Socialism fails again. This time in South America.

[brianthedog]

Argentina just sacked Peron. Venezuela just sacked Maduro. Their people have realised too late what everybody who's read and history and/or economics could have told them in advance. Socialism doesn't work.

 

Yes friends, socialism has failed yet again. This time in Latin America.

How did this happen. Must be some explanation. Can't be a stupid idea. Can it?

 

2 countries which are rich in natural resources. Now everybody (except the leading socialists) is poor. I suppose if you exclude the leaders, the gap between rich and poor may have become smaller. So hooray!?

Price controls. Good idea. Lets make laws to make everything cheap. Oh everything ran out. Including food. How did that happen?

Massive inflation? How did that happen?

 

Nobody tell Corbyn http://jeremycorbyn.org.uk/articles/venezuela/

 

I await your explanations of how this is either a CIA conspiracy or somehow the fault of capitalism.

 

Thatcher called it correctly (see quote in my signature).

[unbeliever]

Thatcher called it correctly (see quote in my signature).

 

I understand peoples frustration. Socialism ought to work. Why wouldn't it.

All the money which is now in the hands of rich folk, who spend it on lavish things for themselves which they don't really need. If we just take it off them, and spend it on the common good, it must surely make things better. How could it not?

 

There are many problems. I'm not an expert, but here are some:

 

One problem is that knowing that the proceeds of risk taking and hard work are going to be seized by the state affects peoples' behaviour. People start doing the bare minimum and expecting the state to take care of everything. Nobody shoots for the stars.

 

Another problem is that although government should (in principle) be better at determining where rich peoples' money should be spent than the actual rich people, a lot of the time they aren't. I don't know exactly how, but that's the way it is.

 

A further problem is that the rich people try to leave. Obviously we can't have the rich people leave with all their money. So you either let them leave and watch the money escape, or you prevent them from leaving and all of a sudden you're no longer running a free society. Oops!

 

 

All these things like printing money and handing it out to the people in cash (M0 or M1) leading to hyper-inflation, and price controls which lead to shortages of the basics of life; they come later when the real money runs out.

 

Socialism breaks the link between effort and reward.

The link is weak in capitalism. Some people are rewarded for having the right parents. Others are rewarded for being born smart. But more effort tends to lead to more reward. That's absolutely vital.

Good government can, up to a point, strengthen the link between effort and reward. They can at least take steps that don't weaken it but somehow make life better for the people.

Bad government takes steps which weaken the link between effort and reward. Socialist governments destroy it. Once it's gone. You're screwed.

 

It's not too hard to work out how much good government is optimal. You can't do it using idealism or theory, it has to be determined experimentally. Of course we want to tax the rich a lot more than the middle. We ideally don't want to tax the poor at all. That's all good. You just have to leave them enough so that people still strive to be rich, or at least richer than they are now.

Edited December 13, 2015 by unbeliever

[I1L2T3]

There has never been an economy with pure socialism and there never will be so stop fretting about it

 

I bet you're scared of the bogeyman too.

[unbeliever]

IThere has never been an economy with pure socialism and there never will be so stop fretting about it

 

I bet you're scared of the bogeyman too.

 

It's not a matter of pure socialism. It's a question of too much socialism. Too much socialism destroys the economy and makes everybody poor. The evidence for this is overwhelming. When the rich people start to leave or reduce their effort and increases in tax rates start to actually reduce tax revenue, you've gone too far.

[I1L2T3]

It's not a matter of pure socialism. It's a question of too much socialism. Too much socialism destroys the economy and makes everybody poor. The evidence for this is overwhelming. When the rich people start to leave or reduce their effort and increases in tax rates start to actually reduce tax revenue, you've gone too far.

 

Why are you worried about it? It isn't going to happen here. We're a capitalist and conservative country at heart, with a failrly limited smattering of some of what most would consider to be the more useful elements from the left.

 

Even the things that seem to frighten you the most (like nationalising some sectors) work extremely well in countries that are more conservative than ours.

 

Don't be scared of the bogeyman. He isn't real.

[unbeliever]

Why are you worried about it? It isn't going to happen here. We're a capitalist and conservative country at heart, with a failrly limited smattering of some of what most would consider to be the more useful elements from the left.

 

Even the things that seem to frighten you the most (like nationalising some sectors) work extremely well in countries that are more conservative than ours.

 

Don't be scared of the bogeyman. He isn't real.

 

Peoples' QE scares me.

Raising the higher rates of income tax in ways that reduce revenue is also worrying.

Above all I fear persecution of the rich to the point where they leave or otherwise stop paying the bills for everybody else.

[I1L2T3]

Peoples' QE scares me.

Raising the higher rates of income tax in ways that reduce revenue is also worrying.

Above all I fear persecution of the rich to the point where they leave or otherwise stop paying the bills for everybody else.

 

Peoples QE is a stupid idea. I don't think it would even be legal to be honest so it wouldn't happen. Don't worry about it.

 

As for taxes, Osborne has introduced hundreds of tax rises since 2010. Income tax is just one part of the whole picture.

 

As for the rich, sorry to be blunt but most don't care much about you or me. So don't worry about them because trust me they can look after themselves.

[unbeliever]

As for taxes, Osborne has introduced hundreds of tax rises since 2010. Income tax is just one part of the whole picture.

 

Tax rises are sometimes useful. If revenue raising can be redirected from the working poor to others, I'm okay with that

 

As for the rich, sorry to be blunt but most don't care much about you or me. So don't worry about them because trust me they can look after themselves.

 

I'm not worried about the welfare of the rich. As you say they can look after themselves. I'm worried about them no longer paying taxes in my country.

[I1L2T3]

Tax rises are sometimes useful. If revenue raising can be redirected from the working poor to others, I'm okay with that

 

 

 

I'm not worried about the welfare of the rich. As you say they can look after themselves. I'm worried about them no longer paying taxes in my country.

 

We had one of the most favourable tax regimes for the rich anywhere in the world under the last Labour government. That has continued under the last two governments. If Labour got in it won't be under Corbyn, and even if he did get in the 50% tax rate for the highest earners is a line that just won't be crossed by any party. I dont think the public would accept it and personally I would not be confortable with it if there was no solid economic case (there may be a case at some point under extreme economic conditions but we are nowhere near that) because without solid reasoning it can be portrayed as politics of envy. Once opponents can use that argument then you've lost.

 

Stop worrying.

[unbeliever]

We had one of the most favourable tax regimes for the rich anywhere in the world under the last Labour government. That has continued under the last two governments. If Labour got in it won't be under Corbyn, and even if he did get in the 50% tax rate for the highest earners is a line that just won't be crossed by any party. I dont think the public would accept it and personally I would not be confortable with it if there was no solid economic case (there may be a case at some point under extreme economic conditions) because without solid reasoning it can be portrayed as politics of envy. Once opponents can use that argument then you've lost.

 

Stop worrying.

 

All that is supposition. Your confidence is unwarranted.