Chap 5 Flashcards
What does it mean to socialize an individual’s cost or value? An example?
spread it to society. state decides others should pay for one person’s education
How does the market reflect individuals’ values of goods and services?
by people paying private costs to receive things they privately value
What does an advocate of socialism assert?
the individual should act to promote the good of society, not the individual’s well-being.
Who is the “founder of socialism?”
Karl Marx
Where did Marx say production should come from?
from each, according to his ability, to each, according to his need
What were the original rationales for socialism (2)?
- Firms have more power than individuals so they exploit workers. 2. fairness
What is an example of “firms have more power so they exploit workers?”
workers may quit and work for a competitor firm, but in reality all the firms are working for the same side
What is an example of “fairness?”
social classes need to be destroyed since people cannot control the class they are born into
What did Marx predict about technology? And what did he think the people would do (2)?
machines would replace workers and leave the masses unemployed. they would 1. starve or 2. overthrow the system
What is a modern rationale of socialism?
we must socialize individual decisions by state force in order to counter nature’s socializing effects
What are external costs?
costs that spill over to others
What are external costs and external benefits known as?
externalities
If individuals do not agree with the assessment of their abilities, the state can respond with one of two ways…
- allow individual choice 2. use force and threat of force
Even if the state decision is made by elected representatives, is force necessary when individuals do not agree with socialist order?
yes
What is fascism?
a system under which the state does not take title to property but orders the use of that property and the individual however it wishes
What would be an example of fascism in your home?
the state would own the design of your home, the style of your house
In what two ways are outright takings of property on the rise?
- imminent domain 2. civil forfeiture
What is imminent domain?
property is taken for state public use but the owner is compensated
When referring to imminent domain, what does “state uses” of the property usually refer to?
not state use, but selling property to business interests
What is civil forfeiture?
when a person is suspected of a crime and that person’s property is seized because it is suspected to be a part of the crime
When referring to civil forfeiture, does the accused have to be arrested or convicted?
No. example: cops take suspicious cash but let the person go
What is the latest socialist rationale?
If the state provides any good from which the individual might get external benefits, no property is private and the state is justified in dictating the use of the individual’s property and income
What does the percentage of total spending done by the state measure?
the degree of socialism in the nation
If the state-directed share of the economy rises by 20 percent, the state is…
20 percent more socialistic.
What did “the pursuit of happiness” mean?
the right to hold and use property freely, to choose one’s profession, make contacts and travel
In the capitalist’s view, who is society’s best interest promoted by?
individuals with property rights making voluntary decisions
In a society with property rights men cannot steal. What must they do in order to improve their condition?
engage in trade and production that creates value
What solves socialism’s “calculation problem” and how?
markets, they give incentive to voluntarily serve, don’t need force
Do socialists favor regulations?
yes, they want to conserve scarce resources. they know the value better than the individual.
Do capitalists favor regulations?
no, wasteful since they are not based on the individual’s values.
P&S’s results claimed incomes have become less equal and the average tax payer’s income has only grown by 3%. In what ways are their claims false?
- size of households have changed, who is the breadwinner, kids, etc
- they measured before tax income, but taxes have fallen
- did not count social security or medicare
- fringe benefits have increased
- the individual taxpayer no longer represents the household (more people living together to lower costs)
If we adjust for P&S’s results, how much is the increase in the average taxpayer’s income?
37%
What is an example of fairness not being agreed upon by capitalists?
athletes and teachers
T/F Socialism can only exist with unelected dictators in power
Falst, if costs are socialized by any legal system it exists, whether or not the state is headed by a dictator
An economic system under which the state has title to all property…
communism
Why does the % of control of the government represent the % of socialism?
As the state spends more and makes more economic decisions, the individual more and more serves the “good of the society”
If property rights are protected, how can an individual in a capitalist society advance materially?
production and trade
How do markets encourage conservation of a resource that becomes scarcer?
increasing price
What do capitalist philosophers say about how markets solve fairness problems?
markets may/may not solve fairness problems, but given limitation of state, it might do better or worse
What 2 observations did Thomas Sowell make about inequality?
- poorest are the young people, but they won’t always be 2. there is movement between the income “photo”
the same people aren’t always rich/poor
What does Milton Freidman say in his video about capitalism?
leaders of all states are greedy BUT capitalism harnesses greed to improve the general welfare, whereas socialism does not.
How much does the U.S. spend on anti-poverty programs per person?
20,000
How does poverty relate to anti-poverty spending?
poverty does not respond to anti poverty spending
What is one area where government spending on fairness replaces private spending?
unemployment
To curse machines is to
curse the human mind
James Goodfellow replaces a worker with a machine, what could possibly employ the worker?
the money saved on the worker will be spent by J.G. creating a job with an equivalent paycheck
Who profits from James Goodfellow’s inventiveness?
short run - JG and long run - others imitate him and prices are bid down for consumers
