Posts
In previous articles, “Historical Arguments for Capitalism”, I offered
the proposition that Socialism and the welfare state it produces eventually
destroys the wealth of the society. The
reason for this is that the Marxism it is based on creates a situation where
citizens become dependent on the government.
With each generation, that dependency grows and ever greater demands on
placed on political leaders. The result
is that even if the government can create the ideal mix of capitalism and
Marxism the redistribution of the wealth will eventually overcome the
production of that wealth. This can be
clearly seen in the economic decline of Western Europe since the introduction
of the welfare state 50 plus years ago, which has left most of those countries
on the verge on economic collapse.
Unfortunately, we no longer need to look so far away to find
further proof how even limited Marxism, in the form of the welfare state, grows
uncontrollably until it threatens to destroy its host economy. In a highly informative article called “The
Road to a Downgrade” (July 28,2011) the Wall Street Journal details how Marxist-inspired
programs, once introduced into America’s predominantly capitalist economy, grow
beyond all expectations and projections.
Two examples are Medicare and Medicaid.
·
When Medicare was established in 1965, it was
projected that the program would cost $12 billion in 1990. The actual cost was $110 billion or almost
1000% more than projected.
·
In 1966, the cost of the Medicaid program was $4
billion or just over one-half of 1% of GDP.
By 1986, it had grown to $41 billion (just under 1% of GDP); last year it
was $243 billion (1.67% of GDP).
As the article points out, it is more than rising medical
costs that have increased the price tag of these programs. Just like in Europe, Marxism has resulted in
an increasing number of Americans becoming more dependent on government. They demanded more benefits or entitlements
and politicians, willing to trade taxpayer money for votes, were more than
eager to oblige. Over the years, the
programs were expanded way beyond their original intents. Even Social Security, initially designed to
provide a safety net for those few seniors who were unable to provide for their
own retirement, became a pension plan for all seniors. In 1960, the cost of the plan was
approximately 2% of GDP; in 2008, it had doubled to just over 4%.
In 1965 total spending on entitlement programs made up about
35% of the federal budget. Forty years
later they have grown to be about 60% of the budget. This clearly shows that if, by a miracle,
politicians are able to create the perfect economy by introducing the ideal
amount of Marxism into capitalism it does not stay that way for long. Marxism will grow and slowly deplete the
wealth of the society. Now America, like
its European counterparts, is facing an economic meltdown as Marxism takes its
toll. The question is do we, as
Americans, continue to go down the Marxist road to perdition or do we return to
the economic system that, for 700 years, has created wealth for its societies?
