Thursday, October 20, 2011

The Fall of Socialism

The protest movement now sweeping the world did not begin with Occupy Wall Street. This past summer there were riots in London and flash mobs in America.

Demonstrations and rioting are ongoing in Greece, and Italy saw rioting this past weekend.

Clearly, something is afoot. Western civilization seems to have reached an important inflection point. Radical change is unfolding across the Western world. But do we know what is going on and why?

To say that protesters have a legitimate grievance does not really tell us very much. By all appearances, the West is declining. In America the standard of living is falling and the misery index is rising. Link here.

Something went wrong, but different people have differing opinions of what it was.

Victor Davis Hanson observes: “In the current left and right anger — somewhat analogous to the upheavals of 1848 or the 1930s — the common denominator is frustration that Western upward mobility of some 60 years seems to be coming to an end. In response, millions want someone or something to be held accountable — whether Wall Street insiders, or wasteful and corrupt governments, or the affluent, who have more than others.”

As I have mentioned before, Occupy Wall Street protesters are disconnected from reality. They believe that it makes no sense that a country awash in billionaires cannot provide jobs, medical care, housing, and social welfare to the general population.

By their calculation, the gross disparity in wealth can only mean that the few are stealing from the many. They wish to repair the injustice by confiscating the wealth of the few and distributing it to the many.

The fact that there is not enough wealth to make very much of a difference does not much concern the protesters. They are on a crusade; they have identified the enemy unbelievers; they believe that punishing the few will enrich the many.

They have not understood what it means for a nation to go broke, to run out of money. They are like children who refuse to believe that their parents cannot buy them what they want. And they want to make their parents pay for their willfully withholding largesse.

The protesters want to punish someone, to hold someone accountable, but punishing malefactors is not going to solve the problems that are currently tormenting America.

When an evil spirit has blown your house down, punishing the evil spirit does not restore your house to its prior pristine state.

I am not saying that evil-doers should not be punished. I am saying that a nation that wants the criminal justice system or the tax system to solve its problems will not solve its problems.

Whether it is Greek demonstrators or American labor union agitators, the protesters have failed to understand a simple economic principle.

In the long run you can only be compensated in relation to what your work contributes to the economy.

If everyone believes that they should get whatever they can take, because it appears to working people that capitalists are doing just that, they have failed to understand the principle of wealth creation.

The Occupy Wall Street protest is asserting, in defiance of reality, that there is enough money, but that it is being unjustly distributed.

The Tea Party activists, however, have recognized that there is no more money and that the nation needs to undergo a bout of austerity.

Whether it is in Athens or Madison or Wall Street, the current leftist protests refuse to accept austerity. They add that austerity will incite violence.

Rioting and protests are intended to threaten people into voting for increased unearned benefits. These benefits will go mostly to labor unions and the unemployed.

The current crop of protesters is continuing to fight a war that was already engaged by Gov. Chris Christie and Gov. Scott Walker.

Now, however, Vice President Biden is threatening an upswing in crime if the president’s jobs bill is not passed. Good soldier in an administration that has excelled at demagoguing issues, Biden is trying to rustle up votes by intimidating voters.

I think it fair to say that the coming austerity is not going to be a lot of fun. What is happening in Greece is not going to stay in Greece.

If you see it as a cry for social justice, that’s one thing. I think it more accurate to see it as the delirium tremens of a system that is detoxing from its addiction to spending money that it does not have. If that is true, then giving another drink, as tempting as it is, is not the way to go. 

Clearly, the protests have attracted their fair share of unreconstructed Communists. Some people still await the coming of the Worker’s Paradise. Some are proud of the fact that they  never learn.

To them the current historical inflection signals that capitalism has failed.

To which capitalism’s defenders have pointed out that socializing losses, whether in the banking system or the auto industry, is not the capitalist way.

Capitalism lets failing businesses fail. Socialism declares that capitalism is fundamentally unfair and unjust in the way it distributes goods and services, and that government agencies know better. Bailouts involve socializing losses, not the working of the free market.

As is perfectly evident, socialism appeals to thinking people. It judges reality against ideals and usually finds reality wanting. It then declares that an injustice was produced by criminal activity, and that only government can right the wrong.

Thereby, socialism or social democracy proposes to make reality conform to an ideal universe, the Heavenly City of the great philosophers.

It’s a nice idea, one that has attracted more than its share of adherents. Now it is failing across the Western world, with a bang, not a whimper.

We can understand this idealistic movement in slightly different terms. A philosophy that refuses to connect the value of your labor adds with your level of compensation, that feels that you have a natural-born right to a job, a home, medical care, and complete financial security, for the simple reason that you have been born a citizen of the nation, rejects the Protestant Work Ethic and free market capitalism.

That much is clear. It might think that it will correct the injustice with socialism, but it really seems to be espousing a return to aristocratic privilege… for the many, not the few.

Aren’t the protesters acting as though they are the children of a hereditary aristocracy and that society at large should care for them, regardless of what they do or do not do?

What else did it mean when an Obama supporter celebrated his election by declaring that Barack was now going to pay her mortgage and her car loans.

It’s as though Obama was going to be the leader of a new aristocracy that would distribute goods and services according to principles of fairness and justice, that is, according to whim and votes, and not according to what each person had earned.

Social democracy is aristocracy in modern dress.

If the fall of communism was the first act in the ongoing fall of socialism, then we have now arrived at the second act.

Now, will people understand that free market capitalism has not failed, but that the social democratic attempt to supersede the markets and to produce more fair and just results has led the Western world to a precipice? It remains to be seen.


Dennis said...

Eventually the people who live and work around these protesters are going to start making their voices heard. Eventually the financial sector is going to realize they don't need NYC in order to prosper.
What we might be witnessing is the death of the "blue" city that has become so anti- business/american that it destroys itself. I have to admit that after years of listening to the residents of these "blue" cities talk about the rest of the country as if they were "fly over country" I might think it well deserved.
California, NY and many "blue" states are contributing to such an outflow of talent that their value will become less and less important. Given the available technology and the innovations that are extant there is little reason to need the anti-business areas of this country. I must applaud NYC's forward thinking. It has lived on laurels that it does not deserve for so long that it has become self destructive. The words of the song that "if you can make it here you can make it anywhere" were never true. Indicative of all that money spent buying a team called the Yankees and who is in the World Series? Can one imagine "Texas" and some team from fly over country. Interesting is it not. There is nothing good that happens in Texas or the rest of the country outside of the "blue' is there?

Stuart Schneiderman said...

I agree entirely... the only question remaining is... how long is it going to take.

Surely, we have been seeing a population migration out of NY and other Northern states, toward the South and Texas.

Perhaps it's going to be slow process, though if New York loses too many more financial services jobs and if the industry starts paying much less in taxes, the slow bleed might become a hemorrhage.

Dennis said...

One of the real problems I see is that the financial services industry will start looking at the overhead and taxes it takes to operate in NYC, not withstanding the disruptions associated with a "Nurse Bloomers" run city.
If one runs a business what does NYC have to offer that cannot be attained somewhere else? One sees a city where the police seem incapable of protecting its own citizens from those who defecate on their property, interfere with their ability to go to work, have a decent night's sleep, the ability to feel safe in their own homes, name calling, violence, et al.
One has to suspect that with both police and fire services being unionized that many of those services are not being provided due to the split loyalty to protect and serve and that of doing the union's bidding. It is no secret that the unions are behind much of the "Astroturf" and violence that is OWS. One cannot have divided loyalties. One is either a servant of the people or they are the servants of an increasingly anti-business/american organization.
It would seem that the powers to be in NYC care little about those they were elected to serve and more about the power gained by extorting the people of NYC.
You will give us what we want or we won't do the jobs we have been paid to do. Nurse Bloomers, the police and fire unions should be sued for the damage that the have encouraged and allowed. When one fails to do the job they are paid to do they should do the paying and not those who were fooled into trusting these people.

Stuart Schneiderman said...

If the decision were merely a business decision I think that many of these firms would be outsourcing more of their work outside of the city.

What is slowing the process is the social and cultural advantages that accrue to people who live in New York and who think of themselves as more refined and sophisticated than the rubes who live in flyover country.

The only problem is, how much are they willing to pay for the privilege of living in the city, and how much longer before they discover that high culture exists outside of NY.

Ultimately, the big financial firms will have to move en masse and to find a place where they can all feel at home.

The place will have to make them feel that their money is safe and that they are not foreigners.

For now it's been a gradual process. Many of the hedge funds have moved to Connecticut... we'll see how long it takes the banks and insurance companies to follow suit.