Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

07 March 2009

Egalitarianism vs. Flourishing

One of the great differences between socialism and capitalism is based on the relative values that the socialist and the capitalist put on egalitarianism and flourishing. The socialist is greatly offended by differences in income and wealth among people. He would rather have a system in which the lower quintile in income of workers had, say, $15,000 income per year and the upper quintile had $25,000 per year income, than one in which the lower quintile of workers had an income of $25,000 per year and the upper quintile of workers had an income of $80,000 per year. In his preferred system the upper quintile makes only $10,000 per year more income and it is only two-thirds greater. In the latter case, the difference in income is $55,000 per year and the the upper quintile is making 3.2 times as much per year. The capitalist is very happy with this case with the greater divergence of income. Why?

The result of the capitalist system proposed here has an upper quintile making 3.2 times as much as they would make in the socialists preferred system. This group is certainly better off. The lower income quintile in the capitalist system is making 1.67 times as much as in the socialist system. Of course, the capitalist system has not rewarded the lower quintile as richly as it did the upper quintile, but it sure did make them 1.67 times better off than did the socialist system.

Yet, many, many people prefer the above socialist system outcome to the capitalist system outcome. Why? One can only see this as the result of an overweening envy and/or an equally overweening guilt at being successful in generating income. Both seem to apply in various combinations to socialists. But these same socialists almost always pretend to actually care about whether the lower quintile will flourish in their system. It is some very twisted notion of caring in which you would condemn the poorest quintile to only 60% of the income they might readily have in the capitalist system. Rather than see the lowest quintile in income actually have more means to buy homes or rent decent apartments, have a car of their own, eat well, be able to reasonably entertain themselves, educate themselves, and wear decent clothes, the socialist wishes to indulge his feelings of envy and guilt. Rather than respect the wealthier quintile for its ability to produce goods and services in high demand by others, they choose to hate them. When they are of that highest group, it is often guilt which motivates them to despise the capitalist system and to hate themselves.

The capitalist proponent seeks the means to allow each individual to maximize his own interest without the use of force, but only by means of arranging free trades for values of mutual interest to the trading parties. This allows each individual to decide for himself what he wants and how he wants to go about attaining it. In this system, it has been shown that men are quite effective in acquiring the values they have chosen. In the socialist system, a huge fraction of the people must be thwarted in their pursuit of their values, so that the differences in the degree to which men achieve those values are minimized. This is a very achievable goal, but it always comes with a very high price tag.

The capitalist system does not just allow some people to maximize the amount of money they make. It allows them and it encourages them to maximize their use of energy and their use of their minds. It allows men to be creative and to offer others the products of their creativity. When Henry Ford built the inexpensive Model T, he not only made himself rich, but he made cars that very many people could afford available to them. He was also able to pay his factory workers unheard of high wages. Who was hurt by the great wealth that Ford acquired? Neither the new car owners nor his factory workers were hurt in the least. In fact, they clearly benefited greatly.

With many desirable products being produced by men becoming wealthy in the process, the population has a rich choice of goods to buy. They buy those that they think will make their lives better and richer. The employees who make the various products also have many choices as to where they will work, for whom they will work, and what kind of work they will do. They can go to the factory with the best pay, which will tend to be the one with the greatest need for workers or the one which can put them to the most productive use. They may wish to stay in a given area of the country where they have family and the more factories there to choose from, the better off they are likely to be in choosing work they like or in negotiating for pay. When the socialist is allowed to put roadblocks in the way of the entrepreneur who is becoming wealthy, they hurt everyone. They hurt those who use or would use the products and services of the in-demand entrepreneur and they hurt the employees of the entrepreneur. They also hurt the stockholders and investors, which even in today's mixed economy is more than half of all workers.

All of this is inescapable and it is also a very obvious truth. Yet, in the name of envy and guilt, many people turn a blind eye to this knowledge. Envy and guilt create blindness and it is most debilitating. It is grotesque when this denial of reality and rejection of the good for almost everyone becomes the justification for the brutal use of force to keep men from making voluntary trades in their mutual interest.

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