Category: Eastern Europe

Chapter 9

WHY SOCIALISM WILL FAIL OVER THE LONG TERM

“Socialism is a philosophy of failure, the creed of ignorance and the gospel of envy. Its inherent virtue is the equal sharing of misery.”                    Winston Churchill

Socialism is a noble cause for those pure in heart.  Franklin D Roosevelt (FDR) President of the United States from 1932- 1945 used it to try to pull the United States out of a depression.

His programs had universal appeal and once the economy started to recover he raised taxes to pay for the programs. The recovery would have been working at a slower speed until WWII changed the course of history.

Once a government starts giving entitlements to the public it becomes accustomed to them. The problem is how does one pay for these services?

One can raise taxes on the wealthiest, but they soon start looking to “tax shelters”. Raising taxes of any kind creates other avenues of avoidance.

The underground economy is where one provides a service or product for a credit. Then one uses those credits with another member.  This will ultimately create more government debt as tax receipts fail. These deficits weaken an economy and encourage politicians to accumulate vast sums of “compensation” for running the country.

It also demoralizes the public in their desire to improve ones lot through hard work and effort. It is the individual that provides growth to an economy by wanting to earn more through an extra effort to succeed.

Countries with limited surplus or assets use a peaceful solution by hiring foreigners as cheap labor. Eventually these labor pools increase in size and start demanding more equal pay and benefits. They can appease them for a time, but the cinders will start burning the fires of resentment and hatred.

As time starts to diminish funds, the wealthy are the first to feel the pinch as their taxes are raised. “It is their civic duty and pride” to partake in this noble effort.

After that the sales taxes are imitated or increased. Now everyone feels poorer. The sales tax hurts the poor most. A 6% sales tax on dollar leaves only $.94.  If a dollar is all one has – ouch.  6% of a hundred dollars amounts to $6.00, but one still has $94.00 left.

During this time the country has been borrowing, and at first their costs were low, but as the debt builds up the costs rise and suddenly the borrowing is to mainly pay the interest charges.

The next to get hit is foreign companies who have local plants that will have a tax on them. They will find all kinds of ways. If it is hard assets, then they will find a way to nationalize them.

Then as the situation becomes dire, the governments become bolder and greedy in ways to find moneys. Mind you, in the 13^th century the French monarchs had the habit of inviting domestic creditors to dinner and for desert they were beheaded. This was called “bloodletting”.

A better example of heavy debt load is when the credit-card companies start adding interest penalties to ones debit balance and there comes a point of no return. Socialism will self-destruct if you have assets because the government will want them to pay for various entitlement programs. The “poor” will now be in force to protect their entitlements so they can remain on the gravy train. The wealthy will soon become poor and the nouveau rich will be “our representatives” in Washington and various state capitols across our nation.

When the flow of funds ceases is when the riots would expand from the inner cities out to the suburbs.

If it is not too late, governments can slowly wean thy public off the welfare rolls by delisting people who are not legal citizens of the community and cannot speak the common language of the area. This makes the employers honest and also assures they are not using public funds for their corrupted earnings.