Chap 5

Question 1

What does it mean to socialize an individual’s cost or value? An example?

Answer 1

spread it to society. state decides others should pay for one person’s education

Question 2

How does the market reflect individuals’ values of goods and services?

Answer 2

by people paying private costs to receive things they privately value

Question 3

What does an advocate of socialism assert?

Answer 3

the individual should act to promote the good of society, not the individual’s well-being.

Question 4

Who is the “founder of socialism?”

Answer 4

Karl Marx

Question 5

Where did Marx say production should come from?

Answer 5

from each, according to his ability, to each, according to his need

Question 6

What were the original rationales for socialism (2)?

Answer 6

1. Firms have more power than individuals so they exploit workers. 2. fairness

Question 7

What is an example of “firms have more power so they exploit workers?”

Answer 7

workers may quit and work for a competitor firm, but in reality all the firms are working for the same side

Question 8

What is an example of “fairness?”

Answer 8

social classes need to be destroyed since people cannot control the class they are born into

Question 9

What did Marx predict about technology? And what did he think the people would do (2)?

Answer 9

machines would replace workers and leave the masses unemployed. they would 1. starve or 2. overthrow the system

Question 10

What is a modern rationale of socialism?

Answer 10

we must socialize individual decisions by state force in order to counter nature’s socializing effects

Question 11

What are external costs?

Answer 11

costs that spill over to others

Question 12

What are external costs and external benefits known as?

Answer 12

externalities

Question 13

If individuals do not agree with the assessment of their abilities, the state can respond with one of two ways…

Answer 13

1. allow individual choice 2. use force and threat of force

Question 14

Even if the state decision is made by elected representatives, is force necessary when individuals do not agree with socialist order?

Answer 14

yes

Question 15

What is fascism?

Answer 15

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

Question 16

What would be an example of fascism in your home?

Answer 16

the state would own the design of your home, the style of your house

Question 17

In what two ways are outright takings of property on the rise?

Answer 17

1. imminent domain 2. civil forfeiture

Question 18

What is imminent domain?

Answer 18

property is taken for state public use but the owner is compensated

Question 19

When referring to imminent domain, what does “state uses” of the property usually refer to?

Answer 19

not state use, but selling property to business interests

Question 20

What is civil forfeiture?

Answer 20

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

Question 21

When referring to civil forfeiture, does the accused have to be arrested or convicted?

Answer 21

No. example: cops take suspicious cash but let the person go

Question 22

What is the latest socialist rationale?

Answer 22

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

Question 23

What does the percentage of total spending done by the state measure?

Answer 23

the degree of socialism in the nation

Question 24

If the state-directed share of the economy rises by 20 percent, the state is…

Answer 24

20 percent more socialistic.

Question 25

What did “the pursuit of happiness” mean?

Answer 25

the right to hold and use property freely, to choose one’s profession, make contacts and travel

Question 26

In the capitalist’s view, who is society’s best interest promoted by?

Answer 26

individuals with property rights making voluntary decisions

Question 27

In a society with property rights men cannot steal. What must they do in order to improve their condition?

Answer 27

engage in trade and production that creates value

Question 28

What solves socialism’s “calculation problem” and how?

Answer 28

markets, they give incentive to voluntarily serve, don’t need force

Question 29

Do socialists favor regulations?

Answer 29

yes, they want to conserve scarce resources. they know the value better than the individual.

Question 30

Do capitalists favor regulations?

Answer 30

no, wasteful since they are not based on the individual’s values.

Question 31

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?

Answer 31

1. size of households have changed, who is the breadwinner, kids, etc
2. they measured before tax income, but taxes have fallen
3. did not count social security or medicare
4. fringe benefits have increased
5. the individual taxpayer no longer represents the household (more people living together to lower costs)

Question 32

If we adjust for P&S’s results, how much is the increase in the average taxpayer’s income?

Answer 32

37%

Question 33

What is an example of fairness not being agreed upon by capitalists?

Answer 33

athletes and teachers

Question 34

T/F Socialism can only exist with unelected dictators in power

Answer 34

Falst, if costs are socialized by any legal system it exists, whether or not the state is headed by a dictator

Question 35

An economic system under which the state has title to all property…

Answer 35

communism

Question 36

Why does the % of control of the government represent the % of socialism?

Answer 36

As the state spends more and makes more economic decisions, the individual more and more serves the “good of the society”

Question 37

If property rights are protected, how can an individual in a capitalist society advance materially?

Answer 37

production and trade

Question 38

How do markets encourage conservation of a resource that becomes scarcer?

Answer 38

increasing price

Question 39

What do capitalist philosophers say about how markets solve fairness problems?

Answer 39

markets may/may not solve fairness problems, but given limitation of state, it might do better or worse

Question 40

What 2 observations did Thomas Sowell make about inequality?

Answer 40

1. 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

Question 41

What does Milton Freidman say in his video about capitalism?

Answer 41

leaders of all states are greedy BUT capitalism harnesses greed to improve the general welfare, whereas socialism does not.

Question 42

How much does the U.S. spend on anti-poverty programs per person?

Answer 42

20,000

Question 43

How does poverty relate to anti-poverty spending?

Answer 43

poverty does not respond to anti poverty spending

Question 44

What is one area where government spending on fairness replaces private spending?

Answer 44

unemployment

Question 45

To curse machines is to

Answer 45

curse the human mind

Question 46

James Goodfellow replaces a worker with a machine, what could possibly employ the worker?

Answer 46

the money saved on the worker will be spent by J.G. creating a job with an equivalent paycheck

Question 47

Who profits from James Goodfellow’s inventiveness?

Answer 47

short run - JG and long run - others imitate him and prices are bid down for consumers