Defining the Terms

Recently, some public figures were talking in the press about the US becoming a socialist nation because of the effects of the stimulus package. An article appeared in Newsweek magazine essentially saying similar things. It was said that some fear the US is going to takeover and nationalized banks. Some are concerned that the US is going to take control of the auto industry. Some say the public, thus the government, now own the big investment houses. Last night, on my usual mental wandering that usually occur when I have my evening Cabernet, I thought about that. My first thought was of my dad who always made us define our terms before we had any serious discussion. I can hear him now saying “get the book.”

I had not dealt seriously with this term since shortly after I left college. I needed to refresh my memory on just what the term socialism meant. I had a feeling that the term was being misused by those self-elected representatives of the people. So, I got out one of my old college textbooks and checked with Wikipedia, the Webster On-line Dictionary and the Oxford English Dictionary. (I believe in being cautious. I wear suspenders with a belt). I got the book, dad. I found the following.

Socialism:
Socialism refers to a broad set of economic theories of social organization advocating public or state ownership and administration of the means of production and distribution of goods, and a society characterized by equality for all individuals, with a fair or egalitarian method of compensation

That seems pretty simple. The government owns the land, equipment and materials as well as the processes for producing and distributing goods and services. China is one example, although it is allowing more private ownership than in the past. Venezuela is trying to become a socialist nation and President Chavez is nationalizing as fast as he can. although he is not anywhere near there yet. So how is it that the US is becoming a socialist nation? Is the bailout money being used to acquire government ownership of any means of production?

My understanding is that investment in and regulation of the means of production and distribution does not mean ownership by the state. One could argue that the regulations, whether enacted directly by the government or attached as strings to any investment made by it, could be such as it resulted in de facto state ownership. From what I can tell, however, the elected officials are not removing any economically viable business from private ownership. At least not at this time. In fact, it seems to me that they are taking great care to make sure these privately owned behemoth companies survive. (Whether a publicly held company [shareholders] is actually privately owned is a subject for another mental wandering)

About half way through the second glass of Cabernet, it occurred to me that what the elected US government officials are doing may well result in this Country moving more toward the European style welfare state of the 1950s and 60s, and like the ones that exist today in Denmark and Sweden. Those were not good days for England and France. I remember the stories of poor production and distribution of goods and services in those two countries. Stories about shortages of goods and services, poor health care, no innovation and a poorer standard of living for many.

Welfare State:
A model in which the state assumes primary responsibility for the welfare of its citizens. This responsibility in theory ought to be comprehensive, because all aspects of welfare are considered and universally applied to citizens as a "right". Welfare state can also mean the creation of a "safety net" of minimum standards of varying forms of welfare.

A welfare state can, of course, have a socialist economic system, or a capitalist economic system or one of many variations between the two. Most European welfare states retained basic private property and private means of production and distribution but the government owned some portion of major industries. All businesses as well as property ownership were heavily regulated and assessed (taxed) for the “public good.” They never converted over to a socialist economy. Today, most European countries have backed away from the old social welfare state system because of the “free market” idea and its resulting increased wealth and standard of living that are sweeping across the world. The fundamental problem with a welfare state is that it will eventually bankrupt itself by providing ever increasing welfare and free services to its citizens. It is simply a matter of economic reality (and history). Besides, as the old saying goes, do you really want a bunch of people who could not make a profit running a house of ill repute in Nevada making rules for your welfare?

History has shown that where there is private ownership of property and the means of production and distribution the majority of the people under that system fare better than those in welfare states. The prime examples in the world today are, first, Russia and China, who had no where near the productive capacity of free market states until each began to relax the rules and let the free market start working. Second, most of those countries that have socialist economies are nonproductive, agrarian societies. Third, the governing planners are never concerned with any individual's welfare, but rather, the welfare of the society as a whole.

I learned long ago that most people in the world simply want to be left alone to grow their own rice to feed their families, to be able to raise their families without interference and to believe in whatever they wanted to believe in. Most people desire to be free from unnecessary government interference and free from demands by nosy people who think they know what is best for everyone. There is no right or wrong in any economic system or any particular type of government. (I am sure that this statement will be the subject of a future mental wandering). It is simply a matter of what works best for the society (tribe) as a whole, what is sustainable in the long run and what produces and distributes enough to take care of the society's needs. Remember always, that society is merely an abstract phrase for a group of real, living, breathing individuals.

I would enjoy hearing your comments on the subject. Caveat. Bring your textbooks, dictionaries, and Cabernet.