The Iowa Caucus: Bernie Sanders, Millennials, and the Empty Promise of “FREE STUFF!”

untitled (24)Today, the focus of America will be on the state of Iowa, as Presidential Candidate Hopefuls from both parties, vie to win their respective races.

On the Left Side of the Political Aisle, a 74-year old curmudgeon, from a tiny New England State, promising a whole lot of FREE STUFF, is in a virtual tie with the Queen of Mean, the “Inevitable Democrat Party Candidate” Hillary Rodham Clinton.

The Washington Post reports that

DES MOINES — In his final campaign rally before the Iowa caucuses, Democratic presidential hopeful Bernie Sanders on Sunday decried the nation’s “rigged economy” and pressed other now-familiar themes before an enthusiastic crowd estimated at 1,700 people.

“You want a radical idea? All right, here’s a radical idea,” the senator from Vermont told an audience packed into a gym at Grand View University. “Together, we’re going to create an economy that works for all of us, not just the 1 percent.”

Sanders’s appearance capped a full day of campaigning on the eve of the nation’s first presidential nominating contest, which could go a long way toward shaping the direction of the Democratic race against Hillary Clinton. Polls have shown the caucuses to be a dead heat.

Sanders made only passing references to Clinton during his 48-minute remarks, instead emphasizing the same issues that propelled him from being a fringe candidate when he launched his bid nine months ago to a surprisingly strong contender.

He called for a $15 minimum wage, pay equity for women, paid family leave for workers, a $1 trillion federal jobs program and an overhaul of the tax system to make large corporations to pay substantially more.

Sanders singled out Wal-Mart, saying it pays its workers so little that taxpayers subsidize the company’s owners by paying for Medicaid, food stamps and housing assistance for its employees.

“I say to the Walton family: Get off of welfare, pay your workers a living wage,” Sanders said, referring to the family that owns the company.

In an interview taped in Ames before the rally, Sanders told Matt Lauer of NBC’s “Today” show that his campaign is “in this until the end,” regardless of the outcome in Iowa.

“What we are doing is running a national campaign,” Sanders said. “We’re going to run until the convention.”

“I hope we win, but if we lose by two points, so what — we’re going to go to New Hampshire, then we’re going to go to South Carolina, then we’re going to go to Nevada,” he told Lauer. “We are in this to the end.”

Why is this self-proclaimed SOCIALIST still in the Race?

Sanders is riding the crest of a wave of popularity among the generation whom we call “Millennials”…those, whom  my late Daddy, who landed on the beaches of Normandy, France on D-Day, all those decades ago, in the biggest Fight Against Fascism that the world has ever known, and the rest of “The Greatest Generation”, would have called “useful idiots”, “dupes”, or “slackers” for their inability to recognize the con job and failed theory that is Marxism, when they see it.

The following is a post found on fee.org, the website of the Foundation for Economic Education. It explains this part of Marxist Theory and “Why Socialism Failed”.

Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.

In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.

A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.

In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter!

Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter!

In a radio debate several months ago with a Marxist professor from the University of Minnesota, I pointed out the obvious failures of socialism around the world in Cuba, Eastern Europe, and China. At the time of our debate, Haitian refugees were risking their lives trying to get to Florida in homemade boats. Why was it, I asked him, that people were fleeing Haiti and traveling almost 500 miles by ocean to get to the “evil capitalist empire” when they were only 50 miles from the “workers’ paradise” of Cuba?

The Marxist admitted that many “socialist” countries around the world were failing. However, according to him, the reason for failure is not that socialism is deficient, but that the socialist economies are not practicing “pure” socialism. The perfect version of socialism would work; it is just the imperfect socialism that doesn’t work. Marxists like to compare a theoretically perfect version of socialism with practical, imperfect capitalism which allows them to claim that socialism is superior to capitalism.

If perfection really were an available option, the choice of economic and political systems would be irrelevant. In a world with perfect beings and infinite abundance, any economic or political system–socialism, capitalism, fascism, or communism–would work perfectly.

However, the choice of economic and political institutions is crucial in an imperfect universe with imperfect beings and limited resources. In a world of scarcity it is essential for an economic system to be based on a clear incentive structure to promote economic efficiency. The real choice we face is between imperfect capitalism and imperfect socialism. Given that choice, the evidence of history overwhelmingly favors capitalism as the greatest wealth-producing economic system available.

The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.

Prices

The price system in a market economy guides economic activity so flawlessly that most people don’t appreciate its importance. Market prices transmit information about relative scarcity and then efficiently coordinate economic activity. The economic content of prices provides incentives that promote economic efficiency.

For example, when the OPEC cartel restricted the supply of oil in the 1970s, oil prices rose dramatically. The higher prices for oil and gasoline transmitted valuable information to both buyers and sellers. Consumers received a strong, clear message about the scarcity of oil by the higher prices at the pump and were forced to change their behavior dramatically. People reacted to the scarcity by driving less, carpooling more, taking public transportation, and buying smaller cars. Producers reacted to the higher price by increasing their efforts at exploration for more oil. In addition, higher oil prices gave producers an incentive to explore and develop alternative fuel and energy sources.

The information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.

The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price.

Look at what happened during the 1970s when U.S. gas prices were controlled. Long lines developed at service stations all over the country because the price for gasoline was kept artificially low by government fiat. The full impact of scarcity was not accurately conveyed. As Milton Friedman pointed out at the time, we could have eliminated the lines at the pump in one day by allowing the price to rise to clear the market.

From our experience with price controls on gasoline and the long lines at the pump and general inconvenience, we get an insight into what happens under socialism where every price in the economy is controlled. The collapse of socialism is due in part to the chaos and inefficiency that result from artificial prices. The information content of a controlled price is always distorted. This in turn distorts the incentives mechanism of prices under socialism. Administered prices are always either too high or too low, which then creates constant shortages and surpluses. Market prices are the only way to transmit information that will create the incentives to ensure economic efficiency.

Profits and Losses

Socialism also collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses.

By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.

Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated.

Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives the results are a spiraling cycle of poverty and misery. Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.

Private Property Rights

A third fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a “tragedy of commons” on a global scale.

The “tragedy of the commons” refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource.

When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement.

Since socialism, by definition, is a system marked by the “common ownership of the means of production,” the failure of socialism is a “tragedy of the commons” on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.

As Peruvian economist Hernando de Soto remarked, you can travel in rural communities around the world and you will hear dogs barking, because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries are just now starting to recognize the importance of private property as they privatize assets and property in Eastern Europe.

For the past 7 years, Barack Hussein Obama has been promising “Hope and change”, through his unceasing rhetoric of Class Warfare, Racial Animus, and “Sharing the Wealth”.

His promises have proven to be as empty as our pocketbooks.

Almost 94,000,000 Americans are now out of our workforce, having given up ever being able to find a job.

The Socialist Paradise, which Bernie Sanders is offering Millennials, is nothing new.

Ask the countries of Venezuela and Greece, as they burn to the ground, their hopes and dreams piled on top of a “Democratic Socialist” Pyre of their own making.

As we enter the first event of the Presidential Primary Season, the Iowa Caucus, tonight, it would be wise for those voters who want to “#FeelTheBern” to remember the words of a great World Leader, Sir Winston Churchill, who, as Prime Minister, lead Great Britain though the Fight Against Fascism, which I referenced before, World War II, when he said,

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.  – Winston Churchill

Someone has to pay for all of the FREE STUFF that ol’ Bernie is promising, kids.

And, if he gets in office, that will be YOU.

Until He Comes.

KJ

 

Advertisements

Tags: , , , , , , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: