socialism (or is it serfdom?) on the way
in the recent article by glen allport, in which he enumerates all the poor countries of the world who adopted socialism and then became prosperous (spoiler here…the answer is 0), the crippled economics of sweden–ostensibly one of the most famously socialist and to all outside perception one of the wealthiest countries in the world–are described in detail. with a real unemployment number of about 20%, and a per-capita income of $37,000 or so (which is actually less than the united states with $48,000), sweden is clearly no longer the wealthiest nation in the world. sweden has done little to increase business during its socialist watch, with only two companies going into public trading since 1970, and the number of jobs in the country has been static since 1950. allport describes the dilemma of socialism, and why it eventually (and always) causes the downfall of a country, in the following (i was unable to transfer most of the formatting and all of the hyperlinks; please see the full article on strike-the-root.com for all citations):
Short answer: human nature.
Slightly longer answer: the nature of life itself.
Despite how obvious those answers are, many people seem not to understand them. Somehow, many of the same people who believe that government should “adjust” human behavior via rewards and penalties – higher taxes on tobacco or alcohol, for instance, or fines (such as speeding tickets), or prison sentences, or specific income tax deductions (e.g., for mortgage interest or for purchasing a hybrid car) – also believe, rather bizarrely, that when government penalizes the creation of wealth with high taxation or onerous regulation and rewards non-productivity with transfer payments and corporate welfare and other forms of wealth redistribution, human behavior does not change in response.
The reality is quite simple:
Penalize a behavior and you get less of it, and/or unintended consequences.
Reward (or protect) a behavior and you get more of it, and/or unintended consequences.
This is true with cats, dogs, pigeons, and all other animals, including humans. Yes, there are nuances and seeming exceptions, but few things about life are more broadly true: make a behavior more difficult or painful in some fashion, and organisms will tend to display that behavior less often, or will attempt to shield themselves from the unpleasant effects when they do display the behavior – and not always in ways you might expect. Reward an organism for doing something, and the organism will be more likely to repeat that behavior; here also, unintended consequences (including “gaming the system”) are likely and may be significant.
This is perhaps the most fundamental and important macro-behavior genetic programming in the animal kingdom: avoid pain and seek out reward. Would life have survived for long without such programming?
Income taxation is a fine on income. Increasing that fine is likely to cause aversive conditioning and result in changed behavior. Sample result: Bono and U2 moved their financial affairs to the Netherlands in 2006 after the Irish government changed the tax code in a way that would have cost Bono and his bandmates huge amounts of money. That is, the band responded to an increase in the fine on their income by removing their income from the taxing authority’s jurisdiction. If someone like Bono, who is famous for complaining that governments should spend more tax money helping the poor, prefers to spend his money as he chooses rather than have it taken by politicians under threat of force, then how likely is it that other high earners are unaffected by attempts to confiscate more of their income?
Government-provided welfare payments, be it to the poor or the rich, are rewards for non-productivity and for misallocation of production and resources. Use tax dollars to subsidize a corporation’s foreign advertising or anything else it does, and the pressure for efficient operation is reduced. Pay unemployed single mothers to stay home, and you not only encourage them to not find jobs but – if the mothers must remain single to qualify for the “free” money – you also ensure that millions of children will grow up with unmarried parents and, in many cases, without their fathers, as has happened in the United States.
“While it is widely recognized that this type of means-tested program discourages work, it is less commonly understood that means-tested aid also discourages marriage and rewards single parenthood. Subsidized housing and other means-tested welfare programs penalize marriage because a single mother will suffer a substantial reduction or elimination of benefits whenever she marries an employed male.”– Millennial Housing Commission Policy Option Paper, 2001
a message from our government to welfare mothers of the world: stay unmarried, stay out of work, because we pay you to stay that way. furthermore, if you have more kids, you’re paid more. the government is compensating people for their lack of productivity…just the same as the bank bailouts that so recently were passed.
this is relatively old news; at least, the notion isn’t a sudden epiphany. but the part that most concerns me is: what can be done to push people “over the hump”? what can be done to encourage people to abandon their public assistance, build and enhance their marketable skills, find an entry-level job, and live life on their own terms? what’s the incentive?
of course, the impending bankruptcy of the united states government might foist this upon all of us, but i’d rather people accept this new paradigm without the attendant rude awakening.
