Socialism

We are all hearing alot about socialism these days.  Apparently, Obama/Biden are socialists.  Here is the definition from Webster:1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods2 a: a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state As of today, the federal government is infusing money into banks in exchange for ownership.  GM is making noise about their desire to get some bail-out money (presumably for a share of ownership as well).  These actions are happening under a Republican Free Market administration and, while some question if this is socialism, we the people have been assured that the current bail-out is necessary but not necessarily socialist.  Though the means of production in our country are dependent on credit from banks receiving bail-out money – so the means of production are impacted by a socialist policy, even if it is one step removed.The State of Alaska has long redistributed oil wealth through dividend payments that go from oil companies to every resident of the state.  This in exchange for the right of way for a pipeline.  Alaska is part of the United States and the oil pumped out of Alaska goes to the United States but the residents receive a dividend that takes wealth from oil companies.  I am not aware of a similar program paying dividends to Washington State residents based on apple production.  Or a tax on wineries for California residents.  Or a permanent fund that taxes the mining industry in Colorado for redistribution.  Socialism?  Not exactly.  The means of production are still owned by private industry.So why is Obama a socialist?  It seems to come down to an assumption that sharing the wealth through tax policy and extending health insurance to all people equates to socialism.  First off, all taxes share the wealth.  And all tax payers benefit from the common grace of tax payments.  If all taxes share the wealth, then the socialism question must be coming from the way in which taxes are levied.  An administration that advocates higher marginal tax rates for income above certain thresholds is seen as socialist-leaning because that policy penalizes people for earning more money.  Conversely, an administration that advocates tax cuts across the board is seen as free-market because that policy gives money back to people.  Both presidential candidates maintain a graduated tax code with multiple tax rates.  The difference is in the income break points and the top marginal rates.  Is it an issue of fairness?  Is Obama trying to legislate fairness based on his definition while McCain is doing the same using a different definition?  The fairest way to levy an income tax is to use a flat tax rate with no deductions and limited tax credits.  That system says “No matter how much you earn, you pay 7% of your income into the treasury for the common good”.  Administrations could then play around with tax credits to encourage savings, encourage investment, or support education.  The fact that a family chose to have five children does not entitle that family to a larger tax credit than a family with two children.  Fair is fair – your choice, your cost.  Then again, graduated taxes can also be fair.  A graduated tax treats dollars differently based on their marginal utility.  In other words, the first $40,000 a taxpayer earns are useful for basic life expenses.  The next $80,000 provide increased utility but not necessarily wealth.  And so on.  All taxpayers are treated the same with the exception of the many deductions offered as ways to limit taxable income.  But does anyone really think that a $1000 child tax credit offsets the cost of an additional child by any measurable amount?  Only those without children.  Taxes are not fair; they are a part of a social contract that seems to work most of the time. Neither candidate is a socialist unless the definition of socialism has changed.  I do not buy the “trickle down” theory of McCain/Palin that seeks to lower taxes for the top earners so that some of their excess wealth will drip down in the form of jobs.  Nor do I agree that we the people should soak the rich with a new Obama/Biden tax rate or disdain the notion of wealth in a society that values the story of a self-made fortune.  But those nuances are both part of the same capitalist system.The health care argument is even weaker.  Universal health coverage is not socialized medicine.  The hospitals, labs, clinics and drug companies that comprise the health care system do not become government owned entities.  The means of production do not become state-run.  Universal health coverage is a way of recognizing that capitalism has limits and weaknesses.  One of those blind spots looks at health care as an industry rather than a societal concern.  Do we want hospitals to run on a pure P&L basis that seeks to maximize profits by optimizing the care delivered to people on the basis of financial return?  Think about that for a minute.  Someone comes into the ER with multiple injuries from an accident.  This patient will tie up more resources for a long time with a limited chance of survivial.  In contrast, there are 20 patients in the ER with simply ailments, no required follow-up care and a clear revenue stream.  Do you?????Universal health care is a way of saying – human life and health seems to fit in a category that lies outside the pure free market so we the people will pay into a system that provides access to all while maintaining competition in the base industry.  Again, not socialism.  Compassionate capitalism?

Advertisement