Democratic socialism won’t solve America’s problem

 

By Jaime Ortega.

 

I am not a socialist and I am not pro-capitalist. I grew up inside a democratic socialist country and saw the ups and downs of the system. Socialism in itself is not a bad concept, and some programs should be adapted into the system, but oscilating in all fairness and without bias, socialism is not the cure of America’s troubles. Socialism if nothing, is the excuse, of America’s own guilt.

There is little to no doubt that the unrestrained boom-bust cycles of capitalism echoed in the 2007 stock market crisis have dented the US economy. The headache partly started for the lack thereof to avoid regulating the risky fiscal-asymmetry credit default swaps in the mortgage and hedge fun markets carried since former president Bill Clinton repealed Glass Steagall when he signed the Gramm-Leach-Bliley act. The FDIC since, failed to constrain the modus-operanti scheme banks abused by jerking proprietary trade — tax evasion and loopholes are part of such peril as even billionaire Warren Buffet claims to pay less in income taxes than his secretary which include capital gains. The Internal Revenue Service contends that the top 10 percent of earners paid 68 percent of all federal taxes in 2011 (latest stat available), though they earned 45 percent of all income. So technically the 1 percent of the 10 percent have increasingly done better and the rest have not — but are wealthy individuals at fault for the current state of the economy? One could accuse quants, others could accuse diligence-under writers; others could blame rating agencies like Moody’s and Standard & Poor’s or contend the fact that synthetic CDO’s were permissible legal forms of trade during the Bush and Clinton administration, but they are other factors at bay the political class frightens to discuss. Despite the great recession, the following GDP growth in states like North Dakota 6.3%, Texas 5.2%, West Virginia 5.1%, Wyoming 5.1%, Colorado 4.7%, Oregon 3.6%, Utah 3.1%, Washington 3.0% and many other states show optimistic levels of recovery in the economy — even as late as 2013, New York City was one of top ten booming cities. However, they are other cities like Detroit and Chicago that have declared bankruptcy, but overall the nation has surprisingly recovered.

Franklin D. Roosevelt was not a socialist

Socialism is an economic system that comprises social ownership and controls the means of production and cooperative management of the economy. Democratic Socialism only differs with conventional socialism in that there is greater participation in the ballot box. FDR was no socialist, he was a pragmatist. With the ‘New Deal’ he applied the Keynesian model of economics to endow the government with enhanced ability to regulate the means of production than about actually transferring ownership of means of production to social organizations such as unions. Having the burden to cope with years that followed the Great Depression, when FDR headed to office he tried anything that he thought would help. A socialist would have adopted policies that would have allowed government to take on critical industries, whereas FDR spent a lot of tax payer money on temporary public work projects like building dams and roads. By doing so he brought capitalism back to life in the US giving leeway to the Great 50’s. In the end what took America out of the Great Depression was not FDR’s charisma, but the incredible American workforce that worked up to 21 hours per day seeking any available job to survive only to indirectly rebuilt the economy under the patronage of nationalism to resurge from its ashes. Such unity, work ethic and mentality no longer exist.

First problem

For socialism to effectively work, it has to comprise a strong working class. Millions of Americans don’t want to take on lower income jobs. Unlike the days of the Great Depression where Americans worked any job to survive even at the cost of travelling across the country to meet the next opportunity, today Americans with no skills would rather take a job in Footlocker and avoid working as a dishwasher. The Law known as HB56 intended to scare off undocumented workers, has affected many farm owners that are struggling to find replacements in places like Alabama, Wisconsin, New York and almost every state that contract illegal workers. Even paying American citizens wages up to $17-$20 that include health benefits to work the fields to replace the undocumented, these quit given the labors hardship. Many farm owners not only are witnessing the destruction of their crops, but pressuring state laws to allow illegal immigrants to come back and work. Just in the strawberry industry, 1/3 of crops were lost in Alabama because Americans workers were not capable of keeping with deadlines thus hurting the economy. But it doesn’t end with the farming sector, this situation is palpable in construction, textiles, services, agriculture and most lower income sectors. If increasing the minimum wage was not enough to seduce American citizens to take on lower income jobs, will socialism really work? The same can be said with higher education. As the Population Reference Bureau showed in 2009, more US scientist and engineers are foreign born. 60 percent of foreign born scientist and engineers in the US where from Asia. Whereas Americans are taking on easier college majors like psychology, arts, public affairs and philosophy to name a few, new immigrants are taking careers that help the economy grow during times of recession. No one needs philosophers or movie critics during a financial recovery. To issue further, 90 percent of students that attend Harvard are Asians not to mention other Ivy League schools, so the whole dynamic of education contradicts the popular conception of reality. Ultimately, economic growth has attacked native born workers and the shift has increased to triple digits since 2009. The middle class is shifting to new ethnic Americans who take advantage of the system where many Americans slack. During the Cold War, American citizens were heavily involved in science majors and took on much harder college courses. Those who had no skills worked low income jobs without feeling presumptuous to pick certain jobs based on citizen entitlement. No politician has addressed such issue, and Bernie Sanders is no different. The new generation of Americans overall have slacked to compete with new American ethnic groups hungry to succeed in lower and upper sectors of the economy.

Comparative advantage

It is impossible for socialism to work in America mainly because the culture itself throughout its recent history has spoiled citizens to forbid financial sacrifices to adopt a lavish consuming lifestyle. Unlike in Europe where individuals in most Mediterranean and Northern countries on average per capita save their money, Americans prefer to waste it only to buy themselves back to poverty without properly investing in their future. The African American community resembles more than any other integrated ethnic group the problem with many Americans. When first generation immigrants from countries like China, India and Africa to name a few restart their lives in America, they settle in low income areas. After many years of struggle, hard work, determination and sacrifice they eventually leave the projects and move to higher income areas. So how is it that Chinese people are capable of moving up the scale and start their own business coming from the bottom-end; whereas, many African Americans stay stuck in the system? Most projects have public libraries, but these are almost empty. The same issue resembles high income areas, where public libraries show low signs of inactivity. Most young millennials are not taking advantage of the system and are not interested in doing so, but they have all the resources available to progress. It is common to see low income African American teens spend $150 in a brand new pair of Jordan’s, but across the street the Goodwill thrift store books sell for $2.50, that range from math to history subjects and rarily get purchased. Every day alone according to the US Department of Education 7,000 student’s drop out of high school, and every year this results in 1.2 million. The fact that these new immigrants are taking advantage of the system and Americans are not, shows the decadence and failure to address the real issues taking place in the US. How will socialism change the problem, when the resources are already available and native born American’s don’t take advantage of the free system? I am all for free college (go Bernie!), but if people are already dropping free education at a basic entry level, would free college suddenly break the deadlock? Don’t bet on it!

Greed starts at the grassroots

During the 2008 bailout people blamed the government for all their problems, but is government responsible for people’s greedy decisions? Let’s face it, even though banks legally played the system, they never forced anyone to sign mortgage loans. Common sense indicates that when anyone signs an agreement (especially with banks), one ought to check with a microscope the terms and conditions regardless of how tempting the loan might present itself. Many Americans rejected such loans, but a significant percentage paid no attention or raised an eyebrow of suspicion. Just like the Hansel and Gretel story, greed took the children to follow the witch who showed them a house made of chocolate, and ate without thinking the risk or consequences involved in their actions. The people responsible for signing these mortgage agreements, knowing their precarious financial condition were ultimately responsible for the risks they took and should be held accountable for their decision considering no bank pointed a gun at their head and said ‘sign the damn contract’; quite contrary people rushed to the banks to finance their new luxurious house without questioning the consequences of their decision. The outlook also applies with healthcare. Millions of Americans live an unhealthy lifestyle unwilling to sacrifice their addictive behavior to better their condition. Why should tax payers pay more taxes to support individuals who won’t quit smoking, but complain they want more health benefits after developing lung cancer? Why should tax payers pay universal health coverage to alcoholics and drug users who care not to develop health diseases? Or the lady or the gentlemen who could easily help himself by eating a vegetarian diet and drink water instead of drinking sugar pop, eat unhealthy meals, plus smoking, plus drinking? They are 119,487 libraries in the US scattered throughout 50 states, why are native people not taking advantage of education, but foreigners and new born immigrants? Would a significant percentage of America’s lower income youth start going to libraries, purchase free books online, buy $2.50 books in thrift stores and save their money instead of buying a brand new pair of new Jordan’s, the latest IPhone 6 or the newest Play station, if Sanders sat in office? Will socialism end instant gratification and individual greed? No politician has spoken such truth, people are just as greedy as government but won’t acknowledge it and instead point the finger to avoid responsibility. Bottom line is that no one wants to commit sacrifices but expect the world in return.

What about efficiency?

Make no doubts technology has crippled employment, ‘capital hypermobility’ continues to worsen. Companies like Smiths, Kroger’s, Giant Eagle, Savons, Target, Safeway, and Walmart among thousands of other companies have invested in “self-check-out” machines to avoid employing people, in order to maximize efficacy without relying on human resources. From Redbox to New York’s MTA MetroCard vending machines, technology has subtly replaced workers, especially at the industrial-manufacturing level. According to the CATO institute in 1983 the Upjohn Institute of Employment Research Forecast confirmed the existence of 50,000 to 100,000 robots in the US by 1990, resulting in a net loss of some 100,000 jobs. Larry summers latest interview with The Washington Post estimates that in the 1960’s about 1 in 20 men between the age of 25 and 54 was not working. Today, the number is more like 1 in 6. According to Erik Brynjolfsson a professor at the MIT Sloan School of management, rapid technological change has destroyed jobs faster than it is creating them, contributing to the stagnation median income and the growth of inequality in the United States. To aggravate the problem, many companies in the agricultural sector are relying on technology to cope with demand and supply to produce goods at a higher ratio. During the recovery of the Great Depression, the industrial bonanza did not have the sophistication of today’s age. Would socialism really fix such problem? Surely Bernie Sanders alike the rest of candidates have not addressed this issue. If you really care, its simple! Boycott technology, and demand human labor instead, but don’t complain if prices soar during the transition.

Why encourage the local economy, when I have the whole world….

Globalization has not only hurt the local economy, but has incrementally tarnish the competiveness of local retail shops to the point of riling the US market. Why buy a product in my home state at a higher price, when I can shop online in E-Bay, Ali-Baba or Amazon and purchase that same product for a cheaper deal? The bankruptcy of companies like Circuit City, Marvel and Blockbuster Videos show the menace that online shopping possesses to disfigure the local economy. According to MSNBC, the brick-and-mortar firms are struggling to keep pace with online service. Tim Worstall a Forbes economist stated on one of his recent articles that online shopping is “killing” malls, adding “there’s 1,200 vacant malls in the US, of those perhaps 15% are 30-50% vacant.” Not to mention that illegal downloading has had a tremendous toll in world markets, especially in the US. SOPA and PIPA argue that online piracy is a huge problem, one which cost the U.S. economy between $200 and $250 billion per year, and it’s responsible for the loss of 750,000 American jobs that according to the Diplomatic Courier have affected a sector that comprises a total of 2.4 million technicians, editors, producers, hair stylist, and camera operators. Once again, is the solution towards uplifting the US economy a socialist system? Will socialism tax e-commerce to help local markets? Will socialism stop illegal downloading? The answers is no, unless of course, the government that is supposed to work for the people plans to revolutionize online usage which would violate the bill of rights of many Americans  – in other words, the perfect way to not get reelected.

It’s easier said than done

America like the rest of the world is financially bonded with China. The World Trade Organization latest 2013 report that Chinese exports equate to $2.209 trillion. 16.7% of these exports went to the US. The WTO also reports 94% of the $2.209 trillion were manufacturing goods. In 2013 US reported imports of goods from China of $440.447 billion. The problem with such statistic is that the US resource-manufacture bond between the two countries is so tight, that it would destroy and further increase the US debt to China and destroy the US economy under a resilient socialist takeover. According to the New York Times foreign companies are a key part of US employment and contract 5.3 million Americans. If indeed socialism starts to own industry will it not conflict with foreign companies who wont accept a takeover? How will that affect US workers working for these companies? The issue also includes US debt to Japan and India alongside with other countries widening concerns, but if that wasn’t enough, the US owes more money to itself than to any other country, and the numbers point close to 16 Trillion. If the US pulls into a socialist backyard, even more manufacturers and businesses will flee the country threatened by a takeover. Will a socialist government set an embargo and boycott China without significant side effects in the US economy? Will Americans who vote for Sanders or even Donald Trump, stop purchasing Chinese made products to help local employment grow? It’s a complete fiasco and no socialist government in Europe has ceased their addiction to China and neither will the US. It’s easier said than done.

What type of socialism clone the US?

If the US models itself after the fingerprints of Denmark, what guarantees can the new social democratic government promise that the experiment won’t turn into a Mediterranean socialist economy like Italy, Spain, Ireland, France and Portugal renowned for corruption? Since the US economy has already shown steady signs of recovery at state level, should risking a new federal socialist system ponder a greater risk at this point? Cross your fingers because the chances point to greater economic backlash. Socialism works under certain circumstances — none which pertain to America!

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