Friday, June 27, 2014

Curmudgeonocracy 2—Socialism


The Basics; Social Welfare in Europe and Scandinavia

“Hey, Curmudge, cramming a topic this big into a brief blog posting requires us to be frugal with examples and also to assume that the reader possesses some knowledge of the subject.”

“Right, Julie, and we’ll also assume that the reader will Google any issue for which he finds our hyperlinks to be insufficient.  And further, we’ll defer health care under socialism until later because we discussed Health Care Elsewhere two years ago.”

“I know the basics, Old Guy.  In a socialist economy, there are no private corporations.  All factories and companies belong to the state, and all workers are state employees.  This system so restricts personal freedom that a true socialist country will tend to have a totalitarian government.”

“The effect on one’s freedom under capitalism vs. socialism has been described by Milton Friedman (1).  ‘In a capitalist society, one can openly advocate and work for socialism.  However in a socialist society, one can’t advocate capitalism because all jobs are under the direct control of political authorities.’   In that situation, one’s job would be in jeopardy.  Here is a surprising story from Friedman’s book: ‘Prior to the outbreak of World War II, Winston Churchill was not permitted to talk over the radio to the British people to warn them of the menace of Nazi Germany.  The British Broadcasting Company (BBC) was a government monopoly and his position was too controversial.’ “

“Wow, Curmudge.  Even a little bit of socialism can be damaging.  In our search for curmudgeonocracy, let’s start with extreme examples.  The former Soviet Union had a communist government (socialism controlled by a single party).  One reason for its failure was its vast size and diversity, i. e., it was a complex system.  As we discussed two years ago, such a system cannot have a single point of control, e.g., Moscow, which is required by socialism.”

“China is another example that we don’t want to emulate.  It calls itself communist, but it does have some private enterprise.  Some individuals have become extremely rich, because crony capitalism is rampant.  That plus limited political freedom would keep me on this side of the Pacific.”

“Then let’s look in the other direction, Old Guy, toward Europe.  Although most European countries have tinkered with socialism, they now have significant private ownership of manufacturing plus a government-run cradle-to-grave social welfare system.  In France and southern Europe (Spain, Italy, Greece), industry is highly regulated (almost impossible to fire a worker; 35-hour work week in France), and the countries spend money they don’t have on welfare programs.  Efforts to balance an economy are met with strikes and riots.  These can be interesting places to visit, but I wouldn’t want to live there.”

“Right as usual, Julie.  Here’s a sad quote about France, dated January 7, 2014: ‘France’s economic sickness is primarily due to its overbearing state, horrendously high tax levels, insane regulations, absurd levels of inefficient public spending and generalized hatred of commerce, capitalism, success and hard work.’ “

“But what about Scandinavia?  I’ve heard that those countries—especially Sweden—are hotbeds of successful socialism.”

“Well, the beds aren’t as hot as believed, and their success—as well as their socialism—aren’t total according to the Swedish think tank, Captus.  The government owns only about a quarter of the country’s productivity.  Sweden’s well-known industries, such as Volvo and Ikea, were founded before socialism took over.  More recently, at the end of the 1990’s, ‘the median household income in Sweden was the equivalent of $26,800, compared with $39,400 for U.S. households.’  And that was before taxes, which in Sweden are among the highest in the world.  The most onerous is their value-added tax (VAT), which is as high as 22.5% on most foods.”

“There’s more, Curmudge.  In Sweden workers can earn up to 570 paid days off per year (not a typo), and unemployment benefits are so generous that ‘productive Swedes often join the ranks of the unemployed as a form of early retirement.’  Historically, Sweden’s success was based on its homogeneous population and strong work ethic.  Now, ‘by college, many of the young people have been programmed to join the unemployed and collect benefits.’  No wonder the government is having trouble making ends meet.”

“Before we leave Sweden, Julie, let’s share the somewhat different view of Paul Krugman, a left-leaning economist who writes for the New York Times.  He points out that in Denmark and Sweden taxing and spending are handled locally and efficiently and with the consent of the local populace.  ‘The Nordic social democracies just happen to be places which do everything in entirely the opposite manner to which most American liberals argue things should be done.’ “

“Our last stop in Scandinavia is Norway.  ‘Most production in Norway is done by privately owned businesses.  These businesses are effectively regulated and taxed at much higher levels (than in the U.S.) to pay for a vast array of cradle-to-grave social services.’  As you learned, Curmudge, when you visited Norway a few years ago, everything that isn’t free is very expensive.”

“That’s for sure, Julie.  When I looked at a small bottle of the local aquavit (distilled spirits), the sticker shock drove me back to the beer counter (and beer was also expensive).  Overall, Norway looked like a pretty nice place to live, assuming that one could live without sunlight from November to January (60 days without sun in Tromsø).”

“But there’s a catch, isn’t there, Old Man?  The other countries with cradle-to-grave welfare can’t afford what they are promising to their people.  Norway is different because…”

“…Because Norway has a continuous influx of cash from their oil wells in the North Sea.  Instead of demonstrating the value of social welfare, Norway demonstrates the value of geography.  And speaking of the North Sea, in our next posting we’ll cross it and talk about socialism in Great Britain.  Then hopefully we’ll wrap up our consideration of socialism.”

Kaizen Curmudgeon

(1) Friedman, Milton Capitalism and Freedom  p.16-19 (1962, The University of Chicago Press)

Link to posting from blog archives: Docs on a Treadmill7/15/10

Friday, June 13, 2014

Curmudgeonocracy 1—History


historyAncient Democracies and Laws, U.S. Constitution, American Exceptionalism

“It appears, Curmudge, that our next topic will be Curmudgeonocracy, whatever that is.  I presume that it has something to do with democracy and that we are going to build it, brick by brick, as we read and write.”

“Correct as usual, Julie.  I have been reading about the history of democracies and the documents they adopted to govern interactions between people and between the people and their leaders.  Ancient Greece, especially Athens, had one of the first democracies around 500 B.C.  It was a direct democracy in which all citizens voted on laws.  That contrasts with a representative democracy in which citizens elect representatives, who make the laws.”

“Speaking of old things, Old Guy, there were the Code of Hammurabi in 1772 B.C. for the Babylonians and the Ten Commandments given to Moses in the 1600 – 1300 B.C. ballpark to govern the behavior of the Israelites.  And for the most part, they are still pertinent.”

“And often ignored, chère étudiante.  Commandments such as ‘Thou shalt not bear false witness’ (lying and propaganda) and ‘Thou shalt not covet’ (redistribution of wealth).  Systems of law have continued to evolve, including Roman Law, Sharia (Shari’ah) Law, common law, and civil law.  The thing I‘ve noticed about most of these laws is that they govern legal issues between the people but don’t seem to place limitations on their leaders.”

“Maybe that’s because, except for ancient Greece, these older civilizations weren’t democracies.  Leaders commanded strong armies (Alexander the Great 356-323 B.C., Genghis Khan 1162-1227 A.D.), or had tribal or religious authority (Moses), or royal parents (various monarchies), or a commanding presence, a line of propaganda, and powerful supporters (various dictatorships and oligarchies).  Hey, Curmudge, the dictatorships and oligarchies bring us right up to the present time.”

“Before we talk about current issues, Julie, let’s mention instances in the past when limitations were imposed on the powers of leaders.  The classical example is the Magna Carta, signed in 1215.  Here is a summary: ‘Abuses by King John caused a revolt by nobles who compelled him to execute this recognition of rights for both noblemen and ordinary Englishmen. It established the principle that no one, including the king or a lawmaker, is above the law.’ “

“That’s good stuff, Old Guy.  Do you suppose that we might get all the despots and wannabes in the world to sign a similar document?”

“Not even in this country, Julie.  But I appreciate your dream.  The closest thing we have in the U.S. is the oath of office taken by the President on down to military recruits promising to ‘preserve, protect, and defend the
Constitution of the United States.’

“So now, Professor, are we ready to discuss the U.S. Constitution?”

“That’s too big a topic for a blog posting.  However we should mention the concept of separation of powers into the Legislative, Executive, and Judicial branches of government.  For the serious student, there is Constitution 101, a free online course offered by Hillsdale College.  It includes the U.S. Constitution Reader, a reading list of over 100 primary source documents.  Among the documents are those read by and written by the Founding Fathers prior to their writing the Constitution.”

“I perceive, Curmudge, that you are a fan of the Constitution and most of its amendments as written.”

“True, but if I had been alive at the time, I would have been troubled by the 18th Amendment (prohibition).  Glad it was repealed.  A few years ago I met a couple who introduced themselves as, ‘Hi.  We’re John and Mary Jones.  We’re dry.’  I first thought they were thirsty, but I learned later that they were expressing their feelings about alcohol consumption.  Glad that I didn’t offer them a beer.”

“But there are parts of the Constitution that seem to be under continuous attack, even currently.”

“Right, Julie.  Among them are Amendment I regarding freedom of speech and Amendment X, ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.’  Occasionally the courts have had to rein in the Executive and Legislative branches to keep them from running roughshod over the Constitution.  I guess that makes being a strict constructionist a part of Curmudgeonocracy.”

“Before we talk about the 20th century, Curmudge,  we should mention American exceptionalism.  It seems to go hand-in-hand with strict construction.  The term was coined by Alexis de Tocqueville, who came to America in 1831. ‘He was duly impressed by our governmental structure, including the separation of powers, but he was in awe of the public educational system, which rendered its recipients completely literate by the completion of second grade. Early settlers not only mastered reading, writing and arithmetic, but also shared practical skills, all of which enabled them to traverse and tame a rugged and frequently hostile terrain.  As isolated communities sprang up throughout the nation, they were able to thrive through innovation, industry and compassion. The “can-do” attitude involved hard labor, but it also included a sense of responsibility for those who through injury or other hardships could no longer care for themselves.’ “ 

“Americans have continued to prove to be exceptional by their actions. The early settlers who came from Europe were exceptional because they accepted the challenges inherent in forging a new nation out of a wilderness.  Others who chose to remain behind ‘missed the boat,’ but those who came later learned from those who were already here.  This was further demonstrated 70 years ago, on June 6, 1944 (D-Day).  And those who came involuntarily from Africa needed to possess unique strength of body and spirit in order to survive the voyage.”

“In my opinion, Professor, our exceptionalism has endured from generation to generation.  But it’s really unfortunate that some Americans simply won’t accept the concept.  So what’s next in our search for Curmudgeonocracy?”

“Progressivism, socialism, the New Deal, the administrative state, and more.  Don’t go away, Julie.”

Kaizen Curmudgeon

Link to posting from blog archives: AIDET Redux7/01/10