Saturday, July 16, 2011

We Don’t Need History for This

Socialism is failing right now?  Who knew?

I often say that history is full of examples of failed or damaging economic systems, and we should look to those examples as predictors of likely outcomes from solutions that various groups are proposing.  I can understand when people like to discount historical evidence.  It’s easy to say that the “conditions were different,” or that there are nuances that change the perspective.  But what I don’t understand is why some people ignore contemporary examples.

I’m talking about all the economic problems that many European countries are having.  I’m not going to use Greece as an example, because I think their problems are not as similar to ours as other countries may be.

I’m talking about Italy.  They’re going to pass austerity measures in the very near future because, gasp, they simply can’t sustain their social programs with such shitty growth.  I can’t speak as to why their growth sucks because I’m not an expert on economics, and I’m damn sure not an expert on Italian economics.

Italy is not in the same boat as Greece, but they have to make some cut backs as well if they’re to stay afloat.  Their plan?  Make budget cuts *and* modest tax increases to make up for the huge deficit and to begin to pay off their debt.

Italy is not the only country that has had to start cutting back on social programs.  For a few years now, France has been looking in to privatizing more of their healthcare industry because, gasp again, they simply can’t afford it on the back of the taxpayers.  Britain is in the same boat.  While they might not have been looking into privatization, they’ve been straining for money.  Healthcare providers have begged Parliament to give them more money, but Parliament refuses because that would require a tax hike on a people who are already paying very high taxes.

"A motion is now on the floor to stop sucking ass.  All in
favor . . ."
So why are Liberals ignoring this when Conservatives tell them we need to scale things back a bit?  There’s no mistake in arguing that the Democrats want the American welfare state to closely resemble that of European countries like Britain, France, and Italy.  So when we see even these countries failing to support the people on the back of the people, why do they still want it?

I’m failing to understand why some people think the solution to our economic woes is to adopt a system that is suffering even greater woes than ours.  I’ve tried to debate this very point with the folks at Crooks and Liars, and usually what I get is some dig on about how capitalism is evil and how it has destroyed all the socialist countries.  They then say that the massive bill of the social programs in Europe is not to blame, and the austerity measures are all barbaric and what not.

I’m not sure what planet they’re living on, but countries like Greece and Italy are not going to get out of their holes by borrowing more money.  Spending more money does not always equate to positive economic growth.  What they seem to not understand is that the Keynesian model might work in a vacuum, but in reality the money multiplier has proven to not work very well for countries that already have sound infrastructure.  Look at where the money multiplier theory has taken us.

Whatevs, I guess.  We’ll just have to listen to them continue to blather on about how socialism is awesome and Europe does it better, all the while knowing that they’re only executing an exercise in cognitive dissonance.


Silverfiddle said...

The oldest song in the book of human history is Blame the Other.

I've known quite a few lefties and even some socialists and communists, and I've never heard an adequate explanation of how capitalism is evil.

The closest some got to explaining it was my Latin American friends, and they had a point. Venal governments had taken bribes to allow mineral extraction or whatnot with no regard for any laws whatsoever.

Adam Smith told us 200 years ago that capitalism without morals devolves into a jungle. Before he wrote Wealth of Nations, he wrote a book on morality.

Here's a useful resource:

You will see that Germany takes in over 40% of GDP in taxes and spends around 43%. Italy's numbers are 43% of GDP in taxes/48% spent. A recipe for disaster.

We would have to double revenue collection to match the vaunted European Model, and a sane person must ask why would we want to do that when the model is collapsing?

We are not Germany, and Americans (call us dumb, liberals) just don't want government controlling 50% of our economic lives. They've lost our trust, and with good reason.

Harrison said...

It's the same reason why Communism has been tried in many places even though it's never worked:

Well THEY did it wrong we'll do it differently and it will work.

Damien said...

The European failures that are currently happening is in my opinion as a result of the beaurocracy in Brussels self-perpetuating itself in a committe format that regardless of the politics of the individual Member States, is almost a perfect example of Communism.

Committees worked out quotas, economic values and regardless of the realities on the ground, proceeded anyhow.

Greece and to a lesser extent Spain and Portugal did their sums and shouted "bingo! we are in!" without considering that the maths did not add up and hold back and alert the fact that they were going to spend more than they could ever possibly afford. Greece did so even one step further, they started rolling in it like a pig in mud, lowered their retirement ages, increased their social security payments and assumed that the Europe would pay as a single entity.

Oh, just to get it right, Germany and to a lesser degree France bring in Taxes that are just under the spending rates because the EU reimburses an element that would result in national incomes in those two countries to a level that would make it 60/40 in favour of income. Germany and France are actually wealthy.

The model is not collapsing, the administration and their maths are.

jez said...

"Venal governments had taken bribes to allow mineral extraction or whatnot with no regard for any laws whatsoever."

This doesn't require a corrupt government, but SF understands what imo is the only valid "anti-capitalist" argument: it's not that capitalism is evil, it's unregulated exploitation that we want to avoid. When workers' unions first emerged, I think we would now all agree in retrospect, regardless of what we think of modern-day unions, that they were then obviously needed: Victorian era capitalism was famously cruel, and despite the unprecedented wealth industrialisation generated, somehow it placed the larger part of the population in awfully bleak conditions. And so it continues in China etc. It may not be capitalism (or at least not quite), but it's the same problem.

In conclusion, I too am unaware of a decent argument for capitalism being evil, only corrupted versions of the above sentiment.

Silverfiddle said...

Precisely Jez. For death and grinding poverty, 20th Century communism racked up an impressive toll, which does not let capitalist human exploiters off the hook.

Using people as slaves, chattel, tools, however you want to describe it, is the problem.

Damien said...

Could not agree more. Communism ultimately results in unchecked and unscrutinized dictatorship and because it takes out the faith element it also eliminates morales.

Capitalism without controls often leaves the opportunity for greed which we have seen often enough.