About Capitalism and Socialism

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  • Fri, Dec 05, 2008 - 12:32pm

    #11

    Damnthematrix

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    Re: About Capitalism and Socialism

In fact, we need a completely new ism based on sustainability.  Can’t think of a name right nowm doesn’t matter, but if we can’t work out a way to be sustainable, then we truly are screwed….. http://www.futurescenarios.org/content/view/16/31/

  • Fri, Dec 05, 2008 - 01:07pm

    #12
    jmar8692

    jmar8692

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    Re: About Capitalism and Socialism

Michael, 

As a child I have lived in "communist" eastern europe. My parents have lived in it all their youth. Despite 20 years of transition to the "free market capitalism", some of the "benefits" of  socialism that you praised in your post have outlasted until today here in the Czech Republic. It is because people got used to it and no government will ever dare to abolish these benefits, neither a right wing government which is qute rarely formed (and BTW our "right wing" is still more leftist than US Democrats).

We have a free health care. In fact, you pay some participation for drugs and you can pay for some "luxury" services, like nicer artifical tooth at the dentist or for a better room with a TV/internet in the hospital, but you can’t pay for a medical care itself, even if you want. For example, if you need a hip joint replacement, you wait 2 years until you can take the surgery. It is so simple – when the money does not set the limit, something else must set the limit and if you let the departmental ordinances to set the limits, then you will get rewarded by 2 years in pain, waiting for your new hip joint. To be honest, they recently managed to shorten the waiting time to 1 year and pride themselves greatly over this success 🙂 In reallity, people bribe the doctors to get the surgery earlier. Even an half-legal but tolerated system originated: You need a hip joint surgery, you have money (say $1.000 – $2.000, it is not so expensive operation anyways) and you don’t want to cripple along for a year or two when you will get the "free healthcare". Then you simply make a donation to the hospital and wonder happens – you can undergo the surgery next month. Look how the free market finds its way into this regulated system.

The current "right wing" government is very unpopular, because they introduced "see doctor fees" in effort to stem over using of free health care. You have to pay 30 CZK ($1,5) when you come to doctor, the same ammount for every item on the drug prescription,  60 CZK ($3) for a day in hospital and 90 CZK ($4,5) if you come to emergency. For many people here this is thievish abuse of our free healthcare.

Of course, the doctors don’t work for free, although their wages are regulated too, so they are much cheaper than in US. From every employee’s salary, the state takes about 10 % for "health insurance" (which is no insurance at all, it is just tax). However this money does not go to any personal account, it is not even bind to the health care, rather it goes to the state budget and they redistribute it somehow.

Similarly, another 25 % goes to "social insurance", from which the retirements, unemployment benefits and other services are supposed to be paid. You can see that just these two taxations consume 35 % of employee’s wage. From the rest you have to pay income tax (about 20 %) and when you spend the rest, you still pay the VAT (9% or 19%) on all goods and services. Fuel and cigarettes are extra taxed sky high, so that 1 gallon of gasoline costs about $5 in these days when oil is below $50/barrel. Although the average employee is taxed to death (about 50 % or more depending on the income), the budget is still deficient, debt is rising and nobody seems to be much worried about it, because "our debt to GDP is quite low".

On the other hand, you pay nothing (or only some chickenfeed money) for healthcare, schools (all free including colleges). I must agree with the statement that whatever is free is being abused and the service quality deteriorates. This is true about our healthcare, social wellfare, pension system and education.

In the communist era, we have not free, but very cheap (subsidised) housing and mass transit – and both was appalling.

I could write more and in more detail, but it is already a long post, so feel free to argue and/or ask question. But having my experiences and my parent experiences, I would never experiment on socialism. Really, never ever.

  • Fri, Dec 05, 2008 - 02:48pm

    #13

    Michael Höhne

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    Re: About Capitalism and Socialism

Well, don’t get me wrong: I’m not experimenting with socialism. I live in Germany and not too long ago we had Eastern Germany and Western Germany. I was in Western Germany and had all the benefits compared to the eastern part. I never wanted to live in Eastern Germany, because it seemed so underdeveloped and different. I enjoyed the advantages of our system my entire life, but where are we today? I haven’t thought it could happen and before watching the Crash Course and reading the forums I even wasn’t much aware of it all. Even then I wouldn’t have believed if the current economic situation was "normal".

To make it easier once more: forget about the *isms and try to look forward. We cannot change history, but we can change the future. And I’m repeating myself here: without ideas you cannot change anything. I like the idea of free mass transit and it has nothing to do with socialism. I also like the idea of free housing and anything else I wrote before. Again it has nothing to do with socialism.

We currently have an outdated social security system that is about to fail in the future. Health insurance is getting more expensive almost every year, while benefits drop. Our state pension funds won’t be able to pay in the near future, because more people retire and they get older as well. For that reason the age of retirement already changed from 65 to 67. If you retire earlier, then you get less money from the state. So at least this is addressed, but not entirely solved. To continue this model, we need a growing population, because more workers can pay more taxes. But this won’t work in a financial crisis like the one we are facing today. Instead more people will lose their jobs and usually the older people are asked first, letting them retire in the age of 58 or even earlier. That puts even more pressure on the system: it’s not only less taxes, it’s also more money for pensions or unemployment benefits. And the only way to finance is more debt or higher taxes. As we all pay taxes, you could name the existing system "socialism" as well, but as said, I’m not very much interested in words and their meanings. We tend to call our system "social market economy".

  • So what is bad about a free mass transit, if you always can buy a car if you have enough money?
  • What is bad about free staple foods, if you always can buy additional items if you have enough money?
  • What is bad about free medical assistance anyway? If you want additional benefits, then you can pay for it as well or pay for health insurance.
  • What is bad about free housing, if you can always rent or buy a bigger one, given that you have enough money?

Do you really think that most people won’t work anymore when the above is for free? I can’t imagine living like this for very long. But I would be glad to have it when being unable to find a job. Just my opinion.

And one last time: don’t just say that something cannot work without telling how to do better. I hoped to see a discussion about how our future could look like, not what has failed in the past. However, I liked your response because of the insights of your country and why it’s not working in the Czech Republic as well. What about using your own experiences and trying to modify what I wrote so that it makes sense to you? If you think that it’s complete nonsense, well, then you don’t have to. But even then you may have ideas how to make things better that are worth sharing.

 

  • Fri, Dec 05, 2008 - 03:50pm

    #14

    Aaron M

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    Re: About Capitalism and Socialism

DamntheMatrix,

Nice job saying nothing – while managing to be insulting.

  • Fri, Dec 05, 2008 - 04:18pm

    #15
    jmar8692

    jmar8692

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    Re: About Capitalism and Socialism

Michael,

first of all, no offence. I am glad to participate in this discussion. If I use capitals, it is for emphasize purposes, no shouting 🙂

[quote=Michael Höhne]

To make it easier once more: forget about the *isms and try to look forward. We cannot change history, but we can change the future. And I’m repeating myself here: without ideas you cannot change anything. I like the idea of free mass transit and it has nothing to do with socialism. I also like the idea of free housing and anything else I wrote before. Again it has nothing to do with socialism.

[/quote]

these have EVERYTHING to do with socialism. These all will NEVER be free, rather you should say you want them to be funded from public budget. The money come from taxes (or worse from debt). Either way, the citizens WILL pay for these services (sooner or later) and they will NOT be free in effect. 

Once you make them "free", people will start over using or abusing. So they will pay more in the end, because of all the waste.

[quote=Michael Höhne]

  • So what is bad about a free mass transit, if you always can buy a car if you have enough money?

[/quote]

This is perhaps the one which I could personaly imagine to be possible as people would hardly abuse this benefit. Here in CZ, in some small towns they have a free mass transit. In the large cities, you have to pay for tickets, but usually you can buy a long term ticket for cheap. For example in capital city of Prague, the year ticket costs about 4.500 CZK ($225), however, the ticket fees cover only 25 % of total costs, the remaining is paid from municipal budget. Well, you can think about it as 75 % "free". Last year an accounting survey in the Prague public transport company that 25 % of its "white collar" employees did almost nothing but playing computer games. If I remember it correctly, there was a guy who played some internet game 6 hours a day on average. This will of course happen once you fund any company from the public budget, protecting it from competition.

[quote=Michael Höhne]

  • What is bad about free staple foods, if you always can buy additional items if you have enough money?

[/quote]

Who will be in charge of these quotas, how will it be distributed, how will you prevent people from selling their quotas on blackmarket and if you let them, are you aware of the waste that will neccessarily originate?

[quote=Michael Höhne]

  • What is bad about free medical assistance anyway? If you want additional benefits, then you can pay for it as well or pay for health insurance.

[/quote]

I agree that some very basic medical treatment should be allowed to everybody. However, is not it already provided? What are your "additional benefits"? If you calling for full health care service for free with optional paid luxury services (which consist less than say 10 % of the total costs) – are you then aware that you can spend virtually ANY ammount of money on health care? Who will set the limits? Because there MUST be some limits, otherwise you could not finance the enormous costs. Where your wallet doesn’t decide, other people are making decisions. Are you prepared for your cancer treatment being terminated prematurely, because there were recently too many patients with cancer treated and the funds are depleted? These things happen every day in healthcare systems which are funded from public budget…

[quote=Michael Höhne]

  • What is bad about free housing, if you can always rent or buy a bigger one, given that you have enough money?

[/quote]

How do you plan to achieve it in the first place? Where will you find house or flat for everyone? This is utterly impossible, unless you do some kind of communist thievery by nationalizing real estates giving their owners nothing in reward. What if there was not enough flats? The state would have to build flats on its own (which exactly the communists did). Another inefficient state owned company… Who would pay for the maintenance? The costs would be enormous as once there are some people who don’t appreciate much anything which was given them for free. Have you ever seen a ghetto? This is the sort of people who usualy pay little if anything at all…

And what about renting your "free housing" flat on the black market? And what about poor worker paying taxes to be spend on free housing for the rich M.P.? Again, I am not conspiring against a good idea, I am talking about my experience. Here in CZ we have another relict from the communist era – regulated rents. About 1/3 of all flats has its rent regulated by law. These regulated rents are at some places as low as 20 % of the ammount usual on the market. There are people of all sorts living in these flats – from a poor 80 years old pensioner to a rich leftist M.P. who commit himself in preserving these regulations as necessary (pointing out the 80 yeared pensioners, while other poor pensioners who were not so lucky to end up in a regulated flat has to pay full market price, which is higher because of regulation on 1/3 of the market).

I didn’t provide much thoughts for the future as you requested and I admit that. If I get some time during the weekend, I will certainly add some thoughts. For the beginning, I believe that following some Chris’s advices is a good start. So – we must stop living on debt. We must have a sound currency. Once we have a sound currency, we must start saving. Recently I read a book "The richest man of Babylon", I gladly recommend it – there are some supertemporal advices about wealth and success. Once we have savings in sound currency, we are becoming wealthy. Sound investing multiplies the wealth and creates the jobs. Mankind lived like this for thousands of years and they survived without our knowledge and all the supertechnologies. I wonder why we would not just manage to continue in doing this, after we eliminate the excesses in our economy.

  • Fri, Dec 05, 2008 - 05:00pm

    #16

    Michael Höhne

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    Re: About Capitalism and Socialism

I really appreciate your comments and you are right on everything you say. It’s not that I’m not aware of it at all. It’s just that our current systems don’t work. Pure socialism isn’t productive and pure capitalism favors very few people. Neither you nor me lives in one of these extremes, so it’s always somewhere in the middle. Our governments have to set rules to keep things running and obviously they failed in the last decades. Maybe they just didn’t know better, and now it really isn’t a good time for dramatic changes. Always better doing them when things are good, but knowing this doesn’t help now.

We will see our governments making tough decisions while being under horrible pressure. And that bears a high risk of failing. I also totally agree that saving and stopping excessive consumption is very important to get things in balance over time. What I’m still interested in is how to prevent these bubbles in the future. All of the money being injected could be used to create an ever bigger bubble. I really hope that we learn this lesson and decide to invest in things we really need instead. Guess that’s the entire story behind my original post.

And thanks to all others having replied as well, but please follow general discussion rules. Personal disputes should be taken offline.

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