Socialism vs Capitalism

 With the current political environment, I posted the statement above. This lead to a discussion of socialism vs capitalism. A friend posed this question: 

“quick serious question, if 78% of Americans live pay check to pay check, and the wealth gap continues to widen, ( the wealthy continue to increase the gap) when does it all fall apart? When approx 78% have very little savings and housing costs are going so high and rent prices very high when does it all collapse and the 1% have all the money and the rest of people get poorer and poorer? You have travelled all over , someone here used Mexico as an example. That is perfect, they have a massive gap in income and we know their problems. The Said-Garza family represents about 20% of GDP in Mexico , we are starting to have a few people here just owning more and more . Which is great capitalism, I support that 100% , but I own and have owned many companies but always paid my employees well , you get better productivity if they are happy , not worried about paying their bills and spend more. We know you really can’t just live on SSI but that may be all a majority of Americans will have when they retire , If you are working and have very little cash reserves what happens if you have a minor emergency ? Just asking your theory and thoughts.”

Because we live in a capitalistic society, my husband and I have been able to save and now build our dream home. Therefore, I decided this would be a good place answer his question. My answer is below. 

The wealth gap continues to widen

I have heard this argument about the wealth gap a lot and I ask, “How did they get their wealth?” Most of those people earned their money. I look at this wealth gap from a different view point. A majority of the people that are living paycheck to paycheck are doing so because of poor decisions and/or expecting others i.e. the government to take care of them. 

Let’s talk about the 78% that live from paycheck to paycheck.

Many in this group tend to live beyond their means or depend on entitlement programs. That is where it all began – when the government began “taking care of people” back in the 50s. Many of these programs were not intended to be permanent but there is nothing more permanent than a government program.

The best way I know to explain my stand on this topic is by example – my family. I will try hard to not get bogged down in the family dynamics.

1955 - 1965

Until the age of 12, we live on a farm. We were not wealthy plantation owners. My grandfather rented the land. We were provided a 2 bedroom house with no running water, no indoor plumbing, no telephone, no TV and no vehicle. (Yes, I used an outdoor john) My father was given approximately $50/month to buy groceries for a family of 4 and could use the farm truck to go to church.  My father’s step mother would take me to a local store to buy me 5 new dresses and 1 pair of shoes for school each year. During the summer I wore my brother’s hand me down shorts and shirts to save my “good clothes” for when we went somewhere. We all worked in the fields in some capacity.

Probably by now you get the picture. We never received any government aid and we had no insurance but we survived. We didn’t expect anyone to take care of us, we did not live beyond our means. My father never had a credit card.

1965 - …

My grandfather decided to give up farming. My Daddy had to figure out what to do. We moved to Drew, rented a 2 bedroom duplex, and he worked in a factory. We didn’t move into a fancy house we could not afford (partial picture to the right), we did not eat steak and lobster, and the only vehicle we had was an old truck that my Grandfather let us have from the farm. We walked to school, walked to town, walked to football games…

My point is we did not expect the government or anyone else to pay for us to have a telephone, my Daddy did not go out and buy a big fancy car, we didn’t have fancy jewelry, or fancy clothes. If we could not afford it, we did not do it.

 

Fast forward to current times…

My father pasted away with savings, owning the duplex we lived in and 2 vehicles. Nothing fancy but within his means. The government did not take care of him – he took care of himself.

I retired as a successful teacher with a specialist degree, traveled to over 30 countries, and building a 4 bedroom, 4.5 bath 2 story house. I constantly looked for a hand up not a handout. I took advantage of every opportunity I was given and worked hard.

A large number of the 78% you are talking about expect handouts from the government and blame everybody else for poor decisions they made. They spend money on cigarettes, alcohol, cell phones, fingernails, and cars. That is what bothers me because my taxes continue to rise and that money is going to pay for these people to take feel entitled to these things.

If politicians and people would focus on cleaning up the system instead of preaching propaganda about everything from Covid to Presidential candidates until I don’t know who is telling the truth anymore…, we could then get back to the America we once knew. The America where communities worked together and looked out for each other. Not the America of hatred, name calling, propaganda, and entitlement programs.

I don’t have the blueprint on how to do this but I feel in my heart this is the only way we can heal our country. If not, we will progress into ruins as other nations have done.

 

Which is great capitalism, I support that 100%

The second part of this conundrum you answered yourself.

“but I own and have owned many companies but always paid my employees well , you get better productivity if they are happy , not worried about paying their bills and spend more.”

Adam Smith, father of free enterprise, said in order for a free enterprise system to work, business owners must have moral sentiment. You have moral sentiment…many business owners and politicians today do not have moral sentiment. How do we correct that problem? My only answer to that is get back to basics. I don’t have the blueprint but I do know that is what needs to be done. Think of all the hatred, scams, corruptness, etc. that now exist in our country. Even people looting in the name of “peaceful demonstrations.”

The best model for business owners is put forth in the book, The Big Five for Life, by John Strelecky. If business owners followed this model, we would all benefit. 

“We know you really can’t just live on SSI but that may be all a majority of Americans will have when they retire , If you are working and have very little cash reserves what happens if you have a minor emergency ?”

 The answer goes back to one of my first points – live within your means. Ron and I are both retired and we are doing fine. My Daddy retired lived on social security and a meager government pension and saved money.

There is not a socialist nation that I have spent long period of times in that I would prefer to live in rather than America. My Daddy instilled in me pride in my country and working hard for everything I have received and that is what I have done.