WARNING:  

This image doesn't imply an unbiased view of socialism herein.

In PM discussions with several on OS, and one in particular, invitations have been extended for someone to post a brief primer of some beliefs regarding socialism in America.  The objective of this exercise would be to initiate a dialogue among those holding disparate views on this subject.  The nature of this dialogue would be what apparently cannot be captured in the halls of either Congress or most State legislatures. 

Unwisely, I have picked up this gauntlet. 

Brief though this primer might be, it does not seem practical to cover the entire spectrum of all contemplated sub-topics on this subject in one post.  Therefore, if this first installment does not mention an aspect of American socialism of interest, then please wait for subsequent ones; but enjoy whatever discussions might arise from this submittal. 

I am grateful to, and complimented by, all of you who have written.  You know who you are.  I look forward to your views and to our discussion. 

Let’s begin. 

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"Those who don't know history are destined to repeat it."

Edmund Burke - famous Conservative

INTRODUCTION

Many have serious doubts about the sustainability, efficacy, constitutionality, and general worth of the welfare state.  In America, the welfare state is manifested primarily by entitlement programs wherein a minority of beneficiaries is supported at the expense of general communalism. 

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Part 1 – DEFINITIONS

            Socialism

Go to the dictionary and read the element of the definition of ‘socialism’ that mandates government ownership of the means of production.  This will not be the definition of ‘socialism’ used in this primer. 

For the purposes of this primer, ‘socialism’ describes a political philosophy that encompasses the use of governmental resources, especially financial, to address perceived social ills, whether or not the government owns the associated means of production. 

For example, if ‘homelessness’ is perceived as a social ill and a government uses general tax revenues to subsidize the apartment rent of certain indigent citizens who might otherwise be deemed (by the government) to be without shelter, then, for the purposes herein, this will be considered ‘socialism’, despite the fact that the government will not own the apartment whose rent is being subsidized.  Similarly, if ‘hunger’ is perceived as a social ill and a government provides food stamps to qualifying beneficiaries, then this will be deemed ‘socialism’, even though the government would not own the farms, the distribution systems, the stores, or the products purchased by its  food stamps.  

Entitlement Socialism

The programs receiving the most attention these days are those in which the beneficiaries qualify under a circumstance such as: age, poverty, homelessness, hunger, unemployment, disability, illness, heritage, widowhood, elderly parenthood with young children, impoverished non-marital parenthood with young children, and various combinations of the foregoing.  Most of these qualifications arise from circumstances most collectivists, socialists, and wealth tranfer advocates would view as unfortunate. 

These programs share at least one distinguishing characteristic: each is funded by governmental takings from all for the benefit of providing bank drafts, direct deposits, stamps, funded debit cards, subsidies, or some other form of monetary gift to the few qualified beneficiaries.  Thus, none of these programs collects money in a manner that credits an individual account held exclusively for use by its contributor. 

Each is, therefore, like a Ponzi insurance scheme in many respects.  Under the presumption that this type of socialism always fails (see below), each favors the earlier receivers at the expense of later ones.  The obvious corollary to this, especially when inflation is not considered, is that each favors the earlier contributors at the expense of the later ones.  

            Non-Entitlement Socialism

This section is designed to forestall the nonsensical arguments that arise from those who contend that building highways, electrifying rural areas, constructing levees, erecting hydro-electric power plants, installing potable water treatment plants along with their pressurized distribution systems, and putting in sewer collection systems along with their waste water treatment plants at public expense equates to, and justifies, writing checks to individuals who qualify under the narrow guidelines of focused entitlement programs. 

For those of you inclined to argue in this vein, please take a moment to meditate upon what an intellect capable of rational and logical thought is supposed to do.  We will all be grateful for every effort you put into thinking about non-entitlement socialism so as not to burden the subsequent debate with distracting irrelevancies. 

Please understand that, in addition to the vast differences in the global benefit of highway construction, rural electrification, etc., versus the local benefit of subsidized rent for an indigent citizen, for example, there are also vast differences in the manner in which legislatures fund these different types of socialism and in the manner in which waste, fraud, and abuse, common to both forms, impacts our society. 

Thank you.

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Part 2 – THE SUSTAINABILITY OF ENTITLEMENT SOCIALISM

            Three Economic Reasons for the Failure of Entitlement Socialism

Historically, entitlement socialism, left unchecked, collapses under its appeal both to human sloth and to the temptation that it provides elected officials to purchase the votes of the unfortunate through the expansion of its benefits.  Both of these factors contribute to ever increasing numbers of beneficiaries of programs often formed with the opposite intent of decreasing, or eliminating, them. 

Moreover, the welfare state is least affordable during the times it is needed most.  All governments depend upon revenues whose availability is related to the vitality of their associated economy.  During economic distress, the financial resources of governments decrease while the demands on the welfare state increase.  This is a “double tap” in the language of New York City mobsters and Navy SEAL teams.

Finally, the collectivist funding schemes for entitlement programs are generally characterized by investment fraud:  The healthy pay for those who are ill and are not credited in a proportional, time-weighted, manner for their contributions to their own accounts.  Workers pay for those who are retired and are credited in a non-proportional way for their contributions albeit not in their individual accounts.  Those who are sheltered subsidize the rent of those who are not and are not saving for themselves in anticipation of times when they cannot meet their mortgage or rent payments . . . and so on.  When demographics unfavorable to the economic structure of entitlement programs manifest themselves, then such programs fail in the same way that all Ponzi schemes do. 

            The Consequences of Unchecked Entitlement Socialism Failure

The USSR was the ultimate socialist experiment – an industrialized, centrally planned economy that couldn’t adapt to the weather, much less changing economic realities.  It was the worker’s paradise, where, theoretically, each gave according to his ability and each received according to his need; where each was entitled to, and expected, cradle-to-grave care by the government.  Its duration (from 1922 to 1991), was only 69 years; and its collapse was clearly an economic implosion in conjunction with problems associated with domestic and foreign unrest. 

Greece, a country whose citizens never heard of an entitlement program they didn’t favor, coupled with a government that rarely denied honoring this stupidity, has been bumping along recently, seemingly in a perpetual state of impending insolvency.  The greed of Grecian entitlement program collectivists has not only mortgaged current contributors but also mortgaged the descendant contributors via government borrowing. 

Further, little Greece, by virtue of its inability to pay its debt and by virtue of its inclusion in the Euro Zone, has threatened the value of the currency of financially viable countries like Germany.  Greece, thereby, puts many others at risk, including current and future retirees in Germany, including those who import goods to Germany from outside the Euro Zone, and including those who wish to travel outside the Euro Zone. 

The demographic problem in Greece is, perhaps, the most significant contributor to the failure of its entitlement socialism.  For several generations, there have been insufficient kids or grandkids to screw over.  Greece currently has a fertility rate of about 1.3: 10 grandparents have six children between them.  These six children have four grandchildren between them - i.e., the family tree is upside down.   

The bad news is that demographers call 1.3 “lowest-low” fertility - the point from which no society has ever recovered.  The worse news is that, compared to Spain and Italy, Greece has the least worst fertility rate in Mediterranean Europe.   

(By the way, you don’t have to go to Greece to experience Greek-style retirement.  The Athenian “public service” of California has been metaphorically face-down in the ouzo for a generation.  The feckless, insatiable boobs in Sacramento have driven their State to the same dam over which the Grecian ship is now sailing, and they have the budget and debt problems to prove it.) 

My brother-in-law is from Cuba.  Cuba is a giant . . . . pothole into which 1940’s and 1950’s era cars drive and break their suspensions.  However, it does have free healthcare.  

These examples, as they say, are endless.  Here is what also is said, “Those who don’t know history are bound to repeat it.” 

Therefore, let’s be clear.  The general, inevitable, consequence of unchecked entitlement socialism is national financial bankruptcy. 

            What Motivates the Debate about Socialism

Perhaps it is this sub-topic of entitlement socialism sustainability that most closely correlates with the motivation to debate this form of welfare in America today.  It is likely that only the obtuse will fail to understand why debate over entitlement programs arises in the context of our national debt crisis.  We have reached a point where:

• nearly half in America live in a household that receives some type of government benefit,
• our total federal revenue collections are wholly captured by the outlays for entitlement programs,
• our national debt equals our Gross Domestic Product, and
• total means-tested welfare spending has increased 17-fold since the beginning of Lyndon Johnson’s War on Poverty in 1964. 

Yet, time and energy is wasted debating certain aspects of America’s welfare state that are undeniably fact.  For example, debate is totally unnecessary on the topic of whether entitlement program reform will occur.  This reform cannot now be avoided, nor could it ever have been avoided.  It is inevitable; and it always was.  Entitlement reform will occur with or without further discussion; and it will occur whether the national government acts, or fails to act. 

Thus, without advocating, much less doing, anything, welfare reform . . . significant reform . . . will soon occur in America, just as it has now been thrust upon Greece. 

The only questions worth answering regarding on-going entitlement sustainability are those related to the quality and quantity of such reforms.  Whatever the nature of such changes, they were made necessary on the day the associated entitlement programs were established. 

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OK. 

The next post will comment on the efficacy, or lack thereof, of entitlement socialism as well as its constitutionality. 

In the meantime, let's think, then chat.