I was talking recently with a new friend who I’m just getting to know. She tends to be somewhat conservative, while I lean more toward the progressive side.
When our conversation drifted to politics, somehow the dreaded word “socialism” came up. My friend seemed totally shocked when I said “All socialism isn’t bad”. She became very serious and replied “So you want to take money away from the rich and give to the poor?” I smiled and said “No, not at all. Why do you think socialism mean taking money from the rich and giving to the poor?
“Well it is, isn’t it?” was her reply.
I explained to her that I rather liked something called Democratic Socialism, just as Senator Bernie Sanders, talk show host Thom Hartman, and many other people do. Democratic Socialism consists of a democratic form of government with a mix of socialism and capitalism. I proceeded to explain to her the actual meaning terms “democracy” and “socialism”.
Democracy is a form of government in which all citizens take part. It is government of the people, by the people, and for the people.
Socialism is where we all put our resources together and work for the common good of us all and not just for our own benefit. In this sense, we are sharing the wealth within society.
Of course when people hear that term, “Share the wealth” they start screaming, “OMG you want to rob from the rich and give it all to the poor!” But that is NOT what Democratic Socialism means.
To a Democratic Socialist, sharing the wealth means pooling tax money together to design social programs that benefit ALL citizens of that country, city, state, etc.
The fire and police departments are both excellent examples of Democratic Socialism in America. Rather than leaving each individual responsible for protecting their own home from fire, everyone pools their money together, through taxes, to maintain a fire and police department. It’s operated under a non-profit status, and yes, your tax dollars pay for putting out other people’s fires. It would almost seem absurd to think of some corporation profiting from putting out fires. But it’s more efficient and far less expensive to have government run fire departments funded by tax dollars.
Similarly, public education is another social program in the USA. It benefits all of us to have a taxpayer supported, publicly run education system. Unfortunately, in America, the public education system ends with high school. Most of Europe now provides low cost or free college education for their citizens. This is because their citizens understand that an educated society is a safer, more productive and more prosperous society. Living in such a society, everyone benefits from public education.
When an American graduates from college, they usually hold burdensome debt in the form of student loans that may take 10 to even 30 years to pay off. Instead of being able to start a business or invest in their career, the college graduate has to send off monthly payments for years on end.
On the other hand, a new college graduate from a European country begins without the burdensome debt that an American is forced to take on. The young man or woman is freer to start up businesses, take an economic risk on a new venture, or invest more money in the economy, instead of spending their money paying off student loans to for-profit financial institutions. Of course this does not benefit wealthy corporations, but it does greatly benefit everyone in that society.
EXAMPLE American style capitalistic program for college: If you pay (average) $20,000 annually for four years of college, that will total $80,000 + interest for student loans. The interest you would owe could easily total or exceed the $80,000 you originally borrowed, which means your degree could cost in excess of $100,000.
EXAMPLE European style social program for college: Your college classes are paid for through government taxes. When you graduate from that college and begin your career, you also start paying an extra tax for fellow citizens to attend college.
Question - You might be thinking how is that fair? If you’re no longer attending college, why would you want to help everyone else pay for their college degree?
Answer - Every working citizen pays a tax that is equivalent to say, $20 monthly. If you work for 40 years and then retire, you will have paid $9,600 into the Social college program. So you could say that your degree ends up costing only $9,600. When everyone pools their money together and the program is non-profit, the price goes down tremendously. This allows you to keep more of your hard earned cash!
Health care is another example: If your employer does not provide health insurance, you must purchase a policy independently. The cost will be thousands of dollars annually, in addition to deductible and co-pays.
In Holland, an individual will pay around $35 monthly, period. Everyone pays into the system and this helps reduce the price for everyone, so they get to keep more of their hard earned cash.
In the United States we are told and frequently reminded that anything run by the government is bad and that everything should be operated by for-profit companies. Of course, with for-profit entities the cost to the consumer is much higher because they have corporate executives who expect compensation packages of tens of millions of dollars and shareholders who expect to be paid dividends, and so on.
This (and more) pushes up the price of everything, with much more money going to the already rich and powerful, which in turn, leaves the middle class with less spending money and creates greater class separation.
This economic framework makes it much more difficult for average Joes to ”lift themselves up by their bootstraps” and raise themselves to a higher economic standing.
So next time you hear the word “socialism” and “spreading the wealth” in the same breath, understand that this is a serious misconception.
Social programs require tax money and your taxes may be higher. But as you can see everyone benefits because other costs go down and, in the long run, you get to keep more of your hard earned cash!
Democratic Socialism does NOT mean taking from the rich and giving to the poor. It works to benefit everyone so the rich can no longer take advantage of the poor and middle class.
what a bunch of total b.s. . exactly what the corporate shills would have you believe by obscuring the real facts of corporate greed. by trying to cover – up the fact that the greedy top exec’s make an obscene amount in salary, bonuses , stock options, expense accounts, paid-up this , personal jets , yachts, country clubs, ect, ect, ect………. and more . however , you say that a private insurer would save money by encouraging the insured to have a fire proof blanket or garden hose , that is hysterical. even trying to suggest a brave ( as agreed by all socialist), fire- fighter might not be as effective or economical as a private insurer would be laughable ,if i didn’t believe you are serious. if you are not a very highly paid corp exec. then either you do not know what goes on behind the closed door, or you are deceived by the real facts .
I live in Europe. I live well, have great healthcare, earn well, am quite educated (with no debts!) and feel safer! I’m also trilingual which enables me to get a variety of perspectives through news and media from other countries. Most Americans have no idea how good it could be if they would just understand how to be more “social” which is not exactly “socialism” and definitely NOT communism! Too many GOP nutcases–America will never move forward. I’m staying here!
To my European friend, thank you for revealing the truth! It’s unfortunate that the USA is insulated from the rest of the world. We are fed a bunch of propaganda, promoted through the corporate media, that is bought and paid for… again thank you!
Wow, a lot of holes in that article. Equating anything done in the common good with “socialism” makes for a definition not far removed from that held by the most backwards conservative, and just as unhelpful and disconnected from reality.
The reason the word has become so worthless in the U.S. is that conservatives embrace an idealized version of “capitalism” that is entirely disconnected from reality, define anything contrary to it as “socialism” (those programs, for example, would be presented as contrary to it, rather than a part of it), and present “socialism” itself as Bolshevism, a “revolutionary” dictatorship of the Soviet/Chinese variety.
By this view, programs that aid the poor are written off as “socialism,” when, in reality, they are an integral feature of modern capitalism, instituted to preserve that capitalist system, and are not necessarily “socialist” in any way (which is why it’s a bad idea to try to define them in the same way, rather than trying to untangle some of this mess). In reality, Bolshevism is an exceedingly tiny minority view within socialism (the Leninist doctrine from which it was born was state capitalist in nature, and Lenin himself denounced left-wing socialism as “an infantile disorder”). Most breeds of socialism–and most socialists–are of other ANTI-Bolshevist schools of socialism, the biggest, indeed, being the many breeds of democratic socialists, who are a major political force in every other advanced industrialized nation on earth.
The right’s use of “socialism” as a curse–and, indeed, its use of “socialism” overall–is born of a most profound ignorance, ignorance we should be mindful not to feed.
Last comment – If Socialistic Countries own businesses, and property, why then would so many “American” countries leave our land to make their “home bases” – their corporate headquarters in Foreign Countries, mostly socialistic countries?
It is amazing how little is actually understood about Social Economic Systems w/in countries… but there sure is a lot of beliefs that create more misinformation, and misunderstanding
What you appear to be speaking of, is Social Democracy- which is different from Democratic Socialism..
Social-democracy is the name for an international democratic socialist movement which has a vision of a fair and human social order in a strong state based on just distribution of resources and employment, sustainable economic and ecological growth, equality of women and men, and non-violent relationships. This vision is not an ethereal dream, but is instead a realistic goal for daily political work. Social-democrats do not refer to > Marxism, and “Socialist” parties in “Latin” countries are usually social-democratic parties. The “Socialist International” is social-democratic, too.
Ironically wont most don’t even recognize or realize is that Capitalism is a form of socialism…
Two great posts on this are
http://www.nolanchart.com/article4246-socialism-and-capitalism.html
http://greytheory.blogspot.com/2009/04/capitalism-is-socialism.html
However, since there is a high level of ignorance in America the average citizen would not be able to understand the difference and just make uneducated oppinions about the issue. Also, like I mentioned, ignorance, keeps many from understanding that America already is in a way a socialist state. The worse part of it all is that many have oppinios but dont even vote and participate in their civic duties, therefore, if you dont vote shut up!
QUOTE: Democracy is a form of government in which all citizens take part. It is government of the people, by the people, and for the people.
Socialism is where we all put our resources together and work for the common good of us all and not just for our own benefit. In this sense, we are sharing the wealth within society. END QUOTE
Socialism is the abolition of private property in the means of production, i.e. no individual owns the physical entity of or is entitled to the capital value of any capital or producer good. Once this has been accomplished there remains the problem of how to direct these resources to the most highly valued ends. Contrary to the tacit assumption of many socialist thinkers there is no separate, conscious entity who feels and knows what the “common good” is; there are only individual humans who each value different ends independently; they may agree, in some cases, on what are valuable ends but they still hold these values as individuals and they are liable to change. Further, there will be disagreement on how these ends are to be achieved and precisely which of the scarce means are to be allocated to them. So how is a) the most valuable ends and b) the most suitable means for those ends to be determined under Socialism? How is disagreement on these matters to be reconciled?
All valuable ends are confronted by the same problem – scarcity of the means of production. Hence the economic problem is how to direct scarce means to the most highly valued ends. You can advocate that this can be done either through socialised property or private property but you cannot argue in favour of both together – they are entirely different solutions to the same problem. If you start from the premise that “certain industries” may be socialised you are already advocating that at least some of the factors of production should be allocated to these industries, but this can only be arbitrary. How do you know? And if you know how do you know which factors should be allocated and in which proportion? How do you compare one set of allocations with another set?
A system of private property in the means of production answers this through pricing, profit and loss. For private property gives way to exchange which creates supply and demand which produces prices which produces profit and loss. Hence costs and revenue can be reduced to a single common denominator, the unit of exchange (money), that allows resource allocation to be compared across the entire economy.
In the absence of private property, however, there can be no exchange. There are therefore no prices in the factor of production and no profit and loss. How are the factors of production to be compared? How is the electorate or its democratically elected caretakers of the means of production to compare the cost of 5 tonnes of steel, 3 tonnes of wood, 40 labour hours, 500 sheets of paper, 6 billboards of advertising, 30 hours of telephone calls if it cannot reduce these inputs to a common denominator?
Nice post. But I do have one problem with it. The definition of democracy that was given.
QUOTE: Democracy is a form of government in which all citizens take part. It is government of the people, by the people, and for the people.
Democracy is not “of the people, by the people and for the people”. Rather, democracy is of the majority, by the majority, and for the majority.
See, in a democracy, anytime the majority of people can be convinced of something, regardless of whether they are right or wrong, the majority wins. That puts the minority at a distinct disadvantage, even if they are in the right.
Simply put, democracy is two wolves and a sheep voting on what to have for dinner.
A republic is a society based on laws. Therefore, even if the majority of the people want something, they are restrained by the law to only receiving what is lawfully allowed.
Property rights are an excellent example.
In a democracy, a person that owns land can have it taken from them by the majority at any time and for any purpose. Thus, property rights do not really exist in a democracy.
However, under a republic, the law states that a person cannot have their property taken from them unless it is for government purposes and they are compensated at current market price. Thus, a republic protects property rights by law.
That is why the United States is a republic and not a democracy.
My only complaint about the difference between a democracy and a republic is imminent domain. I have seen too many instances in Kansas City where property has been seized and compensation has not either been given, or not given adequately.
Government corruption can happen in any system. That’s what “checks and balances” were there to prevent. Anyone who wants to remove those checks and balances, wants to because they want the opportunity to become a crook. That’s why the whole Republican party worked so hard to get rid of our checks and balances — they’re almost all crooks.
America is a republic? what does that mean? China is a republic, so is North Korea, and South Korea, and almost every Communist and socialist country
And Socialism means the eradication of property? really? is that why Siemens, Bayer, Nokia, Nissan, IKEA, and so many companies are here in America, and other countries in the world, (richest former Owners in the world) – and are some of our biggest employers, because their countries would not allow them out of the country?
Such Bad information
The difference between a Democracy and a Republic? Do you vote on all issues yourself, or do you elect others to do this? Athens (all too briefly,)the Swiss cantons, tribes in the Iroquois League came the closest to true Democracy. Rome, the US, and many others are Republics. In our case, it could be argued that we are a Plutocracy (rule by the wealthy) with a veneer of Democracy–er, Republic.
uMM,
so if 30% of the nation VOTES, does it mean there was NO election?
in the last MANY elections there was NO MAJORITY VOTE..no majority selection of rule.
Does this mean we can FIRE EVERY ONE of them and ask for a federal refund?
Very well elucidated Grant, on an excellent post by DW. I wish people would wake up and see what kinds of atrocities have been committed in the world based on what is supposedly for the “greater good of the group”. The “group” is an abstract concept, and cannot exist without many “individuals” which is why individual rights should be of utmost importance. What the world needs is a spiritual/ethical solution where individuals learn to care for one another rather than enforced to do so through collectivism enforced by the State. The people here who defend collectivism have obviously never had to try to defend their individual rights against a State trying to usurp them. Socialism requires “someone” to decide what’s best, and that someone can always be bought,and so unfortunately collectivism only leads to control being in the hands of the political elite, whether controlled by corporate interests or other interests. “I would rather be exposed to the inconveniences attending too much liberty(less collectivist control) than to those attending too small a degree of it.” -Thomas Jefferson
DA, you appear to be confusing collectivism with authoritarianism. Trying to protect our rights against the state is what is going on in American today under corporatism (or corporate socialism). True socialism is about mutually supportive relationships, it’s not about dominator hierarchies (the old USSR and China today), so there really aren’t any modern examples of it, although the Scandinavian countries come close.
In order for socialism (which is actually an economic model) to function properly, it must be democratic, and so it’s not about “someone” deciding what’s best.
Grant – your attempt to differentiate between a Republic and a Democracy is spurious. the primary characteristic of a Republic (from res publica – Latin – ‘a public affair’ – rule by the people) is that it has an elected head of state, rather than an inherited head of state, which is what you have with a monarchy. A democracy (from the Greek dēmokratía – rule of the people) is based on the active participation of suffrage holders – i.e., voters. Democracies can be either Republics or monarchies. Republics and monarchies can be either democratic or dictatorships.
Now, either you know this and are deliberately disseminating untruths, which would make you a liar and a knave, or you don;t know it and have made no effort to check, which would make you an ignorant poltroon.
I don’t know which you are – you choose.
RuariJM,
You are the one that is having problems with definitions.
Monarchy – rule by hereditary rulers.
Dictatorship – rule by one person as the ultimate authority. This is inherently impossible since no single person could make every decision needed to run a nation.
Oligarchy – rule by a select few with a “dictator” as the head of state. Typically the select few are called “ministers” or have titles like “Duke”, “Earl” and “Baron”.
Pure Democracy – rule by majority vote. Laws are what the majority feel is best and those laws can be created and changed as rapidly as the mood of the people changes. This is inherently impossible for anything but local government since trying to get everyone to vote on every issue is impossible over a region as large as a nation.
Representative Democracy – localities elect representatives and those representatives are suppose to vote for the will of the majority of the people they are supposed to represent. Like a Pure Democracy, laws can change at a whim and have no real constraint.
Democratic Monarchy – hereditary head of state with an elected parliament and a prime minister.
Republic – Rule of law with an elected head of state and an elected body of representatives.
The main difference between a republic and all the others is that the law acts as a restraint on the elected head of state and the elected representatives. In effect, the law is the true ruler of the nation.
In the case of the US, the primary law that rules our nation is the Constitution. Any law that violates the Constitution is inherently illegal.
In order to make the illegal law possible, the Constitution MUST be amended. This is typically very hard to do and it was designed to be hard to do. After all, who would want the basis of their country changed on a whim?
Thus, the Constitution cannot, and never should be, considered a “living” document. Instead, it should be considered as a hard and fast literal document. Since this most basic law is so important and vital to a stable society, the vast majority of laws passed in the last 100 years MUST be considered illegal since Congress has had no Constitutional authority to pass those laws.
If you cannot live with this, I invite you to live somewhere besides the US.
Grant, umm… where to start… you’re either really clueless or badly attempting to be really disingenuous. Since I don’t have the time to refute every one of your dozens of erroneous statements, I’ll just quickly pick a few of them. A single person can easily rule a country, as this does NOT require making every decision. This is more common than it should be for a supposedly rational species. Democracy is NOT majority vote, it is sovereignty by the people. And the US Constitution is indeed a living document. This is one of its major strengths. Amendments are not all that hard to pass; most of them have taken less than a year. So, it sounds to me like you have more than a little trouble with truth as well as dissenting views. You might be really happy in North Korea.
Dave – thank you for that.
I am busy moving house and really don’t have the time so your intervention is most welcome!
@Grant – I do, indeed, choose to live somewhere other than the US. In a democratic Constitutional Monarchy, as it ‘appens…
Name one person that actually rules a country all by themselves. I can gaurantee that he has a bunch of other people that make day to day decisions in his name and he knows nothing of those decisions. Since this is the case, he is not a true dictator, merely the very powerful head of an oligarchy.
As for the “living” constitution nonsense, Thomas Jefferson wote about this in a letter back in 1801.
“The Constitution on which our union rests, shall be administered by me according to the safe and honest meaning contemplated by the plain understanding of the people of the United States, at the time of its adoption,—a meaning to be found in the explanations of those who advocated (it)…These explanations are preserved in the publications of the time, and are too recent in the memories of most men to admit of question.”
He’s basically saying that the Constitution was meant to be interpreted using original intent and not as he wrote in another letter;
“a mere thing of wax in the hands of the judiciary, which they may twist, and shape into any form they please.”
If you don’t like the Constitution as it stands, then propose an amendment.
And you are wrong about how easy an amendment is to pass. There are 30 amendments that have never passed.
Name one person that actually rules a country all by themselves. I can guarantee that he has a bunch of other people that make day to day decisions in his name and he knows nothing of those decisions. Since this is the case, he is not a true dictator, merely the very powerful head of an oligarchy.
As for the “living” constitution nonsense, Thomas Jefferson wrote about this in a letter back in 1801.
“The Constitution on which our union rests, shall be administered by me according to the safe and honest meaning contemplated by the plain understanding of the people of the United States, at the time of its adoption,—a meaning to be found in the explanations of those who advocated (it)…These explanations are preserved in the publications of the time, and are too recent in the memories of most men to admit of question.”
He’s basically saying that the Constitution was meant to be interpreted using original intent and not as he wrote in another letter;
“a mere thing of wax in the hands of the judiciary, which they may twist, and shape into any form they please.”
If you don’t like the Constitution as it stands, then propose an amendment.
And you are wrong about how easy an amendment is to pass. There are 30 amendments that have never passed.
“Name one person that actually rules a country all by themselves.”
Name one General who does all the fighting themself.
Come to think of it, that might not be such a bad idea…
You seem to be operating under a misconception about the definition of Socialism. Your definition appears to be based on Marxist communism. The accepted definition of socialism is: “A political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.” That is clearly not what you were describing. There is no prohibition in that system against owning property. Sweden is a great example of a socialist country unsullied by the soviet communist model. So next time rather than launching off in a screed against something that you don’t define properly, please come to an understanding of what the original poster was talking about and at least try to think outside of the box our “news” places us all in.
QUOTE: Democracy is a form of government in which all citizens take part. It is government of the people, by the people, and for the people.
Socialism is where we all put our resources together and work for the common good of us all and not just for our own benefit. In this sense, we are sharing the wealth within society. END QUOTE
Who are you quoting? This is quite wrong, of course because socialist countries are also democracies and have better democratic systems then the USA has by far.
Finland, Denmark, Norway, Sweden are all prosperous socialist democracies.
Great article! this is a little nit picky, but isn’t what you were describing social democracy rather than democratic socialism? I though democratic socialism was seeking to eliminate the entire private sector through democracy, whereas social democracy was promoting regulations of the private sector and creation of a public sector in things like education, healthcare, etc. Could someone please clarify the difference between social democracy vs democratic socialism because what I have researched is very inconsistent.
Nurse Pam, I just want to hug you for this article and for explaining it so well to your friend.
We severely need more people as well informed and level-headed around to explain things to those willing to listen. Hell, we need more people willing to listen too.
Thanks for writing this so well.
Great post, thank you!
So by everyone paying for my education the price drops for the degree from $80,000 to just under $10,000? Can someone explain how more people paying my bill drops the total bill by 85%?
The total spent on college would increase not decrease in a socialist system (assuming we pay professors and everyone the same). Parents won’t pay 20K/year for a failing student, and semi smart people would never taking loans if they were failing. But if someone else is paying for it there is no incentive to drop out or actually even try as a student.
I’m not opposed to state supported education, but this article fails quickly with the slightest application of critical thinking.
Oh wait, I get it, colleges have a 85% profit margin!
Michael – If more people pay into ANY one system, the cost for everyone goes down. That’s just simple mathematics.
Plus as is now, students must meet requirements in order to be accepted into any college. Therefore a “failing student” would not be admitted, as is currently.
However on the same token, the USA has numerous bright minds that never are allowed to become great, simply because they can’t pay the price.
We are experiencing the results of the Reagan implemented trickle down economic system which is based on greed. Unless you’re wealthy, this system has resulted in a negative impact.
Today the United States is experiencing an increasing shortage of engineers, physicians, etc. basically because it’s extremely expensive to attend college in the USA. http://blogs.wsj.com/economics/2010/07/07/fewer-low-income-students-going-to-college/
This is also part of the Occupy Wall Street protests. So may Republicans believe the protests are about getting stuff for free. That’s NOT what Occupy Wall Street is about, it’s about fairness and accessibility.
If the United States will not allow everyone fair access to resources to better yourself… our country will one day implode.
actually, colleges and health care in the united states do have enormous profit margins. Most such private institutions (including most text book publishers) are owned by Private Equity groups, whjich use leveraged buyouts to create cartels- much like the opec cartel. It’s why the price of medical care has gobe up over 500% in the last twenty years, to the point where insurance is now the second alrgest expense, after mortgages. It’s why you pay 10-20 times as much for the same procedure, with the same trained personel, and the same equipment in the uS then in canada.
no… we are not short of engineers etc. because school is too expensive. We are short because students are stupid. They are spending too much time studying for tests and not enough time learning the subject.
Parents don’t give a crap, as long as their little snowflake doesn’t get discouraged, or fail. Kids NEED to fail to learn. I did. My parents did. Not getting something correct has been been some of the best learning I’ve had.
Nowadays the little snowflakes aren’t allowed to get a failing grade in school… or stay behind a grade in case their little feewings get hurted.
Screw them.. give some of them a failing grade.. let their feelngs get hurt. It will make them better people, better engineers and better scientists.
And it will teach their parents that they can take it… and it won’t warp them for life… like pretending that they can win at everything does while preparing them for nothing.
Umm, no, Michael. It’s the loan companies that have an 85% profit margin.
Firstly, do you think that your education would cost $80,000 if you were the only one going to school there? The costs would be reduced through economies of scale. Textbooks and other infrastructure costs would be decreased dramatically.
Secondly, by educating the *entire* populace, you benefit the whole through an improved workforce, greater potential creativity, and reduced dependency on foreign resources – keeping more money in the system.
If your line of thinking is accurate, why do we not apply it to High School? Or Public Education in general?
The University of California has 191,000 students and the cost per student (to the state and student) is $25k/year. Can you explain to me how big it has to become to get the cost down to $3000/year thru economies of scale? Since this system is already 100% government run, just like a socialist system would be, can you explain how every student can get $100,000 in government services and only pay $9600?
This article should have been called “Getting $100 in government services and only pay $10 for it! – The progressives guide to getting idiots to vote liberal”
$9600 is what is costs a person paying $20 a month for 40 years. In essence, this is what you “really paid” after going to school for “free.”
The reason the cost goes way down is because there will always be MORE graduates and others that have finished school than there are college students. Your $9600 that you paid over the course of 40 years is multiplied by the entire adult population.
If the university has 191,000 students and California has around 37 million people, you can see how it works out. If ALL the universities add up to 2 million students, and all the post graduate population is 20 million people (just guessing), then you have 20 million people paying $240 a year = 4.8 BILLION DOLLARS, divided by 2 million students = $2400 per student.
If you know the ACTUAL number of students and the ACTUAL number of post-graduates (or also adults that are finished with school), you can use the same math and get a more accurate number.
Uh, hello…..if everyone is paying in then the cost goes down for each student in school. Lets put this on the micro scale so even you can understand. If there are 20 people in a town of 150 going to college and 120 of those people are earning a living and paying taxes then you have 120 people paying for 20 people to go to school. That takes the 20000 per year of college costs and makes it 1/6 per that student. The total number of working/tax paying Americans FAR outnumbers the total number of college students to do the math. This is why folks will continue to scream socialism is bad, mmmkay and proves why education is so important. Obviously, math is a problem in America.
Michael, you aren’t using the figures you provide correctly. No one is saying educational systems (the UC, for instance) should get bigger–only that they should be subsidized by the greater community. Look at it this way (and let’s use your figures for your comfort and for simplicity)–Right now, the 191,000 UC students pay a collective $4.78 billion a year in fees (191,000 x $25,000). And all higher education institutions are struggling for money, as well as graduating students who have, on average according to a recent TIME magazine article, $30,000 in interest-accruing loan debt. Now let’s say we try it the “socialist” way–All the taxpayers in California (let’s say there are 20 million)pay the equivalent of $25/mo to higher education taxes. Or $300 a year. That brings in about $6 billion annually (enough to pay what is paid now by individuals with about $1.22 billion to spare–which could go toward growth while still maintaining current numbers. Then, of course, growing campuses would mean jobs–contractors, architects, teachers, staff, and small businesses catering to student populations. Those jobs and that spending would produce higher sales tax, thus filling state coffers–or actually replenishing the horribly depleted coffers of today. And so on.) And what does this mean to the individual? Under the current system (again using your numbers), a student will pay $100,000 for a four-year degree (which will probably be more like $125,000 or $150,000 because slashed class schedules do not allow for finishing in the traditional four-year time span). Add interest over 10 years (which will probably be more like 20 or 30 due to un- or under-employed deferments) and you’re looking at paying maybe $200,000 for a degree from the UC. Whereas, under the $300/year format (and using the figure of a 40 year working life), a degree will cost about $12,000. And we have a significantly less debt-ridden populace which can in turn invest in starting new businesses or contributing to the economy. And remember, the ONLY thing that creates jobs is demand (for products, services, work force, etc.) This would pay for education, grow the economy, and make us more competitive on the international stage. Get it now?
the problem with your math is it’s retarded from the start. If we pay for college, everyone goes to college, just like high school now. If everyone goes, than the total cost will just be whatever the cost is right now X Everybody. So over your life time, not only are you all paying for you and everyone else to go college, you are also paying for the administration of collecting and distributing these tax dollars. The first 30 years it would be cheaper for those in college, because those of us who already went already paid 100% of ours, and are now paying a percentage of there, but it would catch up with itself. College is currently in a bubble, the bubble will burst, because it won’t make fiscal sense for someone to spend $250K on a college education to make $40K a year.
If 100 people are in a town, and all went to college, and now there are 100 people paying for the college of those 100 people – there is that expense, plus administration. Even if 90 out of 100 go to college, and we spread that cost over 100, plus administrative costs, it will still cost more.
Socializing a retarded high expense is not a solution, it’s like plugging an oil leak with burning tires. It will never stop leaking because that’s not how you stop a leak, you are just burning up the oil when it leaks out.
I don’t know about you guys, but I learned more on the job and through working with local business owners than I ever did in the actual classes. I think I would have gotten more out of 4 one year internships for very little pay, than I learned in the classroom. Maybe the whole theory is broken, not to mention expensive.
Matt, you are operating under the assumption though that EVERYONE will go to college. Not everyone goes to college–some students drop out of school in high school, some go straight into the workforce, and some don’t have the grades to get into college. Just because a college would be government-funded would not mean that they would have to lower their admittance standards.
If colleges are publicly funded, than there will be some college with lower standards that let’s almost everyone in. It will become the new high school diploma. Either way there will be a huge percentage going to college that wouldn’t right now, because it’s free. That’s not necessarily a bad thing, but it will be expensive. Unless you actually attack the high costs of the education, you can’t solve the problem by spreading it out over a larger populace. You just give everyone a much smaller problem a few million times. The costs plus the administration costs of spreading and collecting this money would increase the per student cost, if we don’t do anything about making tuition reasonable. Socializing a problem can’t magically bring the cost down from $25K a year to $9000 a year. Right now around 25% of people go to college, that would be at least double if you are paying for it either way. Since High School education is socialized, you don’t have to test into high school. You might have to test into a better high school, but there is always a public one, state school, that will take you if you graduated 8th grade. The same will be the case with people graduating 12th grade and finding a college somewhere that will take them. Again, not a bad thing to have more kids going to college, but don’t tell me it won’t be more expensive. There is absolutely no incentive to control costs in a government contract.
In 2007…
Total number of undergrads= 18,200,000
US POP= 302,200,000
302,200,000 people pay $240 just in that one year ($20 a month)
302,200,000 x $240 = $7,248,000,000
$7,248,000,000 is the amount available to spend on college education.
$7,248,000,000/18,200,000 = $398.24
In 2007, if 302,200,000 paid $240 each for that year that means that it would only cost 18,200,000 people $398.34 to earn their degrees.
Simple really. And $400/($20×12)=1.7 years
It would take 1.7 years to essentially to pay for your degree
My bad
400×4 = 1600
1600/(240×4)= 1.7
Still works out the same in case there was still a debate…
ummm… the total population of the US is not a good variable. Many are too young, or old to work…. how about finding a number of actual working Americans? Then will you have multiple programs in which we pay 20 bucks? Wouldnt all these 20 buck a month taxes be very regressive? Socialist always paint themselves into corners….
So once you figure that out…. The explain how the formula works when all those who can go to college (even under strict testing) decide to, since it is free? Also explain how all the costs of college do not go up under this system, and how would it compare to anything the govt runs, in comparison to private enterprises.
Than you for a great article.
Socialism is not inherently evil. Not as so many conservative (and plenty of liberals also) would have everyone believe.
- They point to the idea that socialist systems ALWAYS fail in the long run. Really? There are plenty that are alive, well and vibrant!
- They say that it is akin to communism or at the very least that it leads to communism. Not true and not true.
A free market capitalist system is profit driven. With the right wing folks wanting less government, more and more would be pushed into the free market. Things increasingly become profit centric. Prisons are headed that way. Do you really want people with a financial incentive for you being incarcerated having a lobbyist presence with lawmakers? The investment and banking industry completely imploded. Do you want them in charge of social security?
One last thing. Sure, the vast majority of wealthy people pay a whole lot of taxes. The problem is the corporations that are getting off easy. On the state level, states are competing with each other to lure corporations to base themselves in their state. They do this with tax incentives. Ultimately, whatever state comes to them with the lowest amount of taxes they will have to pay is where they go. Everyone loses.
Actually, corporations shouldn’t be paying any taxes.
Think about it, what does a corporation do with their profits?
They reinvest in the corporation to grow, modernize or increase efficiency.
Payroll and dividends are paid BEFORE taxes and are subject to either income taxes or capital gains taxes. If a company wished to completely avoid corporate income taxes, all they have to do is spend all their money every year. However, with a high corporate income tax, that income is often dumped into anything possible to reduce a companies tax burden.
For example, you have $10 million extra laying around at the end of the fiscal year? Buy a corporate jet or a fleet of limousines! It isn’t really needed, but at least you get the full value of your money and the government isn’t confiscating 35% of it. By eliminating the corporate income tax, the company can retain earnings to buy things the company actually needs.
By the way, a company from California recently moved to my state because of reduced regulation and no corporate income tax. California lost all those tax payers and we gained them. SO California had slightly increase to 11.9% unemployment and our unemployment dropped a bit from it’s already low rate of 4.6%.
Sounds to me like California (as well as the federal government) could learn a thing or two from this.
I completely agree.
No corporate tax would be a much better way to do things. The problem is that right now, not every corporation gets to reap the same benefits. The large corporations with significant power can hold a lot more sway over state legislators than a small locally owned 20 employee corporation.
Make it the same for all!
“They reinvest in the corporation to grow, modernize or increase efficiency.”
If that was entirely true then you would be much harder to argue with, Grant. However, that is largely untrue, which makes things very simple. Corporations distribute much of their profits (assuming they make them) in the form of dividends to their shareholders. Even when they don’t make profits, they still tend to distribute dividends (Apple, Inc., is a notable exception).
That portion of their profits that corporations reinvest, they get tax relief on – so they don’t pay tax on reinvested profits. However, that isn’t enough for many corporations, so they establish their registered headquarters in jurisdictions – foreign countries – that levy either very low or no corporation taxes. In other words, they play accounting games to avoid paying taxes in the countries that provide their educated workforces, that pay to build the roads by which their goods are distributed, that pay for the fire department that will come and put fires out on their premises, that pay for police forces that will investigate criminal attacks on their properties, etc, etc.
In short, many large corporations are a bunch of freeloading bloodsuckers who should be required to pay more taxes, for the common good. If they did, the USA would have no problem in affording the finest free-at-the-point-of-use healthcare system and free education up to first degree level in the entire world. It would have the best-educated and healthiest people on the planet – and probably the best road and rail infrastructure as well.
RuariJM,
You’re missing a great deal by using old (and flawed) assumptions. Let me clear some things up for you.
1. Profits distributed as dividends are taxed as income.
2. If the company was not being taxed, there would be no need for a tax break on reinvestments into the business, would there?
3. If there were no corporate income tax, why would any business need to leave the US for a nation with lower taxed? The last time I checked a 0% tax rate is as low as you can get.
4. Current corporate tax revenues are only $327B (or 12.5%) of the total tax reciepts of $2.609T.
What you really seem to have a problem with is someone (or some business) making money that you can’t get your hands on through a government program.
If Bill gates makes $2B this year, how much should he get to keep and how much of what he doesn’t get to keep should be your share?
If you let him keep just 50% and assuming the money is distributed evenly among the (approx) 300 million US citizens then you get a whopping $3.33. If 100% of his earnings were taken and distributed, you’d get up to the staggering sum of %6.66!
The only problem with taking 100% is that Bill Gates would have absolutely no incentive to continue working, would he?
It’s far better for the US to let Bill keep as much of his money as possible so that he can use it to buy things and improve the lives of the people that produce the goods he needs. Since some taxation is necessary, let’s set tax rates at the average tax receipts of 18% of GDP.
Bill keeps $1.64B and the federal government gets $360M. Bill still has incentive to work, he still buys a lot of things from people and those people are better off for selling to him. Plus, the government gets $360M to build roads and provide for the common defense.
If bill spends 50% ($820M) of his retained income and sales taxes are at 6%, that’s $49.2M in sales taxes to the local government for streets, schools, police, teachers, sewage and water treatment plants and the like.
If Bill invests the other 50% and grows his investments by 10%, then the next year he has another $82M that will be added to his $2B in earnings.
Only through reasonable taxation and limited government can everyone achieve their own level of success. Some will be more successful than others, but no one ever said that we were all entitled to equal happiness, only that we had an equal right to pursue happiness.
The knee-jerk reaction from the right is always most hilarious when the ‘S’ word comes up. Look at the fearful, cringing little selfish wussies.
DID YOU EVEN READ THE ARTICLE, OR DID YOU JUST FREAK OVER THE EVIL SOCIALISM?
Every God-damned one of you is a complete moron without a clue as to the actual facts of the physical universe.
1: We live in a closed ecological environment called Earth. There is NO outside support. If we kill it, we die.
2: Capitalism demands continual expansion regardless of the cost to persons or planet, while religions promote large families and no birth control.
3: These conditions can NOT continue without the direst of consequences for the human race.
THEREFORE:
Shared resources MUST be managed by profit-neutral, ecologically sound and responsible organizations. Corporations are (arguably) fine for making widgets, but not controlling water supplies. Or oil fields.
National infrastructure is as important as national defense. Else what are we defending? Programs to maintain highways, bridges and other public-use entities require participation of all citizens via taxes, and “social” (Foxies call it socialist, because billionaires have to pay their fair share and corporations can’t charge it to the customers) programs.
Instead of responsible (to SOMEONE) management by a government bureaucrat that may have trained for the position, we have greed and massive, often deliberate, corporate mismanagement (yeah, government mismanages things too, but you and I cannot fire Rupert Murdoch.)
Ad PLEASE never forget that Business majors do NOT study the product they re responsible for, nor the manufacturing process, or anything to do with what the company sells. They study how to generically Manage, as if a doughnut shoppe were the same as an oil refinery. How can they POSSIBLY have a clue as to how to make things better? We need LESS Executives and more promoted-from-the-ranks managers who understand the product, not the spreadsheet…
CEOs may understand profit and loss, but NOT their own businesses…
And those who watch the Faux Propaganda network will never be capable of thinking clearly enough to grasp that.
Exactly!!
I just don’t see why people don’t see that socialization actually saves us money. We spend over 15% of our GDP on healthcare, whereas Canada spends 10% for a system with universal coverage. If we just got our healthcare costs down to those of every other industrialized country in the world, it would free up $730 billion a year.
Definition of fascism, Obama’s health care plan, Obama’s bailouts! How can you say its just republicans, clearly both parties are happy to help out their corporate buddies!
Are you REALLY that stupid?
Here’s a QUICK history lesson for you:
The banks got bailed out while BUSH was STILL President. NOT Obama. This concludes our history lesson.
Mathew was right. You might be confusing TARP with Obama lending money to the auto industry which they (the auto companies) paid back with interest thereby allowing us to make some money. Agh! Fascism!!!! Lesson number 2, the Affordable Care Act, what you call Obamacare actually rewards the insurance companies with 20-30 million new customers, Agh! Fascism!!!!! guysilvernale, stop regurgitating FOX news talking points and do a little research before you continue to make a complete fool of yourself.
“You do realize, of course, that “teabagger” is a rather vile double entendre, don’t you?”
While only tangentially germane to the post, it was the Tea Party folk who branded themselves “Tea Baggers.” You DO recall the tea bags hanging from their sunhats and such, right? And the signs that read, “We ARE the Tea Bagggers!”
True enough, after about two months they came to realize that, what with their heads in the sand and all, they hadn’t noticed in the previous two decades the term had picked up another definition. And so by the third month they were fleeing the self-identification of “Tea Baggers.”
When they become as diligent about so much of the garbage they spew, from the President’s supposed Kenyan birth, to their irrational championing of an astroturf organization as a supposed “grassroots effort,” then I’ll consider acknowledging one of their less substantive instances of having got things wrong.
Until they acknowledge their many other errors and lies, I’ll refer to them by THE LABEL THEY CHOSE FOR THEMSELVES: Tea Baggers.
I no longer refer to Tea Party members as teabaggers because equating these chiclet brains with people who enjoy the recreational suckling of testicles is insulting…to the ballsuckers.
You do realize, of course, that “teabagger” is a rather vile double entendre, don’t you? I’m not fond of Conservatives, but if you would not call a person a “scrotum sucker” to their face, calling them a “teabagger” is no better in intention.
For starters; So what? You conservatives act as though there’s nothing worse than not having a job while at the same time pursuing policies that guarantee fewer and fewer jobs available. While people struggle to get by on stagnant wages while the top incomes skyrocket, you want to blame people who have nothing, have nothing to look forward to, and are simply part of a growing class of people the right wing has deemed disposable. You don’t care if they starve, as long as you don’t have to help feed them. You understand that over fifty percent of people on welfare ARE employed? That they don’t make enough to support a family? What’s to be gained by working harder when all it does is make the people at the top MORE money they will do everything short of murder to retain whether they need it or not.
Well put, Saje. My only point of contention is “everything short of murder.” Trust me, if these people believed that you stood between them and profit they wouldn’t hesitate to pull the trigger.
Hell, they’d make a smart-ass comment afterward like a villain in a bad action flick. These are people who wouldn’t bat an eye at sending us by the thousands, by the millions, to go die if it meant they could maintain their cushy lifestyle.
They are the TRUE social parasites.
Apart from grossly misrepresenting the realities of taxation in various European countries, what really annoyed me about this article is that it does not describe democratic socialism but Social democracy. Democratic Socialism abolishes the capitalist method of economic production entirely, producing it with a socialist one while also rejecting centralism and authoritarianism. Social democracy is what you described; a capitalist economy with Keynsian state social programmes working in conjuction with capitalist production.
I write this a European, a Marxist Socialist and a student of political theory at University.
Thomas wrote: “Social democracy is what you described; a capitalist economy with Keynsian state social programmes working in conjuction with capitalist production.”
How does Europe’s system of education, health care, etc. compare to the USA and why? Since you are European, it would be nice to have your outlook, outside of a scathing reaction to word play. Thanks!
“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”
Sir Winston Churchill
lol sounds like capitalism to!
Then he started the NHS
This is a grossly oversimplified piece. I guess liberals really do have small minds. Here’s the problem – socialism, by its popular definition, only works in small doses. For example, you have a town of about 10000 people, everyone pays property taxes, which are usually relatively close to one another, and those taxes are used to provide police, fire, and basic infrastructure (roads, signs, laws, building codes, etc.). I don’t think you’d find even the staunchest Republican that can argue with that. However, the larger it becomes, the more ripe for abuse it becomes, and that’s why every socialist form of Government, including the hailed “European Socialism”, has failed, and a Democratic Socialist United States will also ultimately fail. Here’s an example. I live in NJ, one of the most Socialist states in the country. Here we have a state-funded public education system, like most states do. Nice idea in theory, but there’s a lot of wrinkles in it. Things like education and public safety become bastions of support for politicians, to the point where the entities that control that particular public interest are able to manipulate politicians into working solely for that interest group at the expense of everything else. In NJ, our public education investment from the state is roughly $10 Billion, about 1/3 of our entire budget. Through the wonders of Democratic Socialism, 6 Billion of that money goes to a handful of schools, and about 5% of the schools in the state get exactly zero support from the state. At first glance, it seems like the state makes its largest investment in schools that need the aid the most. Scratch the surface a little and this is hardly the case. Some of these schools are in the most wealthy parts of the state. What it boils down to is that politicians have used this idea to funnel taxpayer monies to keep taxes low in areas that typically vote in large quantities for a particular party, while the schools themselves have either shown nominal improvement or have deteriorated in spite of 30 years of receiving exceptional amounts of state aid. The rest of the state has to pay for services to be given to people in certain parts of the state at a relatively low cost, while the rest of us pay through the nose for the same service. What it amounts to is polticians using taxpayer money to keep taxes low in areas that vote for a particular party, while other areas are forced to pay state taxes for those areas, and then pay for our own local services out of our own pockets. I’m using education as an example, but it happens in all facets of public interest – police, fire, emergency services, law (we have a similar service that provides lawyers to “poor” people at taxpayer expense, but regular Joes have to pay for their own if they get sued), and it’s actually becomes counter-productive. We have a whole generation of people who are taught that it’s acceptable to be a constant recipient of state assistance, when the reality is that those services are designed for “emergency” purposes. The people that are able to be productive in life are forced to provide long-term support for large amounts of people who think it’s acceptable to not be productive, and that includes providing basic needs for your family, like a suitable living environment, food, clothing, and schooling. That’s why Democratic Socialism as a way of doing the business of the federal government is doomed to failure. It gives the illusion of success, but like a red tide, the failure will always rear its ugly head, and it is very difficult to fix that failure.
Yes, lets fear monger socialism while you baggers and rethuglicans beat us with fascism.. Only one word comes to mind and it’s from the gatherings of misspelled signs “MORAN”
It’s not fearmongering when it’s true. Way to stick to the handbook talking points, though.
If you want the handbook for talking points, read the 14 defining characteristics of Fascism and tell me how the republican party isn’t leading us there without rhetoric and soundbites
Heh. John R writes a long, reasonably well-thought-out comment. TJ replies with namecalling. Boy, you sure showed him. Moron (spelled correctly).
And you completely missed the reason TJ misspelled the word in the first place. Buffoon.
What a typical response by leftists. When confronted with a reasonable argument backed up with verifiable facts, the only rebuttal is schoolyard name calling. It is no wonder that politics in the US has become nothing but sound clips.
If you want to see what the US will become if it stays on its current course, come down to Australia. The government controls everything down here. Healthcare is “free” for citizens, but you pay for it in absurd taxes on everything you buy. The nominal income tax is a reasonable 35%, but there is a VAT tax on everything, so our overall tax rate is more like 55%. A pair of 505 Levi jeans costs over $100 on sale. A six pack of Coke is $20. A dozen eggs is $6. Liquor is even more ridiculous because the government uses taxes to pay for healthcare. A six pack of beer is $24. A 750ml of cheap vodka is $40. Try living on the average wage at those prices.
Apparently, the public education system in new Jersey does not instruct their students in the proper use of paragraphs…
…and they typing classes I took in the Colorado public school system didn’t prevent me from missing the capitalization of “New” in “New Jersey,” either…
…or the substitution of the word “they” for “the.”
Gotta love typos… failure to use paragraph breaks, however, is NOT a typo.
If the only comment you have is about my typing skills, please keep your comment to yourself.
I agree, John. After all you wrote the only dispute was over puncutation. I concur with much of what you said. Good reply.
European socialism has not failed and is still providing services, education and truly democratic governments.
John R, I hardly consider Germany a failure considering they are still running trade surpluses in the world market. Maybe you are just so in love with pure capitalism because you benefit extraordinarily from it?
Germany is leading the charge to do away with Democratic Socialist Governments because the form of government is a government based on a systemic failure. The idea is good on paper, but it doesn’t work in reality.
You are using the example of whats wrong with our two party democracy to point out the flaws of democratic socialism?
The reason for the flaws in New Jersey most likely lie in one political party gaming the system for their own advantages.
That party I assure you is not the democratic socialist party.
Try again.
I agree. When there are only 2 political parties, they will both just be corrupted by different, or some of the same factions. The problem lies in campaign fundraising, and the Citizens United ruling. If there was a small limit to what someone could spend on their campaign, they wouldn’t spend 2/3 of their day begging special interest groups for money. Then they could spend more time solving problems, and less time making complicated tax laws so they can later add loop holes for campaign contributors.
When you say things like:
“In Holland, an individual will pay around $35 monthly, period. Everyone pays into the system and this helps reduce the price for everyone, so they get to keep more of their hard earned cash.”
I doubt any ‘wealthy’ person would object to paying that or something to that extent. I believe wealthy people understand that they have to pay their fair share to institutions that keep society functioning well (police, fire depts, etc). It’s just that when government and very leftist groups go on crusades to ‘tax the wealthy’ that things get hairy. Because really when is it going to end? Society will always have problems, but they can’t JUST look to high earners as a bailout. Taxpayers just want to see that their dollars are being spent on something that truly benefits society, and not going to waste on ridiculous government hand-outs.
Socialism could work in America if government can prove that it truly does benefit everybody, and is not just a handout from rich to poor.
If everyone pays, how can it be a handout from the rich to the poor?
Because in American Socialism, the rich pay for everything while the poor get the services for free.
No, the middle and lower classes pay for everything, while the rich and the poor get everything for free.
I understand the poor get everything for free, but tell me how the rich get everything for free.
Dunno where you get your data in Upside Down Land. According to IRS figures, the top 5 percent of wageearners pay about 58 percent of all federal income taxes received. The bottom 50 percent pay a little less than 3 percent. Regardless of whether or not you think millionaires pay a fair amount or not, that’s the facts. So you’re either ignorant or lying, dear sir. Your comment amounted to Pee Wee Herman repeatedly saying, “Yeah you are but what am I?” and contained zero useful content.
If the top 1% owns 955 of the wealth, and the bottom 99% owns 5% of the wealth, then how is it fair that the ones who own 95% pay 58%?
YOU do the math.
Phoenix — you pay taxes on your income not your accumulated wealth, except for property taxes. Those, I bet are a huge percentage to rich people who own property and zero for those who rent and don’t own cars.
It’s a bit more complicated than that, unfortunately. The incentive structures produced by socialized systems function, economically speaking, as price ceilings, which produce shortages (by artificially inflating demand without necessarily any corresponding increase in supply).
We see this in minor form right now in the countries with socialized health care, where people complain about wait times, etc. As the population ages, this problem will get worse. Just wait. A common prediction is that “unhealthy” habits will start to become a political issue because they will affect everybody’s ability to get care. Etc., etc.
Look up the “tragedy of the commons” as well.
I’m not saying you didn’t make a good article, just saying the issue is more complicated than you are making it out to be. And while socialism is the better solution for a lot of things (e.g. police), no matter what you use it for there *are* consequences that are less than savory. There is no black and white. Everything is babies and bathwater.
The problem with the whole concept as it is used is that not everyone, actually only about 40% of the people pay anything for the common good policies and programs. I think if the tax code was re worked so that everyone the richest and poorest and everyone in between paid the same percentage of their income to paying for these services then the idea of social programs would not be such a hard pill to swallow.
With the services mentioned the people doing the paying actually see the benefit it is the other programs that they do not see the benefits only the cost that irks. I bet if the tax code was fixed so everyone had a stake in what it cost to run the government and its programs there would be a lot less fighting amongst the left and right. :o)
let’s get serious about tax burden. taxes are extracted from every individual in many ways people do not even realize. If you drive a car, every time you purchase gas there are local, state and federal taxes which are utilized to construct and maintain roadways. Almost every state has sales taxes which may include a portion local and state funds. Sales taxes are generated on most products and services at varying percentages. Every piece of real estate owned generates property tax dollars. Those dollars support local education, infrastructure, policing and emergency services, city and county governments and community support programs. Then there are state and federal payroll and income taxes. These support the overarching resources needed to maintain government programs. There are no loopholes for avoiding sales, property, fuel and part of payroll taxes (specifically those deducted for social security and medicare). When all totaled and compare as a percentage of income, there is a much larger impact on low and middle income people,
how are you going to this when 49 or 51% (your choice) of americans dont even pay any tax? Oh, I know. lets tax the rich more….
david s., I understand that’s what you’ve been told, but it isn’t true.
That percentage does not pay FEDERAL INCOME TAX. They paid other taxes – withholding – from their wages. They pay the same sales tax as anyone else living in their state. Because their income is so low, the math comes out that they’ve already paid – through withholding – what they owe.
But the politicians claim (lie?) that these people pay “no” tax, so that people who believe them without questioning will, instead of turning on the ultra-wealthy who have consolidated so much money and power, you guys turn on the poor instead.
It hardly seems fair. Or balanced.
You forget that a portion of these people who pay no tax are the ultra-wealthy. They don’t mention that to you when they give you that massive percentage, but there are many in the ultra-wealthy class who pay no federal income taxes. Yes, they pay sales tax and other taxes, but a much much smaller percentage of their incomes, and then no federal taxes. So while the bulk of people pay taxes, the poor don’t pay federal taxes, AND the ultra-wealthy also don’t pay federal income taxes. They point you toward the poor, so you won’t notice they’re guilty of the same thing. So, yeah, raising taxes on all those people who pay none, but have the ability to pay a lot more than you do, isn’t exactly the crime they would like you to believe it is.
>It would almost seem absurd to think of some corporation profiting from putting out fires.
This is how I feel about incarceration, and yet, it’s one of America’s fastest growing business sectors. Never saw that one coming.
Written is such a clear and concise way, even a Teabagger could grasp it. Well…
QUOTE: The fire and police departments are both excellent examples of Democratic Socialism in America. Rather than leaving each individual responsible for protecting their own home from fire, everyone pools their money together, through taxes, to maintain a fire and police department. It’s operated under a non-profit status, and yes, your tax dollars pay for putting out other people’s fires. It would almost seem absurd to think of some corporation profiting from putting out fires. But it’s more efficient and far less expensive to have government run fire departments funded by tax dollars. END QUOTE
This is no different from insurance. Individuals pool their premiums together with a private provider in order to provide the resources for extinguishing fires in an emergency and/or compensating the unfortunate victims of fire damage. The only difference is that each individual can choose whether to pool his premiums with one particular provider or not (or at all). The insurer therefore has to act in a way that will retain its customer base, one of which is to keep premiums lower than those of its competitors. The primary method of accomplishing this is to minimise the amount that has to be paid out in compensation and the only way to do this is to prevent and control fires as much as possible. The insurer may, therefore, specify that your home be fitted with some basic fire-fighting equipment such as fire extinguishers or fire blankets and that all of your equipment is electrically tested, for example. If the cost of this is less than the saving you make on a lower premium then you are likely to do this. They may charge higher premiums in cases where flammable substances are stored on a property, or refuse to insure you altogether because the risk would be too great, thus discouraging the accumulation of dangerous materials. The result of this is that each person pays according to the amount of risk he is willing to bear and everyone, consumer and insurer, is equally interested in taking steps to minimise the number of fires as much as possible.
If a fire does start, however, the longer they burn the more the insurer has to pay in compensation to a covered individual. They are therefore likely to respond with the utmost urgency with their own, privately owned, fire fighting equipment or privately contracted fire fighting supplier in order to minimise the amount of damage.
All of these incentives are lost when fire-fighting is managed by the Government. The Government does not need to be concerned about losing your premium to a competitor – you have to pay it in taxes or it will incarcerate you regardless. Hence it is less bothered about minimising the amount of damage. Fewer homes will therefore be installed with preventive equipment and less electrical testing will take place. There will therefore be more fires. Further the tax paid towards fire-fighting services is not adjusted to your individual level of risk; rather it is determined by your income. There is therefore less incentive to avoid the accumulation of risks that contribute towards fire. Every preventative measure you take is an extra cost but there is now no added benefit – you still have to pay the tax and you are still entitled to the same service as everyone else. The result will be less prevention and more fires, more destruction of property and consequently less overall societal wealth.
And finally, once a fire starts, the Government is not going to lose any money if your house burns. Even if it has to pay you compensation the Government will not go out of business if it has to pay too much, unlike a private firm. The Government-employed fire-fighters know that, regardless of what happens to your house, they will, in principle, still be employed and paid tomorrow regardless of the cost to the Government of compensating you for your house. This is not to suggest that Government fire-fighting will always be slow, shoddy and negligent. But given these facts what is the likelihood that a Government fire service will respond more efficiently to a case of fire than a private fire service?
This is a typical case of Government having carried out a particular function for so long that everyone forgets what it looks like when it is carried out privately. Yet the above should demonstrate how it would most likely be done and to a higher degree of efficiency than by the Government.
QUOTE: Similarly, public education is another social program in the USA. It benefits all of us to have a taxpayer supported, publicly run education system. Unfortunately, in America, the public education system ends with high school. Most of Europe now provides low cost or free college education for their citizens. This is because their citizens understand that an educated society is a safer, more productive and more prosperous society. Living in such a society, everyone benefits from public education. END QUOTE
No one denies that education is a beneficial and indeed a good and beautiful thing. But for every resource spent on education there is one less resource to be spent on something else. How do you know that education is the most productive use for these resources?
We could devote the entire productivity of the world to a huge and glorious education system where everyone pops out as smart as Einstein. But there would be no cars, no shops, no food, no computers, no houses, no offices, no factories etc. because all resources are devoted to the education system.
The problem faced by an economic system is not to determine what is valuable in the abstract – it is how to direct the scarce means to their most highly valued ends before all others.
QUOTE: When an American graduates from college, they usually hold burdensome debt in the form of student loans that may take 10 to even 30 years to pay off. Instead of being able to start a business or invest in their career, the college graduate has to send off monthly payments for years on end.
On the other hand, a new college graduate from a European country begins without the burdensome debt that an American is forced to take on. The young man or woman is freer to start up businesses, take an economic risk on a new venture, or invest more money in the economy, instead of spending their money paying off student loans to for-profit financial institutions. Of course this does not benefit wealthy corporations, but it does greatly benefit everyone in that society. END QUOTE
But the cost has to be paid by someone. If the graduate has to pay for his own education then yes he has less money to “start up businesses, take an economic risk on a new venture, or invest more money in the economy”. But if everyone else has to pay for his education through taxes then everyone else has that little bit less to do all of those wonderful things. The graduate has only gained what everyone else has lost.
DW, I only read your posts about firefighting and education, so my reply is based on only those two.
“The problem faced by an economic system is not to determine what is valuable in the abstract – it is how to direct the scarce means to their most highly valued ends before all others.”
The problem here is “most highly valued”. Individuals tend to take a short-run view of things, and of course make choices which benefit them personally the most. It might be more worthwhile in the short run, in your example, to produce cars than to educate people. Cars are nice, right? But in the long run, we need educated people to even be able to make cars. There is no obvious intrinsic value for you to educate my child, whereas if you produce a car, you at least have the car to show for it – let’s keep this to before any money changes hands. So you allocate your abilities toward car-making rather than education (Multiply this a few times, and “you” becomes “society”). But in the long run, there is value in a well-educated society.
My point is, the government has a role when there are externalities for which individuals do not account. (Roughly speaking, an externality is some result of an entity’s actions which affects others positively or negatively but does not impact the entity’s decision-making process.)
As for the pretty picture you paint with the insurance-firefighting example – well, you certainly make a number of valid points. And the things you say are true, to some extent. Yet, as always, there are snags. A private entity does indeed have its own agenda, which can be used to incentivize it towards a more efficient operation than one that is run by the government. But it can also go the other way. No matter what, the government /has/ to put out that fire. But the owner of the private company might be upset with the owner of the burning building… You see my point? Or, what if someone can’t afford to pay the firefighters? Fire is a thing that spreads – again, externalities. And if we expand your example to police officers? That would be no better than paying a gang to protect your family from a rival gang. Finally, insurance markets are hardly perfect or efficient – just look at health insurance companies.
QUOTE: EXAMPLE American style capitalistic program for college: If you pay (average) $20,000 annually for four years of college, that will total $80,000 + interest for student loans. The interest you would owe could easily total or exceed the $80,000 you originally borrowed, which means your degree could cost in excess of $100,000. END QUOTE
If the cost of $80 000 tuition is paid back by the graduate without the interest of, say, $20 000 then that is $20 000 less that can be loaned to another student. There will therefore be fewer funds available to loan to more students for their education. Fewer students will therefore be educated. That is presumably not the intended outcome of this author. Governments, of course, could simply raise taxes to make up the shortfall. But again, all this will mean is that what the graduate has gained the taxpayer has lost.
QUOTE EXAMPLE European style social program for college: Your college classes are paid for through government taxes. When you graduate from that college and begin your career, you also start paying an extra tax for fellow citizens to attend college.
Question – You might be thinking how is that fair? If you’re no longer attending college, why would you want to help everyone else pay for their college degree?
Answer – Every working citizen pays a tax that is equivalent to say, $20 monthly. If you work for 40 years and then retire, you will have paid $9,600 into the Social college program. So you could say that your degree ends up costing only $9,600. When everyone pools their money together and the program is non-profit, the price goes down tremendously. This allows you to keep more of your hard earned cash! END QUOTE
The cost of $20 monthly is arbitrary and no proof of this being the real cost under such a system is offered. The conclusion that “the price goes down tremendously” is, therefore, a non-sequitur. If anything, the cost of education is likely to go up as relieving every individual of the cost of his tuition will cause an increase in demand which causes prices to rise.
This is the reason, in the UK, for the recent “outrages” over higher education tuition fees. Government sanctioned loans systems artificially stimulate demand while the Government also caps the number of students, hence leading to a reduction in supply. Increasing demand and suppressed supply equals spiralling costs.
It is therefore Government interference with the higher education system and not private finance that makes bearing the costs of higher education so intolerable to graduates.
QUOTE Health care is another example: If your employer does not provide health insurance, you must purchase a policy independently. The cost will be thousands of dollars annually, in addition to deductible and co-pays.
In Holland, an individual will pay around $35 monthly, period. Everyone pays into the system and this helps reduce the price for everyone, so they get to keep more of their hard earned cash. END QUOTE
Health care premiums are so expensive in the US precisely because of Government interference in the insurance industry (and the only reason that insurance is the preferred method of funding healthcare is an anomaly that originates in The Great Depression). If Governments legislate so as to compel a provider to insure risks which are perceived by the latter as higher and more constly the latter then the latter is forced to take on the burden of paying more than it would like when these risky events transpire (an almost guaranteed certainty if the insured event is something over which the policyholder has control. This is simply compensation individuals for their deliberate actions). Costs, therefore, rise.
Socialised healthcare under Medicare and Medicaid under which the healthcare consumption of an individual is divorced from its cost to the individual, the ease of malpractice suits, and lengthy and bureaucratic drug approval processes mandated by the FDA all contribute to the rise in healthcare costs in the US. None of these are phenomena of the free market.
Holland also operates on an insurance-led basis. One should investigate whether the lower cost allegedly associated with this is because of less and not more Government involvement.
QUOTE In the United States we are told and frequently reminded that anything run by the government is bad and that everything should be operated by for-profit companies. END QUOTE
http://www.usa.gov/directory/federal/index.shtml is a list of Federal Government departments and agencies. Just a brief glance will reveal Government involvement in commerce, transport, housing, education, broadcasting, agriculture, labour, security, energy, healthcare, environment and engineering. Even if America is “frequently reminded” by somebody “that anything run by the Government is bad” no person can look sensibly at this list and conclude that Government does not already control or regulate vast areas of the US economy.
QUOTE Of course, with for-profit entities the cost to the consumer is much higher because they have corporate executives who expect compensation packages of tens of millions of dollars and shareholders who expect to be paid dividends, and so on. END QUOTE
Executive compensation cannot determine market prices of consumer goods. Every good purchased by you is evaluated on its merits alone, not on the costs that went into producing it. If you deem the merchant’s asking price to be less valuable to you than the utility you will gain from the good then you will make the purchase. Otherwise, you will not make the purchase. It is therefore because an entity’s goods are so highly valued and consequently sell so well that companies are willing to pay more to hire the best employees. Not so if their sales are less successful.
Profit (and loss) is revenue minus costs. In order to make a profit you must increase your revenue as much as possible but what is forgotten is that you must reduce your costs also. Employee compensation is a cost and the higher it is in relation to revenue the lower the profit of the entity will be; the lower the profit, the less it will be able to invest in growth and the sooner it is more likely to stumble in meeting the needs of consumers which is the first step to insolvency.
In 2011, total executive compensation at Tesco plc was £21.7m against a turnover £60.9bn, approximately 0.0356%. Even if executive compensation did drive up consumer prices one has to wonder how such a small percentage could make much of a difference.
Finally, regarding very large corporations one might wish to investigate the effects of monopoly and regulatory privilege granted by Government and the effects of Government–granted limited liability in generating a preference for the large, publically-traded entity before implying that these beasts are creations of the pure pricing, profit and loss system.
QUOTE This (and more) pushes up the price of everything, with much more money going to the already rich and powerful, which in turn, leaves the middle class with less spending money and creates greater class separation. This economic framework makes it much more difficult for average Joes to ”lift themselves up by their bootstraps” and raise themselves to a higher economic standing. END QUOTE
You cannot leave the general population with less spending money and push up the price of everything simultaneously. If the population was left with less money then it would have less with which to bid for goods and services. The latter would therefore remain unsold until prices were dropped. If prices were dropped, profits for vendors would drop. If profits drop then costs have to be cut. One of those costs is executive compensation.
If a firm, however, is able to continue to raise its prices without affecting sales and this increases profit margins beyond that experienced in other industries, resources are diverted away from the less profitable industries and into the profitable both by the existing entity and by new competition. Supply is therefore increased and prices consequently decrease.
It is therefore very difficult for an entity to raise its prices to increase profits without a) choking off sales or b) attracting competing investment.
The most effective way for the latter to be avoided is for the entity to induce the Government to regulate the industry. Compulsory licensing, planning permission, Government imposed trading standards, health and safety standards, employment regulation, etc. all serve to deter competition. For every extra regulation that must be complied with is an extra cost that a new competitor must meet and, by virtue of its status as a start-up, must consist of a larger portion of its costs that those of an incumbent provider. There is therefore a tendency for larger firms to become entrenched and for the “Average Joes” to be unable to “lift themselves by their bootstraps” – all because of Government intervention.
QUOTE So next time you hear the word “socialism” and “spreading the wealth” in the same breath, understand that this is a serious misconception. END QUOTE
That is precisely what the effect of socialism is. In a capitalist society wealth accumulates to each person according to his productivity. If another system is adopted then the wealth must be distributed in a different way with a different result; otherwise implementing socialism would be pointless. Hence socialist writers devoted part of their theory to the problem of distribution of goods in a socialist society, i.e. to “spreading the wealth”.
QUOTE Social programs require tax money and your taxes may be higher. END QUOTE
Correct.
QUOTE But as you can see everyone benefits because other costs go down and, in the long run, you get to keep more of your hard earned cash! END QUOTE
What has been demonstrated, in fact, is that costs rise under socialism. If an individual does not have to pay for his consumption, all else being equal he consumes more. Hence demand rises and so do costs.
QUOTE Democratic Socialism does NOT mean taking from the rich and giving to the poor. END QUOTE
It means taking from the productive to fund the unproductive. This can be the only logical outcome of a system other than private property, where the fruit of production accrues to the producer.
QUOTE It works to benefit everyone so the rich can no longer take advantage of the poor and middle class. END QUOTE
It benefits the unproductive ahead of the productive. The unproductive are able to take advantage of the productive. Productivity therefore becomes less valuable and decreases whereas unproductivity becomes more attractive. Societal wealth therefore declines.