Friday, November 27, 2020

Socialism - The Bigger the Government the Less Freedom

Those in the United States that want Socialism point to European democracies that provide cradle to grave services for their people.  What they don't understand is the history.  After World War II, Europe was devastated.  We implemented the Marshall Plan under President Truman to assist European countries with rebuilding their economies and to prevent Communism from taking hold.  

As late as 1970, when I took my first trip to Europe most countries in Europe were relatively poor.  I remember the holes in the floor instead of toilets in many places.  The people of Europe were desperate for a decent life.  They traded their freedoms in many ways for Socialism and cradle to grave government services like "free" health care, university etc. because so many of them had nothing.  Of course, nothing is "free". In exchange, governments extracted very high taxes.  In addition to high income taxes on everyone and taxes for social services, value added taxes (VAT) of 17% - 23% were implemented, the equivalent of a sale tax on most purchases that compounds through all stages of production.  

And, then there were the fuel taxes.  To help pay for public transportation, the trains and subways that are quite good, very high taxes were charged on gas and diesel fuel so paying $8 for a gallon of gas is not uncommon.  That is the reason cars in Europe were half the size of cars in the US and most families own none, or maybe one. 

In addition, lower and even middle income people live in shoe box apartments and homes.  Typically half the square footage of what would be common in the US because building cost are very high given all the taxes they pay.  Average People just don't have the disposable income to buy or rent homes that are bigger, even if they existed.  

Americans typically live in bigger homes and apartments, often own multiple cars and generally experience a higher standard of living than people living in Europe when measured in material terms.  Our economy thrives because we are a consumer society.  Europeans have learned to settle for less.  When our employees from Europe came for meetings in the US, they often brought empty suit cases with them to buy basic items like over the counter drugs and razor blades in the US because they were so much cheaper.  Some of our employees had Costco cards so they could shop at Costco when visiting the US.  They also went to our outlet malls to buy name brand clothing that was 30% or more cheaper than in Europe because of the way VAT taxes are applied.  

No doubt, there are people in the US that would give up their freedoms and be completely subject to government control of their lives for cradle to grave "free" services, particularly if others were paying for them.  As it is now, the Makers in our society, the 50% of us that pay all the income taxes support the Takers, those that pay no income taxes at all.  We actually have the most progressive income tax system in the world.  The problem is that 50% of Americans paying income taxes could never cover cradle to grave government services for everybody.  

So, as occurs in Europe the Middle Class, people earning from $50,000 - $150,000 a year too would have to pay much higher taxes in order to support the Takers in our society.  There is no other way, which is why taxes in Europe are so high.  The government could confiscate all wealth from the rich in the US and tax corporations much higher taxes, which would kill jobs and it still would not cover the entitlements the Socialists in the US are proposing under Joe Biden.  As Margaret Thatcher, the late Conservative Prime Minister of Britain used to used to say, "Socialism works well until there is no one left to tax."   

Socialism always leads to poverty, misery and even murder.  At a minimum, as we have seen in Europe, Socialism has led to less freedom, a lower standard of living and higher unemployment than exists in the US.  There is no free ride.  Given the American personality, spirit and history, it is very unlikely that half the country that voted for Trump will tolerate European style Socialism given the limitations on freedom that would come with it.  There are even Americans that voted for Biden who if told their taxes would double to provide entitlements for people that  pay no income taxes would also say Hell No!  We value our freedom much more than cradle to grave government entitlements because they come with intrusion into all aspects of life.  No thanks!

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