Tag Archives: Dependency

What is the difference between capitalism and socialism?

Over 100,000 Venezuelans pouring into Colombia from the Venezuela in order to buy food
Over 100,000 Venezuelans cross into Colombia in order to buy food

(This photo H/T Prager University)

One country that has done a good job of implementing socialism is Venezuela.

Here is an article from March 2013 from Slate, a web site that strongly favors socialism. The headline is “Hugo Chavez’s economic miracle: The Venezuelan leader was often marginalized as a radical. But his brand of socialism achieved real economic gains”. The author is “a senior writer for the International Business Times”.

He writes:

Chavez became the bugaboo of American politics because his full-throated advocacy of socialism and redistributionism at once represented a fundamental critique of neoliberal economics, and also delivered some indisputably positive results. Indeed, as shown by some of the most significant indicators, Chavez racked up an economic record that a legacy-obsessed American president could only dream of achieving.

What did Chavez do, precisely, that caused the Venezuelan economic to boom? Well, he nationalized private industry and redistributed wealth from job creators and entrepreneurs to the poor.

As The Week correctly put it, while “Chavez’s policies of redistribution and nationalization of oil assets endeared him to Venezuela’s working class” and produced many laudable results, the country’s “oil-centric economy has taken away resources from other areas that are badly in need of development.”

OK, so that’s pretty much what the Democrat party wants to do in the United States as well. Nationalize the energy sector, nationalize health care, etc. Let the government take over the private sector industries in order to eliminate “inequalities”. Raise taxes, and redistribute the money to the low income people via social programs, also known as welfare.

So, how does it work? Is socialism really an “economic miracle”?

Here is the latest from Venezuela, as reported by CNN Money. (H/T William)


Venezuelans cried at the sight of fully-stocked supermarket shelves in Colombia.

Pregnant women, children and even elderly Venezuelans crossed into Colombia on Sunday after the border was temporarily reopened, allowing them to buy basic foods and toiletries — rare commodities in their home country.

Tearful Venezuelans had gone weeks without basic food items like milk, flour and toilet paper. It’s a sad but common part of daily life today in crisis-ridden Venezuela, a country that has the world’s largest proven reserves of oil. Colombian officials estimate that about 100,000 Venezuelans crossed the border.

Venezuela is expected to dive deeper into the abyss this year, according to new projections published Wednesday by the International Monetary Fund.

The IMF forecasts Venezuela’s economy will shrink 10% this year, worse than its previous estimate of 8%. It also estimates that inflation in Venezuela will catapult to 700% this year, up from the earlier guess of about 480%.

“Venezuela’s economic condition continues to deteriorate,” says Alejandro Werner, chief Latin America economist at the IMF. The estimates for growth and inflation are the worst worldwide.

The numbers are just the tip of the iceberg. Venezuela is deep into a humanitarian crisis — people are dying in ill-equipped hospitals and many live without basic food items. Venezuela can’t pay to import goods because its government is desperately strapped for cash after years of mismanagement of its funds, heavy spending on poorly-run government programs, and lack of investment on its oil fields.

[…]It’s all even more tragic given that despite Venezuela’s oil abundance, its state-run oil company, PDVSA, is broke. Venezuela’s oil production fell to a 13-year low in June, according to OPEC, of which it’s a member.

That’s what you get when you let the government take over the free enterprise system, or even when you just stifle the free market with burdensome regulations and high taxes. That’s what socialists in Venezuela did. That’s what the Democrat party would do. They’re  two sides of the same coin.

Dennis Prager

Dennis Prager put out a good video recently explaining the problems with socialism:

Why would anyone prefer a system that encourages some people to feel entitled to what other people create and earn? We want a system that is focused on serving your neighbor – not stealing from them.

Arthur Brooks

If you would like a very brief introduction to capitalism, also known as the free enterprise system or the free market system, then you can watch the videos below, featuring Arthur Brooks, president of the American Enterprise Institute.

Here is the first one, which explains the myths that most Americans are taught about capitalism in school and in the culture:

An important advantage of capitalism is that it lifts people out of poverty. The poorest people in America live much better than the wealthy in Venezuela.

And the second video explains what capitalism offers to individuals for their fulfillment, which socialism does not:

Earned success makes people happier, which is at least as important as the wealth benefit.

We can compare the results of each system by looking at where it’s been tried. Capitalism lifts people out of poverty – all the people in the society who are willing to work are lifted out of poverty. Even the people who can’t work in a capitalist society enjoy the benefits of charity from their neighbors – when people do well, they give more money away. Socialism drives those who work and those who don’t work into poverty, and eliminates charity. No one has anything to share when everyone is poor.

Related posts

Arthur Brooks: why is the American public shifting from optimism to envy?

Labor Force Participation down to 62.8%
Labor Force Participation down to 62.8%

An editorial by Arthur Brooks appeared today in the leftist New York Times. His topic is the shift from optimism to envy, why it is happening, and whether envy makes us happier than optimism.

Excerpt: (links removed)

The Irish singer Bono once described a difference between America and his native land. “In the United States,” he explained, “you look at the guy that lives in the mansion on the hill, and you think, you know, one day, if I work really hard, I could live in that mansion. In Ireland, people look up at the guy in the mansion on the hill and go, one day, I’m going to get that bastard.”

[…]Unsurprisingly, psychologists have found that envy pushes down life satisfaction and depresses well-being. Envy is positively correlated with depression and neuroticism, and the hostility it breeds may actually make us sick. Recent work suggests that envy can help explain our complicated relationship with social media: it often leads to destructive “social comparison,” which decreases happiness. To understand this, just picture yourself scrolling through your ex’s wedding photos.

My own data analysis confirms a strong link between economic envy and unhappiness. In 2008, Gallup asked a large sample of Americans whether they were “angry that others have more than they deserve.” People who strongly disagreed with that statement — who were not envious, in other words — were almost five times more likely to say they were “very happy” about their lives than people who strongly agreed. Even after I controlled for income, education, age, family status, religion and politics, this pattern persisted.

It’s safe to conclude that a national shift toward envy would be toxic for American culture.

Unfortunately, in the wake of the Great Recession, such a shift may well be underway, given the increasing anxiety about income inequality and rising sympathy for income redistribution. According to data from the General Social Survey, the percentage of Americans who feel strongly that “government ought to reduce the income differences between the rich and the poor” is at its highest since the 1970s. In January, 43 percent of Americans told the Pew Research Center that government should do “a lot” to “reduce the gap between the rich and everyone else.”

Why the shift? The root cause of increasing envy is a belief that opportunity is in decline. According to a 2007 poll on inequality and civic engagement by the Maxwell School of Citizenship and Public Affairs at Syracuse University, just 30 percent of people who believe that everyone has the opportunity to succeed describe income inequality as “a serious problem.” But among people who feel that “only some” Americans have a shot at success, fully 70 percent say inequality is a major concern.

People who believe that hard work brings success do not begrudge others their prosperity. But if the game looks rigged, envy and a desire for redistribution will follow.

This is the direction we’re heading. According to Pew, the percentage of Americans who feel that “most people who want to get ahead” can do so through hard work has dropped by 14 points since about 2000. As recently as 2007, Gallup found that 70 percent were satisfied with their opportunities to get ahead by working hard; only 29 percent were dissatisfied. Today, that gap has shrunk to 54 percent satisfied, and 45 percent dissatisfied. In just a few years, we have gone from seeing our economy as a real meritocracy to viewing it as something closer to a coin flip.

There is a good lesson in this for people who want what is best for the poor. Simply receiving money from others is not going to make poor people happy. What we need to focus on is providing the poorest people with opportunities.

One way to help the poor is by giving poor children a better education. Conservatives support school choice, which takes money away from government and puts it back in the hands of parents, letting them choose the best school for their child. Schools have to produce good outcomes in order to earn the money, just like private businesses have to compete for customers. But Democrats oppose school choice, as when they killed the D.C. voucher program that helped poor black students. Less school choice helps public schools to be insulated from competition, which provides worse outcomes to students, especially poor minority students. If we really cared about poor, minority students, we would put pressure on public schools to compete with private schools. But the Democrats don’t want that, they prefer to give favors to their teacher union allies.

Democrats also want to punish job creators with high taxes and burdensome regulations. Democrats passed Obamacare, which punishes businesses with taxes if they allow part-time workers to work for more than 30 hours a week. Many jobs were lost because of this, and many people are now struggling to pay higher premiums for plans with higher deductibles and co-pays. Obamacare is a nightmare of intrusive regulations, too. Now the Democrats are talking about raising the minimum wage, which is going to put even more pressure on employers to lay off workers, because they can’t afford to pay them more money for the same work. For Democrats, this is all to the good, though. Because if the poor don’t have jobs, or can’t work enough hours, they start to see the economic game as “rigged” and they are more responsive to “envy rhetoric”. They start to look to big government for handouts, rather than trying to prevent the government from taxing and regulating job creators.

What we need to see is that it’s not the Democrats’ objective to help people find jobs. They gain when people become more envious, like in European countries, and start to vote to grow the size and power of government to redistribute wealth. Speeches about income inequality never have the goal of giving people jobs. None of Obama’s policies aim to do that. That’s why he won’t build the Keystone XL pipeline, or boost domestic energy development here at home. Instead, they want to extend unemployment benefits and pass the costs on to the next generation. Their goal is to get you unemployed or on disability or on welfare, so that you will vote for the government to continue to take your neighbor’s money to give it to you. That manufactured envy is what keeps the Democrats in power.

This plan to borrow from young people to buy the votes of old people today works for a while, until the money runs out. But by then, the politicians who put in place the redistribution programs are usually long gone .

Kansas enacts law to attach work requirement to welfare benefits

Kansas governor Sam Brownback
Kansas governor Sam Brownback

This story is from the Daily Signal, and it’s about a new (April 2015) Kansas law that produced great effects in the last year.

It says:

Over the past several years, the number of Americans on food stamps has soared. In particular, since 2009, the number of “able-bodied-adults” without dependents receiving food stamps more than doubled nationally. Part of this increase is due to a federal rule that allowed states to waive food stamps’ modest work requirement. However, states such as Kansas and Maine chose to reinstate work requirements. Comparing and contrasting the two approaches provides powerful new evidence about the effectiveness of work.

According to a report from the Foundation for Government Accountability, before Kansas instituted a work requirement, 93 percent of food stamp recipients were in poverty, with 84 percent in severe poverty. Few of the food stamp recipients claimed any income. Only 21 percent were working at all, and two-fifths of those working were working fewer than 20 hours per week.

Once work requirements were established, thousands of food stamp recipients moved into the workforce, promoting income gains and a decrease in poverty. Forty percent of the individuals who left the food stamp ranks found employment within three months, and about 60 percent found employment within a year. They saw an average income increase of 127 percent. Half of those who left the rolls and are working have earnings above the poverty level. Even many of those who stayed on food stamps saw their income increase significantly.

Work programs provide opportunities such as job training and employment search services. For example, in Kansas, workfare helped one man, who was unemployed for four years and on food stamps, find employment in the publishing industry where he now earns $45,000 annually. Another Kansan who was also previously unemployed and dependent on food stamps for over three years, now has an annual income of $34,000.

Furthermore, with the implementation of the work requirement in Kansas, the caseload dropped by 75 percent. Previously, Kansas was spending $5.5 million per month on food stamp benefits for able-bodied adults; it now spends $1.2 million.

So, I am doing a hunt to find the best states to live in, and Kansas is in my top 5. They have Governor Sam Brownback, and he has just done a magnificent job pushing conservative policies – not just social policies, but fiscal too. It’s a great state, but still edged out by Oklahoma and Tennessee, in my opinion. We’ll see what else Governor Brownback has in store, though.

You might think that all the news is bad, and that no one is putting into place any conservative policies. Well, of course the good red states are putting in these policies, and of course these policies are achieving the desired objectives. If you elect Democrats, you get Detroit. If you elect Republicans, you get welfare reform that lifts people out of dependency and into earned success. I’m sure that they feel better about not being dependent, too.

As Christianity declines in Europe, churches are put up for sale

I have a key that will unlock a puzzling mystery
I have a key that will unlock a puzzling mystery

This sad story is from the Wall Street Journal.


Two dozen scruffy skateboarders launched perilous jumps in a soaring old church building here on a recent night, watched over by a mosaic likeness of Jesus and a solemn array of stone saints.

This is the Arnhem Skate Hall, an uneasy reincarnation of the Church of St. Joseph, which once rang with the prayers of nearly 1,000 worshipers.

It is one of hundreds of churches, closed or threatened by plunging membership, that pose a question for communities, and even governments, across Western Europe: What to do with once-holy, now-empty buildings that increasingly mark the countryside from Britain to Denmark?

[…]The closing of Europe’s churches reflects the rapid weakening of the faith in Europe, a phenomenon that is painful to both worshipers and others who see religion as a unifying factor in a disparate society.

[…]The Church of England closes about 20 churches a year. Roughly 200 Danish churches have been deemed nonviable or underused. The Roman Catholic Church in Germany has shut about 515 churches in the past decade.

But it is in the Netherlands where the trend appears to be most advanced. The country’s Roman Catholic leaders estimate that two-thirds of their 1,600 churches will be out of commission in a decade, and 700 of Holland’s Protestant churches are expected to close within four years.

[…]As communities struggle to reinvent their old churches, some solutions are less dignified than others. In Holland, one ex-church has become a supermarket, another is a florist, a third is a bookstore and a fourth is a gym. In Arnhem, a fashionable store called Humanoid occupies a church building dating to 1889, with racks of stylish women’s clothing arrayed under stained-glass windows.

In Bristol, England, the former St. Paul’s church has become the Circomedia circus training school. Operators say the high ceilings are perfect for aerial equipment like trapezes.

In Edinburgh, Scotland, a Lutheran church has become a Frankenstein-themed bar, featuring bubbling test tubes, lasers and a life-size Frankenstein’s monster descending from the ceiling at midnight.

Jason MacDonald, a supervisor at the pub, says he has never heard complaints about the reuse. “It’s for one simple reason: There are hundreds and hundreds of old churches and no one to go to them,” Mr. MacDonald said. “If they weren’t repurposed, they would just lie empty.”

Many churches, especially smaller ones, are becoming homes, and that has spawned an entire industry to connect would-be buyers with old churches.

The churches of England and Scotland list available properties online, with descriptions worthy of a realty firm. St. John’s church in Bacup, England, for example, is said to feature “a lofty nave as well as basement rooms with stone-vaulted ceilings,” and can be had for about $160,000.

There are many reasons why Christianity has declined in Europe, but surely the widespread embrace of left-wing economic policies – even by evangelical Christians – is one of the largest.

Here’s a fairly recent paper (PDF) that explains it:

What accounts for cross-national variation in religiosity as measured by church attendance and non-religious rates? Examining answers from both secularization theory and the religious economy perspective, we assert that cross-national variation in religious participation is a function of government welfare spending and provide a theory that links macro-sociological outcomes with individual rationality. Churches historically have provided social welfare. As governments gradually assume many of these welfare functions, individuals with elastic preferences for spiritual goods will reduce their level of participation since the desired welfare goods can be obtained from secular sources. Cross-national data on welfare spending and religious participation show a strong negative relationship between these two variables after controlling for other aspects of modernization.

I have many friends in the UK who classify themselves as evangelical Christians. They almost all embrace moderate to leftist economics, and they complain to me about why the church is in decline, why there is no interest in apologetics, why they can’t find Christian girlfriends, why they can’t get speaking engagements. The answer is, of course, that by majoring only in theology and apologetics, they have crafted the rope that their secular allies in government are using to hang them. Leftism is embraced by European Christians in part because they don’t want to be like those dastardly Americans with their free enterprise system and their rule of law and their private property and their law-abiding gun ownership.

It just goes to show you why Christianity suffers when we focus on piety at the expense of practicality. Too much A. W. Tozer, not enough F.A. Hayek. I doubt my well-meaning UK Christian friends – who are so proud of their laughable NHS health care – even know who F.A. Hayek is. To think that Lady Thatcher ones brandished “The Constitution of Liberty” by F.A. Hayek and declared “this is what we believe!”. But ordinary UK Christians do not believe what she believes, and now they must reap what they sowed with their knee-jerk rejection of the free enterprise system. Ignorance of economics killed Christianity in Europe, and pious, risk-averse Christians were willing participants in the murder.

The biggest driver of income inequality is single motherhood

Does government provide incentives for people to get married?
Does government provide incentives for people to NOT get married?

Indian economist Aparna Mathur, whose work I’ve featured here before, writes about it in Forbes magazine.


The fabric of our society is changing. In 1980, approximately 78 percent of families with children were headed by married parents. In 2012, married parents headed only 66 percent of families with children. In a new report, Bradford Wilcox and Robert Lerman explore the role of family structure with new data and analysis, and document how this retreat from marriage is not simply a social and cultural phenomenon. It has important economic implications for, amongst others, men’s labor force participation rates, children’s high school dropout rates and teen pregnancy rates. Since these factors are highly correlated with economic opportunity and the ability to move up the income ladder, this suggests that income inequality and economic mobility across generations are critically influenced by people’s decisions and attitudes towards marriage. Understanding the role of family structure is therefore key to understanding the big economic challenges of our time.

[…]Wilcox and Lerman document how the shift away from marriage and traditional family structures has had important consequences for family incomes, and has been correlated with rising family-income inequality and declines in men’s labor force participation rates. Using data from the Current Population Survey, the authors find that between 1980 and 2012, median family income rose 30 percent for married parent families, For unmarried parents, family incomes rose only 14 percent.

These differential patterns of changes in family income have exacerbated family-income inequality. Since unmarried parent families generally expand the ranks of low-income families, while high-income, high-education adults increasingly marry partners from similar socioeconomic backgrounds, inequality trends are worsened.

[…]The authors estimate that approximately 32 percent of the growth in family-income inequality between 1979 and 2012 is associated with changes in family structure. Other research, studying the period 1968-2000, finds that the changing family structure, accounted for 11 percent of the rise widening of the income gap between the bottom and top deciles.

So, what specific policies discouraged people from marrying, especially before they have children? Was it conservative policies or liberal policies?

Robert Rector explains in The Daily Signal.

He writes:

It is no accident that the collapse of marriage in America largely began with the War on Poverty and the proliferation of means-tested welfare programs that it fostered.

When the War on Poverty began, only a single welfare program—Aid to Families with Dependent Children —assisted single parents.

Today, dozens of programs provide benefits to families with children, including the Earned Income Tax Credit, Temporary Assistance for Needy Families, the Women, Infants and Children food program, Supplemental Security Income, food stamps, child nutrition programs, public housing and Section 8 housing, and Medicaid.

Although married couples with children can also receive aid through these programs, the overwhelming majority of assistance to families with children goes to single-parent households.

The burgeoning welfare state has promoted single parenthood in two ways. First, means-tested welfare programs such as those described above financially enable single parenthood. It is difficult for single mothers with a high school degree or less to support children without the aid of another parent.

Means-tested welfare programs substantially reduce this difficulty by providing extensive support to single parents. Welfare thereby reduces the financial need for marriage. Since the beginning of the War on Poverty, less-educated mothers have increasingly become married to the welfare state and to the U.S. taxpayer rather than to the fathers of their children.

As means-tested benefits expanded, welfare began to serve as a substitute for a husband in the home, and low-income marriage began to disappear. As husbands left the home, the need for more welfare to support single mothers increased. The War on Poverty created a destructive feedback loop: Welfare promoted the decline of marriage, which generated a need for more welfare.

A second major problem is that the means-tested welfare system actively penalizes low-income parents who do marry. All means-tested welfare programs are designed so that a family’s benefits are reduced as earnings rise. In practice, this means that, if a low-income single mother marries an employed father, her welfare benefits will generally be substantially reduced. The mother can maximize welfare by remaining unmarried and keeping the father’s income “off the books.”

For example, a single mother with two children who earns $15,000 per year would generally receive around $5,200 per year of food stamp benefits. However, if she marries a father with the same earnings level, her food stamps would be cut to zero.

I blogged recently about a study that was done to make sure that welfare programs really do discourage young people from marrying, and that’s exactly what the study found.

The authors of that study found that penalties to marriage “on the margin”, i.e. – at lower income levels where welfare could substitute for a husband – caused lower rates of marriage:

“The supposition that marriage penalties have an impact on decisions to marry gains credence from the simple fact that marriage rates are highest among higher-income groups that are less affected by them and for whom such penalties represent a smaller proportion of total income,” they wrote.

So you see, the thing the left complains about (income inequality) is actually the thing they do the most to cause. Their big spending on welfare programs for the poor makes it easier for them not to get married and stay married before they have children. This is true across all races, too. It’s an economic issue, not a race issue. People on the left are all about taxpayer-funded welfare programs and growing government to make more and more people dependent. They are causing the income inequality, and then complaining about what they have caused.

So what’s the answer? It seems to me that we should be paying people to do what is best for children – marriage. People do more of what they get rewarded for doing. Right now, we’re taking money from high-earning married couples, and paying people to have fatherless children. This creates more dependency, more poverty, and more income inequality. If we want to reduce income inequality, and for children to be happier, we should be encouraging people to marry.