A Parable on Socialism
The following was received as an email. While the content is presented as non-fiction, I am always dubious about the veracity of such claims, especially when received via the anonymity of the internet.
Regardless of its fact or fiction, the parable is a concise illustration of the inevitable failure of Socialism. The narrative succinctly captures the behavior distortions and debilitating result of an economic system which subverts individual incentives.
An economics professor at Texas Tech said he had failed very few students, but had once failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "Ok, we will have an experiment in this class on socialism. All grades will be averaged and everyone will receive the same grade meaning, obviously, no one will receive an A."
They all agreed to this. After the first test the grades were averaged, everyone got a C. The students who studied hard were upset and the students who studied little were happy.
But, as the second test rolled around, the students who studied little studied even less; and the ones who studied hard decided they wanted a free ride too, so they studied little. The second test average was a D! No one was happy.
When the 3rd test rolled around the average was an F. The scores never increased as bickering, blame and name calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great dismay the professor failed them all.
Then he sent all of them this note: "A socialistic government will also ultimately fail -- because when the reward is great, the effort to succeed is great, but when government takes all reward away, no one will try to succeed."
"The problem with socialism is that eventually you run out of other people's money"
Margaret Thatcher
Regardless of its fact or fiction, the parable is a concise illustration of the inevitable failure of Socialism. The narrative succinctly captures the behavior distortions and debilitating result of an economic system which subverts individual incentives.
An economics professor at Texas Tech said he had failed very few students, but had once failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "Ok, we will have an experiment in this class on socialism. All grades will be averaged and everyone will receive the same grade meaning, obviously, no one will receive an A."
They all agreed to this. After the first test the grades were averaged, everyone got a C. The students who studied hard were upset and the students who studied little were happy.
But, as the second test rolled around, the students who studied little studied even less; and the ones who studied hard decided they wanted a free ride too, so they studied little. The second test average was a D! No one was happy.
When the 3rd test rolled around the average was an F. The scores never increased as bickering, blame and name calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great dismay the professor failed them all.
Then he sent all of them this note: "A socialistic government will also ultimately fail -- because when the reward is great, the effort to succeed is great, but when government takes all reward away, no one will try to succeed."
"The problem with socialism is that eventually you run out of other people's money"
Margaret Thatcher
In capitalism, the rich students bribe the professor to pass them and fail the poor students so that the poor students drop out and work at the rich students' sweatshops.
"The problem with capitalism is that the rich get richer and poor get poorer" -working class
Reply to this
Excerpt from comment posted in response to A Parable on Socialism:
"The problem with capitalism is that the rich get richer and poor get poorer"
Comrade,
I do not dispute that Capitalism has its problems. But it is also the best system for improving the economic situations for all participants that has ever been devised. Any objective analysis of history bears out this truth.
Your complaint with Capitalism appears to be that the rich and powerful sometime abuse the system. I defy you to provide a single example of a country, present or past, where such injustices have not taken place. I note that the most deplorable abuses by the rich and powerful seem to have occurred in Socialist, Communist and centrally-planned countries. Your protestation, attributed to Capitalism, is in fact endemic to all economic, political and social systems, but is most prominent in less free countries.
The children of the rich enjoy advantages over the children of the poor everywhere. Isn’t it better to exist in a dynamic system where everyone has the potential for economic mobility, and those advantages serve as motivation to improve the lives of one’s family?
Defining Poverty
The statement that within Capitalism “the poor get poorer” is overtly false. As such, I assume that your assertion relates to a different, modern and increasingly American concept.
There are two distinct definitions of poverty; one “Real” and one “Relative”.
Real Poverty is not an arbitrary concept. It relates to having access to the bare necessities of life. Food, clean water, shelter, etc…
According to the IMF in 2008 the world’s per capita GDP was $10,497. People in more than 100 countries on the planet with per capita income well below this level are familiar with Real Poverty.
Relative poverty is arbitrarily defined and better described as “perceived income inequality”. In the United States politicians and the media rely almost exclusively on this subjective perception of poverty to foment dissatisfaction and justify Progressive social agenda.
The Reality is that People Defined as ‘Relatively Poor” Are Created Every Day
It is common sense that relative monetary and income disparities will always exist. By definition, as long as poverty is defined in relative monetary terms "poverty” will also always exist.
Some people will always have more than others. This is a matter of understanding and is in no way offensive. A 65 year-old who spent a lifetime saving and acquiring wealth is richer than an 18 year-old who enters the work force for the first time today.
People arbitrarily defined as “poor” based on relativism are created every day. Individuals become adults, graduate from high school and accept their first jobs. This is no tragedy, it is reality. These people meet the relative definition of being poor but don’t necessarily stay in this situation.
Immigrants have come to this country for over 200 years and most have shown up with little or nothing. Few of these people would be offended by the modern moniker of poverty.
The majority of immigrants in recent years have come from Mexico. These people are also arbitrary defined as poor. But the reason they come to the United States is that their lives and economic opportunity set is superior here. They are Relatively Poor, but they are much better off than in Mexico and have happily chosen their situations.
What is Important
What matters are the Real, quality-of-life gains, benefiting rich and poor, which inevitably result from Capitalism.
Reality dictates that the existing rich receive more benefit from Capitalism than the Newly Created, Real or Relative Poor. This logical inevitability has nothing to do with injustice and is completely distinct from the actual gains enjoyed by all participants including those who have relatively less. This dynamic is only offensive if one chooses to deem it so.
Parable on Relativism
Moral indignation over American Income Inequality is the equivalent to being offended by the existence of relatively short people. Some people will always be shorter than others. Tall people benefit from their height advantage. As per capital wealth rises, diets improve and all people become taller. But some remain taller than others. It is the universal benefit that is important, not the relative disparities that persist.
No where is this example better illustrated than on the Korean Peninsula. The Capitalist South Koreans are on average more than 3 inches taller than the Communist North Koreans due to differences in wealth and nutrition. The South Korean’s still have relative height and income disparities within their society, but when put into context with the stark, Communist alternative to the North, neither is a major social concern. All South Korean’s, short and tall, have benefited from the transformational forces of Capitalism.
Realities of Capitalism
Capitalism reduces Real Poverty in a steady and relentless fashion.
In relative terms, the expansion of societal wealth inevitably increases the disparity between those people at the top of the income spectrum, who have assets, and those at the bottom who start out with nothing. This is a matter of simple mathematics.
American Poverty
How have America’s “poor gotten poorer"?
We live in a country where the biggest health threat amongst the Relative Poor is obesity. With all do respect, this is not Real Poverty.
I recently read a series of articles about homeless people in the U.S. who are in possession of cell phones and who blog and entertain themselves from their lap top computers. These people can afford monthly phone and internet service. Can such a situation be defined as Real Poverty?
The next time you are in your local Piggly Wiggly, Food Mart or 7-Eleven look around at the diversity of cheap offerings, and then imagine the diets of rich Americans 100 years ago. Think about the diets today of 500 million rural Chinese, 500 million destitute Indians and 500 million impoverished Africans. Inexpensive fresh fruits and vegetables are plentiful year-round in America in a range of alternatives that was unheard of until global trade and modern distribution networks were developed by Capitalists. Much of the world does not have access to clean, fresh water. How many “poor” Americans die each year of dysentery?
America’s poor (living at or below the “poverty line”) would be considered rich living in 100 other countries on our planet.
I would guess that at least 3 billion people globally would enthusiastically choose to trade places with someone defined as poor in the United States.
This dynamic did not arise by accident but was created by an economic system which rewards rational self-interest. Socialism is a conscious decision to restrict or eliminate this transformative force. In doing so, growth, innovation and economic mobility are retarded. The worst way to eliminate Real Poverty is to focus society’s efforts instead on solving the perception of Relative Income Inequality.
I defy anyone to prove that in Real terms “the poor are getting poorer” in the United States.
Reply to this