The Socialism Scam

 by Sprott Money

Zero Hedge 09/04/2018

Written by Peter Diekmeyer, Sprott Money News

Alexandria Ocasio-Cortez’s recent win of the Democratic Party’s nomination in New York’s 14th Congressional district has given America’s socialists a breath of fresh air.

The  telegenic 28-year old ex-waitress, who lives in a one-bedroom Bronx  apartment, defeated Joseph Crowley, a 20-year incumbent and one of the  Party’s most powerful members.

Ocasio-Cortez’s  win has given particular hope to American youth. Polls suggest that  millennials, like generations of youth before them, broadly support a  socialist agenda.

However,  there are growing signs that increasing government involvement in the  economy is bad forAmericans, particularly its youth.

Making government big again
Ocasio-Cortez’s unlikely win comes on the heels of growing momentum in the socialist movement.

Bernie  Sanders almost won the Democratic Party’s presidential primary in 2016  by running on a socialist agenda. His platform (which Ocasio-Cortez  supported) included government-financed universal medical care and  tuition, as well as a $15 per hour minimum wage.

Indeed, even Republicans are moving to the left.

The  nominally conservative Trump Administration increased public spending,  the deficit, taxes on imported goods and (through its trade policies)  has vastly boosted government control of the economy.

Lies my teacher told me
The  bad news for Americans, particularly youth, many of whom have been  badly misinformed about socialism by unionized teachers in  government-financed schools, is three-fold.

First,  increasing the size of the public sector beyond a certain point makes  everyone poorer. The world saw this in dramatic fashion after the fall  of the Soviet Union, when all of the country’s bullish economic data  turned out to be false.

Countries  that were split in two during the Soviet era, such as Germany and  Korea, were particularly illustrative. In both cases the zones that had  less government involvement did better.

Secondly, there are strong signs that the American government, which has been growing faster than the economy for more than three decades, is on a similar path.

A free currency market would have checked government spending, which, when accruals are included, now exceeds 60% of the US economy,

However,  since the abolishment of the gold standard, governments, through a  variety of mechanisms, can now effectively print whatever money they  need.

Thus,  thirdly, the resulting lack of a stable unit of account now makes it  almost impossible for observers to measure just how bad the situation  is.

America’s national pastime: stealing from each other
Younger  Americans, who don’t vote in large numbers and have few inside  connections, appear particularly ill-suited to succeed in a socialist  state.

This  is due in part to socialism’s very nature, which rewards special  interest collectives who pressure governments for funding, the creation  of jobs with above-market wages, and legislation which enables favored  professions to extract “rents.”

Unlike  free markets, which rely on voluntary exchanges, governments thrive on  coercion, ultimately at gunpoint. In that sense taxes are, to a large  degree, theft.

Using government to steal from each other has thus become America’s largest economic activity.

A pernicious effect on the national character
This leads to a fourth result of socialism, which is hardly studied at all: its pernicious effect on the national character.

That  didn’t matter so much a century ago when communism was first  implemented. Back then most people were unskilled workers or farmers who  could be muscled around.

But in an information economy, in which many workers know more about their jobs than their bosses, this is highly dangerous.

Policy makers haven’t yet realized that it isn’t a good idea to steal half of their doctors’ salaries.

Stealing  half the salary of your accountant, the guy who sets your economic  policy or the scientist who advises you about climate policy isn’t too  smart either.

Kids come last
Socialism  thus leaves American youth at a severe disadvantage, because income  distribution only works if your special interest group can steal more  from others than they steal from you.

For example, if you vote to tax businesses, but those businesses raise prices by a higher amount, you may be worse off.

The  trouble is that when government tax revenues are divvied up among  special interests, kids come last. Older Americans get the lucrative  government jobs. They then implement seniority laws and credentialism  requirements to keep others out.

Government  spending, much of which is financed by borrowing, also  disproportionately benefits seniors. Kids get stuck with the debts.

Are American youth being scammed?
Critics rightly argue that the young come last under any form of government.

American youth can thus be admired for advocating a sharing society, which socialism is supposed to foster.

However, they’d do well to question their teachers and consider a sentiment famously misattributed to Winston Churchill.

“If you aren’t a socialist at twenty, you have no heart. But if you are a socialist at forty, you have no brain.”

The Socialism Scam 

Written by Peter Diekmeyer, Sprott Money News

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Much more interesting than posting a dictionary style definition of socialism. In fairground metaphor, it could be likened to the hammer and the bell. No matter how much force is used to launch the clanger, it never reaches the bell. Idiots ignore real history.


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