Today the topic is "What's Good About Socialism".
Socialism, or perhaps more accurately called communitarianism (NOT communism) - my preferred term is fraternalism - stresses that people should share and live in communities (as brothers or sisters) where all share in the work and product of the community "fairly", that no one take an outsized, disparate portion of the community's wealth, and all contribute to the care of the poor and indigent and simply unlucky. Aggregating many communities gives us an entire society, hence the term "socialism". Fine.
Does it work in theory and practice in aggregates of human beings? Yes, it can work. Of that there is no doubt. Socialism began very early in the 19th century in many small experimental communities in Europe and the US. You might be surprised by the US being a crucible for much early experimentation, but yes, it's true. Several scholarly books which I own and have read document a very large number of "communist" experimental communities (aka "utopias") in the US north and Midwest in the 19th century.
These were communities formed completely voluntarily - not by force by government. And yes, they did succeed providing much happiness for their members. People could join and could leave. So they had freedom, and thus prove that humans can live in such communities freely and achieve the "pursuit of happiness". BUT most of these communities broke up or failed after a few decades. Not all failed. Some still exist, but many are now historical sites to be preserved for education of the people about their past and for tourists, such as Zoar Village in northeast Ohio.
So these are definite counterexamples for those (many on the US right) who say socialism can't work. A counterexample - one - definitively disproves a hypothesis. Socialism can work and can provide happiness for its members.
The elevated good of socialism comes from the reduction in the negative: the community helps those in need (for whatever reason) and thus the aggregate happiness of the community is increased. And as I've proven in prior posts, under basic economic theory, that aggregate amount of increased happiness of those helped is MORE that the reduction caused by reallocation of resources away from some, due to the principles of diminishing returns and risk aversion.
In the experimental communities, this reallocation was voluntary in the sense that no one had to participate to remain in the community. Some "force" (in the general sense analogous to the force of gravity) is needed to bind the community as many humans are selfish by nature. In the experimental communities, a religious belief or the ideology of the community or even a charismatic leader provided the force. IF the force came from a charismatic leader, that was bad - after the passing of the leader, usually the community broke up. Religion or ideology worked better.
In modern nations, socialism has succeeded in nations like Norway, Sweden, and Denmark, permitting much happiness for their people. There is no doubt those nations are very prosperous and the people are quite happy. Socialism - to the extent its precepts are employed in those nations - also works in Germany and France. It has evolved in fits and starts in both, with some very bad turns, but now seems solidly entrenched and no doubt the people are mostly happy with the results. They freely return governments that intend to preserve its tenets of community care and support. Why deny it, as the American right often does? Facts are facts. Socialism can work and provide much happiness for people living in those places.
In modern socialism applied in nations, this reallocation is not voluntary (except as controlled by democracy IF that exists in the nation). But people can emigrate. If, as the American right spouts, socialism is so bad, why don't people leave those nations ? There is no wall or force of troops keeping Norwegians in Norway. Some nations welcome immigrants. Australian does, and the US does to a limited extent. These is no flood of Norwegians seeking to move to the US. Many or most Norwegians know English, so language is not a barrier. Neither is culture much of a barrier since American TV and movies are sooooo prevalent and viewed worldwide. Let's face it - socialism in Norway and those other nations does work without loss of much freedom.
Now look over that list of successful implementations. What do they all have ? They all have a relatively homogeneous population and shared culture. That provides a strong, nongovernmental force to hold the people together. And it provides a true sense of community values and feelings for each other. Sweden has only about 10 million people. Norway and Denmark have about 5 million each. Those are just the size of one major city in larger nations. France and Germany are larger, but are now internally bound by strong language and cultural ties that did not exist before around 1800. The force: shared culture, langauge, history and values. This should be no surprise as those are the foundations of what we would call a Community.
That's the good part of socialism: increased aggregate happiness for the people. Socialism can achieve its objective as proven in small and larger societies. BUT it does seem to need a force to bind the communty together. No successful multicultural, socialist society exists or has existed ... yet. Whether the EU can achieve a federalist - and multicultural socialist - society remains unproven.
Tomorrow I will write about what's good about capitalism.
Markets
Waiting. No new sell orders from Krypto as the rise in equity prices is rather uniform. I suspect that a few % more up will create some sell orders.
Word of the Day
"Abecedarian" - noun and adjective [$100] from reading Montaigne's Essays.
Abecedarian means (noun) 1. a person who is learning the letters of the alphabet; 2. a beginner in any field of learning; (adjective) 1; of or pertaining to the alphabet; 2. arranged in alphabetical order; 3. rudimentary, elementary, primary.
Sentence: This week's series of post will provide an abecedarian overview to the good and bad of socialism and capitalism.
Usage from Montaigne (Essays, Book One, 54 in Great Books, volume 23, page 191) "It is said with some plausibility that there is an abecedarian ignorance that comes before knowledge, and another, doctoral ignorance that comes after knowledge: an ignorance that knowledge creates and engenders, just as it undoes and destroys the first."
Why this subject ?
The Panic of 2008 has created a huge wave of talk about changing "capitalism" with little true thinking about what it is, what is being changed and to what object is the change made. Without good theoretical and practical thinking, all this talk becomes blather and often a insidious power grab by bureaucrats and politicians. I will employ simple analysis of the basics of both and draw on actual examples of successes and failures as proofs for what I call the "good" and the "bad".
Today the topic is "What's Good About Socialism".
Socialism, or perhaps more accurately called communitarianism (NOT communism) - my preferred term is fraternalism - stresses that people should share and live in communities (as brothers or sisters) where all share in the work and product of the community "fairly", that no one take an outsized, disparate portion of the community's wealth, and all contribute to the care of the poor and indigent and simply unlucky. Aggregating many communities gives us an entire society, hence the term "socialism". Fine.
Does it work in theory and practice in aggregates of human beings? Yes, it can work. Of that there is no doubt. Socialism began very early in the 19th century in many small experimental communities in Europe and the US. You might be surprised by the US being a crucible for much early experimentation, but yes, it's true. Several scholarly books which I own and have read document a very large number of "communist" experimental communities (aka "utopias") in the US north and Midwest in the 19th century.
These were communities formed completely voluntarily - not by force by government. And yes, they did succeed providing much happiness for their members. People could join and could leave. So they had freedom, and thus prove that humans can live in such communities freely and achieve the "pursuit of happiness". BUT most of these communities broke up or failed after a few decades. Not all failed. Some still exist, but many are now historical sites to be preserved for education of the people about their past and for tourists, such as Zoar Village in northeast Ohio.
So these are definite counterexamples for those (many on the US right) who say socialism can't work. A counterexample - one - definitively disproves a hypothesis. Socialism can work and can provide happiness for its members.
The elevated good of socialism comes from the reduction in the negative: the community helps those in need (for whatever reason) and thus the aggregate happiness of the community is increased. And as I've proven in prior posts, under basic economic theory, that aggregate amount of increased happiness of those helped is MORE that the reduction caused by reallocation of resources away from some, due to the principles of diminishing returns and risk aversion.
In the experimental communities, this reallocation was voluntary in the sense that no one had to participate to remain in the community. Some "force" (in the general sense analogous to the force of gravity) is needed to bind the community as many humans are selfish by nature. In the experimental communities, a religious belief or the ideology of the community or even a charismatic leader provided the force. IF the force came from a charismatic leader, that was bad - after the passing of the leader, usually the community broke up. Religion or ideology worked better.
In modern nations, socialism has succeeded in nations like Norway, Sweden, and Denmark, permitting much happiness for their people. There is no doubt those nations are very prosperous and the people are quite happy. Socialism - to the extent its precepts are employed in those nations - also works in Germany and France. It has evolved in fits and starts in both, with some very bad turns, but now seems solidly entrenched and no doubt the people are mostly happy with the results. They freely return governments that intend to preserve its tenets of community care and support. Why deny it, as the American right often does? Facts are facts. Socialism can work and provide much happiness for people living in those places.
In modern socialism applied in nations, this reallocation is not voluntary (except as controlled by democracy IF that exists in the nation). But people can emigrate. If, as the American right spouts, socialism is so bad, why don't people leave those nations ? There is no wall or force of troops keeping Norwegians in Norway. Some nations welcome immigrants. Australian does, and the US does to a limited extent. These is no flood of Norwegians seeking to move to the US. Many or most Norwegians know English, so language is not a barrier. Neither is culture much of a barrier since American TV and movies are sooooo prevalent and viewed worldwide. Let's face it - socialism in Norway and those other nations does work without loss of much freedom.
Now look over that list of successful implementations. What do they all have ? They all have a relatively homogeneous population and shared culture. That provides a strong, nongovernmental force to hold the people together. And it provides a true sense of community values and feelings for each other. Sweden has only about 10 million people. Norway and Denmark have about 5 million each. Those are just the size of one major city in larger nations. France and Germany are larger, but are now internally bound by strong language and cultural ties that did not exist before around 1800. The force: shared culture, langauge, history and values. This should be no surprise as those are the foundations of what we would call a Community.
That's the good part of socialism: increased aggregate happiness for the people. Socialism can achieve its objective as proven in small and larger societies. BUT it does seem to need a force to bind the communty together. No successful multicultural, socialist society exists or has existed ... yet. Whether the EU can achieve a federalist - and multicultural socialist - society remains unproven.
Tomorrow I will write about what's good about capitalism.
Markets
Waiting. No new sell orders from Krypto as the rise in equity prices is rather uniform. I suspect that a few % more up will create some sell orders.
Word of the Day
"Abecedarian" - noun and adjective [$100] from reading Montaigne's Essays.
Abecedarian means (noun) 1. a person who is learning the letters of the alphabet; 2. a beginner in any field of learning; (adjective) 1; of or pertaining to the alphabet; 2. arranged in alphabetical order; 3. rudimentary, elementary, primary.
Sentence: This week's series of post will provide an abecedarian overview to the good and bad of socialism and capitalism.
Usage from Montaigne (Essays, Book One, 54 in Great Books, volume 23, page 191) "It is said with some plausibility that there is an abecedarian ignorance that comes before knowledge, and another, doctoral ignorance that comes after knowledge: an ignorance that knowledge creates and engenders, just as it undoes and destroys the first."
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