The Road From Capitalism to Socialism and Why The US is F**ked
Wednesday, August 31, 2011 at 3:22PM It is perhaps the saddest story ever told and it has been told over and over again for millennia. It is the never-ending urge to dismantle capitalism after it has created great amounts of wealth.
This has been going on since Roman times as can be seen in this quote from Cicero circa 50 B.C.:
"The budget should be balanced,the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance."
Sounds a lot like what needs to happen in the US today, no? In Rome they had economic freedom and it created a massive amount of wealth and innovation. The Government that grew up around it, however, slowly drained and warped the economic climate to the point where people, as many in the US are today, were unproductive and dependent upon the state for their survival. Soon after, it completely collapsed... as will the US.
CHINA - FROM COMMUNISM TO CAPITALISM TO SOCIALISM AGAIN
China has been the most modern case-study of this reversion from communism, back to capitalism and again back to communism. Under Mao's "Great Leap Forward" (government program names never cease to amaze in how egregiously opposite they are to the stated goal) tens of millions of Chinese died of starvation and the once proud Chinese culture was decimated to the point of subsistence living.
Finally, by 1976, it collapsed. Since then the Chinese Government has had to allow some economic freedoms. Either that, or starve the entire country to death.
The magic of economic freedom did its work incredibly quickly in China just as it did with Japan and Germany after World War II where it rebuilt two completely destroyed nations into the powerhouses they became by the 1980s.
Within the span of a few decades China went from being a nation of rice farmers to being a global economic powerhouse and is now the biggest creditor to the US - who has been going in the exact opposite direction.
But, now that so many Chinese have become so rich comes the backlash. The outcry that they need to spread the wealth. How quickly they forget what "spreading the wealth" did during Mao's time.
A flashy gold car in ChinaAccording to this news article, too many of China's new rich are driving around in flashy cars and have nice things. This makes other people who have not been as productive "feel bad". So, once again, the Government has to come in and play Robin Hood. Steal from the rich and give to the poor.
The Chinese government has even announced plans to implement a “seniors’ pension scheme” - along with improved social health care services - by the end of 2015.
If history is any indication, China will keep treading back to socialism until all the wealth has been shared and it will collapse yet again.
THE US - FROM CAPITALISM TO SOCIALISM
The US has been, by far, the most dynamic and productive country of the last century. Nothing comes close. The main reason being that more than any other country during the 20th century, the US railed against socialism. It wasn't perfect in this regard. Not at all. But it still held more true to capitalism in the 20th century than any other country.
The creation of the Federal Reserve in 1913 (central banks are one of the main tenets of communism) began the long, slow road down, however. By 1933 the US had already gone bankrupt and had to confiscate gold to survive. Then, again, by 1971 they were bankrupt again and broke off any link from gold in order to survive a few more decades.
Policies such as FDR's "New Deal" and LBJ's "Great Society" helped to bankrupt the nation along the way. And today easily the most socialist President in the history of the United States presides.
Not that it even matters that much. The following chart provided by GoldSwitzerland.com shows that things have been going in the wrong direction steadily for decades.
After decades of the government (which destroys wealth) becoming a larger part of the economy while the private sector (the one that creates wealth) shrinks, this graph is about to complete what dirty minded technical analysts refer to as a "phallic" chart pattern. The "shaft" part of the formation began in the 1960s and things turned even worse after the "head" formation began to be traced out after the 1990s.
Now with government spending about to cross over and become more of the economy than private spending it will complete the phallic formation. It's only fitting that this chart has drawn out the shape of a penis after all these decades because now, due to all this government involvement in the economy, the US is good and truly f**ked.
Reader Comments (19)
There is no example in history where using greed as the primary motive of a society has resulted in a civilization that didn't collapse. When a society worships individualism and wealth too much, the wealth gap increases to the point where you have a tiny rich elite and massive poverty and eventually collapse. Look at any Scandinavian country to see how equitable wealth distribution leads to a healthy democracy, good health, high education and low crime.
Look at your chart above. Public spending is increasing, funny how that also mirrors "defense" spending. The US spends absurd, astronomical sums on offensive weapons systems, a worldwide network of military bases and many useless military projects that have no other purpose than supporting powerful military contractors and the banks that finance them, almost none have anything to do with genuine "defense." These are the private entities that lobby government and corrupt it. The inevitable result of Capitalism is economic polarization and a shift from democracy to corporate-led fascism. But hey, if you think that empowering the world's greediest people to run things for the benefit of all is a good idea, then power to you.
As for scandinavian countries, we are willing to admit that if you have a VERY small country with a VERY homogenous group of people and ALL of them are generally quite willing to 'share the wealth', that socialism works better (it'll still eventually collapse)... but outside of a few countries where everyone looks exactly the same and has a population of 3 million, socialism just turns into a big giant mess of corruption and theft.
Name any other place other than Denmark and Sweden where socialism has really actually not destroyed the entire country.
The great tragedy of Socialism: The MISERY is......"
Jerry Stockdale
Queenstown, New Zealand
formerly, Okoboji, Iowa
We've reached the peak of our western civilization lifestyle. The amount of growth experienced in the first 75 years of the last century, I believe will not be duplicated. I'm no expert but it seems to me we'll have to go backwards ( much lower standards) before we can go forward once again. The next century probably will belong to Asia, as they have the most to gain and to provide. I hope my beliefs are off.
For Libertarians, Austrians, anarchists, or anyone concerned about sound money policies, our arguments, graphs, charts, etc. need to be absolutely bulletproof and unassailable. Here's why: You have a great video of the false reporting on CNN during the Iraq War. Total propaganda BS. We can't get caught up in the same thing or we'll be accused of pushing our own false propaganda.
It may seem trivial, but its important.
I love it when people bring up the Scandinavian countries in these discussions. I note that the apparent worlds leading economics writer Paul Krugman (cheerleader of alien invasions and wars with Iran) has been recently posting about the socialist paradise that is Sweden. I think he is blinded by the beauty of the women there (who isn’t) and possibly the hilarious Jon Stewart parody from some years ago. As someone that lived in Denmark for several years, speaks the language fluently and has had a danish girlfriend for five years let me give you the 'flip side of the coin'.
First – Denmark was involved in the Iraq war, is involved currently in the Afghan war and in the bombing of Libya, so the idea that this is a benign socialist state that doesn’t have a nasty corporatist edge is rubbish. Their prime minister at the time Iraq and Afghanistan broke out (Anders Fogh Rasmussen) is a wannabe Tony Blair and the current head of Nato directing operations in Libya.
There is very little entrepreneurialism in Denmark. A recent survey showed that 97% of the population have little or no interest in having their own businesses. Everything is owned by old money, and the taxation system ‘locks in’ that old money as there is not a new generation of young people with the wealth or ability to generate savings, raise finance and compete in the marketplace. Most young people that have bought real estate are in negative equity just like the rest of the western world, and the taxation system encourages this by giving a rebate on interest paid on real estate loans . The older generation will slowly join the negative equity party in larger numbers as the likelihood of the prices of real estate in Denmark falling over the coming years loom large.
Government sector workers account for a massive part of the economy, are hugely union protected, generally unaccountable and concerned only with preservation of status and rights. I have tried to find out my rights several times regarding the government and the general attitude of the people within the government sector is ’If the government wants to know it what do you have to hide?’. Doesn't quite vibe with the freedom loving liberal mindset I hear people associate with Denmark.
A minimum wage approaching 100 kroner per hour (approx US 20$) means that the poorest in society do better overall, but people lose a lot of individual rights along the way and it creates a society that doesn’t want to think for itself. If you want to do nothing and live off of the state, Denmark is probably the world’s premier destination. I know people that lived off Danish state unemployment benefits system in Spain (approx US$ 1700 per person per month) and would just fly back once a month to pretend to look for a job. A scary example of this reported in the media is a year or two back a random planeload of people coming in from one of the Mediterranean resorts was stopped by the immigration officials at Copenhagen airport and out of approx 120 people checked 35-40 were cheating the benefits system!
Just remember, $20 an hour minimum wage sounds great but most Danes rarely eat in restaurants or go out to cafes and bars in their own country, it is just too expensive when personal taxes are up to 60%, sales taxes are 25%, most people pay 40/50% of their remaining income in rent/mortgage payemnts, a pint of beer is $10 plus in an average establishment, you pay 200% tax to purchase a car and $2 US dollars for a litre of petrol. Should I continue explaining the cost of living in Denmark???
I could write pages on this, and Denmark is probably the best performing truly socialist country right now, but it is a meaningless award in the big picture of where things are heading.
Anyway, I am calling it here on Jeff’s blog. Denmark will outperform the UK and the US, but will still end up suffering badly as the financial system unravels. Most of the outperformance of its larger western cousins will come from the wealth in the land and assets of the country divided per person (not a densely populated country), the lower reliance (though still dangerously unstable and high) on its banking sector and the close relationship with Germany, who IMO will be the best performing western country over the next 10 years.
The social system will have to crash, as the debt taken on will become unsustainable when interest rates rise and this will lead to some real soul searching in the country as the socialists/communists look to blame the crony capitalists and vice versa. The young generation will not be able to support large socialised pensions and medical bills as well as crippling payments to stay in properties they generally have negative equity in. Truth be told, it is fait accompli that the Danish and Swedish systems are going down over the next ten years, and the reasons are the same as the reasons as the coming fall of the US, the UK and Canada.
Regards the high suicide rate, it is true. It also has a huge rate of alcoholism, based on alcohol being one of the few cheap things you can buy in the supermarket (a beer is approx 1/2 the price of a coca cola) and how little control people really have over their own destiny outside of how much they consume.
A final point on this. I just arrived back from Delhi in India. While there I learned that the population of Norway, Sweden and Denmark would fit into some definitions of the city limits with plenty of change. When you consider the natural wealth of the land mass of these countries, and their proximity/access to some of the worlds most prosperous markets over the last century it would be an abject failure if they didn't enjoy a good standard of living.
Side note, the Norwegian Kroner might be a good play to hold currency in, based on population vs resource deposits. I hope they do not get some crazy idea about printing money, their citizens are the only ones that go to Denmark and find it cheap ;)
Check out their balance of payments.
http://www.ssb.no/ur_en/
Now, in the USA, we are at over 300,000,000, and the top-heavy size engenders such corruption and inefficiencies that the whole collective becomes a total mess (as we see). Support for the system is bought by stealing from A and giving to B, while lying enough to convince the masses of the need for the system. It may take time, but away it goes. Indeed, away, which just may happen during the next reign of whoever is elected to a federal office in 2012.
It never ceases to amaze me how statists, like yourself, look past the inconvenient fact that govt wealth-redistribution and central-planning (i.e., socialism) usually is the reason for hardships.
From Chinese 'incompetence' to the U.S. military spending...you utterly fail to see the state's culpability, instead focusing on external causes (bad people 'corrupting' govt!).
You rail against 'greed' but fail to see the hypocrisy in wanting to take what others have earned and give it to someone else. In your Bizarro-world, people simply wanting to keep the fruits of their labor are greedy while those who want to take it are selfless heros.
You're insane.