On Socialism and Capitalism

Although I’ve been aware of this great divide for decades now, moving to Tennessee has heightened my sense that a large number of my fellow American citizens are oblivious to basic economic concepts. The Knoxville newspaper barely goes a day or two without someone railing about the evils of socialism. A dear friend who ought to know better wants to elect Republicans in order to save her Medicare! It shouldn’t be necessary, but I think I have to say something about what I consider to be elementary economic theory.

Very few people in the United States are socialists. But very few are capitalists either. The vast majority of us fall somewhere along a spectrum. Most of us probably don’t realize how close we are in that spectrum–as evidenced by my pro-Medicare Republican friend.

Socialism, simply put, is an economic theory by which people agree to pool their resources and pay for services for the common good. When Benjamin Franklin first proposed a public library, he was endorsing socialism. The idea was (and is) that we will pool a bit of money to fund the purchase of books which anyone can read–whether or not they could have afforded to buy the books themselves.

Do you believe that we should pay for our military forces out of a general tax collection? That’s socialism! Should taxes fund roads and bridges? Socialism again!

It may be hard for you to believe, but there are places in these United States where a fire company will let your house burn down unless you are in the correct district or have paid some fees. Most of us are blessed by living under a socialist regime wherein the firefighters will save our homes without asking whether we have paid the fee. Perhaps you think that’s foolish and a home owner should be required to produce a receipt before the firefighters start working. Then you would be trending towards the capitalist side of things.

Should people be permitted to starve to death if they can’t afford food or die of an infection if they can’t afford an antibiotic? If you answer “yes” you’re a good capitalist. But if you answer “no” you’re not necessarily a socialist–therein lies a rub.

Until now I’ve been stacking the deck in favor of socialism. But I’m not a socialist. For example, I don’t believe that we should all be taxed so that someone who doesn’t work can live in a luxury dwelling for free. You might be able to convince me to pay for some minimal level of shelter for people who are ill or unable to work through no fault of their own–especially if the help is temporary. I am in favor of public transit, but I don’t believe everyone should be able to ride for free. I don’t want to see anyone go hungry, but people should work (in my opinion) if they want to eat in restaurants. In short, I do believe in the work ethic. People should work hard, work to obtain good educations, and be able to enjoy the product of their hard work. So I’m a capitalist in those regards.

Americans, like many other people around the world, are neither socialists nor capitalists. We do accept a number of socialist norms and most of us do feel that hard work should be encouraged and rewarded. So the only question is that of borders. Where do we set the lines? What level of health and comfort do we want to guarantee to all citizens? When do we tell someone, if you want that advantage you need to work for it?

Let me make this explicit for my Republican friend. Medicare is a form of socialism. What we have said, since the Lyndon Johnson administration, is that everyone should be willing to kick in a percentage of their income (currently about 3%) to a common kitty so that no older American need fear going without health care. We also use forms of socialism to at least partially cover the indigent and children. Most other industrialized countries have said that it is silly to require everyone else to pay for private insurance. If you’re going to have a system which takes care of the young and elderly, why not just provide health care for all?

Capitalists do have a valid point. If we say that we will provide an unlimited amount of medical care to everyone who wants it, we will bankrupt ourselves. No amount of taxation would be sufficient to pay for health providers and insurance companies giving everyone anything they pleased.

The solution must come from some sort of compromise. That’s what our public debate should be about. How much health care can we afford to provide to anyone, and how much should be reserved to those who can pay?

One thing that happens when you collectivize the effort is that you can reduce some costs. If a person who is diagnosed with cancer will be treated regardless of ability to pay, there will be no need to engage the services of an insurance company. Current estimates are that about 25% of the costs of the American system of health care come from insurance companies, so a more socialized system can be at least partially funded by eliminating the need to pay insurance companies for these sorts of issues.

But what about cosmetic surgery, Lasik for eyes, birth control, all sorts of undoubtedly worthwhile things that people might desire? That’s where capitalism comes in! People can either just pay for such things or purchase insurance policies which will pay for such things. The discussion in the public square becomes one in which we define how many services we want to provide via our taxation system, and what we will require people to arrange on their own dime.

Make no mistake about it–you’d have to find a very extreme Tea Party member indeed who is not in favor of some socialist positions. So let’s stop throwing the term “socialism” around like it’s some bogey man. We are all socialists and we are all capitalists. It just depends on the issue under discussion.

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