The New and Old Socialism
Whether it is the socialism espoused by the Nazis or the socialism of the former Soviet Union or the socialism that is emerging in the United States, there is one overarching sentiment, however different socialism in these three societies may be. Socialism everywhere expresses envy of excellence by treating the contributions and wealth of the successful as the wages of sin.
The Nazis saw the sin as a Jewish conspiracy; the Soviets saw sin as the exploitation by the bourgeoisie and what is emerging in the United States is the sin of the wealthy.
In the Obama administration, greed is considered the sin that must be opposed. But greed, whatever its deficiencies, is, as Adam Smith pointed out, an incentive for the promotion of capitalism which in the aggregate has a salutary influence on the economy. To combat greed, the socialists emphasize envy. Since equality is the goal, even trivial differences in income are exaggerated and the progressivity in the tax system is employed as blunt instrument to impose equality.
Lincoln said, “[Y]ou can’t make a poor man rich by making a rich man poor.” But President Obama seems to believe that wealth is invariably related to the wages of sin and must be controlled or, to use his language, “spread around.” To make sure this happens, government must expand and, in so doing, the private sector will inevitably contract. That explains why socialism, which purports to represent the interests of the average person, ends in overwhelming government control or outright tyranny.
Just as greed has its excesses, envy manifests excess in schadenfreude, a desire to destroy rivals, or, in this instance, penalize the alleged wages of sin. If you assume wealth is bad, invariably a function of illicit or inappropriate acts, it must be penalized, i.e. a surtax to pay for universal health care or a 40 percent income tax. Even though one percent of the population pays for close to forty percent of government revenue, it is still not enough for the masters of egalitarianism. They ask, why should so few, have so much? And they answer by arguing for leveling, i.e. a collision at the income mean through transfer payments.
Of course, what the egalitarians never realize is that at some point the rich will take their assets to a safe harbor or, assuming there are restrictions on moving capital, will simply be less productive. Contrary to the supposition of the enviers, it takes only about ten percent of the population to be a catalyst for innovation and wealth generation. If there aren’t rewards for this portion of the population, there won’t be the technological breakthroughs that foster economic growth.
That, of course, is the rub for President Obama. On the one hand, he needs to tax heavily in order to generate the revenue for his ambitious domestic agenda. On the other hand, excessive taxation will most likely result in more disappointing revenue projections than he anticipated since the wealthy will be less productive than they were in a low tax environment
That socialism cannot work is the inevitable conclusion of Ayn Rand’s Fountainhead and the historical experience of the twentieth century. If excellence isn’t the goal of personal achievement, conformity or mediocrity reigns. If wealth isn’t a reward for success, poverty reigns. And if success is a sin, failure is a virtue.
Yet, despite this reality, socialism is a persistent idea. My suspicion is that socialism is related to the belief that most people think they can be free-riders; they can get something for nothing by taking from the rich. But this Robin Hood psychology is, in fact, a form of theft. It subtracts from the fruits of one’s labor and, without apologies, contends arbitrarily that some people simply have too much.
Alas, socialism condemns “too much” and ends up giving too little. What it offers is an ideal, an abstraction of equality that is intoxicating. But its destructive influence inexorably becomes apparent. Why be productive, if others produce for you? And why would you oppose high taxes, if these revenues offer “free assistance?” As Hayak noted, the Road To Surdom is littered with promises of the golden age, a time when the government provides all that you need.
President Gerald Ford put this matter in perspective when he noted “that a government that can give you everything you want will be large enough to take everything you have.” It’s too bad President Obama doesn’t read history.