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Capitalism and Socialism

Updated: Nov 15, 2023

THIS IS SIMPLE. Capitalism and Socialism are essential for all mankind to survive. The most important thing is that The Government should NOT have a direct capital, spending money, role in either Socialism or Capitalism. This article is not the typical Capitalism versus Socialism. It is a prescription of supporting Socialism within Capitalism in the United States of America. We need alternative answers to our problems.

If the Office of Management and Budget's projection is correct, the US debt will become unsustainable as soon as 2030. Note that all the government spending that has delivered the US to this point is much more than a safety net. We have to wonder how much-unearned luxury spending has been made possible because the Government has covered affordable expenses for Americans. Add to this that Government spending is not subject to competition and financial constraints of the capitalistic free market and is therefore inefficient. Add to this, the door is open to politicians to "buy votes" in return for social spending. We have a problem; our elected representatives cannot balance our budget anywhere, as well as the average American.

How Did We Get Here?

Blame it on Capitalism's failure to prevent the great depression of 1929. President Franklin D. Roosevelt's New Deal put us on a path to look to the government's central planning to support more and more of our social needs and expenses. Following President John F. Kennedy's assassination in 1963, President Lyndon B. Johnson established the politicization of big government spending on social causes coupled with the disruption of Capitalism:

  • Without The Rule of Law that supports our free market, Capitalism can not survive without it. It is dying as you read this. In 2022, retail theft in the US hit $112 Billion. Soros wants US to fail!

  • Diversity, Equity, and Inclusion are paramount, while MERIT matters less. This will affect profits and, therefore, productive jobs.

  • The Scientific Method is portrayed as a tool of White Supremacy used to oppress and is not respected and necessary to represent an opinion as fact.

  • The Woke believe profit is the goal, and Capitalism is the tool of the greedy oppressors.

  • Environmental, Social, and Governance investing is like investing in Bitcoin; without a tie to productivity, it is like gambling in Las Vegas.

  • Children are divided into oppressors and the oppressed while learning Critical Race Theory.

  • No winner's trophy for young children, only the same participation trophy for all or Equity for all. By the time they are in college, they need Safe Spaces to hide from the competition of ideas. No wonder, with a degree in hand, they expect to be given a high-paying job only to find they need to learn more to be competitive in the free market; thus, Occupy Wall Street.

  • Since the beginning of time, parents have led their children's sexual and gender development. Having the Government and Society change this is a violation of human rights. Sex is determined at birth, and the social development of the child determines gender. Everything a person does in life should be to be successful with what they were given at birth. Parents lead the social development of their children until they leave the family. Education must focus on knowledge and skills for future adults to be productive in creating products, services, ideas, and solutions.

  • Lowering standards is never a good idea, even if it is more inclusive. All you do is damage the productivity and prosperity of everyone, leaving less profit to help the needy.

Since 1970, the liberal, progressive politicians have won the battle with conservatives for their tax and spend political agenda, bringing us to the financial dilemma we are now in. This is amazing since all politicians tend to be tax and spend.

Today, How Does Government Socialism Work?

Today, the Government is taking tax money from successful Capitalists and using a large, expensive bureaucratic workforce to redistribute wealth as welfare, not workfare, to those who are needy, disadvantaged, and not climbing the Ladder of Capital Value. Besides the obvious inefficiencies of this bureaucratic process, the climbing velocity of the person receiving the wealth is Zero '0'. In contrast, the climbing velocity of the person working for the Capitalist is much greater. We want a healthy, growing economy where everybody wins; the employee gets a raise and a stock option, the Government gets more tax revenue, and the Capitalist grows his wealth. Capitalists who become insanely wealthy get to play a role in making our country stronger based on Capitalistic Rules and Socialistic Incentives and their ability to make good things happen.

US Capitalism Done Differently

For Capitalism, The Government's role is to set the rules so every US citizen has equal access to climb the Ladder of Capital Value(LCV) from poverty to supporting themselves to wealth. With wealth comes responsibility. With poverty comes responsibility. A considerable percentage of US profits must remain in the US free market economy invested in the general welfare of the United States by taxpayer-government partnerships. The advantages of this are:

  • Government and politics have nothing to do with the investment in the needy, no buying of votes.

  • The needy achieve climbing velocity on the Ladder of Capital Value to self-support and wealth.

  • The Capitalist leading this effort has proven his success before and has a win-win profit motive.

  • As the US economy grows, tax revenues increase so the US can pay off the national debt.

For example, the Capitalist's investment could be the same percentage of profits they pay in taxes today. Profit does not belong to The Government but to the person who earns it. However, The Government, We, The People, have some right, Article 1, Section 8, Clause 1 of The US Constitution, to control a portion of profits to pay for running a small, limited government, absolute defense of the nation, and the welfare of We, The People, and our Nation. This means:

  • Pay Debt Owed By The USA

HUGE, NEAR UNSUSTAINABLE DEBT. See the graph below. This is unavoidable. As of November 11, 2023, Moody's Investor Services lowered The US credit rating outlook from stable to negative this week as another government shutdown looms. The government cannot reach a consensus on a fiscal plan to slow the decline in debt affordability.

  • Pay the Expense of Running The Government

Profits are taxed to support government running costs as they always have been. However, the government will be much smaller and operate way smarter; it has to be, and we will be successful. The politicians will compete on issues of who can best manage the capital business of the USA. The ability of politicians to buy votes with big government spending while creating debt and inflation will disappear.

  • Pay the Expense of Providing for the Common Defense

The nation's defense is supported by private free market capitalism companies controlled by The Government and paid for by Profits taxed as usual. I realize this looks like the government structure used by China and Russia today under governance, often called Socialist, even Communist. Still, as you will see, these governments have come a long way toward capitalism, as the US has come a long way toward government central planning. There should be no mystery, all nations are progressing to what works best. We need a strong, winning defense that can beat any enemy. After all, this is not very different from what we do today.

  • Pay for the General Welfare of the United States

General Welfare is very nebulous. Many interpretations can be read into these few words. Most US national debt directly relates to these few Constitutional words; see the graph above. The US is on an unsustainable path. The situation screams out for a solution. The best solution may be Private Social Capitalism, described below.

Private Social Capitalism

Follow the money. The best solution is to use some of the profit and the business skills of successful capitalists. For Socialism, The US Government should incentivize successful Capitalists to offer opportunities to future successful Capitalists climbing the LCV, call it workfare. Of course, the US Government would also continue incentivizing private capital to provide charitable help for those who cannot create basic self-sustaining value. This is called Private Social Capitalism.

How Does Private Social Capitalism Work?

The successful people in the free market should sustain and lift up the needy, not The Government. Government spending is a slippery slope due to central planning inefficiency, unsustainable national debt, unaffordable inflation, weakness-vulnerability to manipulation by other nations, and overall less prosperity for all citizens. The event of failure and takeover of the USA is always a possibility unless we act. The best Government is small, which leaves capital spending up to the much more effective free market.

If The Government does its job right, the vast majority of tax money it takes in today would be left in the Free Market to be leveraged by successful Capitalists. Because it is their profit that Capitalists are investing, they are more likely than a salaried Government employee to be successful in turning a needy person into a successful Capitalist. Instead of paying a percentage of their profit in taxes, the Capitalists take advantage of money-making opportunities while creating new jobs for the needy who, without government help, paid for with borrowed money, are highly motivated to succeed. Call it workfare. Capitalists are scored on how needy people succeed. Poor-performing Capitalists will be taxed as usual, losing control of a large percentage of their profits. Other, more successful Capitalists shall be loaned their tax money at a very low-interest rate to invest in social workfare.

A Mixed Economy vs. Private Social Capitalism

A mixed economy is a system that combines elements of both free market capitalism and centrally planned socialist economies. In the last half of the 20th century, China and Russia realized their mostly centrally planned socialist economies were failing to compete and participate in the capitalistic free market economies of the West. In 1972, President Richard M. Nixon opened trade with China. From this starting point, China has impressively used worldwide free-market capitalism to fund its centrally planned Socialism. Similar but different events occurred during President Ronald Regan's administration, leading to Russia embracing Capitalism. This transition to Capitalism has seen the centrally planned socialistic economies of the world start to dream of worldwide economic dominance. However, centrally planned Socialism has an Achilles' heel: Government Socialism confiscates capitalist profits to fund its centrally planned Socialism. The dominant economy worldwide today is the US. However, the US is currently not only confiscating capitalistic profits but is creating unsustainable National debt, while China and Russia have much more conservative debts. Our wild ride on the slippery slope of centrally planned Socialism has progressed to our unsustainable national debt and inflation.

Today, all the world's major economies are mixed, including the US. Even tightly controlled socialist North Korea has a pervasive free market: the Black Market. Over the last 50 years, major economies have realized to have a strong booming economy, they must allow partial capitalism. All purely controlled socialist economies have failed.

China's Economy

China is a mixed economy with planned(38%, trending down) ) and free-market capitalism( 62%, trending up) elements. The government plays a significant role in the economy and allows for private ownership of businesses and property. China's economy is reasonably healthy, as its debt is only 49.5% of its annual economic output, GDP. China's mixed economy has been immensely thriving in terms of economic growth. The Chinese economy has grown at an average rate of over 9% per year for the past 30 years. That means it is 13 to 14 times larger GDP today than it was 30 years ago and growing. This has lifted millions of people from poverty and made China one of the world's largest economies.

Government Socialism Momentum Down - Capitalism Momentum Up

Russia's Economy

Russia is a mixed economy, with elements of both planned(40%, trending down) and free market capitalism(60%, trending up). The government plays a significant role in the economy and allows for private ownership of businesses and property. Russia's economy is very healthy, as its debt is only 20.1% of its annual economic output, GDP. According to the World Bank, the state-owned sector accounted for 40% of Russia's GDP in 2022. This means the government owns and controls a significant portion of the economy, mainly in the internationally important fossil fuel sector. However, the private sector is also increasing, accounting for about 60% of GDP.

Government Socialism Momentum Down - Capitalism Momentum Up

USA's Economy

The United States is a mixed economy. It combines planned(27.9%) and free-market capitalism(72.1%). The government plays a role in regulating the economy and allows for private ownership of businesses and property. The United States economy is in trouble, as its debt is 129.2% of its annual economic output, GDP, compared to China's 45.9% and Russia's 20.1%. Levels not seen since WWII, the 1940s, when the world was on the edge of darkness. Are we there again? I hope not because in 1940, we had a considerable advantage, allowing us to quickly pay off our debt as the US was the only significant world power undamaged by the war. Today, we are not in a place of considerable advantage.

Government Socialism Momentum Up - Capitalism Momentum Down

Value of Education

Those climbing the LCV must understand that the Free Market determines Value. It is always a great shock when you graduate with your expensive bachelor's degree or even more expensive advanced degree and discover how much you still have to learn on the job to climb the LCV. Things are even more disappointing if you face the headwind of a student loan payment. Your expensive education uplifts and accelerates your on-the-job learning and resulting value growth. You have three years after graduation to establish your base Capitalistic Value; your expensive education will not be as important to your current or future employer as your job experience during those first three years.

Is Education Required to Climb the LCV?

The absolute answer is yes, but your education does not have to be formal. Many very successful Capitalists dropped out of formal education and, using their passion, determination, and drive, climbed the self-education ladder and then the LCV to success. Examples that come to mind are Bill Gates and the Beetles for more details, read "Outliers: The Story of Success" by Malcolm Gladwell.

Most of us are not Outliers. I did not drop out of school before I acquired a bachelor's degree. However, I finished the last three years as a full-time student, 12 hours per semester, in night classes at the University of Houston, while at the same time working full-time for Control Data Labs, first driving the remote computing customer pickup/delivery truck at $300/month ($2,960/month in 2023 $s); my employer soon discovered my software engineering talent, and from 1965 to my graduation with a Bachelor of Science degree with a minor in management in 1967, I climbed the LCV. After graduation, I made over $900/month ($8,123/month in 2023 $s). I jump-started my LCV by three years, but school and work monopolized my life 24/7 for those three years. After graduation, I changed jobs and continued to develop my software engineering skills at University Computing Company until I was offered my dream job at Computer Sciences Corporation (CSC) in Los Angeles, the largest software company in the world at the time, where I worked under one its three founders, Owen Mock, and continued to develop my software development skills. It was all worth it as, in 1974, I made $10,000/month ($72,251/month in 2023 $s) as an independent consultant to Boeing Aircraft to deliver the system software for their Panama Canal Project, The Marine Traffic Control System that replaced the manual system with a Nasa Houston Space Center type of system in 1974. However, it was not until 1980 that I "jumped off the diving board, blindfolded, knowing there was water in the pool."

Public Education Favors Capitalism Depending on Socialism

Winston Churchill said, ‘If You Are Not a Liberal When You Are Young, You Have No Heart, and If You Are Not a Conservative When Old, You Have No Brain’. The young have a newfound fondness for Socialism; well, it's just so social. After all, today's young person can not live without social media like Facebook, Twitter, Snapchat, TikTok, and WhatsApp. Today, our life is limited, forget freedom by a vast growing concept of what is politically correct. Our life is increasingly controlled by new laws that grow out of social media-developed political correctness ideas instead of by Congress. Congress rubber-stamps a new law supported by social media. Our young people see us as a social democracy (Democratic Socialist). One asks what is wrong with this, with a majority coming together over the Internet to decide a new rule, regulation, or law - we are a democracy, after all.

The education system has failed the youth so badly. Another problem we face is that young people are influenced by teachers who are often against capitalism or don’t truly understand a mixed economic system. Sadly, the liberal university staff promotes an anti-capitalist agenda to the future teachers of our children. Add to this the fact that teachers consider themselves extremely badly paid, and you end up with a group of educators who feel capitalism has failed them, and they promote this idea to their pupils. They don’t stop and think that capitalism hasn’t failed them, but the politicization of capitalism has failed them.

What is a Free Individual Capitalist?

Having money you have worked for is the only way to be financially free. Don't you want to be a free individual Capitalist? Find a capitalist entity that you can offer something they need. The best situation is a job that can provide the experience that prepares you to be more valuable to this or another capitalist entity. Now, are you greedy, or are you feeling pretty good about yourself? Do you feel like giving some of your earned money to someone starting where you did but unwilling to give you something for it? Maybe all you want is for this needy person to spend money on something that will improve his/her earning power; by the way, this is velocity charity - something rich people do. If you are willing to spend a ridiculous effort on learning from your capitalist experiences, you may be capable of starting your own company, the ultimate goal of a capitalist. Now, you will offer money to people like you were years before, allowing them to be independent and free. This is how the world works best.

The Fact is Socialism Depends on Capitalism

To enjoy a healthy and happy Socialism, there must be strong support for Capitalism. I fear for our future. Mostly, progressive liberals are teaching our young people, and many of them follow "Rules for Radicals" by Saul Alinsky, the goal justifies ruthless tactics. Capitalism is presented as the problem. Too often, the classroom has zero or low tolerance for traditional and conservative ideas. Christian conservative speakers are increasingly asked not to speak to our young people. Teachers and activists say the US Constitution is outdated, and it's OK to work around it. Whenever non-liberal ideas are expressed, our young students are offered, and they feel entitled to a "safe space" so they can avoid listening. Unsurprisingly, many young people have come out to support Social Democrats like Bernie Sanders.

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