What is Socialism

I have heard much talk in this election year about socialism. Much of it is in the form of accusations made by one candidate to another over economic issues. With the economy heavily weighing on the minds of voters this election, let us take a moment to determine what socialism is.

Socialism has its roots in the philosophy of Karl Marx. According to the Stanford Encyclopedia of Philosophy, Karl Marx’s philosophy was based on the belief that societies, including economic systems, rise and fall as they further and then impede the development of human power. He viewed capitalists as those who would in the beginning further the development of human power but as the economic system grew he believed these capitalists would begin to impede this development. His view on profit was that it was the extraction by these capitalists of excess value from an exploited proletariat or working class. He believed that societies would progress through various modes of production, culminating in communism.

Full-fledged communism is when the state or government has full control and ownership of economic resources. Socialism is system in which the government allows private ownership of resources but through progressive taxation and regulation attempts to redistribute these resources among the population. This fulfills the underlying philosophy of Karl Marx “To each according to his need. From each according to his ability”.

In order to determine if a candidates accusation of socialism on his or her opponent are true, we need to look at his or her economic positions. If his or her positions favor the following, his or her policies are socialistic in nature.

1. The candidate proposes increasing taxes on the rich who are the greatest producers in the economy.
2. The candidate proposes tax cuts to lower income individuals regardless of whether they even pay taxes.
3. The candidate proposes using the increase taxes received from the producers to offer benefits to lower income individuals such as free healthcare or free education.
4. The candidate opposes any proposed across the board tax cuts or reformation of the tax code to a flat rate income tax or sales tax.

However, I am not saying that the candidate is a socialist, just that his or her economic policies are socialistic in nature.

The only thing left is for you as a voter to determine is if you believe socialism is the most beneficial economic policy for the country to follow. However, consider that most of us probably work for one of these capitalist producers in the economy. If we increase taxes on these producers, how will they pay the additional taxes?

1. They could just fork over the money
2. They could increase prices to their customers
3. They could lay-off employees
4. They could offer lower, or even eliminate pay raises
5. They could offer lower, or even eliminate bonuses such as Christmas bonuses
6. They could lower pay
7. They could lower or eliminate some employee benefits

All of these methods for payment of increased taxes, except the first one, would actually end up punishing the lower and middle class individuals the socialist policies were designed to help. So do socialist economic policies really help the lower or middle class or actually end up hurting them? Something to consider as Election Day approaches.

Joe the Plumber, the Real Issue

Those of us who watched the final presidential debate this week heard Senator McCain’s reference to Joe the plumber. In the following days, Joe became a political football that was kicked, passed, and carried up and down the political field. The politics aside, let us take a few minutes to explore the real economic issue with Joe the plumber.

Joe works for a plumbing company in Ohio. He is interested in buying the business for which he currently works. As anyone of us looking to purchase a business would do, he looked over the books to determine if it would be a good investment or not. During a campaign stop in Ohio, Senator Obama came down Joe's street to talk with the residents. Joe approached him about his proposal to raise taxes on Individuals and businesses making more than $250,000 per year. Joe told him that this proposal would affect the business he was considering buying. Senator Obama’s response tells us much. He told Joe that he did not intend to hinder his success but felt it necessary to spread the wealth.

In a capitalist economy such as the United States, small businesses are a critical component to job creation. Small businesses are created when someone like Joe has a dream to improve his or her financial position, and believes the best way to accomplish this is starting or buying a business. Joe’s boss is apparently interested in selling his business and Joe is interested in buying it. However, if Joe, or any other perspective buyer, is discouraged from buying the business because of increased taxation, Joe’s boss may choose to liquidate his business instead. Should he do this, all of his employees, including Joe, will be unemployed.

The real issue with Joe the plumber is government policy should encourage small business creation and not hinder it. Arbitrarily increasing taxes on individuals or businesses because their income exceeds a certain amount places a cap in economic growth. Is it wise, under our current economic climate to place such a cap on economic growth?

Hello everyone. Please allow me to introduce myself.

My name is Dale Weckbacher and I have worked in the accounting and finance industry since 1976. I have a bachelors degree in accounting along with an MBA. During that time I have witnessed many economic ups and downs but nothing like what we are witnessing now. As I look at the current situation, there seems to be little common sense at all in what is being done in an attempt to correct the situation. As we have seen from the current economic ups and downs, simply throwing more money at the problem, as the government did with the recent bailout bill, has provided little relief and has actually resulted in the market dropping further.

What is necessary is for more common sense in our economic policies. This begins with education. I am currently working on a book entitled commonsensenomics which I plan on having completed in the next 6 months. I currently do not have a publisher, so if anyone has any contacts, please let me know.

In the mean while, I will be posting some information as I come across it in my research so the education process can begin. I plan on posting to this blog on a weekly basis. Please feel free to send everyone you know, regardless of their political affiliation, to the site so they can learn more about how we can restore common sense to our economic system.