Marx, Lenin, Trotsky, Stalin and the Soviet Union

Posted by PITHOCRATES - February 18th, 2014

History 101

Marx called for a Dictatorship of the Proletariat where the Workers controlled the Means of Production

Karl Marx did not like capitalism.  Or middle class people that used money to make money.  The bourgeoisie.  Who exploit the working man.  The proletariat.  The bourgeoisie used their capital to exploit the labor of the working man (i.e., taking a risk and investing in land, factories, machinery, labor, etc.) to make money.  While the working man slaved away at slave wages creating all the great things we have in the world.  Of course, the proletariat could not do any of this unless others took risks and invested in land, factories, machinery, labor, etc.

This was just not fair to Karl Marx.  Because the industrial bourgeoisie had all the power.  And their exploitation of the proletariat was nothing more than a dictatorship of the bourgeoisie.  So Marx created a socio-economic philosophy to address this dictatorship.  Marxism.  And called for a social transformation.  For working men everywhere to unite.  And break the chains that bound them in the dictatorship of the bourgeoisie.  Calling for a dictatorship of the proletariat.  For the workers to control the means of production.  In a new system that replaced capitalism.  Socialism.  Until they could usher in the true ideal.  Communism.

In capitalism the bourgeoisie get rich creating neat things people discover and want to buy.  In communism there would be no bourgeoisie using the means of production to make a buck.  Instead, wise and selfless people would determine what was best for the people.  Instead of free markets allocating scarce resources economic planners would.  And they’d do it better.  Because they are selfless.  Creating large surpluses that would go not into some rich capitalist’s bank account.  But they would fairly distribute this surplus among the working class.  So society as a whole would be better off.  Sounds great.  But if the market didn’t make the decisions of what to produce who did?  As it turned out for Marxism that was a very difficult question to answer.

Leon Trotsky was a Like-Minded Marxist and the number two Communist behind Lenin

The Russian people were growing tired of World War I.  And Tsar Nicholas.  In fact they had it with the Russian Empire.  Even before World War I.  Although serfdom was abolished in 1861 the lives of peasants didn’t improve much.  There was still famine.  And the serfs had to pay a lot to their former landlords for their freedom.  So there was revolutionary fervor in the air.  And a few peasant uprisings.  As well as a few revolutionaries.  Such as Vladimir Ilyich Lenin.  Who was a Marxist.  His anti-Tsarist political activity got him arrested and exiled a few times.  In fact, during World War I he was living in exile in Switzerland.  Hoping that the Germans would weaken Tsarist Russia enough to kick off a socialist revolution in Russia.

When revolution did break out Lenin was anxious to return to Russia.  But being in Switzerland posed a problem.  It was surrounded by warring countries.  Lucky for him, though, the Germans were anxious to close the eastern front of the war.  And a little revolution in Russia could do just that.  So they transported Lenin through Germany and helped him return to Russia.  They travelled north.  Took a ferry to Sweden.  Then by train to Petrograd.  Formally Saint Petersburg (Peter the Great’s new capital on the Baltic Sea).  Which was later renamed Leningrad.  And then later renamed Saint Petersburg.  Where he would lead the Bolshevik Party.  And the world-wide socialist revolution against capitalism.

Leon Trotsky was a like-minded Marxist.  And an anti-militarist.  He had a falling out with Lenin but eventually reunited.  With Trotsky becoming the number two communist behind Lenin.  Trotsky addressed a problem with Marxism for Russia.  Socialism was to be the final step AFTER capitalism.  Once there was a strong industrial proletariat.  Russia didn’t have that.  For it was one of the least advanced countries in the world.  An agrarian nation barely out of the Middle Ages.  So Russia had to industrialize WHILE the proletariat took over the means of production.  Which brought up a big problem.  How could a backward nation industrialize while having a revolution?  How could they do this without other advanced capitalistic countries coming to the aid of the bourgeoisie?  Which Trotsky answered with his Permanent Revolution.  For the Russian socialist revolution to be successful there had to be socialist revolutions in other countries, too.  Thinking more in terms of a worldwide revolution of industrialized states.  And not just in Russia.  Something another Marxist disagreed with.  Joseph Stalin

Communist States have Guards on their Borders to prevent People from Escaping their Socialist Utopia

During these revolutionary times workers’ councils were appearing throughout the country.  Soviets.  Which helped stir up the revolutionary fervor.  In 1917 the imperial government fell.  The Bolsheviks killed the Tsar and his family.  And Russia fell into civil war.  Which the Bolsheviks won in 1922.  And formed the Soviet Union.  Or the Union of Soviet Socialist Republics (USSR).  That stretched from Eastern Europe to the Pacific Ocean.  Under the rule of Vladimir Ilyich Lenin.  Until he died in 1924.  Then Joseph Stalin took over after a brutal power struggle.  Even exiled Leon Trotsky.  And established totalitarian rule.  Stalin created a planned economy.  Rapid industrialization.  And collectivization.  As well as famines, forced labor, deportation and great purges of his political enemies.  To strengthen his one-party rule.  To protect the socialist revolution from a return of capitalism.

The Russian Revolution was the only successful socialist revolution in Europe.  The dictatorship of the proletariat did not happen as Lenin and Trotsky had envisioned.  So Stalin abandoned the idea of Permanent Revolution.  And adopted Socialism in One Country instead.  To strengthen the Soviet Union.  And not support a world-wide socialist revolution against capitalism.  In direct opposition of Trotsky.  To aid in the USSR’s industrialization Stalin made a pact with the devil.  Adolf Hitler.  And entered an economic agreement that would allow Hitler to build and test his war machine on Soviet soil that he would use in World War II.  Then came the Treaty of Non-aggression between Germany and the Union of Soviet Socialist Republics.  And the secret protocol.  Where Nazi Germany and the Soviet Union agreed to conquer and divvy up the countries located between them.

Trotsky did not like what the Soviet Union became under Stalin.  An oppressive dictatorship of Joseph Stalin.  Not the dictatorship of the proletariat envisioned by Karl Marx.  And he didn’t like that pact with a militarist Nazi Germany.  He predicted that Stalin’s USSR would not last.  Either suffering a political revolution like Tsar Nicholas suffered.  Or it would collapse into a capitalist state.  Stalin disagreed.  And killed him and his family.  Getting rid of the last of the old Bolsheviks.  Leaving him to rule uncontested until his death in 1953.  Exporting communism wherever he could.  Where it killed more people than any other ideology.  Until the great and brutal socialism experiment collapsed in 1991.  For Trotsky was right.  It could not survive when a better life was just across a border.  Which is why all of the communist states have guards on their borders.  To keep their people from escaping their socialist utopia.

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Hugo Chávez’ Socialism made Venezuela a more Violent and Dangerous Place

Posted by PITHOCRATES - December 28th, 2013

Week in Review

The Democrats have a mission.  To reduce the income disparity between rich and poor.  To reduce the rate of violent crime.  For the only reason people ever hurt one another is because they are wanting for the basic necessities in life.  And they sometimes take them forcibly from those who have them.  But if there is no income disparity there is no rich and poor.  So no one would ever hurt anyone.

Which is why Democrats work so hard to reduce the income disparity between rich and poor.  Their tool?  Income redistribution.  From those according to ability.  To those according to need.  Like Karl Marx wanted to do.  But socialism never really caught on in the United States.  As most Americans see the abject failure it has been.  But this hasn’t stopped other nations from experimenting with it.  In 1999 Hugo Chávez became president of Venezuela.  And he proceeded to make Venezuela socialist.  Here are some highlights of his work pulled from Wikipedia:

Following Chavismo, his own political ideology of Bolivarianism and Socialism of the 21st Century, he focused on implementing socialist reforms in the country as a part of a social project known as the Bolivarian Revolution. He implemented the 1999 Venezuelan Constitution, participatory democratic councils, the nationalization of several key industries, and increased government funding of health care and education and made significant reductions in poverty with oil revenues.[1][2] The Bolivarian Missions have entailed the construction of thousands of free medical clinics for the poor,[3] the institution of educational campaigns that have reportedly made more than one million adult Venezuelans literate,[4] and the enactment of food[5] and housing subsidies…[6]

Closely aligning himself with the communist governments of Fidel and then Raúl Castro in Cuba and the socialist governments of Evo Morales in Bolivia, Rafael Correa in Ecuador, and Daniel Ortega in Nicaragua, his presidency was seen as a part of the socialist “pink tide” sweeping Latin America. Along with these governments, Chávez described his policies as anti-imperialist, being a prominent adversary of the United States’s foreign policy as well as a vocal critic of US-supported neoliberalism and laissez-faire capitalism.[8] He supported Latin American and Caribbean cooperation and was instrumental in setting up the pan-regional Union of South American Nations, the Bolivarian Alliance for the Americas, the Bank of the South, and the regional television network TeleSur. Chávez was a highly controversial and divisive figure both at home and abroad. On occasion he used undiplomatic language towards other world leaders, having compared US president George W. Bush to a donkey[9] and the devil.[10]

Hugo Chávez created a socialist paradise in Venezuela.  One that would have pleased the father of socialism.  Karl Marx.  Chávez destroyed the income disparity between rich and poor.  Making the people happy.  Where they linked their arms together and sang Kumbaya.  Like the hippies in America did as they lived in their socialist/communist communes.  So you think the people would be living together in a brotherhood of man.  Like John Lennon sang about in his song Imagine.  No possessions.  No greed or hunger.  Just everyone living as one.  So how is that socialist paradise?  Well, the people aren’t living as one in a brotherhood of man (see Venezuela’s Homicide Rate Rises, NGO’s Report Says by the AP posted on ABC News).

A non-governmental group that tracks violent crime in Venezuela says the country’s homicide rate has risen again in 2013 and has quadrupled over the past 15 years.

The Venezuelan Violence Observatory estimates that 24,763 killings occurred this year, pushing up the homicide rate to 79 per 100,000 inhabitants. It was 73 per 100,000 people in 2012. In 1998, the rate was 19.

The more Chávez made Venezuela socialist the more violent crime there was.  That’s not what’s supposed to happen according to the Democrats.  It’s supposed to create a brotherhood of man.  Like John Lennon sang about.  Not make more people kill each other.  Apparently not only was Karl Marx wrong.  But the Democrats are wrong, too.  Imagine that.

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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.

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Labor Theory of Value and Prices

Posted by PITHOCRATES - May 13th, 2013

Economics 101

“Do you know how many men you and that machine are putting out of a job?”

Ditch digging is back-breaking work.  Often under a blistering sun.  Where laborers swing picks into the hard soil.  Breaking the compacted soil and rock into loose chunks.  Then another laborer thrusts his shovel into the loosened soil.  Scoops up a load and transfers it to a large bucket.  When full other laborers topside heave the bucket up from the trench.  And empties it onto a cart.  Then returns the bucket to the bottom of the trench.  Then laborers swing their picks.  And scoop up more soil.

A ditch digger may hate his job.  The immense physical requirements wearing him down.  Working in unbearable heat.  And the monotony.  Just dig, dig, dig.  Pausing to wipe the sweat rolling off his face with his shirt sleeve.  To grab a deep breath.  Or a swig of water.  Then back to the pick.  Or shovel.  Calloused hands gripping a splintered handle.  As his burning muscles drive it back into the earth.  All the while thinking that there must be a better way.

Then the day comes when a truck pulls onto site.  Pulling a trailer.  And on that trailer is the future.  A mechanical excavator.  With a 44″-wide bucket on it that can move more soil with one swipe than a laborer can dig in a day.  A machine that would revolutionize ditch digging.  As one machine and a crew of a few men could do the work of 100 ditch diggers in far less time.  As the machine operator prepares to drive the mechanical excavator off the trailer a grizzled ditch digger walks up to him and says, “Do you know how many men you and that machine are putting out of a job?”

Something is Worth what Someone is Willing to Pay for it Regardless of the Quantity of Labor

The labor theory of value would say this ditch is very valuable.  Before the future arrived on that trailer.  For this theory states that value is proportional to the quantity of labor it takes to make or do something.  The more labor hours required the more valuable it is.  It’s not the market that determines value via the laws of supply and demand.  As happens under capitalism.  No.  It’s labor that determines value.  A theory championed by labor movements.  And Karl Marx.  The father of communism.  The greatest anti-capitalist of them all.  Which reveals the true motive behind the labor theory of value.  To give more political power to labor.  While having nothing to do with economics.

To illustrate this let’s look at ditch digging.  The way it was.  And the way it is.  For this exercise let’s consider a ditch for a 60″ storm drain.  Which requires a deep, long trench.  Let’s say it takes a crew of 100 laborers to hand-dig the trench in 6 weeks.  While a crew of 10 laborers and a machine can do the job in 1 week.  Each laborer has $25 worth of tools.  And the mechanical excavator costs $25,000 to rent for one week.  Now let’s assume two construction companies put a bid together for this work.  One bases their estimate on the way it was.  Men digging by hand.  The other bases their estimate on the way it is.  Using a machine.  The value of this trench is the cost of their estimates.  That is, the value of the trench is the cost to dig it.  Which is the price someone must pay to have this ditch.  We summarize these two estimates in the following table.

Ditch Digging

The bottom line in the table is the value of the dug trench.  Which you will notice has two different values.  Even though both methods result in an identical thing.  A trench the same length, width and depth.  Yet if dug by hand the price is $1.8 million.  But if we dig it with a machine the price is $55,250.  How can this be?  How can two identical things have two different prices?  Well, they can’t.  What we have is two prices.  But only one price someone will pay.  The low price.  Because that’s all the trench is worth.  The price someone is willing to pay.  Regardless of the quantity of labor used to dig it.

The Labor Theory of Value is a Flawed Economic Theory used more to Attack Capitalism

So Karl Marx was wrong.  As are those in the labor movement.  While the capitalists were/are right.  Labor does NOT determine value.  The market does.  Something is only worth what someone is willing to pay for it.  Based on the laws of supply and demand.

For example, a lot of labor hours go into building a caboose.  The last car on a train before FRED (flashing rear-end device).  The steel wheels, the brakes, the enclosure, the wood burning stove for the brakeman to warm up by, etc.  Which gives it great value based on the labor theory of value.  And a high selling price.  But trains today don’t use cabooses.  For they have no brakemen running along the top of moving trains to turn the brake wheels to stop the train.  Thanks to George Westinghouse and his air brake.  So there is very little if any demand for cabooses by today’s railroads.  Making it all but worthless.  Despite the high price tag based on the quantity of labor used to build it.

Again, supply and demand determine prices.  Not the quantity of labor.  And you can see this anywhere you look.  Another good example is housing.  You can build identical houses in two different locations and they can sell for two different prices.  Despite being built with the exact same amount of labor.  That house on the beach in Malibu will have a far higher price than the same house in Detroit.  For when it comes to real estate three things determine the price of a house.  Location, location and location.  Regardless of the quantity of labor used to build it.  Whether 100 workers build it using nothing but hand tools.  Or a crew of 10 using the latest in power tools and equipment.  It will cost more to pay 100 men to build it using nothing but hand tools.  But it won’t sell for any more than the one built by the crew of 10 using the latest in power tools and equipment.  Because the labor theory of value is a flawed economic theory.  Used more to attack capitalism.  To transfer power from the capitalists to the labor movement.  And the unions that represent them.  As well as the government officials that protect the unions in exchange for campaign contributions.

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2012 Endorsements: Karl Marx

Posted by PITHOCRATES - October 29th, 2012

2012 Election

Because Workers just don’t Spontaneously Join Together into a Functioning Business they need Capitalists

Karl Marx is the father of socialism.  And communism.  He was also the author (along with Friedrich Engels) of the Communist Manifesto.  The 19th century book that said, “Let the ruling classes tremble at a Communistic revolution.  The proletarians have nothing to lose but their chains.  They have a world to win.  WORKINGMEN OF ALL COUNTRIES, UNITE!”  Some people heeded his advice.  Vladimir Ilich Lenin, Joseph Stalin, Mao Zedong, Kim Il-sung, Fidel Castro, Ho Chi Minh and Pol Pot, to name a few.  The greatest mass murderers of all time.  No ideology has killed more than communism.  Not even the socialist Adolf Hitler, leader of the National Socialist German Workers’ Party (more commonly known as the Nazi Party) killed more.

According to Marx the history of society has been a class struggle.  Before his time it was the landed aristocracy oppressing the peasants in feudalism.  Then came along capitalism.  Where the new oppressor was the bourgeoisie.  The capitalist.  The employer.  The person that paid others to work.  And kept the profits of their labors.  Basically that means your boss.  Who you may hate while you’re working.  But if business is slow and layoffs are coming you desperately hope it’s someone else and not you.  And should you lose your job you desperately look for someone else who will pay you to work.  Because that’s the only way you know how to feed yourself and buy yourself nice things.  Like a home.  A cup of coffee at Starbucks.  Or a smartphone.  Marx called this oppression.  While most everyone else would call that being happy to have a job.  Because most workers don’t have a clue on how to run a business.  Let alone build one out of nothing.  For workers just don’t spontaneously join together into a functioning business.  They need capitalists.  For without capitalists there would be no jobs for workers.

So who does the bourgeoisie oppress?  The proletarians.  The laborers.  The employees of the bourgeoisie.  The people that actually do the work.  In his day that meant the factory workers.  Who were ruthlessly exploited in sweatshop conditions toiling away at monotonous tasks beneath the dignity of a human being.  The bourgeoisie was turning man into little more than a machine.  That worked until exhausted.  And what did they get for their labors?  Barely enough to survive.  Interestingly, whenever these cruel capitalists turned to actual machines to free these workers from this inhumane labor they cried out against this capitalist greed.  For replacing workers with machines was greedy.  And destroyed jobs.  So on the one hand these jobs oppressed the working class.  But on the other they were the best thing that ever happened to the working class.

Karl Marx summarized his Theory of Communism in One Tenet: The Abolition of Private Property

That’s something else Marx didn’t like.  Change.  The bourgeoisie was always changing things.  Updating their factories.  Installing new machinery.  Forcing the people that did things the old way out of a job.  Much like President Obama blames much of our economic woes on today.  And our high unemployment.  ATMs have put bank tellers out of a job.  Self-serve checkout lanes have put cashiers out of a job.  One man and a trenching machine put hundreds of ditch diggers out of a job.  The electric light put gas lighting workers out of a job.  And gas lighting put kerosene lighting workers out of a job.  And kerosene lighting put whale oil workers out of a job.  And whale oil lighting put candle makers out of a job.  It’s this modernization that Marx doesn’t like.  It disrupts labor.  Making the old worker obsolete.  So unions come in to protect these old jobs.  Allowing people to earn high wages without having advanced skills.  So instead of learning the skills to do the new jobs of the future they can keep doing the jobs of the past.  President Obama talks about bringing back high-paying manufacturing jobs.  Where workers toil away in those monotonous tasks that are beneath the dignity of a human being.  The kind of jobs the parents of college graduates toiled away at to put their kids through college.  So their kids wouldn’t have to do what they did.  Because the new jobs are better than the old jobs.  They’re easier.  Safer.  And offer higher pay.  But the downside is that they take more education and training.  Where some people will be better than others.  Which is unfair to those who aren’t as good.

Of course to help these factory owners pay these old jobs high wages they need to sell their goods at high prices.  Often at higher prices than the market price.  So they have to unlevel the playing field.  Governments pass minimum wage laws.  Union requirements.  And minimize the competition.  Either by restricting other domestic competitors by high entry costs.  Such as licensing fees.  Or by placing tariffs on lower priced foreign imports.  Raising their prices so they don’t cost less than the higher priced domestically produced goods.  Allowing these few factory owners to pay their employees these higher wages.  By forcing the general public to spend more money than they would have without these protections.  And thereby having to make sacrifices in their lives because they have less of their earnings for their own families.  For these reasons Marx called free trade exploitation.  Because free trade made it difficult for unskilled workers to earn high wages.

Marx summarized his theory of communism in one tenet: The abolition of private property.  For it was the bourgeoisie’s accumulation of private property that exploited the working class.  So no one can own anything.  Even laborers.  Because whatever private property the laborers accumulated came from only one place.  From the exploitation of other workers.  And that’s not the only thing Marx wanted to abolish.  He also wanted to abolish the past.  Even though he held on to the jobs of the past.  Marx advocated abolishing tradition, customs, institutions and religion.  Even families.  He wanted to replace education with communist indoctrination.  Much like they did in Nazi Germany.  In the Soviet Union.  In communist China.  North Korea.  Cuba.  Cambodia.  In a socialist/communist society everyone is equally subordinate to the state.  Where there is no private property.  No bourgeoisie.  Just a dictatorship of the proletariat.  A workers’ paradise.  A communist utopia.  Where no one looked anywhere but to the state for all of their needs.

If Karl Marx were Alive Today he would Likely Endorse the Democrat Candidates Barack Obama and Joe Biden

So what would it be like in this communist utopia?  This dictatorship of the proletariat?  There would be a heavy progressive tax.  (The US has a progressive tax rate.  And the Democrats want to raise tax rates higher yet at the high end.)  No right to inheritance.  (Democrats want to raise inheritance taxes.)  Confiscation of the property of emigrants.  (The Democrats want to highly tax/seize money invested outside of the United States that is trying to escape that heavy progressive tax.)  A central bank.  (The Federal Reserve is a central bank.)  Centralization of the means of communication into the hands of the state.  (The three television news networks have a Democrat bias.  Most newspapers have a Democrat bias.  And the two areas that don’t, talk radio and the Internet, the Democrats want to regulate.)  Free public education.  That indoctrinates our children.  (Public education tries to turn our children into Democrat voters.  By teaching the unfairness of capitalism.  America’s sins.  And by scaring our children about global warming.  And that only government can protect us from global warming by regulating private industry more.  Generous tuition subsidies help continue this work at our colleges.)

The Democrats further this class struggle, or rather create one, with their endless class warfare.  The top 1% isn’t paying their fair share of taxes.  The Democrats embraced the Occupy Wall Street movement.  Pitting the 1% against the 99%.  The Democrats employ racism.  Tuning any criticism of President Obama into a racist attack.  The Democrats try to scare women by warning them of the Republican war on women.  Saying ‘women should buy their own birth control’ is code for Republicans hate women and will oppress them if elected.  The Democrats constantly divide us.  Putting one group against another.  Trying to keep the people agitated.  And angry.  So they will welcome more government into their lives.  And the abolition of the capitalists’ private property through that heavy progressive tax.  The empowerment of unions.  Both private and public.  The restriction of our liberties through radical egalitarianism.  By punishing achievement.  So no one can rise to a higher level of success.  Or to a higher level of wealth.  So everyone is equally miserable in their workers’ paradise.

So if Karl Max were alive today who would he support in the 2012 election?  The party that includes a lot of Marxist doctrine in it all ready.  Marx would feel at home in the Democrat Party.  In fact it would be hard not to see a bit of communist revolution in it.  Especially with communist Fidel Castro and socialist Hugo Chávez already endorsing the Democrat Party candidates.  So it isn’t much of a leap to say that if Karl Marx were alive today he would likely endorse the Democrat candidates Barack Obama and Joe Biden.

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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.

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East German Katarina Witt’s Privileged Life in her Socialist Paradise was not as Good as the Life of the Average Western Capitalist

Posted by PITHOCRATES - March 24th, 2012

Week in Review

Katarina Witt was young and beautiful during the Olympics.  Italian great Alberto Tomba was even smitten with her.  But even the suave and debonair Tomba got the cold shoulder from Witt when meeting her during the games.  For they may have both been superstars.  But her star shined brighter.  Few could ski like Tomba.  But no one could skate like Katarina.  She was just beautiful on the ice.  Poetry in motion.  Which is why the Stasi (East German secret police) took such great interest in her.  She could prove the superiority of communism.  And bring home the medals.  For that she lived a privileged life in East Germany.  But even that privileged life couldn’t match what she saw outside of her socialist utopia (see The Stasi watched my every move: Dancing on Ice star Katarina Witt reveals East German secret police spied on her since the age of eight by Katarina Witt posted 3/24/2012 on the Daily Mail).

Of course I became aware of international differences as I grew older. I remember my first trip abroad to compete in Vienna when I was 12.  I looked at one shop window after another, crammed with goods.  Everything was so much more  colourful than shops at home in Karl Marx Stadt (which has now reverted to its original name of Chemnitz). Every Viennese street felt like a candy store, but an expensive one. I must have spent five hours trying to find an outfit I could afford.

In later years, I went on international exhibition tours alongside skaters from other countries. We became friends and, in the evenings, we would all get together in one or other of our hotel rooms and talk – with the Americans, the Russians, the West Germans. The Russians brought the vodka, naturally. The Americans ordered French fries.

Looking back, two decades later, it is as if we were living on a different planet, but we never questioned it  at the time. The constant control,  particularly when it came to travelling abroad, just became a part of my life. ‘We want to  protect you,’ was the message. ‘We want to make sure you’re safe and sound.’

The rhetoric was all rather comforting in its way. I believed we were a country of fairness and good social values. Would I have wanted to live in another country? A free country? The question never occurred to me.

In fact, I probably had even less reason to question than most as I was well treated. Like other leading athletes,  I was given rewards for winning. There were financial bonuses, for example, and  I was allowed to rent an  apartment of my own, even  though I was only 19 and not married!

They let me jump the queue to buy a Russian-made Lada instead of going on the  ten-year waiting list like  everyone else.

This is communism.  Karl Marx’s socialism.  The caring, loving state.  In a country of fairness.  And good social values.  And when one of the privileged got a taste of Western capitalism she saw that life was better in the West.  And what they were protecting her from was that better life in the West.

This is the path the U.S is on.  For Obamacare is all those things.  And will help us become what East Germany was.  Free stuff but no liberty.  A caring government but a life that’s dull and gray.  So much so that people risked their lives to escape it by climbing over the Berlin Wall.  A life that is fair where everyone is equally miserable.  Where the government provides everything but everything is un-colorful and even less plentiful.  Where life is not being in a candy store.  But more like being in grade school.  Where you do as you’re told and someone is always watching you for your own good.  But without the good social values.  For the left gave those up long ago to get the youth vote.

Katarina Witt was one of the most talented people in East Germany.  And beyond.  And the Stasi rewarded her well for that.  So her life wasn’t all that bad compared to other East Germans.  But imagine their life.  Those who didn’t get financial bonuses.  An apartment.  A car without waiting 10 years.  Imagine that life.  Or, better yet, just wait.  For it will soon be upon us here in the U.S.  If we don’t repeal Obamacare.

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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.

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Capitalism vs. Communism, Socialism, Occupy Wall Street and President Obama

Posted by PITHOCRATES - October 14th, 2011

The Corporation was Created to Raise Capital and Manage Risk so they can Build the Stuff we Want

No wonder the Occupy Wall Street people have their heads filled with nonsense.  Here’s an Ivy League publication that doesn’t even understand what a stakeholder in a corporation is.  They have a stake, i.e., a share.  They own stock.  They’ve risked their capital.  And if you don’t risk capital, then you’re just not a stakeholder (see Occupy Wall Street: What Businesses Need to Know by Hari Bapuji and Suhaib Riaz posted 10/14/2011 on the Harvard Business Review).

The demonstrators are asserting that they are stakeholders in American business, and they’re correct — they are stakeholders, as consumers, as employees, and as citizens affected by the financial system in general.

No they’re not.  Unless they bought stock in these corporations.  Which I doubt, because people typically don’t protest against companies they invest in.  Unless they’re idiots.

The corporation was created to raise large amounts of capital.  And manage risk.  By selling stocks to shareholders.  So they can raise the money to build the stuff we want.  Things that hopefully would make a profit one day.  A profit that the shareholders would share in.  As they are the ones taking the BIGGEST risk.  The corporate officers of these corporations have a fiduciary responsibility with the shareholders.  To make a profit.  It’s their company.  They paid for it.  And these shareholders owe nothing to that mob on Wall Street.  Unless any of them own stock.

You’d think those writing for a business school would understand basic business 101.

Businesses should look at whether existing models of compensation are contributing to this inequality. They need to find ways to reward performance without increasing pay disparities. Developing new models of compensation and governance is not easy and can only be possible through a long-term and sincere engagement with a wide set of stakeholders, such as regulators, academics, and representatives of workers.

They want to do away with merit.  And introduce something more akin to communism.  Where everyone is equal.  No matter the value of their work.  People have tried this.  In North KoreaCuba.  And the former Soviet Union.  Note the word ‘former’ in that last one.  There’s a reason why it’s former.  No one wanted to do the harder jobs if they didn’t get paid any more for the additional brain power or risk.  And those stuck carrying the weight of their comrades?  They just didn’t bust their ass in the process.  And that’s why the Soviet Union is a ‘former’ union.

But this is what the Occupy Wall Street people want.  Force people to do those harder jobs.  But pay these wealth creators no more than them.  Even if they only work at a Starbucks.  Or collect government assistance.

The Egalitarian Polices of the Great Society Destroyed the Economy in the Seventies

So an Ivy League publication doesn’t understand business.  But you know who does?  Al Jazeera.  Their conclusions are all wrong but at least they get a lot of stuff right along the way (see The instability of inequality by Nouriel Roubini posted 10/14/2011 on Al Jazeera).

While these protests have no unified theme, they express in different ways the serious concerns of the world’s working and middle classes about their prospects in the face of the growing concentration of power among economic, financial, and political elites. The causes of their concern are clear enough: high unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalised world; resentment against corruption, including legalised forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.

Of course, the malaise that so many people feel cannot be reduced to one factor. For example, the rise in inequality has many causes: the addition of 2.3 billion Chinese and Indians to the global labour force, which is reducing the jobs and wages of unskilled blue-collar and off-shorable white-collar workers in advanced economies; skill-biased technological change; winner-take-all effects; early emergence of income and wealth disparities in rapidly growing, previously low-income economies; and less progressive taxation.

American industry is uncompetitive.  That appears to be the problem.  That’s why there are fewer jobs.  So people who earn income via their labor are being priced out of the market by their generous pay and benefit packages.  But people who earn their income via capital always have a place to invest capital.  Capital is capital.  It is always competitive.  That’s why more wealth is accumulating to the rich.  Because they haven’t killed their golden goose.  Like unions have killed unskilled American manufacturing.

This doesn’t explain those kids on Wall Street, though.  The ones with college degrees.  Their problem is their degrees.  Many of them are worthless.  Probably a lot of English majors out there.  Or have degrees in sociology.  Anthropology.  Philosophy.  Women studies.  Etc.  But there just aren’t a lot of stores out there selling this stuff.

The increase in private- and public-sector leverage and the related asset and credit bubbles are partly the result of inequality. Mediocre income growth for everyone but the rich in the last few decades opened a gap between incomes and spending aspirations. In Anglo-Saxon countries, the response was to democratise credit – via financial liberalisation – thereby fuelling a rise in private debt as households borrowed to make up the difference. In Europe, the gap was filled by public services – free education, health care, etc. – that were not fully financed by taxes, fuelling public deficits and debt. In both cases, debt levels eventually became unsustainable.

Too much debt is never a good thing.  But those bubbles weren’t the result of inequality.  They were the result of trying to make everyone equal.  Extending credit to the credit unworthyPutting people into houses who had no business owning a house.  That was the fault of irresponsible government policy.  Not inequality.  Just like the free education, health care, etc.  We didn’t have these problems when those things weren’t free.  And when only people who could qualify for a mortgage were getting mortgages.

The problem is not new. Karl Marx oversold socialism, but he was right in claiming that globalisation, unfettered financial capitalism, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fuelled by credit bubbles and asset-price booms and busts.

Karl Marx was wrong.  At least, he hasn’t been proven right yet.  And many have tried.  The Soviets.  The Chinese.  The North Koreans.  The Cubans.  Marxism has been an abject failure.  And those busts were made worse by monetary policy trying to eliminate them.  If credit wasn’t so cheap and mortgage standards weren’t so low there would have been no housing bubble.  It was government policy that encouraged people to accumulate debt.  Not inequality.  Government is just bad at running things.  Which is why Marxism has been an abject failure.

Thus, the rise of the social-welfare state was a response (often of market-oriented liberal democracies) to the threat of popular revolutions, socialism, and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued, from the late 1940’s until the mid-1970’s, a period when inequality fell sharply and median incomes grew rapidly.

Some of the lessons about the need for prudential regulation of the financial system were lost in the Reagan-Thatcher era, when the appetite for massive deregulation was created in part by the flaws in Europe’s social-welfare model. Those flaws were reflected in yawning fiscal deficits, regulatory overkill, and a lack of economic dynamism that led to sclerotic growth then and the eurozone’s sovereign-debt crisis now.

Government spending exploded during the Sixties.  They printed so much money in the Seventies to pay for the obligations of the Sixties that Nixon decoupled the dollar from gold.  So he could print more money.  Giving us record high interest rates.  And record high inflation.  Weak GDP.  And high unemployment.  This was all because of the egalitarian polices of the Great Society.  They destroyed the economy in the Seventies.  Reagan and Thatcher brought back prosperity.  By stopping the insanity.  They cut taxes.  Cut regulation.  And the economy took off.  It’s the reversal of the Reagan-Thatcher policies that are returning the economy to the malaise of the Seventies.  Both in the UK.  And the USA.

In the Soviet Union all of the Good Stuff came from the Decadent, Capitalist West via the Black Market

But this socialist/communist claptrap is what they’re teaching in American universities.  These protestors don’t understand the role of capital in the modern economy.  The entrepreneurial spirit.  Risk management.  They don’t understand anything other than that they weren’t born into privilege.  And this just pisses them off (see OWS’ Program? Distract From Dems’ Failures by Charles Krauthammer posted 10/14/2011 on Investors.com).

To the villainy-of-the-rich theme emanating from Washington, a child is born: Occupy Wall Street. Starbucks-sipping, Levi’s-clad, iPhone-clutching protesters denounce corporate America even as they weep for Steve Jobs, corporate titan, billionaire eight times over.

These indignant indolents saddled with their $50,000 student loans and English degrees have decided that their lack of gainful employment is rooted in the malice of the millionaires on whose homes they are now marching — to the applause of Democrats suffering acute Tea Party envy and now salivating at the energy these big-government anarchists will presumably give their cause.

Except that the real Tea Party actually had a program — less government, less regulation, less taxation, less debt.

What’s the Occupy Wall Street program? Eat the rich. Then? Haven’t gotten that far. No postprandial plans.

It’s ironic that that they hate corporate America but love to indulge in their products.

During the Cold War.  When there was full employment behind the Iron Curtain.  In the tractor factories.  People stood in line all day to buy soap and toilet paper at reasonable prices.  But they bought Levi’s on the black market.  And anything else they wanted that wasn’t dreary and drab.  Or scratchy and caustic.  Whatever the price.  Why?  Because all of the good stuff came from the decadent, capitalist West.

These protestors need to read a little history of what it was like when there was true egalitarianism.  It sucked.  That’s why Soviets defected to the U.S.  And Americans didn’t defect to the U.S.S.R.  Because capitalism was better.  People lived better under capitalism than they did under communism.

The President of the United States should not use the Risk of Civil War as a Reelection Strategy

As Krauthammer says in his column, this Occupy Wall Street movement has political motives.  Obama is following in the shoes of Jimmy Carter.  The economy is in the toilet.  His policies have all failed.  And he has no chance of reelection based on his record.  So he is using the class warfare card.  Which is irresponsible.  And dangerous.

Obama is opening a Pandora’s box. Popular resentment, easily stoked, is less easily controlled, especially when the basest of instincts are granted legitimacy by the nation’s leader.

Mobs are easy to create.  But they take on a life of their own.  Are dangerous.  And unpredictable.  The president of the United States should not use the risk of civil war as a reelection strategy.  Because it’s not exactly constitutional.  Or in keeping with the oath of office he swore.

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FUNDAMENTAL TRUTH #65: “The only thing the market is inefficient at is funneling money to anti-business politicians.” -Old Pithy

Posted by PITHOCRATES - May 10th, 2011

The Natural Order and a good Last Name

There are two types of people in America.  Those who work.  And elitists who want others to work for them.  It’s been this way since the dawn of civilization.  One group asserted their power over the masses.  The masses then worked.  The ruling elite didn’t.  They just gave the work orders.  The masses dutifully followed their orders and grew the food.  The ruling elite took in the bounty and ate until they were full.  And then some.  While famine thinned out the masses.  It was the natural order once upon a time.  And those who held dominion over the land liked it.

Land, then, was key.  The aristocracy owned the land.  Hence we called them the landed aristocracy.  They owned the land, the food and the wealth.  And the people.  In European and Russian feudalism there were serfs.  In the antebellum American South there were slaves.  The landed aristocracy may buy and sell land and move.  But the serfs/slaves stayed on the land.  Forever.  As their parents did.  As their children would.  It was the natural order.

Your name was very important in the landed aristocracy.  For land was hereditary.  As was wealth.  As was political power.  And it stayed this way for a long time.  While everyone who worked farmed.  But over time, something happened.  People got smarter.  They were able to grow food surpluses.  And they took these surpluses to markets.  Which became cities.  Where we saw the rise of artisans.  Skilled people who made tools and crafts that further improved our lives.  Allowed people to leave the farms.  And create a middle class.  Greatest thing that ever happened for the masses.  It allowed a way out from the back-breaking toil of working the land.  Even if you didn’t have a ‘good’ last name.

Representative Government changes the Natural Order

Of course, not everyone was keen about this.  Because it disrupted the natural order of things.  And threatened the old power structures.  Some adjusted.  Some shared the power.  Like in England.  Where there was a representative government.  There was a bicameral house.  The Parliament.  Representing all people.  The rich in the House of Lords.  And the common people in the House of Commons.  And, of course, the king.  Who represented the king.  And the state.  Now, kings like to wage war.  Conquer.  And add to empire.  But it takes soldiers and sailors to fight.  And money to pay for armies and navies.  Which the king didn’t have.  The rich people had the money.  The landed aristocracy.  The Lords.  So the king just couldn’t wage war unless Parliament consented.  Pretty nice thing this check on power.  This representative government.  It made for happy subjects.

It wasn’t like this in France. While the English were checking the king’s power, the French monarchy was absolute.  It  could do whatever it wanted.  And did.  Spent a lot of money.  Ran up great debts.  Fought a lot of wars.  Including the Seven Years’ War that lost much of French North America to Great Britain.  And helped the Americans in their War of Independence.  Helping them to gain their independence from the British monarchy.  Which proved to be a deadly game for the French monarchy.  For the French people grew fond of representative government themselves.  And they thought if the Americans can overthrow king-rule maybe they could, too.  So they gave it a try.  The French Revolution was a bit bloodier than the American Revolution, but it got the job done.  France, too, had a representative government.  Until Napoleon declared himself emperor, of course.  And then he did a lot of kingly things.  Waged war.  Conquered.  Built empire.  And added to the debt.

Great Britain gave up on minority rule.  France tried to hang on to it, lost it then Napoleon got it back.  The reason minority rule failed in these countries is because a minority ruling power needs money.  And it was easier to get money in an agrarian economy.  When all the wealth was concentrated in the few who owned the land.  The rise of a middle class changed all of that.  Artisans and merchants made a lot of money.  Some even without ‘good’ last names.  The people who didn’t have to kiss any royal ass to get or maintain their wealth.  It was a whole new game out there.  Minority rulers needed to find another way to amass money and power.  And they found it.  In the ‘lie’.

Lies from Marxism to Socialism

A ruling power lying wasn’t anything new.  But some of the lies were.  Marxism, for example, was a new brilliant lie.  It made those the ruling elite wanted to oppress ask to be oppressed.  In the name of egalitarianism.  Rise up you miserable oppressed factory workers.  Attack the industrial bourgeoisie (i.e., the middle class).  You have nothing to lose but your chains.  Karl Marx may have believed the claptrap he wrote.  But those who used it could care less about the underlying philosophy.  They just liked the power it gave them.  So those who aspired to rise to power and rule over the majority led worker revolutions.  And after they won, the workers went back to suffering just as they had before.  Only they had less.  Because the communist commissars knew jack squat about the means of production.  But that was okay.  For it just helped to enslave the masses more.  Well, that.  And the brutal police state that discouraged any inappropriate behavior.  Or thought.

It was a good run for the communist powers that be.  While the masses suffered they lived a very comfortable life.  Just like the landed aristocracy of old.  Unfortunately for them, their ruling policies sent their economies into nosedives.  And they suffered recurring famines.  Marxism was a failure.  The ruling elite knew it.  And most of the people knew it, too.  Often, those who could escape from their communist utopias did.  Because they were anything but utopian.  So those aspiring to ascend to the ruling elite needed a new lie.  And they found it in communism-light.  Socialism.  Which appealed to the people they wanted to oppress for the same reasons Marxism did.  It would stick it to the rich in an egalitarian utopia.

But there was little difference between Marxism and socialism.  Both systems tried to manage the economy.  And both did a horrible job.  Why?  Because state planning is not about improving the lives of those they rule over.  It’s about maintaining power.  An economy left alone will always outperform a managed economy.  Everyone knows this.  But if they leave the economy alone, how can the ruling elite amass power and wealth?  It can’t.  Ergo, the lie continues.  Not to improve the lives of the masses.  But to improve the lives of the ruling elite.  The minority power.  Who only ascends to power by a good lie.

Wealth Redistribution Killed the Golden Goose

The free market does have one inefficiency.  It does not enrich those who do not partake in it.  The ruling elite aspire to be in a minority rule for a couple of reasons.  First of all, when you’re stealing from and oppressing the people, the fewer people in the ruling elite the wealthier each member gets.  Which is what they want.  Wealth.  And being in the ruling elite gives them access to wealth.  Because they are so completely untalented that they could never make any wealth in the free market.  So they use the lie to acquire their wealth.  To live the good life.  Like the landed aristocracy of old.

So they become the champion of the working man and woman.  And promise to deliver that egalitarian society via wealth redistribution.  They promise to tax the rich.  And give to those who will vote for them.  It has proven to be a very effective system.  And in its heyday they were reaping in the money.  Even found a way to funnel tax money directly to them via public sector union dues.  But they just got too greedy.  Pulled too many people into the new aristocracy.  And too many people out of the work force who paid the taxes that paid for their comfortable lives of plenty.

The taxes and policies of the ruling elite have grown so anti-business that it’s reduced economic activity.  And tax generation.  So not only have they bloated the public sector with nonworking people and reduced the taxpaying workforce, they killed the golden goose as well.  And no lie may change the mess they created.  They may have no choice but to unfetter the free market.  And get real jobs.

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