Socialism, A Scientific Economic Theory (Part III)


Foolish Thoughts?

I may have hurt the feelings of some of my visitors by associating modern liberalism with socialism. This cannot be helped because it is a fact of politics. In the following video you will hear individuals advocate the most basic concept of socialism. And in their advocation affirm everything I described about socialism in part II of this series. Most important is the fact that they reveal their ignorance about the most basic fact of an economic system.
1. You cannot eliminate profits or put a cap on profits without bankrupting that business in time.
2. The paychecks of every person working in that business is derived out of the profits of that business not just the owner’s paycheck.
3. No business can grow if you place a cap on the profitability of that business.
4. All taxes are a dirivative of the profits of a business.


A h/t to Bruce over at the “Gay Patriot” for the video lead.

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Categories: Politics | Tags: , , , , | 11 Comments

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11 thoughts on “Socialism, A Scientific Economic Theory (Part III)

  1. “I may have hurt the feelings of some of my visitors by associating modern liberalism with socialism”

    I constantly run into liberals that DO this, while there are many that deny they are socialists.

    Charlevoix??? Really?

  2. BB-Idaho

    I became aware several years back, of the odd and unexpected
    link
    between the stock market and the politics of each administration. By pulling my bets during Reagan and the two
    Bushes, then investing heavily when the Dems were in, I retired
    8 years earlier than my peers. (Just in case you are in the market,
    Griper!)

  3. The Griper

    and i wonder just how well your stocks would have done during those years if profits were banned or capped as advocated by those progressives in the video, BB and allowed only during the years the Republicans held that office?
    i have a sneaky suspicion that your strategy would be different.

  4. The Griper

    one more thing, BB. you provided evidence as to why social security should be privatized too.

  5. BB-Idaho

    The phenomenon of good markets during democrat administrations
    gives rise to any number of theories: mine- business does best when large numbers of customers have $$. The reverse of
    ‘trickledown’, where customers are so unimportant as to be
    left out of the equation all together. Regarding SS…yes, I would have thrived under that as well….but my peers would have been even worse off…and Wall Street much richer. The recent number of foreclosures on wrong houses just reinforces my opinion that the
    business operatives are just as (and probably more) vacuous than
    gov’t. If there were a free market, I can think of several large banks that would be out of business (kind of opinionated today)

  6. The Griper

    BB,
    people are people. there are always some bad eggs in any collective, both, the private and the public sector. the only question that must be asked is where is freedom to act more preferrable, in the public or private sector? it has to be one or the other.

    your peers would be worse off!!
    that statement assumes they would not have behaved any differently and that is something we cannot know. they may have been more cautious in their investments like you were under a privatized system. but i will say that on a collective level that collective would have been better off under a privatized system.

    as for trickle down or trickle up economics we need to remember that during good times money is being circulated freely and during bad times it is not. we must also remember that every dollar spent on a product or service is a dollar invested in the economy.

    during the good times both, the rich and the poor are investing in the economy. during the bad times only the poor continue to invest. it is the rich that slow down investing in the economy. reason; the poor spend their money on needs while the rich spend their money not only on needs but also on desires.

    all needs are depreciable assets. all desirable are appreciable assets.

    when you buy depreciable property you end up with less to reinvest into the economy. when you buy appreciable property you end up with a greater amount to reinvest into the economy.

    so, you tell me, if redistribution of wealth is a good theory what happens to the wealth? my only conclusion must be that wealth become depreciated. and an economy cannot grow unless wealth appreciates.

  7. BB-Idaho

    Generally depreciable and appreciable assets are business terms
    relating to taxation, the first as a deductible, the second as a generator of capital gain. Whether redistribution of wealth is
    a good theory or not, it happens constantly. Over the last 40-50 years it has redistributed into fewer hands, sort of a natural process for any number of reasons. Of course, businesses fail, rich people
    lose their money, etc. so there is a natural, albeit lesser redistribution concurrently. The problem that governments have
    faced for the last 3-4 centuries is that the natural accumulation
    can lead to such assymetry that most are very poor and only a few have all the wealth. (Rome, Spain, Netherlands, Britain -see Kevin Phillips ‘Arrogant Capital’, ‘Bad Money’, ‘Wealth & Democracy’,
    for example); The governments are faced with an unraveling of
    society, rebellion, criminal anarchy. History is replete with such.
    So, governments attempt to maintain enough redistribution to
    avoid this type of thing. (Churchill was so worried about communism in early 20th century Britain that he initiated social security- not as a sop to the elderly poor, but as a preemptive
    defense against extreme left-wing government being attractive
    to those folks.) [the election of Hugo Chavez in South America is another example] There have always been rich and poor; there
    will always be rich and poor: avoiding problematic imbalances
    is a historic pragmatic approach. As a well known writer of
    history noted; the redistribution of wealth is as inevitable as
    its creation, and is always addressed by rebellion or legislation.

  8. The Griper

    redistribution of wealth may be inevitable but greed and envy should not be the incentive for it as rebellion and legislation reveals.the use of “force” never solves a problem in the long term.
    history also shows that regardless of how you redistribute wealth it always finds its way back to the rich. you end up right back where you started.
    the balance you seek must be in the heads of people not in the pockets of people. people need to get the idea of victimization out of their heads and when that is done the amount of money in a person’s pocket won’t matter.

  9. The Griper

    one more thing, BB. the purpose behind this post was to show that modern liberalism can be liken unto socialism and your arguements only verify that fact.

    • BB-Idaho

      I would agree, Griper. I would argue, however, that we over
      generalize when we paint with too broad a brush. Modern
      liberalism is probably best compared with the current European model:
      “Social democracy is not itself a socialist system. Rather, traditional social democrats advocated the creation of socialism through political reforms by operating within the existing political system of capitalism. The social democratic movement sought to elect socialists to political office to implement reforms. The modern social democratic movement has abandoned the goal of moving toward a socialist economy and instead advocates for social reforms to improve capitalism, such as a welfare state and unemployment benefits. It is best demonstrated by the economic format which has been used in Sweden, Denmark, Norway, and Finland in the past few decades.[58] This approach has been called the Nordic model.”
      While the more rigid forms of socialism, eg. nationalisation of coroporations, strict central economic planning and ‘caps are antithetical with free market capitalism, the democratic model
      can augment capitalism by ameloriating its harsher consequences. As for greed among the poor, certainly we
      see looting etc. situations. I was addressing historical peasant uprisings, endemic in medieval and later Europe; they had
      been taxed into near starvation (and we should not confuse
      modern capitalism with the earlier ‘feudal system’, but recognize
      some of the problematic results of extreme wealth distribution.
      I would note that there are conservative arguments that a free
      market ultimately addresses such, but we need also recognize that when it does not, we see that people (and their nations-collectives as you say) will address them…one way or the
      other. In a nutshell; before one can have ‘life, liberty and the pursuit of happiness’, one requires at least a minimum of
      food and shelter. I would further agree that a major problem
      in addressing social disparities is the free loader; something
      that goes all the way back to the days of Rome and the
      public dole. We still don’t have all the answers, Griper.

  10. The Griper

    your argument is a fair description of the socialist of today, i agree. and i have no argument with the intent of the socialist. and as you noted the “right” does declare that the problem is addressed in their system. what is usually not addressed by either side is how their systems addresses the problem of poverty.
    socialism is an economic system that attempts to solve the problem immediately
    Capitalism is an economic system that attempts to solve the problem over generations of time.

    the advocate of the mixed economy recognizes that a socialist solution is a short term solution but in time must fail while the capitalistic system is a long term solution but sees it as a failure for the immediate problem. thus, his solution is to have both in one system. he sees this as having the best of both worlds and addresses the problem now without the inherent failure of a socialistic economy.

    what he fails to see is that he has not eliminated failure but only prolonged the time of its failure. and the reason can be understood by the sinplest idea in economics, revenues(income) minus expenses equals overage/underage.

    success will result obtaining an overage and failure will result from obtaining an underage.

    a socialistic system can only work thus be financially successful if the distributor of the revenues(government) has the ability to completely control the amount of revenues it possesses in order to cover its expenses. the reason being is that by this system the recipient of the revenues (welfare recipients) controls the amount of expenses to be paid out.

    in a capitalistic system, the distributor of revenues must completely control the amount of his expenses so as to not overrun the revenues he possesses if he seeks to be financially successful. the reason being is that the provider(employer) of the revenues controls the amount of revenues a person possesses.

    what the mixed economist does not get is that he must have control over both, revenues and expenses, in order to be successful. but because of legislative compromise the most that can be hoped for in this type of economy is partial control over expenses or revenues. thus prolonged failure will be the result. and since it is a prolonged failure it creates an illusionary result of success prior to its failure.

Be respecful or your comment will be deleted. Also know that Alinsky tactics do not phase me

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