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Governmentally run Socialism is appealing to those who do not understand Basic Economics

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One of the fundamental reasons for the large appeal for Socialism is the simplicity of the economic policies being proposed. I believe this is why there are large amounts of people fixated on an economy run entirely upon the hands of an increasingly growing and authoritative government. Despite the failures of such economic policies, not only are the policies merely easier to understand, but further sound just. 

Of course I am not advocating for an argument that states all socialized policies are easy to comprehend, but an argument that states the most crucial economic policies are easier to comprehend. For this debate, I shall refer to such policies as: 
Welfare, Subsidized Farming, Price Control, Minimum Wage, against price fluctuation

The intentions of which sound just, while the effects prove detrimental. Hence why people who are unable to fathom the detrimental ramifications of such policies are prone to be in favor of a socialized and government-run economy. 
joecavalryAmpersand



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  • joecavalryjoecavalry 430 Pts   -  
    Socialism doesn’t work. Eventually, the government would run out of money/funds for their country.
    DebateIslander and a DebateIsland.com lover. 
  • MayCaesarMayCaesar 5966 Pts   -  
    Moral problems with socialism are mostly related to the classical "Robin Hood problem": is someone stealing from the rich and sharing the stolen goods with the poor acting justly or not? The modern legal stance on the West is that he/she is not acting justly and, in fact, is a criminal. However, when Robin Hood is not an individual, but a public organization (the government), for some reason many people see it as an exception.

    ---

    But regardless of even moral problems, practically socialism leads to a very ineffective economical production. When the resources are taken away from their effective producers and shared with ineffective producers, then economical growth slows down considerably.

    Take the simplest example: we have the nation consisting of individuals A and B, both owning a farm. A employs very effective farming techniques and produces 20% surplus of crops a year. B employs much less effective farming techniques and produces 5% surplus of crops a year.
    • In the perfect capitalism, each owns whatever they produce. A increases his resources by 20% each year, and B by 5%. Starting with 100 crop resources each, in 10 years A owns ~619 crop resources, and B owns ~163 crop resources; the total nation wealth is 782 crop resources.
    • In the perfect socialism, the resources are equally shared between A and B each year. Much more resources at any point in time are owned by B than in the example in the past, hence more resources are affected by his inferior farming practices. The effective total wealth growth is now (5%+20%)/2 = 12.5%, and in 10 years the total nation wealth is 649 crop resources - quite a bit less than in the previous example. A and B own 324 crop resources each.
    But systems such as capitalism or socialism do not generally last 10 years; let us see where this leads us in 100 years. 
    • Perfect capitalism: ~8.2 billion crop resources for A, ~13.1 thousand crop resources for B, ~8.2 billion crop resources total (you can see that B does not significantly contribute to the total resource growth, compared to A).
    • Perfect socialism: ~13 million crop resources for A, ~13 million crop resources for B, ~26 million crop resources total.
    Oh, wow! Perfect capitalism makes the nation over 600 times as wealthy as perfect socialism. And we only considered the first 100 years. The US, for example, has existed for well over 200. Imagine if it had been socialistic throughout all this time...

    Now, one can object, "Very well, in the second case the nation ended up much poorer than in the first case - but B was considerably richer in the end than in the first case, so there is nothing wrong!" Well, the problem here is that both A and B can be much-much richer than that if, rather than resorting to socialism, we simply introduce a minimal amount of equalization (as modern capitalist countries do). Since A is so much richer than B, let us make it so that A gives away 1% of the difference between him and B to B each year. It will not drop A's productiveness significantly, but B will now get a lion's share of A's wealth and enjoy a somewhat comparable quality of life. And maybe B, seeing the potential in A, will hire him and teach him his superior farming methods, so A can contribute to the economical growth better.

    ---

    Socialism is simply logically the inferior system both in terms of the total economical production, and the individual wealth. Someone said that socialism is equality in the sense that everyone is equally poor, and the provided mental experiment illustrates it perfectly. As one economist asked, "What would you prefer, to have $100 a year when your neighbor has $200 a year, or to have $10,000 a year when your neighbor has $1,000,000,000 a year?" And the catch in this question is that there is no third option: "I prefer it when we both have $500,000,000 a year" references a scenario that is not physically possible.


    Ampersand
  • Polaris95Polaris95 147 Pts   -  
    @MayCaesar
    You're right in some aspects, but what if 1 or 2% of the entire population of a country are earning the 20% surplus that you described, while the other 98% have 5%? It's simply unfair. But I am no economist, I'm sure you have much better knowledge of these things. All I'm saying is such a system that permits this obvious disparity is unfair towards the general public.
  • MayCaesarMayCaesar 5966 Pts   -  
    @Polaris95

    I do not see it as unfair, when the 1-2% of the population contributes far more to the total economical growth than the other 98%. What, in my opinion, would be unfair is if those 1-2% offered a 4 times more effective economical production, but received only, say, a 2 times bigger share. It would be similar to getting 2 times as much income for working a 40-hour week, compared to working a 10-hour week at the same position.

    What I do see it as, however, is impractical: if the bottom 98% experience a very tiny growth of their quality of life, then they are very unlikely to start contributing more to the economy; it is a vicious cycle. That is why, like I said, the poorer people should somewhat benefit from the overall technological growth, regardless of their current contribution to it. 

    However, the higher this benefit is, the smaller the economical growth will be. Hence there is a certain balance to be found. Think of it as the interest rate in banks: the more you have invested in the bank, the more your yearly gain is. If you never use the money on your account, then this gain does not matter, since it is just a number on your account. But if you do use the money on your account, then your yearly gain decreases. You want to benefit from your interest rate by cashing in, but you do not want to cash in on too much, because that will exponentially decrease how much you can benefit from it in the future.

    Modern First World countries, even those with very high individual income tax rates (for example, Australia has the highest marginal rate set at 60%), recognize the importance of providing tax breaks and various subsidies for businesses, which are the main source of the economical growth. Nordic countries have as low tax rates as 0% for certain business categories, and this is why they can get away with taxing rich individuals. Interestingly, until recently the US had one of the highest corporate taxes in the world, despite having a reputation of featuring an untamed capitalism - this could be one of the reasons why we turned from the indisputable economical leader into simply one of the best. Economical growth is a tight race, and even small differences in the wealth redistribution can have a very significant long-term effect.
  • AmpersandAmpersand 858 Pts   -  
    Disagree.

    For a start these have nothing to do with socialism, which relates to the means of production being owned by society or a community as a whole.

    To quote Wikipedia which for all its small foibles I think we can agree gives at least a trustworthy core definitions:

    "Socialism is a range of economic and social systems characterised by social ownership and workers' self-management of the means of production[10] as well as the political theories and movements associated with them.[] Social ownership may refer to forms of public, collective or cooperative ownership, or to citizen ownership of equity. There are many varieties of socialism and there is no single definition encapsulating all of them, though social ownership is the common element shared by its various forms."

    The measures listed are nothing to do with socialism and are in fact simply various forms of intervention found in a whole host of countries - various forms of welfare or minimum wage can be found in the vast majority of Capitalist countries on earth for instance.

    Putting aside the incorrect definition, the basic argument of "These economic policies are bad and left-wing people only support them because left-wing people don't understand economics" doesn't hold up either.

    Minimum Wage for instance is a fairly nuanced and somewhat contentious subject even for experts. While people argue specifics such as the precise pros and cons in various countries, it is generally accepted that the situation is fairly nuanced and will differ from country to country, with it being useful for countries to understand the negative as well as positive effects of Minimum wage so that when implemented they can enact complementary policies which enhance the benefits while minimising the downsides. An example of this is that while many studies show that the impact of minimum wage on employment is nil or near nil in many economies (like the USA for instance) the exception even in the best circumstances can often be young workers who lose out - which is why there are recommendations to use differentiated minimum wages. Economies also vary widely by country and this is why the IMF, which is responsible for expert financial analysis on a global scale, might recommend minimum wage hikes in the USA and Japan but support minimum wage freezes or decreases in other circumstances such as Greece following its financial crisis where it noted that it had a higher minimum wage than its competitors which was hurting its economic efficiency.

    Overall I think we can therefore reject the idea that there is anything in particular about leftists which tends them to accept economic theories because they have less knowledge of basic economics. If anything it appears to be right-wingers who are making sweeping baseless claims that run counter to the understood wisdom of how economics functions.
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