Monday 7 November 2011

Socialism In A Nutshell

Rather predictable that the right wing is against the Occupy Wall Street protests that are currently sweeping not only America, but the Western World, but the Fox News team really outdid themselves this weekend.
Not only did they manage to accuse the protesters of being anti-Semitic because they are in support of the 99%, which leaves 1% which is roughly the percentage of Jews in the population, but wheeled out the usual insults of the protesters being anti-Americans, Marxists, Anarchists and Communists.
The Communists and Socialists insults crop up quite a bit in right wing rhetoric and Fox News had a helpful analogy to explain to it's viewers just what a Communist regime would mean for Americans.

Under Capitalism:
10 workers get paid £10 an hour and it takes them 10 hours to make a car. The car gets sold for £10,000. They all get paid £100 each and the remaining £9000 goes to the boss.

Under Communism:
10 workers get paid £10 an hour and it takes them 10 hours to make a car. The car gets sold for £10,000. They all get paid £100 each and the remaining £9000 go to the Authorities.

And now the part Fox failed to mention - Under Socialism:
10 workers get paid £10 an hour and it takes them 10 hours to make a car. The car gets sold for £10,000, They all get paid £100 each and the remaining £9000 is shared amongst them.

So Fox is correct that under Communism, all profits do go to the State as the State owns everything but they neglected to mention that under Socialism, the workers own everything so the profits are shared amongst them. The only difference between Socialism and Capitalism is who is the boss, a board of shareholders who take the profits or the workers who take the profits.

Despite the cries of the Right Wing, Socialism is not the Soviets under Stalin or North Korea, it is simply a system where the financial rewards are more evenly distributed and who wouldn't want that?
Think it wouldn't work in the real world? Department Store John Lewis’s is owned by it's staff, all 70,000 of them, and last year they shared just over £100 million profit between them, each receiving a bonus of nearly seven weeks’ pay. Last year each worker received the equivalent of 10 weeks pay.
Because John Lewis is owned by its staff from the boardroom to the shop floor, each receive the same percentage payout. This year it is equal to 13% of basic salary and that is Socialism in action and this proves that it works.
Now imagine if the banks did this with their tens of billions of pounds of profit, profit that at the moment go to the shareholders. What the Occupy protesters want are the profits of Capitalism to not go to the handful of companies shareholders but to be shared out amongst the people so Society as a whole benfits.
Don't let those who try to discredit the Occupy Protests with their talk of anarchists and Communists wanting to turn the West into North Korea, they are out to protect themselves and their bank balances and they will try to convert as many useful idiots to their cause as possible. Don't be a useful idiot for the right wing.

22 comments:

Anonymous said...

lucy,

Wow. those definitions of the different mechanisms are about as poor as I've seen. seriously.

q

Anonymous said...

Under Capitalism:
10 workers get paid £10 an hour and it takes them 10 hours to make a car. The car gets sold for £10,000. They all get paid £100 each and the remaining £9000 goes to the boss.

- The profit goes to the OWNERS after they pay:
- 7.5% to social security = £675
- 10% to income tax = £900
- 5% to medicare = £450
- 10% for building maintenance = £900
- 10% for machine maintenance = £900
- 10% utilities bills = £900
- 10% for advertizing = £900
- 10% for hiring = £900
- 10% for environmental assessments = £900
- 10% for supplies = £900

Leaving them £675 in exchange for taking all of the initial risk related to financing, taking their job home with them every night worrying about staffing, the competition, suppliers, changing customer demands, and new regulations. Oh yeah, the first 5 years they lost money every year and they were not paid anything.

q

Anonymous said...

Under Socialism:
10 workers get paid £10 an hour and it takes them 10 hours to make a car. The car gets sold for £10,000, They all get paid £100 each and the remaining £9000 is shared amongst them.
- There is little incentive for quality so the cars don’t sell well
- Since the workers are also their own employers (the government) they vote to protect their industry so there are no layoffs even though nobody wants the damn cars
- Government leaders don’t want the damn cars either, so they buy cars made in other countries – but only for use by high level government officials
- Since the cars don’t sell well all the people pay taxes to keep the mediocre auto workers employed
- There is no incentive to innovate so its 2011 and the auto workers still make Model T’s
- Since the cars aren’t innovative, few sell, so the people pay taxes to keep the mediocre auto workers employed
- Since the government owns the business there is paper work and inspection to be done after every part is built, then again after every part is added to each vehicle so production is low and cost is high
- So everybody pays extra taxes to keep the auto workers and inspectors employed since they can’t sell the cars
- Eventually the nation turns into Greece

q

Anonymous said...

Under Communism all profits go to the State as the State owns everything. Under Socialism, the workers own everything so the profits are shared amongst them. The only difference between Socialism and Capitalism is who is the boss, a board of shareholders who take the profits or the workers who take the profits.

Under Communism all profits go to the State as the State owns everything. Under Socialism, the workers own everything so the profits are shared amongst them, but since they all work for the state it is the same thing as communism. The only difference between Socialism and Communism is... well there is no difference except you multiple political parties. They eventually become Greece...

Lucy said...

q, this is exactly how the fox news guy explained Communism (which is what they said the OWS protesters wanted to push onto America) to its viewers so i left it as it was and just added the Socialism aspect to show Communism and Socialism is not the same thing. If Fox considered this a good example for the average Fox Viewer then i just stood on the shoulders of very poor analogists. Aiming for the lowest common denominator and all that. The problem is you would get better examples on other channels but then would other channels have made such absurd statements?

Lucy said...

I do think you are doing Fox news down slightly. There aim was to highlight how under Socialism/Communism (interchangeable to most americans) the Government will take all your money and run everything. As an scaremongering analogy i think it worked because the typical fox news viewer won't go and look it up and will just take it at face value. It wasn't aimed at people like but i fully expect to see people take up the 'ows protesters are communists' mantra because of programmes like these. misinformation can be a powerful tool.

David G said...

What amazes me is that Q, when discussing capitalism, claims the poor bosses are left with next to nothing.

How then do they manage to pay their CEOs millions and expand their empires across the world? Where does the money come from? And how do the rich manage to get hold of most of the wealth which Q claims doesn't exist in the capitalist system?

Methinks I smell a rat!

Nog said...

I'll just pretend for the moment that "capitalism = mercantilism/syndicalism," "mercantilism/syndicalism = free markets," and that "banks" (in their present form) are private "free market institutions." This is all, of course, nonsense. Banks have far more to do with the government to fund social programs designed to help "the people" than they do serving as the paragons of capitalism.



Are you sure you're not using the old "if only they had the right central planners" argument? Any system that requires men to be "better" (a.k.a. soulless mind-thralls of the system's designer) than they are already in order to work won't work. Presumably then, your socialism doesn't require any "moral revolution" in the souls of men.

Alright, so we just need to figure out all of those nitty-gritty implementation problems, and since you're the central planner, you actually have to come up with the answer to each of the issues. Let's start with incentives, how do we get people to do their best? Then let's move on to knowledge, how do we replace or do without all of the knowledge created by the pricing system?

Anonymous said...

Lucy - you're right the other news and entertainment channels never say stupid things (I am laughing my ass off while typing this tripe). And you act like FOX news is one entity. It has dozens of shows and hosts... not all of them know what they are talking about. Of course, MSNBC and CNN don't have any idiots (laughing my ass off again).

David,

Per the department of labor 48% of working Americans work for the federal, state, or local government (these are socialist jobs and the US Post office is a great example of what you get with socialism - slow, poor service, high overhead, high pay for low skill work).

Of the remaining working Americans only 5% work for companies with more than 500 employees. The bulk work for a small company (under 500 employees).

Most small companies fail within the first 5 years after startup. Most large companies fail too (compare the Fortune 500 list today to the Fortune 500 list in 1980 - not much overlap) but it takes longer.

> Bosses and owners are not the same thing.
> The profits go to the owners - not the bosses.
> Bosses are paid employees unless they are the owners (small companies).
> I think CEO’s are paid too much, but that decision belongs to the owners. Not me. Or you. Or Lucy.

q

Anonymous said...

David,

I didn't act like the "bosses" got nothing. I gave them $675 versus the employees $100.

I think the difference is fair compensation considering the risks taken and the difference in commitment by the owners versus the workers.

q

Cheezy said...

That sounds fair enough to me too, Q... Mind you, that looks like a very self-denying chief executive by modern standards:

“Figures published by the labour federation, the AFL-CIO, show how far the gap has grown. In 1980, a chief executive made $42 for every dollar earned by a blue-collar worker. By 1990, that gap was $85. But the real gains in the boardroom were made in the decade that followed as firms ramped up share options. By 2000, chief executives were earning $531 for every dollar taken home by a typical worker.”

http://www.guardian.co.uk/business/2005/aug/04/executivesalaries.executivepay2

Anyway, interesting discussion…

I’ve one more thing to add: Greece does not have a “socialist” economy - and it never has had. It’s a mixed economy, like most of them. The private to public sector split in Greece is roughly 60 to 40 in terms of output – about the same as the USA’s, and less than both the UK’s and the European average. The problems that Greece has cannot be condensed down to a simplistic “It’s because of socialism” OR “it’s because of capitalism” argument. There have been a myriad of causes to their debt crisis (some of them currency related), and it’s all been exacerbated by the one area where Greece IS much worse than most of the rest of Europe and the world i.e. corruption and incredibly high levels of tax evasion.

Lucy said...

q - I can't get CNN or MSBC, just Fox News so i don't know how absurd they are but my guess would be not as absurd as Fox mainly because nobody seems to point and laugh at them. Murdoch wouldn't want to show his rivals on his own platform, especially if they are better than his own. I do think it was quite a decent anaology though, simple enough to scare their viewers and play to the long held fear of the red threat.

Anonymous said...

Cheezy, the AFL CIO isn't exactly objective or neutral. A bigger gap makes their demands seem more appropriate - very political. By the way, the companies in their study represent fewer than 100 companies in America and fewer than 1% of American employees.

Greece is very complex. Granted no nation is purely socialist. Socialism isn't the problem and may not even be a problem.

I think their biggest problem is attitude. But their attitude tends to align with socialist views that all wealth is everybody's wealth... Socrates wouldn't approve...

q

Cheezy said...

Q: If you've got any figures to suggest that the gap between executive income and the median income has done anything but widen dramatically during the past 30 years then I'm all ears...

As for the Greeks, the fact that they're all so averse to paying tax (I mean, even more than most of us are) would tend to suggest that, if they are all socialists, they're not very good ones :)

Anonymous said...

Cheese,

I work for a big company Fortune 200 in the San Antonio Texas area (low cost labor) and our minimum entry salary is $25,000, plus annual bonus 10% to 20%.

At 100 times the ay of our CEO gets paid the average of the 5 companies above us and below us in the F200 ranking. With bonus he makes 100x the lowest (not the average) paid person.

That is a lot of money, and the gap is big, but it doesn't approach 531x. And, we are one of the biggest companies in the world financially. So, how many companies are doing this? Not many... it seems to me the AFL/CIO is offering the worst case... not the average...

q

Anonymous said...

whoa,

ignore "At 100 times the ay of".

q

Cheezy said...

Not so. If you examine the figures on their website, you'll find that they are based on averages, not worst-case scenarios (which it would be wholly useless to examine, I think you'll agree).

Now, what you can legitimately debate is the extent to which one-off windfall payments skew the data. Take the CEO of the multinational company that I worked for until 2009. His basic take-home pay was a relatively modest £900,000 but, after leading a merger, a share option package of £15,000,000 was triggered, which was swiftly augmented by another (as yet unexercised) option of more than £18,000,000, handed to him on becoming CEO of the new enlarged enterprise. And a further bonus of more than £6,000,000 soon followed.

The example you gave me from your own work just seemed to take your boss's salary into account, but for a lot of these guys the salary is just their beer money. You can see from the Guardian article that I quoted that ramping up of stock options was mentioned. It's hard to overstate the importance of this factor when assessing the massive differentials involved here.

Whatever the exact figure though, the main issue here is the trend. I'll give you a fiver if you find any reputable source that says the gap between executive income and average-worker income has not been substantially widening during these past 30 years.

Cheezy said...

Actually, make that 'I'll donate a fiver to the charity of your choice'... and I can think of one or two you could pick that could really annoy me ;-)

Anonymous said...

Cheezy,

First, we agree that there is a huge gap in SOME situations. So, you don’t have to pay up.

Second, I don’t trust anything put out by the AFL/CIO to be objective. No amount of argument will change my mind so don’t bother.

Third, I was trying to make the point that gaps exist in VERY FEW situations and is essentially limited to a subset of the Fortune 500 companies in the USA.

THIS IS IMPORTANT: In the USA less than 5% of Americans work for a company with more than 500 employees (which are typically much too small to be in the F500).
THUS: this is not a big deal and it does not affect many people even though it is a constant topic!!!!!!!!!! of the left and far left!!!!!!!!!!!!!

Concerning charities, I would not give you any heartburn if you are concerned about 1.) children in need, 2.) ill or handicapped in need, 3.) elderly in need, 4.) war veterans in need. This is where my charitable time and money go in order of importance.

q

Cheezy said...

To address your points in order...

1st: The "huge gaps in some situations" isn't where we appear to differ though. We both agree there are huge gaps in some areas. But I'm going further and saying that, on average, they've been widening. I'm still waiting for the reputable source that negates this belief.

2nd: I would never vouch for the objectivity of any interest/lobby group, from the left or the right.. Their whole point is to be UNobjective.. All I'm saying is that their general conclusion (that pay gaps between executives and non-executives have been generally widening, across the board, within both bigger and smaller companies - and not just in "some" cases) is one that I've yet to read any convincing rebuttal of.

3rd: "I was trying to make the point that gaps exist in VERY FEW situations and is essentially limited to a subset of the Fortune 500 companies in the USA"

I'm assuming that when you say "gaps" above, you mean "(huge) gaps (between exec and non-exec income)"...??? But still... even accepting that... source? There are loads of sources that support across the board widening of this gap.

Here is one

It's from the CIA (via the Daily Mail - right wing paper).

As for the donation, I'm still waiting for the reputable source that makes me reconsider everything else that I've heard. And I like all of your charities apart from war veterans one. Although I've got lots of sympathy for people who have had limbs blown off while chasing unicorns in the desert, I don't like the government being able to externalise the costs of its ruinous decisions. This only encourages the cynical chickenhawk fuxx to make more of them.

Anonymous said...

I don't think the gap has widened for any but the biggest of businesses - the mega corporations.

My source is personal observation. In a small business (1 to 10 employees), many of my friends and couple of my family own small businesses, the gap is 3x or 4x. The employees make $20k-$25k a year the owner/ceo makes $80k-$100k a year.

Now, I have a cousin that is a lawyer and in a good year can make millions and his legal secretary makes $50k. A big spread, but not really a business. On the other hand my brother-n-law is a very successful dentist. He makes $250k to $300k a year but he pays his people up to $60k a year... My sister owns an advertising company and makes $100k a year, but her good sales people can actually make more than her!

of course, this does not address all the small businesses that fail. and the vast majority due fail. few last 5 years...

so i'm saying the data doesn't jibe with all that is around me. mind you, i'm a "one-percenter"...

q

Cheezy said...

I guess this is why it's so enlightening to gather data from a wide variety of sources outside of our own personal lives... because no one person's life can possibly be expansive or heterogenous enough that personally collected anecdotal knowledge can be relied upon as a certain indicator of large societal trends. Depending on the issue, your own personal experience may well reflect what's going on with the other seven billion people on the planet. Or equally, it may not. Yep... I see we just passed the seven billion milestone the other day... interesting when you stop to consider the infinitesimal percentage of those people who we can possibly have any sort of personal experience of... and this is the same situation for anyone, 99%er, 1%er, or whoever... (although personally I reject those terms) :)