Communism, Karl Marx, Marxism, Surplus Labor and the Labor theory of Value

Posted by PITHOCRATES - August 20th, 2013

History 101

(Originally published December 13, 2011)

Some would call Putting Profits before People Heaven if they had Lived in the Caring Hell of Communism

No ideology killed more people than communism.  In total numbers.  Such as Joseph Stalin in the Soviet Union.  Or Mao Tse-tung in the People’s Republic of China.  Or as a percentage of population.  Where Pol Pot’s Cambodian genocide holds this honor alone.  These communist leaders killed their people directly for political purposes.  Or starved them to death because of agrarian reforms that produced famines.  All in the name of freeing their people from the horrors of capitalism.

Heaven and hell.  That’s how a defector who escaped communism and made it to capitalism would describe what it’s like to live under each system.  Capitalism would be heaven.  And communism would be hell.  The problem with communism was that it didn’t work.  Economically.  People lived in want of the basic staples of life.  And often went hungry.  When they didn’t starve to death by yet another famine.  And if they complained or spoke out against the system they risked torture.  Or they simply just disappeared.  Banished to a work camp.  A reeducation camp.  Or killed.  So it’s no surprise that people trapped in these countries tried to escape.  Which is why communist states were oppressive police states.  To prevent people from escaping their horrible lives.

And yet to this day some people still hold up communism as the ideal socioeconomic system.  The one that cares about the people.  The one that puts people before profits.  Unlike capitalism.  Which puts profits before people.  Of course some would call putting profits before people heaven.  Especially if they had lived in the caring hell of communism.

Communism as an Economic System is an Utter and Abject Failure

Those who champion communism don’t blame the ideology.  They say it’s the people.  The few who use the ideology for personal gain.  And by few they mean basically everyone.  But if everyone is doing it it’s not the people.  It’s the ideology.  And it goes back to its utter and abject failure as an economic system.

Communism goes back to Karl Marx.  The guy that coauthored the Communist Manifesto in 1848.  And from which we get the terms Marxism.  And Marxist.  To describe varying forms of communism.  And communists.  He’s the guy who said that capitalism exploited the working man.  Those with money (capital) who owned factories, the industrial bourgeoisie, charged more for their goods than they paid their workers to make those goods.  Because Marx believed the value of any good was the labor that made it (the labor theory of value), this excess value (profit) was a labor surplus.  And belonged to the worker.  So he encouraged class conflict.  For the proletariat (the working class) to rise up and take over the means of production from those who owned it.  These middle class capitalists.  The industrial bourgeoisie.  And establish a dictatorship of the proletariat.  So the bourgeois capitalist pig-dogs couldn’t exploit the proletariat any more.  And everyone would then live happily ever after.

But no one ever did.  Like in capitalism.  Where happiness abounds.  Because, in capitalism, the market determines prices.  Not some bureaucrat counting up labor inputs through the manufacturing process.  From the mining of resources.  To the final assembly.  Which can make things very expensive.  And, worse, unwanted by the people.  Because when the market sets the price and assigns value, the market tells people what to make.  Normally when something is a hot seller it tells manufacturers to make more of it.  To cash in on those high prices.  So they do.  And people tend to buy this surge in products.  But when the market isn’t setting the price and assigning value, the market can’t tell people what to make.  So a bureaucrat must.  Which is what happens in communism.  Bureaucrats decide everything.  From what to make.  To the allocation of resources.  To the selling price.  And the things they decide to make are rarely what the people want.  Explaining why stores in communist countries were full of stuff no one wanted to buy.  And why people had to stand hours in line to get the things they did.  Or paid more on the black market.  Which is why communism as an economic system is an utter and abject failure.  And why people wanted to escape it.  Their only obstacle being that brutal and oppressive police state.  Which was necessary because if everyone left that wanted to the communist leaders wouldn’t have anyone to provide for them.

There are no Such Things as Market Failures under Capitalism

Communism was one of the worst man-made tragedies to ever befall man.  Karl Marx was wrong.  And his asinine theories killed tens of millions of people.  People enjoy life and prosper under capitalism.  Under communism they set records for genocide.  Why?  Because the communist economic model is an utter and abject failure.

The struggle between communism and capitalism was an economic one.  And pitted the market against bureaucrats who thought they were smarter than the market.  But it turned out they weren’t.  Not by a long shot.  And despite this history people are constantly talking about market failures and the evils of capitalism.  Much like Joseph Stalin, Mao Tse-tung and Pol Pot.  But for them it was never about the economics.  It was about the power.  Much like it is today.  Because there are no such things as market failures under capitalism.  It’s the bureaucrats who fail.  Not the markets.  At least, based on all recorded history.

Markets fail only when they aren’t free.  They fail when bureaucrats insert themselves into the economic process.  Via regulatory policy.  Or high taxes.  When they try to shape market forces to a political end.  And when they do it is capitalism no more.  It’s crony capitalism.  Or worse.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

China raises the Price of Cotton and Chases the Textile Industry out of China

Posted by PITHOCRATES - June 9th, 2013

Week in Review

Communists think they are smarter than capitalists.  They think they can manage an economy better than market forces.  Despite the failure of the Soviet Union, China (under Mao), North Korea, Cuba, etc., there are many Western nations with activist governments.  Believing like the Chinese that smart bureaucrats can make the economy operate better than those market forces can.  But the problem is they can’t control all market forces.  So when they intervene there are always unintended consequences that usually make things worse after their intervention.  As this example in China shows (see China’s cotton procurement policy hurting textile industry by Staff Reporter posted 6/9/2013 on Want China Times).

China has jacked up the domestic price of cotton to 20,400 yuan (US$3,325) per tonne as of May 13, 4,500 yuan (US$730) higher than the international price, reports Shanghai’s First Financial Daily.

Industry insiders said that the current procurement policy does nothing to benefit cotton farmers and will have a serious effect on the domestic mid-stream textile industry, forcing many firms to move their operations overseas, the paper said…

The government has justified its cotton procurement at prices higher than international levels, by arguing that the policy can protect the interest of farmers and stabilize domestic cotton farm acreage and output, which assures the domestic supply…

The high cost has forced textile firms to abandon orders, with a growing number of firms relocating to Vietnam, Bangladesh, and India. Downstream firms, in dyeing and printing, have also been affected.

China expanded their cotton production when international cotton prices rose.  Then international prices fell.  Leaving them with a surplus of cotton selling at a price that did not recover the costs of that expanded production.  So these wise bureaucrats decided to raise the price of cotton.  And restrict imports.  Problem solved.  They forced the domestic textile industry to buy the higher priced domestic cotton.  Which, of course, raised the price of the textiles they sold.  Above the prevailing international price.  Pricing them out of the international markets.  So this economic reality forced them to relocate to a country that did not force them to purchase cotton above market prices.  Allowing them to produce textiles and sell them at prices the international markets would pay.

This is the same reason why the U.S. doesn’t have a domestic textile industry anymore.  Only it wasn’t government forcing textile manufacturers to buy cotton at above market prices.  It was the unions forcing them to pay labor at above market prices that increased the price of their textiles.  And priced them out of the international markets.  Because there are always unintended consequences whenever we interfere with market forces.  Always.  And the end result is always worse after the intervention.  Always.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , ,

2012 Endorsements: Adolf Hitler and Osama bin Laden

Posted by PITHOCRATES - November 1st, 2012

2012 Election

Workers Enthusiastically Supported the Nazi Party because it had the Word ‘Workers’ in It

Adolf Hitler joined the German Workers’ Party (DAP) in 1919.  The party platform included nationalist, anti-capitalist and anti-Marxist policy positions.  As well as being anti-Semitic.  A socialist party where everyone was equal.  Unless you were a Jew.  Something Hitler could wrap his arms around.  As he would blame the Jews for Germany’s loss in World War I.  A war in which Hitler served as a messenger.  Even got awarded for bravery.  And he would later blame the bad German economy on the Jews as well.  Having a scapegoat is very important if you want dictatorial powers.  For you have to attack someone as you really can’t run on a platform of wanting dictatorial power so you can oppress your people.  The DAP became the National Socialist German Workers Party (NSDAP).  And Hitler designed the party banner.  Creating the swastika.  And the Nazi Party.

Now there isn’t a whole lot of difference between socialism and Marxism.  They are both about sharing the wealth and both are anti-capitalist.  The real reason Hitler hated Marxism is that they were a strong contender for power in Germany.  Power that Hitler wanted for his National Socialists.  And for him.  Which he consolidated by scapegoating, lying and using his personal charisma.  Another important quality for one aspiring to be a dictator.  To create a cult of personality.  Hero worship.  You have to be able to charm the masses so they don’t look that close at your policies.  Or your record.  Germans voted Hitler into office.  He didn’t seize power.  They fell in love with him.  But they had no idea what they were voting for.  World War.  Genocide.  He just moved them so much that they were willing to trust him fully.  Even when some began to learn about what was happening at the death camps or what the Einsatzgruppen (mobile killing squads) were doing on the Eastern Front they told themselves that the Führer was doing what he had to do to protect the German people.  Or, at the least, they blamed these atrocities on excesses of the SS and not their beloved Fuehrer.  Or simply chose not to believe these reports.

The Nazis created an employment boom coming off of the Great Depression.  With massive public works projects.  And an aggressive rearmament program to prepare for World War II.   The war economy made industry hum.  Paid for with funds confiscated from enemies of the state.  And through massive monetary expansion.  That is, they printed a lot of money.  Causing a lot of price inflation which raised the cost of living for the working German.  Businesses were buried in red tape.  The Nazi state controlled everything.  Including the private sector.  Complying with Nazi regulations took up about half of all communications for those in business.  As one task could require up to 40 forms.  Probably in triplicate.  The Nazis shut down small businesses and small corporations.  Wanting to deal only with big industry.  So they could better control the businesses.  And the workers.  Business people once warmly supported Hitler during the ascent of his power only to discover later that Hitler was ruining German industry.  Making them to regret their previous support.  As did the workers.  Who enthusiastically supported a party that had the word ‘workers’ in it.  Only to see higher prices.  Lower wages.  Longer hours.  No collective bargaining.  No right to strike.  High income taxes.  Compulsory contributions for sickness, unemployment and disability insurance.  Union dues (for a union that represented the state, not the worker).  As time passed they even lost the ability to quit their job.  Or change jobs.  Being forever chained to the job the state chose for them.  Which worked well to maximize industrial output.  And to prepare for war.

After 9/11 George W. Bush kept America Safe from another al Qaeda Attack while he was in Office

America’s problem with radical Islam probably dates back to the Iranian Hostage Crisis (1979).  Then came the United States Embassy Bombing (1983) in Beirut.  And then the Beirut Barracks Bombing (1983) that killed 241 Americans.  Who were there in a peace-keeping mission during the Lebanese Civil War.  To be neutral referees between the warring Muslim and Christian sides.  Where the Muslims felt that although the Americans claimed neutrality in the conflict they leaned Christian.  Hence the bombing of the Barracks.  There was no real American retaliation for the attack.  As they weren’t certain who was responsible.  With other threats to American forces President Reagan eventually abandoned the mission and pulled out US forces.  One person took great interest in this American response to terror.  Osama bin Laden.  Who learned the following lesson.  When Americans suffer casualties they quit.

Islamist attacks (and plans for attacks) against American targets increased during the Nineties.  Perhaps the most shocking being the 1993 World Trade Center Bombing.  An attempt to topple the Twin Towers that failed.  Then came the New York City Landmark Bomb Plot (1993).  The Khobar Towers Bombing (1996).  The United States Embassy Bombings (1998).  The Millennium Attack Plots (2000).  The USS Cole Bombing (2000).  Then 9/11.  An attempt to topple the Twin Towers that succeeded.  Until 9/11 we treated all of these events as criminal offences.  Not acts of war.  We talked about bringing these people to justice.  In a court of law.  Despite bin Laden having declared war against the United States back in 1996.  Well, after 9/11 George W. Bush declared war against Osama bin Laden.  And his terrorist organization.  Al Qaeda.

Bush attacked bin Laden’s safe haven in Afghanistan.  Chasing him underground.  Bush invaded Iraq.  In part to pressure Saudi Arabia to crack down on the Wahhabi in their kingdom financing al Qaeda as the Saudis feared Iran filling any power void in Iraq.  Which made American success in Iraq important to the Saudis.  (The Wahhabi hated the Saudi Royal family as much as they hated America.  While the Saudis had to tread lightly around the Wahhabi lest they provoke a civil war in the kingdom).  It worked.  Bush captured Islamist terrorists and sent them to a detention center at the US Naval facility at Guantanamo Bay, Cuba.  Interrogating them for intelligence.  As enemy combatants.  Not as people with American Constitutional protections.  Which helped to thwart future terrorist plots.  Causing the Islamist world to hate George W. Bush with a passion.  But he kept America safe from another al Qaeda attack while he was in office.

If Adolf Hitler and Osama bin Laden were Alive Today they would likely Endorse Barack Obama and Joe Biden

Things changed under President Obama.  Who also hated George W. Bush.  Blaming him for the Muslim hatred against America.  So he tried to offer a softer, friendly face to the Muslim world.  He stopped using the term ‘War on Terror’.  He wanted to try some 9/11 terrorists in the civilian court system in New York City.  Instead of by military tribunal.  He said the US would no longer torture people.  And promised to close the detention center at Guantanamo Bay.  When a radical Muslim in the US Army killed fellow soldiers on an Army base because of America’s ‘crimes against Islam’ the president called that workplace violence.  Not terrorism.  A lot of these things the Islamists liked.  But President Obama also killed indiscriminately with unmanned drones.  Anyone killed that wasn’t on the kill-list was deemed an enemy combatant.  So collateral damage of innocents was greatly reduced.  By simply calling everyone killed an enemy combatant.  And by killing all terrorist and terrorist-adjacent people there were no prisoners to house.  But there was also no intelligence to gather.  Which had its drawbacks.

Years of interrogations and intelligence gathering eventually located Osama bin Laden in Pakistan.  When advised President Obama gave the ‘go’ order to kill him.  So in one day the president killed bin Laden.  Defeated al Qaeda.  And ended the War on Terror.  Something the president likes to say over and over again.  A never ending spiking of the football.  This relentless bragging and the unmanned drone attacks inflamed the Islamist world.  Providing a great recruiting tool for al Qaeda.  Possibly being the impetus for the attacks on the American embassy in Benghazi.  Which was left poorly protected.  Even after the American ambassador requested additional protection.  Especially around the anniversary of 9/11.  But someone in the Obama administration denied the request because President Obama had killed Osama bin Laden.  And defeated al Qaeda.  And having to beef up security in Benghazi would have gone against that narrative.  So they didn’t.

So if Adolf Hitler and Osama bin Laden were alive today who would they endorse in the 2012 election?  Well, Hitler would have liked the Democrat attacks on rich people.  Seeing that as good scapegoating.  He would be impressed by the cult of personality around President Obama.  Though it wasn’t as good as his.  He would like the attack on capitalists and the massive government interference into the private sector.  And the high income taxes and regulations.  As well as those public works projects.  Those roads and bridges.  No doubt Hitler would have liked a lot of what he saw in the Obama administration.  Though, perhaps, he would be confused as the ultimate purpose of this massive power grab.  And Osama bin Laden?  Well, he hated George W. Bush.  President Obama may have killed him but it was all that War on Terror stuff that brought the Americans to him in Pakistan.  He would prefer the Obama light touch over the Bush hammer.  And he’d probably prefer his people getting killed by drones instead of being captured and pumped for information.  Like the guy that gave up a name that eventually led the SEALs to his hiding place.  And he would just love the opportunity to speak in a US court.  Something that just wouldn’t have happened under Bush.  Finally he would have liked the naïveté and arrogance of President Obama.  Which would have given him a target-rich environment.  Like Benghazi.  If Adolf Hitler and Osama bin Laden were alive today they would likely endorse the Democrat candidates Barack Obama and Joe Biden.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Federal Reserve, Roaring Twenties, Stock Market Crash, Banking Crises, Great Depression and John Maynard Keynes

Posted by PITHOCRATES - September 25th, 2012

History 101

The Federal Reserve increased the Money Supply to Lower Interest Rates during the Roaring Twenties

Benjamin Franklin said, “Industry, perseverance, & frugality, make fortune yield.”  He said that because he believed that.  And he proved the validity of his maxim with a personal example.  His life.  He worked hard.  He never gave up.  And he was what some would say cheap.  He saved his money and spent it sparingly.  Because of these personally held beliefs Franklin was a successful businessman.  So successful that he became wealthy enough to retire and start a second life.  Renowned scientist.  Who gave us things like the Franklin stove and the lightning rod.  Then he entered his third life.  Statesman.  And America’s greatest diplomat.  He was the only Founder who signed the Declaration of Independence, Treaty of Amity and Commerce with France (bringing the French in on the American side during the Revolutionary War), Treaty of Paris (ending the Revolutionary War very favorably to the U.S.) and the U.S. Constitution.  Making the United States not only a possibility but a reality.  Three extraordinary lives lived by one extraordinary man.

Franklin was such a great success because of industry, perseverance and frugality.  A philosophy the Founding Fathers all shared.  A philosophy that had guided the United States for about 150 years until the Great Depression.  When FDR changed America.  By building on the work of Woodrow Wilson.  Men who expanded the role of the federal government.  Prior to this change America was well on its way to becoming the world’s number one economy.   By following Franklin-like policies.  Such as the virtue of thrift.  Favoring long-term savings over short-term consumption.  Free trade.  Balanced budgets.  Laissez-faire capitalism.  And the gold standard.  Which provided sound money.  And an international system of trade.  Until the Federal Reserve came along.

The Federal Reserve (the Fed) is America’s central bank.  In response to some financial crises Congress passed the Federal Reserve Act (1913) to make financial crises a thing of the past.  The Fed would end bank panics, bank runs and bank failures.  By being the lender of last resort.  While also tweaking monetary policy to maintain full employment and stable prices.  By increasing and decreasing the money supply.  Which, in turn, lowers and raises interest rates.  But most of the time the Fed increased the money supply to lower interest rates to encourage people and businesses to borrow money.  To buy things.  And to expand businesses and hire people.  Maintaining that full employment.  Which they did during the Roaring Twenties.  For awhile.

The Roaring Twenties would have gone on if Herbert Hoover had continued the Harding/Mellon/Coolidge Policies

The Great Depression started with the Stock Market Crash of 1929.  And to this date people still argue over the causes of the Great Depression.  Some blame capitalism.  These people are, of course, wrong.  Others blamed the expansionary policies of the Fed.  They are partially correct.  For artificially low interest rates during the Twenties would eventually have to be corrected with a recession.  But the recession did not have to turn into a depression.  The Great Depression and the banking crises are all the fault of the government.  Bad monetary and fiscal policies followed by bad governmental actions threw an economy in recession into depression.

A lot of people talk about stock market speculation in the Twenties running up stock prices.  Normally something that happens with cheap credit as people borrow and invest in speculative ventures.  Like the dot-com companies in the Nineties.  Where people poured money into these companies that never produced a product or a dime of revenue.  And when that investment capital ran out these companies went belly up causing the severe recession in the early 2000s.  That’s speculation on a grand scale.  This is not what happened during the Twenties.  When the world was changing.  And electrifying.  The United States was modernizing.  Electric utilities, electric motors, electric appliances, telephones, airplanes, radio, movies, etc.  So, yes, there were inflationary monetary policies in place.  But their effects were mitigated by this real economic activity.  And something else.

President Warren Harding nominated Andrew Mellon to be his treasury secretary.  Probably the second smartest person to ever hold that post.  The first being our first.  Alexander Hamilton.  Harding and Mellon were laissez-faire capitalists.  They cut tax rates and regulations.  Their administration was a government-hands-off administration.  And the economy responded with some of the greatest economic growth ever.  This is why they called the 1920s the Roaring Twenties.  Yes, there were inflationary monetary policies.  But the economic growth was so great that when you subtracted the inflationary damage from it there was still great economic growth.  The Roaring Twenties could have gone on indefinitely if Herbert Hoover had continued the Harding and Mellon policies (continued by Calvin Coolidge after Harding’s death).  There was even a rural electrification program under FDR’s New Deal.  But Herbert Hoover was a progressive.  Having far more in common with the Democrat Woodrow Wilson than Harding or Coolidge.  Even though Harding, Coolidge and Hoover were all Republicans.

Activist Intervention into Market Forces turned a Recession into the Great Depression

One of the things that happened in the Twenties was a huge jump in farming mechanization.  The tractor allowed fewer people to farm more land.  Producing a boom in agriculture.  Good for the people.  Because it brought the price of food down.  But bad for the farmers.  Especially those heavily in debt from mechanizing their farms.  And it was the farmers that Hoover wanted to help.  With an especially bad policy of introducing parity between farm goods and industrial goods.  And introduced policies to raise the cost of farm goods.  Which didn’t help.  Many farmers were unable to service their loans with the fall in prices.  When farmers began to default en masse banks in farming communities failed.  And the contagion spread to the city banks.  Setting the stage for a nation-wide banking crisis.  And the Great Depression.

One of the leading economists of the time was John Maynard Keynes.  He even came to the White House during the Great Depression to advise FDR.  Keynes rejected the Franklin/Harding/Mellon/Coolidge policies.  And the policies favored by the Austrian school of economics (the only people, by the way, who actually predicted the Great Depression).  Which were similar to the Franklin/Harding/Mellon/Coolidge policies.  The Austrians also said to let prices and wages fall.  To undo all of that inflationary damage.  Which would help cause a return to full employment.  Keynes disagreed.  For he didn’t believe in the virtue of thrift.  He wanted to abandon the gold standard completely and replace it with fiat money.  That they could expand more freely.  And he believed in demand-side solutions.  Meaning to end the Great Depression you needed higher wages not lower wages so workers had more money to spend.  And to have higher wages you needed higher prices.  So the employers could pay their workers these higher wages.  And he also encouraged continued deficit spending.  No matter the long-term costs.

Well, the Keynesians got their way.  And it was they who gave us the Great Depression.  For they influenced government policy.  The stock market crashed in part due to the Smoot Hawley Tariff then in committee.  But investors saw the tariffs coming and knew what that would mean.  An end to the economic boom.  So they sold their stocks before it became law.  Causing the Stock Market Crash of 1929.  Then those tariffs hit (an increase of some 50%).  Then they doubled income tax rates.  And Hoover even demanded that business leaders NOT cut wages.  All of this activist intervention into market forces just sucked the wind out of the economy.  Turning a recession into the Great Depression.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Canada doesn’t pay for Medications and Urges People to become Capitalists in Lieu of Welfare

Posted by PITHOCRATES - June 2nd, 2012

Week in Review

A lot of people think that Canada is this social utopia.  Where health care is all free.  And they put capitalism in its place.  But it’s not quite like that (see Microloans for mental-health patients rolling out across Ontario by Tavia Grant posted 6/1/2012 on The Globe and Mail).

There were times when Ed Middaugh had no home, no job and no money. He floated from couch to couch, in and out of hospitals during what he reluctantly calls “episodes,” unable to buy food because payments for medications consumed his whole monthly budget.

These days, Mr. Middaugh, 34, diagnosed with bipolar disorder at age 19, runs his own general contracting business, where he does home renos, stonework and landscaping. He’s bright, articulate, motivated – and steady, thanks to a better mix of meds.

He’s also the recipient of an $8,500 small-business loan that enabled him to buy a used pickup and power tools – something he never could have imagined landing from a traditional bank due to a sporadic work history.

So many Americans yearn for a Canadian-style national health care system.  Well, the health care may have been free but it appears the prescriptions weren’t.  Not when someone has to choose between food and medications.  Why, that’s the kind of thing they say about the evil private health care system in America.  All the while cursing the evil pharmaceuticals. 

Also, this social utopia that puts people before profits has a unique solution to help those who need help.  Helping them to become small business owners.  Instead of a lifetime on government support they make a single investment to help these people take care of themselves.  By becoming capitalists.  Something many Americans wouldn’t expect from Canada.  But something they can learn from their good neighbors to the north.

www.PITHOCRATES.com

Share

Tags: , , , , , ,

Marx, Engels, Communist Manifesto, Capitalists, Bourgeoisie, Proletariat, Private Property, Soviet Union, Iron Curtain and East Berlin

Posted by PITHOCRATES - May 1st, 2012

History 101

Nationalism, Socialism and Communism forced a more Fair, Just and Equitable Society onto the People

Karl Marx and Friedrich Engels published the Communist Manifesto in 1848.  Launching a war against capitalism.  And private property.  Intellectuals and those in academia loved this stuff.  And labor leaders.  Because it was a path to power.  Especially for those who could not create wealth.  Unlike the great wealth producers.  Like the industrialists.  The entrepreneurs.  Small business owners.  The productive middle class.  That is, the capitalists.  Who work hard and achieve success.  By using their talent and ability to create wealth.  Moving up the economic ladder.  Creating income inequality.  The ultimate sin of capitalism.  According to Marx and Engels.  Intellectuals.  Academia.  And labor leaders.

In the Communist Manifesto Marx and Engels single out the accumulation of private property as the source of all our problems.  The capitalists, the bourgeoisie, have an insatiable appetite for private property.  They just can’t get enough of it.  And therefore oppress their workers, the proletariat, to maximize their property.  By paying them less and less to maximize their profits.  So they can use those profits to buy more and more property.  Which keeps the proletariat in perpetual and abject poverty.  And concentrates all the wealth into the few hands of the bourgeoisie.  And the only way to correct this great inequity was through a worker’s revolution.  Where the proletariat rises up and takes the private property of the bourgeoisie and gives it to the state.  So it belongs to everyone.  Especially to those who did not create it.  A very popular idea among those mired in perpetual and abject poverty.  Who are easily swayed to support this more fair, just and equitable distribution of other people’s wealth.

These progressive views enthralled Europe.  Especially after the Industrial Revolution created some appalling conditions for workers.  And they took this opportunity to put them into practice.  It was the 19th century that gave us the ‘fair’ political systems of nationalism, socialism and communism.  That began the process of transferring wealth from the capitalists to the anti-capitalists.  Precipitating the economic decline of Europe.  Making America the new economic superpower.  Which still maintained the principles of free market capitalism throughout the 19th century.  Until the anti-capitalistic teachings of Marx and Engels took hold in the progressive government of Woodward Wilson.  Bringing back the federal income tax Abraham Lincoln used to pay for the Civil War.  But unlike Lincoln Wilson had no intention of repealing it.  The federal income tax was here to stay.  As progressives began building that more fair, just and equitable society.

The Soviet Union Depended on the West for Food because their Forced Collectivized Farms couldn’t Feed their People

But the equitable movement in America was not as intense as it was in Europe.  Or Russia.  Which was taking the teachings of Marx and Engels to their logical end.  They had a worker’s revolution.  They became communist.  And forced that more fair, just and equitable society on their people.  Whether they wanted it or not.  And those who objected they systematically killed.  Or exiled to a Siberian gulag.  For Joseph Stalin’s rise to power was brutal.  As was the Soviet Union.  Even making a deal with Adolf Hitler to split Poland after the Nazi-Soviet invasion of Poland that launched World War II.  Then Hitler double-crossed their Soviet ally and attacked the Soviet Union.  And the Nazis nearly overran them.  The Nazis were in Leningrad (present day St. Petersburg).  At the gates of Moscow.  And in Stalin’s city.  Stalingrad.  The Soviets were unable to resist the Nazi onslaught.  The only thing that saved them was material aid from the capitalist West.  The Soviet T-34 tank (the best in the war).  And, of course, the millions of Soviet people the Soviet generals could throw into the Nazi killing machine to wear the Nazis down.

No one suffered like the Soviet people did during World War II.  The US and the UK each lost about a half million people.  A terrible loss.  The Soviets, though, lost about 25 million people.  A number that just numbs the mind.  This was the second Russian invasion that had brought an enemy to the gates of Moscow.  The first were the French a century earlier under Napoleon.  There wasn’t going to be a third.  Wherever their armies were at the end of World War II they pretty much stayed.  Turning Eastern Europe into a communist bloc.  And to make the Soviet Union a mightier nation they embarked on a rapid industrialization program.  To make it a modern power like those great nations in the West.  But unlike them they were going to do it the ‘smart’ way.  With their command economy.  Where their brilliant state planners would marshal their resources and do what the free market economies did in the west.  Only instead of taking about a century their Industrial Revolution would take only 5 years.

With no industrialists, entrepreneurs, small business owners or a middle class it fell upon the state planners to industrialize the Soviet Union.  As well as feed the Soviet people.  Well, they industrialized the Soviet Union.  But never brought it up to par with the industrialized West.  Worse, they couldn’t feed their people.  Despite having some of the most fertile farmland in all of Europe in the Ukraine.  The Soviet Union depended on the West for food.  Because their forced collectivized farms didn’t work like Marx and Engels said they would.  And they didn’t work in China, either.  Where another brutal communist dictator, Mao Zedong, killed tens of millions of his people by starving them to death.  By forcing a more fair, just and equitable society onto the Chinese.

Time Froze behind the Iron Curtain and People Lived pretty much Forever in the 1940s

At the end of World War II, like at the end of World War I, no one wanted to think about war anymore.  Winston Churchill, though, did.  For he saw what the Soviet Union was doing.  And saw the spread of their communism as a threat to Western Civilization.  He gave a speech at Westminster College in Fulton, Missouri, in 1946.  And said, “From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe.”  There was now an Eastern Europe.  An East Germany.  And an East Berlin.  All behind the Iron Curtain.  All in the Soviet sphere.  All communist.  Where they all suffered under a more fair, just and equitable society.  Whether they wanted it or not.  And they clearly did not.  For the Soviets had to build a wall in Berlin to prevent those in East Berlin from escaping to West Berlin.

The intellectuals, academia and labor leaders loved Joseph Stalin and the Soviet Union.  They thought communism was the enlightened future.  Probably because they didn’t have to live in it.  But what is surprising is that a lot of college students have this affection with communism.  To this day they still wear t-shirts emblazed with the beret-wearing Che Guevara.   Who helped Fidel Castro bring that more fair, just and equitable society to the Cubans.  Who have been trying to escape it ever since by practically swimming to Florida and free market capitalism.  But the college students and their professors still yearn for a Soviet-style economy in the United States.  And condemn capitalism as they sit in coffee bars sipping their lattes.  Enjoying social media on their smartphones.  Wearing the latest fashions.  Enjoying the latest movies.  The newest music.  And dream of that more just society.  Where they redistribute wealth fairly and equitably.  And the rich pay their fair share.  Just like in East Berlin.  Where life was fair.  But it was nowhere as enjoyable as in the unfair West.

Time froze behind the Iron Curtain.  When West Berlin enjoyed the best Western Civilization had to offer in music, fashion, food, entertainment, etc., East Berlin didn’t.  For they were frozen in the 1940s.  Western music was decadent.  So instead of rock and pop music you listened to classical music.  Instead of the latest Hollywood movies you went to the ballet.  You didn’t watch Western television.  Read Western books.  Or newspapers.  No.  You only saw things approved by state censors.  And that were patriotic.  Why?  To prevent their people from seeing how much better life was on the other side of the Iron Curtain.  Where they enjoyed the latest and the best of everything.  Whereas inside the Iron Curtain you went to the black market for any real luxuries.  Like a pair of blue jeans.  Which they didn’t sell in East Berlin.  Because they were decadent.  Why, they wouldn’t even sell a t-shirt with a communist icon on it.  Because you just didn’t wear something like that in the 1940s.  But college kids will attack capitalism.  And support the fairness of socialism and communism.  Even though the things they enjoy come from free market capitalism.  And are simply not available in the communist command economy.  Because the accumulation of private property is the greatest sin of capitalism.  And not allowed under communism.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Carnegie, Rockefeller, Morgan, Interstate Commerce Act, Sherman Antitrust Act, Sherman Silver Purchase Act, Federal Reserve, Nixon and Reagan

Posted by PITHOCRATES - January 31st, 2012

History 101

Government Induced Inflation caused the Panic of 1893 and caused the Worst Depression until the Great Depression

Britain kicked off the Industrial Revolution.  Then handed off the baton to the United States in the latter half of the 19th century.  As American industry roared.  Great industrialists modernize America.  And the world.  Andrew Carnegie made steel inexpensive and plentiful.  He built railroad track and bridges.  And the steel-skeleton buildings of U.S. cities.  Including the skyscrapers.  John D. Rockefeller saved the whales.  By producing less expensive kerosene to burn in lamps instead of the more expensive whale oil.  He refined oil and brought it to market cheaper and more efficiently than anyone else.  Fueling industrial activity and expansion.  J.P. Morgan developed and financed railroads.  Made them more efficient.  Profitable.  And moved goods and people more efficiently than ever before.  Raising the standard of living to heights never seen before. 

The industrial economy was surging along.  And all of this without a central bank.  Credit was available.  So much so that it unleashed unprecedented economic growth.  That would have kept on going had government not stopped it.  With the Interstate Commerce Act in 1887 and the Sherman Antitrust Act of 1890.  Used by competitors who could not compete against the economy of scales of Carnegie, Rockefeller and Morgan and sell at their low prices.  So they used their friends in government to raise prices so they didn’t have to be as competitive and efficient as Carnegie, Rockefeller and Morgan.  This legislation restrained the great industrialists.  Which began the era of complying with great regulatory compliance costs.  And expending great effort to get around those great regulatory compliance costs.

Also during the late 19th century there was a silver boom.  This dumped so much silver on the market that miners soon were spending more in mining it than they were selling it for.  Also, farmers were using the latest in technology to mechanize their farms.  They put more land under cultivation and increased farm yields.  So much so that prices fell.  They fell so far that farmers were struggling to pay their debts.  So the silver miners used their friends in government to solve the problems of both miners and farmers.  The government passed the Sherman Silver Purchase Act which increased the amount of silver the government purchased.  Issuing new treasury notes.  Redeemable in both gold and silver.  The idea was to create inflation to raise prices and help those farmers.  By allowing them to repay old debt easier with a depreciated currency.  And how did that work?  Investors took those new bank notes and exchanged them for gold.  And caused a run on U.S. gold reserves that nearly destroyed the banking system.  Plunging the nation in crisis.  The Panic of 1893.  The worst depression until the Great Depression.

Richard Nixon Decoupled the Dollar from Gold and the Keynesians Cheered 

J.P. Morgan stepped in and loaned the government gold to stabilize the banking system.  He would do it again in the Panic of 1907.  The great industrialists created unprecedented economic activity during the latter half of the 19th century.  Only to see poor government policies bring on the worst depression until the Great Depression.  A crisis one of the great industrialists, J.P. Morgan, rescued the country from.  But great capitalists like Morgan wouldn’t always be there to save the country.  Especially the way new legislation was attacking them.  So the U.S. created a central bank.  The Federal Reserve System.  Which was in place and ready to respond to the banking crisis following the stock market crash of 1929.  And did such a horrible job that they gave us the worst depression since the Panic of 1893.  The Great Depression.  Where we saw the greatest bank failures in U.S. history.  Failures the Federal Reserve was specifically set up to prevent.

The 1930s was a lost decade thanks to even more bad government policy.  FDR’s New Deal programs did nothing to end the Great Depression.  Only capitalism did.  And a new bunch of great industrialists.  Who were allowed to tool up and make their factories hum again.  Without having to deal with costly regulatory compliance.  Thanks to Adolf Hitler.  And the war he started.  World War II.  The urgency of the times repealed governmental nonsense.  And the industrialists responded.  Building the planes, tanks and trucks that defeated Hitler.  The Arsenal of Democracy.  And following the war with the world’s industrial centers devastated by war, these industrialists rebuilt the devastated countries.  The fifties boomed thanks to a booming export economy.  But it wouldn’t last.  Eventually those war-torn countries rebuilt themselves.  And LBJ would become president.

The Sixties saw a surge in government spending.  The U.S. space program was trying to put a man on the moon.  The Vietnam War escalated.  And LBJ introduced us to massive new government spending.  The Great Society.  The war to end poverty.  And racial injustice.  It failed.  At least, based on ever more federal spending and legislation to end poverty and racial injustice.  But that government spending was good.  At least the Keynesians thought so.  Richard Nixon, too.  Because he was inflating the currency to keep that spending going.  But the U.S. dollar was pegged to gold.  And this devaluation of the dollar was causing another run on U.S. gold reserves.  But Nixon responded like a true Keynesian.  And broke free from the shackles of gold.  By decoupling the dollar from gold.  And the Keynesians cheered.  Because the government could now use the full power of monetary policy to make recessions and unemployment a thing of the past.

Activist, Interventionist Government have brought Great Economic Booms to Collapse 

The Seventies was a decade of pure Keynesian economics.  It was also the decade that gave us double digit interest rates.  And double digit inflation rates.  It was the decade that gave us the misery index (the inflation rate plus the unemployment rate).  And stagflation.  The combination of a high inflation rate you normally only saw in boom times coupled with a high unemployment rate you only saw during recessionary times.  Something that just doesn’t happen.  But it did.  Thanks to Keynesian economics.  And bad monetary policy.

Ronald Reagan was no Keynesian.  He was an Austrian school supply-sider.  He and his treasury secretary, Paul Volcker, attacked inflation.  The hard way.  The only way.  Through a painful recession.  They stopped depreciating the dollar.  And after killing the inflation monster they lowered interest rates.  Cut tax rates.  And made the business climate business-friendly.  Capitalists took notice.  New entrepreneurs rose.  Innovated.  Created new technologies.  The Eighties was the decade of Silicon Valley.  And the electronics boom.  Powering new computers.  Electronic devices.  And software.  Businesses computerized and became more efficient.  Machine tools became computer-controlled.  The economy went high-tech.  Efficient.  And cool.  Music videos, CD players, VCRs, cable TV, satellite TV, cell phones, etc.  It was a brave new world.  Driven by technology.  And a business-friendly environment.  Where risk takers took risks.  And created great things.

History has shown that capitalists bring great things to market when government doesn’t get in the way.  With their punishing fiscal policies.  And inept monetary policies.  Activist, interventionist government have brought great economic booms to collapse.  Who meddle and turn robust economic activity into recessions.  And recessions into depressions.  The central bank being one of their greatest tools of destruction.  Because policy is too often driven by Big Government idealism.  And not the proven track record of capitalism.  As proven by the great industrialists.  And high-tech entrepreneurs.  Time and time again.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

China adopts Keynesian Policies and Wastes Capital on a lot of Hayekian Malinvestments

Posted by PITHOCRATES - January 22nd, 2012

Week in Review

Keynesians love Big Government.  And state capitalism.  Where the state actively intervenes in the private sector.  So you know the Keynesians love China.  As the Chinese leadership loves Keynes (see Keynes v Hayek in China posted 11/17/2011 on The Economist).

The present leadership of the Chinese Communist Party, Hu Jintao and Wen Jiabao, have embraced Keynesian prescriptions with great determination. In response to the financial crisis of 2008 they approved an audacious stimulus package, unbalancing the government’s books and spurring the country’s banks to lend. That helped defend their peculiar brand of capitalism from a crushing slowdown…

Whereas Keynes worried about inadequate investment—too little entrepreneurial spending to keep everyone gainfully employed—Hayek worried about bad investment. If credit were too easy, he argued, entrepreneurs would embark on overambitious projects that take too long to reach fruition and make insupportable claims on society’s resources.

It is not hard to find overambitious projects in China: think of the country’s “ghost cities”, such as Ordos in Inner Mongolia, which is being built by government fiat long before people are ready to live in it…

Spurred on by the government, China’s banks increased their lending by almost 9.6 trillion yuan ($1.5 trillion) in 2009. That is roughly twice the size of the Indian banking system, as Bank Credit Analyst, a research company, has pointed out. In other words, China’s lenders added two Indias to their loanbooks in the space of a year…

China’s authorities now admit what was always obvious: many of these projects will fail to raise enough revenue to repay their creditors. Defaults have already surfaced in Yunnan province and elsewhere. Some of these projects will be abandoned halfway. They are what Hayek would call “malinvestments”, investments in capacity that no one is willing to pay for or wait for.

It is clear that China’s Keynesian policies have produced exactly what Hayek said they would.  A whole bunch of malinvestments.  A great misallocation of productive capital.  Building things that no one wants.  Such as empty apartment buildings in ‘ghost’ cities.  Capitalists could have used that capital to build who knows what.  But we’ll never know.  Because the free market didn’t allocate that capital to where capitalists would have used it to produce things people wanted.  Pretty much anything but empty apartment buildings in ‘ghost’ cities.

If those empty apartment buildings have to demolished a Keynesian would be okay with that.  Because those demolition crews would be paid.  And they would then take those wages and buy stuff.  Thus generating more economic activity.  Just as a Keynesian would be okay with you buying 4 identical flat-screen televisions only to throw 3 away.  Because the purchase of 4 flat-screens generates more economic activity than the purchase of only one.  So if you’re a fan of Keynesian economics and state capitalism you can do your part.  Whenever you buy anything by an extra 3 so you can throw them away.  And see how Keynesian economics makes you, the capital provider, feel.

I’m guessing it may convert you from a Keynesian to a Hayekian.  When you learn how terrible it is to waste good capital, a.k.a. your paycheck.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , ,

Communism, Karl Marx, Marxism, Surplus Labor and the Labor theory of Value

Posted by PITHOCRATES - December 13th, 2011

History 101

Some would call Putting Profits before People Heaven if they had Lived in the Caring Hell of Communism

No ideology killed more people than communism.  In total numbers.  Such as Joseph Stalin in the Soviet Union.  Or Mao Tse-tung in the People’s Republic of China.  Or as a percentage of population.  Where Pol Pot’s Cambodian genocide holds this honor alone.  These communist leaders killed their people directly for political purposes.  Or starved them to death because of agrarian reforms that produced famines.  All in the name of freeing their people from the horrors of capitalism.

Heaven and hell.  That’s how a defector who escaped communism and made it to capitalism would describe what it’s like to live under each system.  Capitalism would be heaven.  And communism would be hell.  The problem with communism was that it didn’t work.  Economically.  People lived in want of the basic staples of life.  And often went hungry.  When they didn’t starve to death by yet another famine.  And if they complained or spoke out against the system they risked torture.  Or they simply just disappeared.  Banished to a work camp.  A reeducation camp.  Or killed.  So it’s no surprise that people trapped in these countries tried to escape.  Which is why communist states were oppressive police states.  To prevent people from escaping their horrible lives.

And yet to this day some people still hold up communism as the ideal socioeconomic system.  The one that cares about the people.  The one that puts people before profits.  Unlike capitalism.  Which puts profits before people.  Of course some would call putting profits before people heaven.  Especially if they had lived in the caring hell of communism.

Communism as an Economic System is an Utter and Abject Failure

Those who champion communism don’t blame the ideology.  They say it’s the people.  The few who use the ideology for personal gain.  And by few they mean basically everyone.  But if everyone is doing it it’s not the people.  It’s the ideology.  And it goes back to its utter and abject failure as an economic system.

Communism goes back to Karl Marx.  The guy that coauthored the Communist Manifesto in 1848.  And from which we get the terms Marxism.  And Marxist.  To describe varying forms of communism.  And communists.  He’s the guy who said that capitalism exploited the working man.  Those with money (capital) who owned factories, the industrial bourgeoisie, charged more for their goods than they paid their workers to make those goods.  Because Marx believed the value of any good was the labor that made it (the labor theory of value), this excess value (profit) was a labor surplus.  And belonged to the worker.  So he encouraged class conflict.  For the proletariat (the working class) to rise up and take over the means of production from those who owned it.  These middle class capitalists.  The industrial bourgeoisie.  And establish a dictatorship of the proletariat.  So the bourgeois capitalist pig-dogs couldn’t exploit the proletariat any more.  And everyone would then live happily ever after.

But no one ever did.  Like in capitalism.  Where happiness abounds.  Because, in capitalism, the market determines prices.  Not some bureaucrat counting up labor inputs through the manufacturing process.  From the mining of resources.  To the final assembly.  Which can make things very expensive.  And, worse, unwanted by the people.  Because when the market sets the price and assigns value, the market tells people what to make.  Normally when something is a hot seller it tells manufacturers to make more of it.  To cash in on those high prices.  So they do.  And people tend to buy this surge in products.  But when the market isn’t setting the price and assigning value, the market can’t tell people what to make.  So a bureaucrat must.  Which is what happens in communism.  Bureaucrats decide everything.  From what to make.  To the allocation of resources.  To the selling price.  And the things they decide to make are rarely what the people want.  Explaining why stores in communist countries were full of stuff no one wanted to buy.  And why people had to stand hours in line to get the things they did.  Or paid more on the black market.  Which is why communism as an economic system is an utter and abject failure.  And why people wanted to escape it.  Their only obstacle being that brutal and oppressive police state.  Which was necessary because if everyone left that wanted to the communist leaders wouldn’t have anyone to provide for them.

There are no Such Things as Market Failures under Capitalism

Communism was one of the worst man-made tragedies to ever befall man.  Karl Marx was wrong.  And his asinine theories killed tens of millions of people.  People enjoy life and prosper under capitalism.  Under communism they set records for genocide.  Why?  Because the communist economic model is an utter and abject failure.

The struggle between communism and capitalism was an economic one.  And pitted the market against bureaucrats who thought they were smarter than the market.  But it turned out they weren’t.  Not by a long shot.  And despite this history people are constantly talking about market failures and the evils of capitalism.  Much like Joseph Stalin, Mao Tse-tung and Pol Pot.  But for them it was never about the economics.  It was about the power.  Much like it is today.  Because there are no such things as market failures under capitalism.  It’s the bureaucrats who fail.  Not the markets.  At least, based on all recorded history.

Markets fail only when they aren’t free.  They fail when bureaucrats insert themselves into the economic process.  Via regulatory policy.  Or high taxes.  When they try to shape market forces to a political end.  And when they do it is capitalism no more.  It’s crony capitalism.  Or worse.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Republican (rĭ-pŭb’lĭ-kən), n., One who belongs to the Republican Party, the more conservative of the two major political parties in the United States.

Posted by PITHOCRATES - November 10th, 2011

Politics 101

Republicans can Trace their Lineage back to Abraham Lincoln, Edmund Burke, Adam Smith and John Locke

The Republican Party was born in the 19th century.  As the anti-slavery party.  Their motto was “free labor, free land, free men.”  They opposed concentrated wealth (i.e., land) in the hands of an aristocracy such as the planter elite in the South.  And the slavery that made that system work.  They were the party of the middle class.  Independent artisans.  Small farmers.  Entrepreneurs.  And businessmen.  In other words, free market capitalists.  To a point, at least.  They wanted to industrialize America.  But they wanted to protect these emerging industries with import tariffs.  And they wanted to pay for this industrialization with public money.  Neither of which is very capitalistic.

Republicans can trace their lineage back to the Whig Party.  Abraham Lincoln, our first Republican president, was a former Whig.  Whig political philosophy goes back to Great Britain.  Which built on the philosophy of some of the greats.  Edmund Burke.  Adam Smith.  And John Locke.  To name a few.  The Whigs formed the opposition to absolute monarchial rule.  Supporting constitutional monarchy.  With ultimate power lying in Parliament.  Not the Crown.  Or with the landed aristocracy allied to the Crown.  Which greatly influenced the American Founding Fathers.  Putting them on the path to independence from the Crown.

The Whigs supported the manufacturers and the merchants.  The thriving and prosperous middle class.  And the wealthy.  Which all threatened the power of the Crown.  Because it made the Crown less important.  The privileged class owed their privilege to the king.  The industrialists and merchants did not.  Their wealth was self-made.  And they further threatened the Crown by supporting free trade, the abolition of slavery and expanding the vote to more people.  Which gave people more individual liberty.  A say in their government.  And allowed them to be whatever they wanted to be.  Even wealthy.  If they worked hard to become wealthy.

The Republican Party is the Party of Conservatism in the U.S. but not all Republicans are Conservatives

The modern Republican Party shares much of the same philosophy.  They abolished slavery in the U.S.  Even deployed the Union Army to the South to protect the freed slaves during Reconstruction.  And went on later to fight Jim Crowe laws and the segregationist policies of the Southern Democrats.  Being instrumental in passing much civil rights legislation over Democrat opposition.

They believe in limited government.  And capitalism.  But they’re opposed to tariffs these days.  And favor true free trade.  As well as lower taxes.  Fewer regulations.  Less government spending.  And sound money.  They disapprove of loose monetary policy.  Playing with interest rates and/or printing money.  For an activist, tax and spend government.  Where the government picks winners and losers.  Instead they prefer that government stays out of things economic.  And let the private sector pick winners and losers.    Because the private sector has a record of success.  And government does not.

But some in the party have drifted from their philosophical roots.  Corrupted by power.  Enjoying the privilege of being part of the ruling elite.  They have earned the moniker RINO (Republican In Name Only).  And even though the Republican Party is the party of conservatism in the U.S., not all Republicans are conservatives.  There are a lot of moderates.  And a few downright liberals.  The heretofore mentioned RINOs.

Ronald Reagan got Social Moderates and Even Democrats to vote Republican

There is a schism in the modern Republican Party.  Between God and economics.  You probably have heard someone say that they are a fiscal conservative.  But they’re a social moderate.  This is someone turned off by the God stuff.

Christians tend to be conservative and vote Republican.  Those who aren’t so devout religiously and/or want to keep abortion legal have difficulty voting Republican.  Because of the God stuff.  Which explains why liberals often win elections over conservatives even though they’re outnumbered nearly 2 to 1.  Because the social issues win out over the fiscal issues and these fiscal conservatives vote Democrat.

At least during good economic times.  But when the economy is not doing well their fiscal side wins out.  Especially when you have a great presidential candidate.  Like Ronald Reagan.  Who not only got social moderates to vote Republican.  He even got Democrats to vote Republican.  So remarkable a phenomenon that we call them Reagan Democrats.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , ,

« Previous Entries