Socialism On The Rise

America was founded on two great principles: democracy and capitalism - freedom and private enterprise. They are intrinsically entwined. If you stifle one, you stifle the other. They stand in perfect contrast to autocracy and socialism. In democratic societies, the people have the ultimate say. In autocracies, the government has the ultimate say. In capitalism, companies are owned by private people. In socialism, companies are owned by the government.

So much for economic and political science theory – here in the real world, there are no pure democracies and no country is purely capitalistic. We definitely need some government in our lives. You don’t have to be a socialist to recognize that there are some things that are better run by the government, e.g., the military, homeland defense, mail (UPS and Fedex wouldn’t touch daily mail delivery), highways and roads, police and fire departments, etc. Some other things seem to function best when they are regulated, but not run, by the government, e.g., the airlines, food and drug quality, electric power and natural gas distribution, and interstate transportation. But, in a democracy, these are the exceptions - most things seem to function best when the government stays out of the way and capitalism (free enterprise) is allowed to run its course. And that’s the way things have always been here in America … all the way up to 2009.

Then came CHANGE! Incredibly, everything has been turned on its head during the past few months. The government has taken over more and more businesses and activities, ostensibly to protect us from one “crisis” or another. First we were told that some large insurance companies needed a huge “stimulus” cash injection or they would fail. Then some large banks needed to be bailed out or they would fail. Next came General Motors and Chrysler: bail them out or they would fail. Before we could catch our breath, much less digest the issues or have a national debate, a completely partisan congress passed several huge spending bills, and presto: the government is running insurance companies, banks, and automobile manufacturers, and the national deficit and debt have skyrocketed. How on earth did we ever agree to all this? Well, we didn’t. President Obama and congress just did it. They didn’t ask our permission. Oh, they did keep us informed, sort of: the takeovers were couched in phraseology like “the American people now own a major share of General Motors”. What? I already owned shares of General Motors – shares that I could sell. That’s what it means to own a share of General Motors: you have a stock certificate that you can sell. Does anyone remember getting AIG, Citybank, or General Motors stock certificates when the government took over? These are not takeovers by the American people. These are takeovers by the government. Let’s see, what is it called when the government takes over major industries? Oh yeah, socialism! What is it called when smooth talk convinces you that something you have always instinctively opposed is actually a good idea? Oh, yeah, a con-job!

When 52% of American voters elected President Obama and a Democrat majority in the House and Senate, they were convinced they were voting for hope and change. How many of them were hoping for a change from capitalism to socialism, from democracy to autocracy?

Exactly how critical were all those “crises”, anyway? Most of the “stimulus” money is not scheduled to be spent until 2010 – how critical could that have been? (Oh, I see. It is critical that the money be spent during the political campaign season next year … hmmm.) What would have happened if some insurance, banking, and automobile companies had “failed”. Well, when a company “fails”, it can’t pay its bills, and it is forced to declare bankruptcy. Our economic and legal systems have anticipated such happenstances, and are fully prepared to deal with them. The bankruptcy code includes several types of bankruptcies, and the one that is usually most applicable to large companies is called Chapter 11. In that case, a judge or administrator is placed in charge of reorganizing the company. This means the company renegotiates its contracts with its vendors, suppliers and employees. Everyone initially settles for less than they are owed, but everyone gets something, including a possibility of future payment of the balance. In many cases, the more favorable contracts allow the company to once again become profitable and they are able to pay off their old bills.

Let’s look at General Motors. If the government had not interfered, General Motors would have declared bankruptcy and reorganized by renegotiating its untenable union contracts, closing unprofitable dealerships, and eliminating some models, among other things. Most likely, a smaller, leaner, but profitable GM would have emerged. Then stockholders like me would have seen the value of their shares rise, GM stock would have once again become attractive to investors, and capitalism would have done the rest. Instead, GM went bankrupt anyway, but now the government and the autoworkers union are the majority shareholders – General Motors became Government Motors.

Does anyone really believe that the government and the union will do a better job of making GM profitable?

When has the government ever been efficient or turned a profit? The government owns Amtrak, Medicare, Social Security, and the Post Office. All of them are supposedly self sufficient and all of them are broke! The only reason they continue to operate is that the government keeps infusing tax dollars. (It’s much easier to keep a badly managed enterprise afloat if you can just print more money.)

And does anyone really expect the union to turn a profit? Fat and fatter union contracts have been one of the major problems with the U.S. auto industry. The ever-fatter union contracts have strangled the companies and made them less and less profitable (yes, the company management is also complicit and should be fired). And now the President uses our tax dollars to give a huge share of GM to the unions? As they say in the South, we have put the fox in charge of the hen-house. But, you have to give the President credit: he has kept his promises to the unions who were so instrumental in getting him elected. Wait a minute? Isn’t this the guy who vowed never to be influenced by special interests? I guess that depends on what your definition of “never” is.

Now the government is maneuvering to take over the health care industry: 17% of our economy. Is there an economist anywhere that would disagree with the notion that, when the government gains increasing control of the insurance, banking, automobile and health care industries, capitalism is dying and socialism is on the rise? Is that really the change we had in mind? Seriously? Socialists depend on the government to take care of everyone. Capitalists take care of themselves. Which are we, dependent or independent?

Think about it folks. All of this has happened in less than a year. Congress and the Obama Administration have employed “crisis” tactics to scare us into throwing away capitalistic free enterprise in favor of socialism – competition in favor of regulation. Capitalism is America’s powerhouse, the heart of the strongest economy on earth, the most consistently productive country in history, a meritocracy where excellence and accomplishment lead to achievement and advancement, the mother ship of entrepreneurism and enterprise. We abandon all this for socialism? The heart of socialism is regulated equality – not equality of opportunity, but sameness. Unions, for example, are socialistic ventures. Since seniority is the only basis for advancement, and neither exceptional skill level nor superior competence are factors, everyone is obviously presumed to have equal levels of skill and competence. If the only basis of promotion or advancement is seniority, why would anyone work harder or try to perform better? Why indeed? Welcome to socialism.

America derives is strength and greatness not from equality but from equality of opportunity! Democracy and capitalism strive to treat everyone equally but recognize that we are not all the same. Everyone has the same opportunity to succeed, but the degree of success depends on competence, willingness to work hard, and competitive drive. Socialism, on the other hand, stifles competition and work ethic in the name of sameness, and thus drowns out excellence.

One of the biggest problems with socialism on a national scale is the size of centralized government and the bureaucracy required to run it. Take socialized medicine (national health care) as an example. In the current debate on national health care, many folks have been frustrated by the complexity of the 1,000+ page bill that is working its way through congress. It is so long and complex that many of the politicians who are pushing the bill have admittedly not read either the bill or its many proposed amendments and alternatives. As if that were not sufficiently frustrating, consider this. Whichever bill is ultimately enacted, the resulting law will only prescribe things like purpose, objectives, guidelines, parameters, and limitations. That’s what laws do. The implementation of the law, i.e., how the national health care system will function day to day, will be governed by rules and regulations that will be developed by various government bureaucracies – some existing and some new. If you think this proposed law is long and complicated, wait until you see the resulting rules and regulations. They will comprise tens of thousands of pages, no one will understand the whole thing, there will be dozens of agencies with conflicting rules and competing agendas, and the bureaucrats who administer the rules and regulations will be hopelessly bound in red tape. I can envision a national health care system with the compassion of the IRS and the efficiency of the INS.

As Ronald Reagan once said, “The closest thing to eternal life here on earth is a government program.” Well standby, folks, the government programs are raining down on us and we’re going to have the devil’s own time getting rid of them. By the time our first opportunity comes around in November of 2010, Obama and his socialist secular progressives will be well entrenched. We had better get in shape because we’re in for a helluva fight. The early skirmishes have already been fought by those who participated in the “tea parties” and the “9-12 march on Washington” – truly civilized, non-violent, grass roots protests by good solid Americans. The silent majority is finally finding its voice. Kind of energizing, isn’t it?