One of the dangers to our democracy is the total lack of understanding of basic economics. Most K-12 teachers can’t teach economics because they don’t know it. Yet every organization from a children’s lemonade stand to the largest company, and of course to a country, is subject to immutable and unseen laws of economics. How can you possibly understand the implications of your political decisions if you don’t have any understanding of their economic impact?
Economics is simply the quantification of human behaviors and decisions. Economic conservatives believe in making decisions based upon facts, logic and the idea of a free market system. Democrats believe in making decisions based upon wishful thinking, emotions and socialism. Both groups say that they are for equality for all citizens and are against discrimination in their societies, but they have different views of what is meant by “equality.” The free market conservative group thinks that everybody should have an equal opportunity to succeed, while the socialist Democratic group believes in equal outcomes, enforced by the power of the government.
Understanding beginning economic theory is foundational to understanding what actually works in a society. This understanding is necessary in order to dispel the wishful thinking, denial, and community-held mythologies that result in electing officials that codify things that don’t work or are actually hurtful to those that the laws are supposed to help.
In a free enterprise system, you will have big economic disparities between its citizens. The freer the country, the bigger the disparities. Socialism and communism will level these disparities by bringing down the rich and educated to the level of the poor and uneducated, but then you will not have an economic model that produces the quality or quantity of goods and services that we enjoy today in a free market society. Democrats do not teach, and perhaps do not know that wealth does not exist, but is created, and that the free enterprise system is the supercharged engine of wealth creation.
Communists, socialists, collectivists, the Left, the New Left, Democrats, progressives, Democratic Socialists, the Socialist Workers Party — these are all members of basically the same political ideologies. They just go by different names. The name changes because socialist theories don’t work and to pretend that they are something different from the socialist failures of the past, they are constantly giving themselves and their agendas new names. But the fundamental schemes they have for implementing their wish lists remain the same. The definition of insanity is doing the same thing over and over again expecting a different result. That describes modern-day communists, socialists and progressives.
In a socialist economy, the rich are pulled down to the level of the poor so that everyone is the same. Politicians and government officials become the new elite, and the free enterprise engine of wealth creation is shut down. In a socialist society there are only two classes, the rulers and the ruled.
Why is there an economic disparity? For lots of reasons, some to do with the luck of being born smart or having parents that care. Other causes are that some people invent, create, and/or get a better education than their competition; other people delay pleasures for longer term advantages. These are society’s producers and we should embrace and treasure this group, rather than vilify them as the Left does.
The danger of believing in this imaginary future of equal outcomes is that in order to achieve this goal, individual freedoms will have to be given over to governments who can then force the ideal of equal outcomes. The Soviet Union, Cuba, North Korea and Venezuela — all impoverished socialist states — are modern examples of the failed ideology of the Left.
The Soviet Union was a socialist system. The state owned the factories, and all employees were government employees that were paid in the same way no matter how good or bad they were. These workers couldn’t be fired. This is the system that we use today in the public schools, and its failure should not be a surprise to anyone who understands that the public school system is a socialist system – and therefore destined to fail.
Although this socialist idea gets tried over and over again and fails over and over again, the experiments in socialism continue to this day and it has an army of advocates. In the Soviet Union it took 70 years for the socialist system to collapse. In the process it ruined hundreds of millions of lives.
The same can be said of modern-day Cuba, where thousands risk their lives each year to escape that socialist paradise. We can say the same thing for England before Margaret Thatcher, communist China and socialist India. Argentina and Venezuela should be the wealthiest countries in South America because of their natural resources, but they are impoverished because of their socialist system.
A real life experiment that matches capitalism with socialism is in Korea. After the Korean war, both North and South Korea lay in ruins. North Korea chose socialism and South Korea chose capitalism. South Korea now has 40 times the GDP per capita as socialist North Korea. That’s not a misprint. South Korea has 40 times the production per person as the socialist North Korea. North Korea has reached the progressive dream of equal outcomes by bringing everyone except the dictators into poverty. North Korea did this by creating two classes in their society, the rulers and the ruled. Cuba suffered the same fate. That is always where a progressive agenda leads.
In 1998, a Bernie Sanders-type politician from Venezuela named Hugo Chavez promised free stuff to poor people and they elected him and loved him for his false promises. But in the next 18 years the number of people who were considered poor rose from 58%, when Chavez was elected in 1998, to 78% today. This despite the fact that Venezuela is sitting on one of the largest oil deposits in the world. Bernie’s and Hugo’s pretend-world-of-socialism and free stuff sounds good, but history has shown us that it just does not work.
The poor are not poor because the rich are rich. Nor are the rich undeserving. Most of the rich have contributed brilliant innovations or other expertise to America’s well-being. We all live better because of people who were rewarded with wealth, like Steve Jobs, Bill Gates and Sam Walton. It’s always been that way, and historically we could say the same about Henry Ford, Thomas Edison and Andrew Carnegie who all got very rich, because they left all of us better off. When the rich consume wealth, they provide jobs and business for others. But they produce much more than they can consume, which leaves billions to invest in businesses that benefit everyone else as well. Taking away their wealth kills their investments and hurts everyone. This is the sad story of socialism wherever it has been tried.
Politicians on the left say that millionaires and billionaires are not “paying their fair share.” That statement is a bold lie. Let’s take a look at the actual figures as to who pays the bills from the IRS web site: The top 20% of taxpayers earn 50% of the national income and pay 84% of the tax collected. The bottom 20% of taxpayers pay no tax, but still get an “earned tax credit” refund. One way to look at this is that the top 20% of the taxpayers pay their own way and also pick up the “fair” share that the bottom 20% don’t pay. Who then is not “paying their fair share?”
Socialism is the false god for the poor. It sounds good, especially if presented by a good salesman like Fidel Castro or Bernie Sanders. But the system is an eventual disaster for everyone, especially the poor. It’s the false promise to the poor that there is something for them for nothing and that the rich are rich because they have stolen something from the poor, something that they didn’t have in the first place. Jealousy is a normal human emotion and that plays a role here too. All of these socialistic political and social constructs revolve around the idea of an imaginary future not tempered by common sense, human nature, or the lessons of history, in which everyone gets along and is taken care of.
The American idea of equal opportunity is dismissed as racist, sexist, and the white man’s construct. The Left and so-called progressives are at war with traditional American values of individual freedom and the idea that people should be judged on their character and not the color of their skin or their political views. All politicians ignore the realities of basic economics, at the expense of the community, in order to get votes. But Democrats have made it a religion.
Progressives will say that their dream world will be more like Norway, Sweden or Finland than North Korea, Cuba or Venezuela. Here’s the problem with that idea:
Norway, for instance, is rich from its North Sea oil deposits and has a common culture. In other words, its citizens are united in their culture and not diverse. The words diverse and divisive come from the same root word for a reason. Because of the military protection provided by the United States through NATO [Americans pay 68% of NATO’s budget], Norway’s budget is tiny, thus freeing up money that can be spent on social projects.
Norway has a population of just 5 million. New York City, by comparison, has a population of almost 9 million people. To apply a political system that works for a tiny, rich, homogenous population to a multiracial society of 330 million people is just plain silly.
Free enterprise, also called capitalism, has lifted more people out of poverty than all of the socialist experiments and all of the religious efforts in the history of mankind. Everybody, especially the poor, are beneficiaries of a free enterprise system of government and people like Bernie Sanders do the poor a great disservice with his false promises of free health care and education.
Consequence of Ignoring Economic Fundamentals.
Politicians and the voting public either don’t know fundamental economic realities or ignore them for personal or political gain. Three of these economic realities are:
1. The law of supply and demand.
2. If you tax something, you’ll have less of it.
3. If you subsidize something you’ll get more of it. A real life example of this is that if you subsidize being a single mother, you’ll have more single mothers.
Let’s see how ignoring economic fundamentals plays out in our society, which has certain values such as education, home ownership and health care that translate into political support for directing public funds into promoting these values.
In every case, you initially get more of what you subsidize and at a price that starts out with the unsubsidized price. Therefore, the early recipients of a subsidized commodity get a good deal. The two realities that we talked about now come into play. First, we’ll get more of what we subsidized and second, the price will go up because of the increased demand.
These are simple immutable economic facts, and unfortunately, legislatures can’t legislate against the immutable laws of economics. Sorry about that, guys. Let’s look at what happened in each case.
Higher Education: In my day, you could pay for a college degree by working full time in the summer and part time during the school year. You can’t do that anymore – not even close. So what happened? Lots of things, but mostly subsidized easy-to-get student loans created a new demand for education which raised the price. [Remember the law of supply and demand.] Politicians responded to this increased cost of education by increasing the ease and amounts of student loans which further raised the cost of education.
In the end, this well-meaning effort to lower the cost of education actually raised the cost for everybody and left a legacy of debt with many students, and encouraged some to go to college who may have been better off going to a trade school.
Home ownership: The Government basically took over the home mortgage market and made it possible for many who didn’t qualify to get a home loan anyway. This artificially increased the demand for houses and guess what? the increased demand increased the prices for homes.
This well-meaning effort to help those who couldn’t afford a home to get one artificially raised the price of all homes to unsustainable levels, and saddled many with debt burdens that brought on personal economic ruin. The housing prices collapsed in 2008 and almost brought down the U.S. economy with it. Unfortunately, the law of supply and demand raises its ugly head, and that’s what happens when politicians either don’t know or ignore simple economic rules. By the way, Democrats and their national media supporters blamed the “greedy Wall Streeters” for the home mortgage collapse when it was actually government policy and easy government home loans that caused it.
Health care: is the biggest disaster of all. Nothing is more important to us all than our health and our life, but the government has been stuffing money into the health care system for decades. The results were predictable: costs escalated faster than inflation for all of those decades. Now the government says that costs are too high for the average person so it took over the health care system in order to make health care more affordable. Of course prices will continue to rise as even more money is poured into the system. It’s that old problem of supply and demand again. Not knowing or ignoring Economics 101 will always produce a bad outcome.
The Sorry History of Socialism.
We study history to get insights into our own time. We know from that study that socialism doesn’t work in the real world. It sounds great, the idea that everybody lives equally well, but that is a fantasy and is not validated by any historical precedent. I think that there is a deep-seated need in human beings – call it “human nature” – that keeps this disastrous idea alive over the generations. It may be the deep emotional human need to be taken care of by a strong, caring and wise person or government. One of the socialist founders, August Comte, called socialism “the religion of humanity” for good reason. In place of God the Father it puts God the State.
Historically speaking, here is a snapshot of the steps that socialists use to take over a political system that gives them the power to impose their political ideology on the population.
Step One is to take political control of the country. Saul Alinsky, the radical father of the modern Democratic Party, taught that political change cannot come about if society is peaceful and if people are engaging each others differences in a civilized manner. Therefore, as he explains in his book, Rules for Radicals, you should never let a crisis go to waste and if there isn’t a real crisis, you should create one.
Obama and Hillary are both Alinsky disciples. In fact, Obama was trained in his school and Hillary did her college thesis on him. Obama created crisis after crisis by taking local or regional race issues and elevating them to national prominence by weighing in, as President, and then sending the DOJ to investigate.
The crisis in Ferguson Missouri was a good example of this. Here’s what happened: A petty criminal who was black got caught shoplifting and while resisting arrest was shot and killed. There was no evidence that the police officer was the aggressor or that he shot him because of his race. Seven black eyewitnesses testified to the Grand Jury that the shooting was in self-defense.
Democrats just made up the story that the culprit was murdered because he was black. It was not true. President Obama weighed in and sent Attorney General Eric Holder and the Department of Justice to investigate, making it into a national crisis. As it turned out, the DOJ concluded that the police officer acted in self defense but it came up with a rationale for the rioting that destroyed the town that Blacks were targeted for more traffic tickets than whites. Sounds ridiculous, and it is, but this is pure Alinsky. If you don’t have a real crisis, start one.
Alinsky taught that to effect political change you have to infiltrate the institutions of the State and once you are in, to sabotage them. This is a good strategy, but one that can take years to accomplish. Unfortunately for the United States, the Left has been working at this objective for decades, largely out of the view of the average person. Until the advent of Donald Trump.
The infiltration of our public schools, universities and the national press by the Left is now an accomplished fact, and they are now in a position of power to indoctrinate young minds. In a recent survey of students at public universities, it was found that more than 50% of those surveyed thought that socialism is a better system than free enterprise. These are our future leaders and such a widespread belief, in my opinion, is dangerous to the long term health of our democracy.
Step Two is to take over the institutions such as the IRS, the Department of Justice and the FBI. If you have control of law enforcement, then your own misdeeds will not be accounted for because you control the organization that is charged with discovering them. Of course, this is exactly what happened in the Obama administration – it took over these agencies simply by putting in its own people at the top. It is frightening to see how easy it was for the Obama adminsitration to accomplish this.
Step Three is to disarm the population.The Communists did it, the Nazis did it, the Chinese did it, and the Democrats in the USA are trying to do it too. The Democrats say that the murder rate in the United States is too high when compared to Europe and other developed countries and the way to stop these murders is to control guns. It’s true that the murder rate in the USA is much higher than other developed countries and even many undeveloped countries. What’s not talked about is that if you subtract the murder rates from the five most violent US cities, the ones controlled by Democrats, the murder rate for the rest of the United States is lower than most European countries.
The five most murderous cities in the United States have these things in common:
1. They have some of the most restrictive gun laws in the country.
2. They are all controlled by Democrats.
3. Most the murders are blacks killing other blacks.
Step Four is to control the newspapers and TV. If you can control what people hear and see, you can fashion their opinions. CNN, for instance, has negatively reported on the Trump Presidency 93% of the time. It has been 70 years since the NY Times has endorsed a Republican for President. In today’s media, only the Wall Street Journal and FoxNews have maintained their journalistic standards. All of the other news organizations are now reporting their opinions as actual news, screening out any news that might be favorable to the right or unfavorable to the Left.
News that is embarrassing to the Left is simply not reported except on Fox and the WSJ. It’s called “omission bias” and a viewer simply cannot know what hasn’t been reported. Proverbs 18:17 says, “Every story seems true until you hear the other side”. Many Democrats never get to hear the other side because they rely upon the national press for their information, and therefore are not fully informed on the issues.
Step Five is the courts. Conservative judges are those judges that come to their opinions based upon the law as written and not on their personal opinions. Democrats hate conservative judges because their own judges base their legal opinions on what they think the law should be and are not afraid to legislate from the bench. Democrats do not have the support of the voters to change the country to a socialist state, so they need to rely upon the judiciary to do that work for them. That is why the recent appointment of Judge Kavanaugh, a constitutionalist, to the US Supreme Court, was such a disaster to the Left’s long term agenda.
If you can pack the courts with your political operatives, the courts will affirm the politicians. This happened very recently in Venezuela and that country is now paying the price in a national meltdown which is throwing millions more into poverty. In “Trump v. Hawaii,” four Democrat Judges were willing to ignore the plain language of the law and come up with a political decision.
If Hillary Clinton had won the 2016 Presidential election and had appointed another liberal judge to the US Supreme Court, the trajectory of our country would have been altered toward the disaster of socialism.
Even if you hate Donald Trump and you hated every one of his policies, conservatives and progressives alike should be forever grateful for his appointment of two judges to the US Supreme Court who will follow the law, rather than make it.
Bruce Hendry is a retired businessman who began from humble origins to become a highly successful investor and captain of industry. He embodies the American dream, having earned his way to becoming the president and chairman of the Erie Lackawanna Railroad and Kaiser Steel. He is one of the leaders of the economic revolution that has made America the envy of the world, and also the target of resentful and spiteful leftists who want to destroy it.