Econ-Chapter 5 Flashcards
Socialism
an individual’s cost or value, we spread it to society, at large.
The market reflects individuals’s values of goods and services by
people paying private costs to receive things privately value.
socialism asserts
that the individual should act to promote the good of society, not to promote the individual’s wellbeing
Karl Marx
who is often pointed to as the founder of socialism, said, production should come “from each, according to his ability, to each, according to his need”
Authoritarian choice
wether the state’s decisions are made by a dictator, the peoples’ elected representatives, or by popular vote.
Original rationales of socialism
- firms have more power than individuals, so they exploit workers.
- fairness, different social classes
Marx’s prediction
Machines would replace people, which would equal unemployment .
Modern Rationale’s for socialism
we must socialize individual decisions by state force in order to counter nature’s socializing effects
external costs
some cost or value that naturally spill over to others
externalities
external costs and benefits
efficient assessment of external costs and benefits must be done by
those who have knowledge of all facets of the economy and nothing to to gain from the regulatory process
Authoritarian decision makers choose for others based on…
their own assessments of values and costs
The state can respond in two ways to maintain order:
- allow individual choice= not maintaining socialist order
- use force and the threat of force to maintain the socialist order
Concept of socialism
the individual should act to promote the good of society, not the individuals wellbeing
all socialist orders
serve the individuals who run the state
Fascism
a system under which the state does not take title to property, but orders the use of that property and the individual in any way it wishes
US socialism is generally
fascistic in nature
Eminent Domain
where property is taken for state public use, such as roads, and parks, but the owner is compensated.
Civil forfeiture
where a person is suspected of a crime and that person’s property is seized because it is automatically suspected as having contributed to the crime.
“state use”
taking eminent domain such as houses, because the state would rather sell the property to business interests.
latest socialist rationale-popular in US
the state provides any good that the individual might derive external benefits from, ex: roads, schools, courts
the percent of spending done by the state is a degree of
socialism in a nation
when government spending increases it becomes more
socialist
Bastiat said:
when gov. asks for money, they are really asking for physical co-operation with them, due to the labor they experience, which the end result changes nothing
private property is an important part of
capitalism
the pursuit of happiness
meant the right to hold and use property freely, to choose one’s profession, to make contracts, and to travel.
capitalist view of society
society’s best interest is promoted by individuals with property rights making voluntary decisions
individuals who wish to serve their own interest must
engage in value creating production and trade
Adam smith said
by people trying to improve their own gain, they are improving society’s too
incentive problem
socialism divorces consumption from production and, in that way, takes the incentive to voluntary serve.
socialist favor
regulations that will conserve resources
capitalists favor
regulations based on individuals values of the resources and the products they produce, as reflected in market prices.
Don Boudreaux
he discusses that we can not calculate how to compensate for these endowments, i.e.. jobs in medical field v.s. poet
Socialists concentrate on
pointing out only the differences in income, without respect to how those differences came to be and propose that the state use force (taxation, backed by armed agents) to correct the differences in income generated in large part by the differences in individuals’ natural endowments including ambition.
Thomas Piketty and Emmanuel Saez (P&S)
used tax dollars to conclude that incomes in the united states have become more and more unequal since the 1980’s
Burkhauser, Larrimore, and Simon (BLS)
different viewpoint of P&S’s results,
times have changed, before tax-income, …
Thomas Sowell adds to the BLS statement
- the richest are the elderly
the poorest are the teens and twenties - people can sometimes gain or loose income
efficient economy allows for
value that can help poverty
free economy
individuals contribute income in order to help others and there is competition between nonprofit firms to provide the most and best aid.
as government expands its attempts to help,..
voluntary giving declines
Milton Friedman says:
society runs on greed
advancements are made by individuals pursuing self interests not my government
capitalism and free trade allows for no poverty
