Capitalism and Socialism

                                           

Recently one commentator in the Wall Street Journal reported that young voters don’t see much value in Capitalism. I suppose that this bias is one of the reasons for the remarkable turnout of young voters in support of the attempt on the part of Socialist Senator Bernie Sanders to wrest the Democrat nomination for President away from Hillary Clinton.

I would suggest that if young people want to see the value of Capitalism, they only have to look at the end of their arm and behold the ever-present cell or mobile phone in their hand. The iphone and its many imitators that have revolutionized the world are a product of capitalism. Despite last year’s drop in stock value, Apple Corporation remains as one of the world’s largest and most profitable companies.

Years ago Steve Jobs, Apple’s legendary founder, broke the virtual monopoly in the computer business enjoyed by IBM and Microsoft. He was a genius but he could never have built his company without capital. He either had to borrow money to bring his ideas to fruition, or offer shares of stock (partial ownership) in the company to build the business.

Moreover, practically every day these mobile phones and laptops have to be plugged into the electric grid so that their batteries can be recharged. Electricity is one of our basic human needs in the modern world but it is remarkably cheap compared to other things we buy. Although regulated to some extent by government agencies, most electric companies are privately owned, for profit companies whose shares are also bought and sold on Wall Street.

People hate their electric bills but most of us probably spend less on this vital resource than we pay on beer and coffee. Speaking of coffee, the ubiquitous Starbucks, where so many young people like to meet and hang out is also a product of Capitalism. How could this very popular company have grown from a small start-up in the North West to a worldwide phenomenon without capital?

Actually, the alternative to Starbucks for those college students at the University of Michigan who came out to vote for Bernie Sanders recently is university cafeteria coffee. Ugh!

On a recent trip to California we visited the magnificent campus of the University of California at Berkeley, a veritable training ground for young socialists. The campus is ringed by coffee shops and eateries serving an incredibly wide variety of coffees from all over the world. All of these places required capital to get started. Also, the more coffee they sell, the more valuable they become, and the more people they employ.

If Apple and Starbucks are good examples of Capitalism for college students today, these students might want to consider that non-profit colleges and universities like Berkeley are good examples of Socialism. It is these universities that produce the dorms and cafeterias that seem to be almost universally despised. So far three of my grandchildren have attended college and all of them took the earliest opportunity to get out of the dorms and live off-campus. All of them despised the campus cafeteria food and meal plans.

Of course, these schools and universities have become notorious centers of political correctness and thought control. They praise their commitment to diversity, but the faculty members are overwhelmingly liberal or even radical. The suppression of political views contrary to the party line is one of the main features of socialism.

Years ago when I taught at a small college here in Connecticut, a colleague was doing his dissertation on the kinds of periodicals read in communist China. He found that the magazines read by ordinary people contained largely factual and accurate information about America. However, the reading material of the Communist Party leaders and bureaucrats contained the most outrageous distortions and propaganda. It is no wonder that the Chinese version of socialism slaughtered over 20 Million people.

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Republican Messengers 2016

So far, the run up to the November 2016 Presidential election indicates that the messenger is more important than the message. It seems to me that no one can possibly pay attention to the words and promises spewing from the mouths of the various candidates, especially their interminable post-primary speeches. It is not what they say but how they appear to the American people that will make or break them.

Here is the way they appear to me, and, I suspect, to a lot of others. I will admit that I initially supported Jeb Bush and felt that a Bush/Kasich ticket would be very electable in November. To win in November the Republicans must carry the key pivotal states of Florida and Ohio.

Donald Trump comes across as someone who is willing and anxious to kick butt both at home and abroad. He appears to be a nasty, mean type of boss who will take no excuses and tolerate no fools. This does not necessarily make him unqualified to be President. In fact, I think that those qualities are required in a President. After all, Trump is running for Chief Executive Officer (CEO) of the United States. Those who call him unqualified mean that he has never held elective office before, but no one can deny that he has the experience and knowledge required of a CEO.

On the other hand, Dr. Ben Carson, who finally dropped out of the race after Super Tuesday, came across as too nice a guy to be President. His message was appealing but no one cared since he was too quiet and self-effacing. He was just what you would want in a family doctor but you would never choose him to represent you in a bitter divorce case. Although he had a brilliant career as a brain surgeon, he should have had his own head examined, especially as his numbers started to drop.

Senator Ted Cruz reminds me of a sleazy televangelist trying to drum up donations from little old ladies. Why would an inexperienced first-term senator think to even run for the Presidency before establishing himself as a Senate leader? Again, his ideas and principles might be good but a majority of the people in the country will never vote for someone who seems so self-centered and uncompromising. His tedious and long-winded post primary speeches make one question his sanity. Finally, his unwillingness or inability to cut a deal with other candidates has left the way open for Trump.

Senator Marco Rubio is a young Senator who could be a great Senator but he seems too young and immature for the Presidency. He is 44 but looks younger. People will say that Jack Kennedy was only 44 when he became President, but Rubio is no Jack Kennedy. It is true that President Obama was as young and inexperienced in government or leadership when he ran for President, but that just proves my point. In most of the primaries the Rubio/Cruz vote totals have equaled or surpassed Trump’s, but so far neither one has had the political practicality to combine forces.

Governor John Kasich of Ohio looks and acts Presidential. The large field of Republican candidates had kept his numbers down but if he wins the Ohio and Michigan primaries, his star will rise. As mentioned above a Republican candidate must win the key pivotal states of Ohio and Florida.

Speaking about Florida, Jeb Bush came across as one of the least charismatic candidates in recent history. His failure proves my point about messenger and message. He had the best ideas and plans but no one could get past his name and dull manner. Taking off his glasses, removing his jacket and tie, and rolling up his sleeves made him appear wimpier and wimpier. Enlisting the aid of his brother and elderly mother in the South Carolina was the last straw.

The Bush campaign was another good example of how money does not always talk in politics. The millions he wasted could have been better employed in bribing Cruz and Rubio to drop out of the race.

Finally, I am amazed at how commentators think there is a Trump bandwagon when it is obvious that two thirds of Republican primary voters cast their ballot against him. It is obvious that Trump has a strong core of support but he has never had to run one- on one in any contest.

Some pundits think that the bitter Republican primary campaign has been a bad thing for the party but I think that it will turn out to be positive. At the outset, the Republicans put up a field of at least a dozen viable candidates, each of who had good credentials. The youth and energy of the Republican candidates stands in marked contrast to the aged Democrat contenders. Even when Democrats sought an alternative to Hillary Clinton or Bernie Sanders, they could only come up with old Joe Biden.

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Phony Progressive Fairness

Even though Hillary Clinton eked out a victory over Senator Bernie Sanders in the Nevada Democrat primary, I think that Sanders would still be a stronger candidate this November. Although 74 years old, Sanders exhibits a youthful energy and enthusiasm so lacking in Mrs. Clinton who appears as an old school marm totally lacking in charisma. Moreover, Sanders has touched on a couple of issues that have a great appeal to younger voters. One of these is "fairness."

In his speech following his primary victory in New Hampshire, Sanders claimed that America was all about "fairness", and that his revolutionary agenda was also about fairness. For example, he thought it was unfair to require people to pay for their own college education, or have to take out loans to complete their education. I wonder if he thinks it unfair for people to have to take out mortgages in order to buy their homes?

Nevertheless, when politicians like Sanders speak about fairness, they usually overlook the special privileges and benefits that they enjoy. Does Sanders really think it fair for him and his family to retain his Federal medical insurance program even though everyone else has been forced into Obamacare? Members of Congress were supposed to be covered under the Affordable Care Act but then somehow got exempted. Even though ordinary people who liked their medical insurance plans were not allowed to keep them, Senators like Sanders as well as most other Federal employees were allowed to keep their plans.

Moreover, Members of Congress get a substantial subsidy to cover the cost of their Federal medical insurance plan. They make at least $175000 per year and still get a subsidy even though ordinary people making $75000 per year do not qualify for a subsidy. Is that fair?

Also, the pension plans that cover Members of Congress and other Federal employees provide far greater lifetime retirement benefits than the Social Security system that covers the rest of us.                                          

The maximum Social Security benefit for someone retiring today at age 67 is about $2500 per month or $30000 per year. The Social Security benefit formula is based on a worker’s average pay over 30 years. There is also a cap on Social Security benefits. Even if someone earns over $100000 per year, his or her Social Security benefit can only be based on the first $100000 of earnings. In other words, if someone makes $200000 per year, only the first $100000 will count in the computation.

Using a 30-year average benefit formula, and putting a cap on benefits were sensible, practical features that have been part of Social Security from the beginning. It was always expected that people would have to supplement their Social Security retirement benefits with their own personal savings. To assist in saving for retirement Congress over the years has allowed workers to utilize a variety of tax-sheltered retirement plans like 401ks and IRAs.

It is shocking to compare the system that our elected representatives have created for us to the one they have created for themselves. Members of Congress now participate in social Security just like the rest of us. However, they also participate in FERS (Federal Employees Retirement System). In addition to Social Security they only have to work for 5 years to be eligible for another pension. If they serve in Congress or another branch of government for 20 years, this additional benefit will be based on the average of their highest 3 years salary, not the highest 20 or 30 years. This pension benefit can be as high as 80% of the average of their highest three years pay. Ordinary members of Congress now make about $175000 per year. For example, members of Congress with only 20 years of service will receive 34% of pay or about $60000 per year in addition to their maximum Social Security benefit. For this extra pension they contribute about 1.5% of salary. What a bargain!

Members of Congress, however, seem like pikers compared to many state and municipal employees. State employees in Connecticut can retire as early as age 60 on 75% of the average of their highest three years pay. In California many municipal employees can retire as early as age 50 on 80 to 90% of the average of their last two or three years pay.

I wonder if Senator Sanders thinks these public service pension benefits meet the fairness test?

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Free College Tuition

After his victory last week in the New Hampshire Democrat primary, Senator Bernie Sanders took advantage of the prime time television opportunity to address the Nation on the features of his "revolutionary" platform. Of great interest to his fervent young followers is his call for free college tuition for all. However, it would appear that most followers and commentators missed an important qualifier. Senator Sanders insisted that tuition would be free only at State and other public schools.

Does Sanders really mean that if you attend a private college or university, you will still have to pay the full tuition? If this is the case, his plan would drive most private schools, whether profit or non profit, out of business. At the same time, his idea would put an incredible burden on existing state college systems. Currently, there are no Federal colleges and universities, and so the various states and municipalities would have to expand their facilities and staffs to cover the huge influx of new students.

According to Sanders the Federal government would somehow find the means to pay the tuition costs at these public educational institutions. Also, can there be any doubt that if the Federal government pays the tuition, it will be the boss. It will determine the amount of tuition that the states can charge in the same way that it sets medical costs in Medicare and Obamacare.

In addition, the Federal bureaucrats will inevitably cave into activist demands that there be no admission standards. Actually, this is the case in most state universities today. In Connecticut, for example, the State promises that it's university system will provide a place for every applicant. Of course, only the top students can go to the flagship UCONN campus. Less qualified students go to a variety of less prestigious schools. Once the Federal Government takes over, such an arrangement will likely be declared discriminatory. The lesser schools are separate but not equal.

In effect, Senator Sanders is talking about a Federal takeover of the entire higher education system in this country. Inevitably, it will mean centralized control of curriculum and standards. When President Obama pushed his medical care plan back in 2008, he claimed that if you liked your current plan, you could keep it. We now know how false that promise was. Under the Sanders free tuition proposal, the Alma Mater that you love will either go out of business, or descend into government directed sameness and mediocrity.

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