Deconstructing Liberal Spin on Capitalism and Socialism

Attempting to redefine the debate

Many liberals claim that conservatives are trying to redefine socialism's and capitalism's definitions.

One of their myths entails conservatives labeling socialism as the government taking over everything. They claim that conservatives want to label capitalism as patriotism. They also dismiss the fact that the most successful, the rich, create jobs.

Those claims are straw man attempts to redefine a debate.

Conservatives label increased government control, of the economy, as moving closer towards socialism. This is socialism as it's actually practiced in the real world, not socialism in its true sense.

More regulations and red tape hamper economic progress. A look at the two Koreas could tell you which system does better. One of the Koreas practices socialistic economic policies, the other practices many capitalistic economic principles.

A "from space at night" perspective will tell you that the capitalistic Korea is doing far better.

Conservatives don't label capitalism as "patriotic."

People succeed better, economically, under capitalism. Free market forces reward people for coming up with the best method to meet customer demand. People do succeed in socialistic societies, but not as frequently, or as easily, as they do in capitalistic societies.

Free markets create the conditions needed to create a true "land of opportunities." Isn't that what people come to America for? That's where the patriotism comes in.

Capitalism isn't just an economic term; it's a concept

Capitalism facilitates people making money... if they want to.

If people want to start a business, they invest in equipment and items they'll need. They'll spend money to hire people to work in their business. Since the business owner purchased the equipment, materials, buildings, etc., those items belong to his business, as assets.

These items shouldn't also belong to the employees, unless they also paid money to obtain the business' equipment.

The business owner invested money in a venture he, or she, hopes would bring profits. If that business brings profits in, the business owner has rights to what's left over after expenses are paid. Payroll is one of those expenses.

Employees are entitled to what they agreed on during the employment negotiation. They're not entitled to anything more than that.

In a capitalist system, employees have a role over who they work for. They can work for one employer; then work for another one that pays them more. If a business doesn't pay people enough, workers can work for someone that does.

Our founders had the free market/capitalist system in mind when they wrote the constitution. This system allowed our type of democracy to evolve into something the rest of the world wants to copy.

It allows more people to succeed. That's the American way. The system liberals want would make it harder to achieve the American dream. This is what conservatives mean when they argue patriotism.

Most people that start successful businesses, and corporations, are loyal Americans that won't hesitate to put their hands over their heart when they see the passing U.S. flag.

Socialism looks good on paper, but fails to factor real life variables

The idea that socialism doesn't advocate free market's "termination" is another liberal myth.

Under socialism, everybody involved with a business organization owns that organization. They own the operation, the decisions and the profits. Gone is the pay scale that pays people according to their skills and hierarchy. Under socialism, everybody shares the profit according to their needs.

That's not how human nature, and the free market, works. Let's say that a person wants to work for a business organization.

He has skill sets that this company needs, so he submits an application. Human Resources, HR, reviews his application, and calls him in for an interview. He's offered employment, so they negotiate his wage. Once they reach an agreement, they sign an "employment contract."

When it comes to employment, workers agree to contribute their labor in exchange for monetary compensation. This compensation covers labor over a period of time. What workers get will depend on many variables, including supply and demand, as well as skill level.

Capitalism rewards people according to merit, and value to the organization

This is why white collar workers generally get paid more than blue collar workers. This is why people working in technical, engineering and construction tend to get paid better than cashiers or fast food floor employees.

More people know how to mop a floor compared to the number of people who could successfully run and manage a business operation. The higher you go on the corporate ladder, the more impact you have. The higher you climb, the more specialized skills, and experience, you'll need.

The pay scale reflects that reality.

For a floor employee, their worries are restricted to their job descriptions, and the time they're on the clock. Once they clock out, they could put their job out of mind until they clock back in. Salaried managers don't have this convenience.

Progressives claim that a business can operate, temporarily, without the manager. This same business would grind to a halt if a low level employee doesn't show up for work.

The restaurant serves as a popular argument piece. Say the busboy and dishwashers decide not to come in. That restaurant's business operation has to come to a halt. But, if the shift supervisor doesn't show up, business still goes on.

Now, what happens if the manager, usually the one that gathers data for the accounting books, fails to gather this data? What if payroll data isn't submitted to the agency that processes pay? What if the business owner failed to pay space rent, local, state and federal taxes, etc? What if the restaurant owner fails to make sure that accounting is done?

Not only would the employees not get paid, but the business would come to a screeching halt.

The cold hard reality is that busboys and dishwashers are more expendable than the manager. There are more people who could spray water on dirty dishes, then shove them through the washing machine, than there are people who could successfully manage a restaurant.

Contrary to liberal myths that a dishwasher and busboy are as important as the management, thus should get paid as much, they're easier to replace than the manager.

Can government funded services improve if the free market took over?

Many progressives argue that the police, fire protection, prisons, education, health care, parks, electricity, water supplies, sanitation, roadways and other services, shouldn't run for profit. Since everybody needs these, no organization needs to be profiting from them.

The free market has consistently provided superior services than the government.

Schools serve as a perfect example. Our universities rank among the best in the world, yet our K-12 school system is among the worst. How could one country hold both extremes in education?

The free market system places a strong influence on our universities. The Government manages our public K-12 schools. Their standings shouldn't come as a surprise.

Children attending private schools tend to do better than their counterparts in public schools. The free market has more influence on private schools than the government.

Liberals also argue that the government can do as good, or better, than the free market when it comes to health care.

Military healthcare, on military posts, is an example of why that assumption is wrong.

Many military hospitals, on large bases, near large urban centers, have Emergency Room waiting lines. Patients sit in the waiting areas, sometimes for hours, to get attention for minor ailments and injury.

Go to a clinic in that same urban area. The chances are great that the waiting time is real short, and you'll see a doctor. Many of these clinics advertise having both, doctors on shift, and the ability to quickly take walk-ins.

A few years ago, Walter Reed made the headlines. Their health care was nothing but a nightmare. Incidents, like a recovering soldier falling from his bed, and not being discovered till later... or where a soldier was able to see the bathtub, for the room above him, through a shower ceiling hole... rightfully resulted in an outcry.

Liberals tried to attack George Bush, but they missed a major point: Walter Reed was an example of a health system that that fell under the government's domain.

This isn't unique to US military hospitals. Canada had some issues where ambulances had to be turned around, and sent to another hospital, because of backlogged Emergency Rooms.

Commercial optometrists hardly use the machine that "puffs" materials into your eyes. Many optometrists, and their nurse assistants, consider those machines as archaic. Yet, this is standard equipment in military optometry clinics.

Free market hospitals tend to have more advanced equipment than government ran or military hospitals.

Health care, offered in the free market, costs more for the consumer than health care that the government subsidized. Liberals don't understand that government funded and managed healthcare also costs a lot. They don't see that, as the government pays it, not the consumer.

In countries where the government funds "universal" healthcare, the tax payers pay a really high tax rate.

Why is it that free market organizations tend to do better than their government funded counterparts?

It's survival of the fittest in the free market. Those that satisfy consumer demand, more efficiently and effectively, do better than those that don't. Those that fail to meet consumer demand, better than the others, lose business. If they continue to not be effective, they go in the red, or go out of business.

It's imperative for a "for profit" organization to provide a better product, or better service, than its competitors.

Not so for a government ran and funded organization.

An organization that receives money, "no matter what," doesn't need to have the best business operation to survive. Bad decisions, poor organization, ineffectiveness, multi dimensional red tape, etc., don't drive government organizations into the ground.

If you privatize many of the above services, economic competition will force those services to get better.

Try driving on a "toll road," compared to a "non toll road." You drive a substandard road until you get to a machine that issues you a ticket. You drive pass the stations and get back on the road. It's not long before the road quality improves. You get to the end, and pay your toll. Not long after that, the road's quality goes down.

If the government puts most its highways under a toll system, and quits using taxpayer money, that part of the tax system becomes fairer. People who use the highways more often pay most the money that's paid to highway improvement.

Now, there are some exceptions.

The military, police, and other first responders are properly placed under government control and provided government funding. You want the military's loyalty to be to the people, and to the country, and not to the highest bidder. Likewise, you want the police to be loyal to the community, and not to the highest bidder.

Credit unions aren't examples of Socialism, they're examples of free market at work

Liberals talk about credit unions being great examples of socialism at work.

Credit union employees get paid according to position, and where they're at in the pay scale. People, that bank with the credit union, generally own a part of that institution. They get a percent of the profits via dividends paid to their accounts. However; the employees and customers aren't "playing boss" for every aspect of the operation.

An employee runs the overall operation during a given shift. This supervisor works for a general manager, who works for someone that oversees several banks. The credit union still has a "corporate ladder" that pays higher the further you are in the chain of command.

Under socialism, employees on the lower rungs would get as much, or more, than the CEOs. This'd be the case if no other factors were involved. Employment compensation, under the credit union, doesn't match socialism's "everybody is the owner" concept.

Credit unions tend to be more user friendly than regular banks. If credit unions ride out recessions better than regular banks, this is why. Again, under the Free Market, you do better if you cater to the market better.

Government shouldn't be a hedge against poor personal economic decisions

Liberals argue that "basic necessity" demands are non negotiable. Organizations that provide basic necessity items should be protected from the free market's ups and downs. Since everybody needs gas to go to work, progressives argue that gas prices shouldn't be raised.

The point they miss is that it's not the government's job to protect them from facing rising gas, electricity and food prices.

Food prices go up?

It's time to start becoming economical. Maybe the $10.00 T Bone steak isn't a good idea. That $1.50 beef slice, enough to feed two people, is a better idea. Maybe it's not a good idea to constantly have boxes of soda when regular water could suffice. Maybe the junk food could remain on the store shelf, in favor of more natural foods.

You have food that the rich can afford, you have food that the middle class can afford, and you have food that the poor could enjoy. If your income lowers, then you should adjust your food selection to match your income reality.

Gas prices go up?

Maybe it's a good idea to start car pooling. Liberals love to argue that we should take care of the environment. Here's a good chance for them to do just that. If the workplace is close enough, maybe they could take a bike or go for a walk. If the city has public transportation, then they might save on gas money.

Basic household utilities become too expensive? It's time to stop that magazine subscription, cable subscription, internet subscription, fancy phone features, and other "want base" expenses.

If cutting unnecessary expenses still doesn't do the trick, a person could always find a second job.

Know someone that thinks that this isn't doable, given the current economic climate? I know a woman that works three jobs. She won't have sympathy for those that refuse to get additional jobs to help make ends meet.

As long as there are establishments with "help wanted" signs and advertisements, there's an opportunity for a second job.

Many liberals argue that since there are household services that everybody needs, these prices shouldn't go up. They must understand that they're not entitled to government guarantees for these services, simply because they're human needs.

Higher taxes and government red tape drives jobs out of this country

Our economy doesn't sit still. It's constantly growing and evolving. This has been the case throughout US, and Western, history.

Corporations and businesses in the United States aren't restricted to the U.S. The whole world is their option. Businesses are constantly measuring their performance in the economy. Business owners are looking at what they have to spend in order to make money.

If they could achieve a net gain in profits, by going overseas, they'll go overseas.

Companies have to pay tax expenses. If tax expenses go up, their break even point goes up. The higher their expenses, the les profits they make.

Companies pay payroll expenses. If the government forces them to pay higher wages, payroll taxes go up. Again, this eats into their profits. Companies react by not hiring more, by laying people off, or by going overseas.

Healthcare related laws, that force a company to pay more toward employee health insurance, increases healthcare related expense. The reaction is similar to increasing payroll taxes.

CEOs and business owners offset increases in these expenses by outsourcing. They'll move some or all of their operations to a country that charges fewer taxes on earnings. They'll move to a country where labor costs are lower.

When a company moves operations overseas, they cut both tax and labor expenses. They produce the goods, then ship them back to their American markets. This arrangement helps them meet customer demand while increasing their profit margin.

The American people's purchasing habits also force companies to move jobs overseas

The vast majority of the American public doesn't discriminate between what's made in the US, and what's made overseas. Their main concern is getting the best quality at the best prices.

A company can provide similar quality, at lower costs, if they could reduce labor and tax expenses. American companies achieve this by going overseas.

What would happen if US based manufacturing companies refused to move their operations overseas? Foreign manufacturers would wipe them out, since they're also moving their manufacturing operations outside their home countries.

Free market forces governments to make business friendly decisions

A government that wants to create jobs needs to create a business friendly environment. This includes low tax rates, and minimal laws that drain cash from these operations. When companies move in, they bring jobs with them.

You can't prevent jobs from going overseas with tax hikes on the businesses and companies that create those jobs.

The liberal's myth that the wealthy don't create jobs

Free market works when people make money by meeting customer demand.

Remember Bill Gates and Paul Allen?

Their venture had humble beginnings. They built from these beginnings and ultimately created Microsoft. Just think of the numbers of people who work for Microsoft. Corporations and businesses hire employees to do basic service and manufacturing jobs.

Many liberals claim that it's demand that creates these jobs, and not the corporation. They argue that it's the customers, and not the corporate and business owners, that are the true job creators.

That's like saying that you don't need chickens to create chicken eggs. You need both, rich's ability to hire new employees, and consumer demand.

Corporate and business ability to hire is key.

You don't want demand that becomes possible with government handouts. You want demand that becomes possible when businesses and companies hire employees... and provide them with a constant paycheck.

This happens when companies and businesses see the financial environment getting better. This includes corporations seeing increased profit potential... with increased hiring as a needed ingredient to achieve those profits.

And get this. The rich and super rich are also consumers. They're able to buy more than the average consumer. This means that they're able to place more money into the economy than the average consumer.

When times get tough, the average consumer reduces spending. This includes average employed consumers. If these consumers get more money, they either save it, or reduce their debts. This is less money entering the economy.

But those making more than the average consumer are still able to spend money during a recession.

Why businesses and corporations would hold onto their extra cash... and the catalyst that could cause them to open their money coffers...

People who run businesses and corporations constantly look ahead. They want to see how their business will do down the road. They weigh government actions heavily. Is the government going to raise taxes on corporate earnings? Is the government going to let reduced tax rates expire? Is the government going to do something that'll affect its credit rating?

CEOs and business owners understand that they're taking risks. They're not willing to spend more money when the business and economic environment risks getting worse.

One tactic they could utilize is to wait and see if the political landscape changes in Washington. If politicians are known for pushing for business friendly policies, and these politicians have numerical advantage, expect corporations and businesses start expanding.

This expansion would include hiring new employees.