Cavat Emptor: Understanding the Socialistic Issue with Economics

[Zardoch]

I know many are looking to me to respond to everyone in the Obamacare thread, but there are many other things I have to do besides take an hour or two to respond to everyone. As such, I'm making this thread as an informative post to allow the other side to understand the reasons for why both Conservatives, Independents, and Democrats are against socialized medicine or socialism in general. Furthermore, I'm going to be using basic economics to explain the issues more thoroughly. (Also, a lot of what I will be using is based on lessons from conservapedia.com, of which I'll provide links for at the bottom so you may study these lessons yourself.)

First off, the most basic reason for people to go against any kind of socialized system is mostly because of government intervention. It was stated 200 years ago that the government was only given the power to protect and serve the people who give it power, not regulate various parts of their lives, especially medical care. Why is that? Because America is based on a 'free market/free enterprise/capitalist' system, which is more or less defined as 'Transactions free from interference by someone or something', such as the government. That means this 'free market' has no regulations of set prices on goods or services.

Now, some people might ask, 'Why is that a good thing?' I'm glad you asked.

To understand the question, I should probably elaborate on the basics of economics. Basically, economics is the study of financial systems and how they work with the flow of goods and services. In the case, it's about Supply and Demand. This is the center core for all businesses to research and understand as it creates a foundation for how a business can make a profit and revenue, while answering the demands of the consumer.

Expanding on both what I said earlier and this understanding, the free market is where businesses can set their own prices while a market based on socialism has set prices from outside interference. With that in mind, let me continue to explain how the subject of supply and demand works.

There are three principles about economics:

1. A rise in price tends to increase supply and decrease demand. Conversely a fall in price tends to decrease supply and increase demand. LOWER PRICE MEANS HIGHER DEMAND

2. When demand exceeds supply at a given price, the price tends to rise. Likewise, when supply exceeds demand, the price tends to decrease.

3.Price tends to move towards the amount at which the quantity in demand is equal to the quantity in supply: EQUILIBRIUM IS WHERE SUPPLY EQUALS DEMAND. [1]

Here we see the word equilibrium used, which basically means a balance has been created. In the case of economics, it means supply has equaled demand, meaning the supplier has set the price to a point where the demand is equally met. This may be confusing for some of you, so let's expand on that as well.

http://img.photobucket.com/albums/v4...yanddemand.gif

As you can see in this graph, once you understand those 3 principles of economics, this becomes a lot clearer. However, one thing not said about supply and demand is that when it comes to this, demand is always curving downwards and supply is always curving upwards. You can also see exactly where equilibrium takes place as it sits directly at the center of where these two lines meet. Let's try an example for the first time.

Okay, to understand how supply and demand works, we'll also need an object to sell and a price. Let's say you're selling ice cream with a mobile vendor and let's say all ice cream from this vendor is 1$. Now, if I were to sell my own ice cream at only .50$ (cents), the demand would increase and the supply would decrease as my ice cream would probably be sold much more quickly than competitive vendors. At the same time, if I sold my ice cream at 3$, then supply would increase while demand decreases since no one wants to spit out so much money on something they would otherwise get cheaper at another ice cream vendor. That's how supply and demand works. At the price of 1$-1.50$, equilibrium is finally met as supply then EQUALS demand. Once you understand this, you'll also understand why you see prices going up and down at the supermarket. One day a piece of candy is 87 cents and 98 the next. It's all based on the fluctuation between supply and demand and the profit is made when equilibrium sets in.

Now that we've finally established all of that, let's move on.

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy. Its inherent virtue is the equal sharing of misery." - Winston Churchill

How does socialism affect a free market system? Well, socialism is a government system of statehood that controls and regulates production and prices in favor of equal distribution to everyone. This sounds quite fine on paper, but in terms of actually working, on the other hand, it has barely been met with varying degrees of success. The affect of socialism is that it the presets of prices and wages stalls the increase in supply from satisfying the demand. So in other words, if the demand cannot be met because the supply is decreasing, then both the quality and the time to receive that quality is decreased as well, i.e. longer waiting lines for doctors and less doctors to treat patients.

This is why capitalism is the best financial system in the world because it allows supply and demand to react quicker and more efficiently, while at the same time making a profit that benefits everyone. In socialism, that can't happen as it also drags on the economy, increases debt, and eventually either leads to bankruptcy (e.g. England) or a complete overhaul of the entire financial system. In a way, you could also call capitalism 'blind justice' because it is indifferent to the class and status of a person, allowing equal opportunity.

“Capitalism is essentially the economic system of poor people. That’s what allowed the people that came from humble origins of the world to have economic rights the way only nobility and the high bourgeoisie had it before. So capitalism is essentially a tool for poor people to prosper.” - Hernando de Soto, PBS Interview, March 30-31, 2001

To extend the effects of socialism, Canada is a perfect example of what has gone wrong.

If an elderly Canadian is vacationing in Florida and falls and breaks his hip, which is very painful, the Canadian system of health care will not even reimburse the patient for surgery at the nearest hospital. Instead, the patient must fly back to Canada in excruciating pain to be operated on by a government-controlled doctor there. [2]

As you can see in this scenario, if the elderly Canadian man decides to go to an American hospital, he'll likely be treated excellently, but be charged for every dime because Canadian health care does not provide insurance for its people. Only a system that causes so much trouble not only to peoples' health, but to the economy as well is determent.

Let me use another example I used for Jin in explaining socialism. Socialism is like taking a bar of butter and trying to use that one bar to spread across an ever-increasing amount of pieces of bread. Eventually, the butter is used up, but the pieces of bread keep on coming. The supply of butter has been used up because the demand increased (i.e. the population increased). The only way for such a system to work is if it as an infinite amount of funds, but like hell is that going to happen. (Unless like I said before, every country agrees to a one world currency system where there's one central bank and that is exactly what is described within the book of Revelations as being apart of the system of the beast.)

Here's the bottom line: people don't want to be controlled. Socialism gives control to governments that, in the past, has destroyed societies and civilizations.

"But today's governments won't do that because countries like England and Venezuela are enlightened!" ... one might say.

If the present is ever going to escape its past, more people are going to have to study history to understand how they can better the future. That is what the United States Constitution and Bill of Rights tries to accomplish by truly giving the power to the people within a system of checks and balances. A government can never be trusted to use control correctly, especially since as time goes on and things change (and they will) and if you can't accurately predict the outcome of the future using histories' mistakes, then you're a fool to put your trust in a future that is so vulnerable to murphy's law.

What America and essentially the world has felt in these past 3 years is the effect of socialism through the democrats who regained power in 2006. And if history is correct (and it is), nearly every time democrats gained power in at least America's history, things went terribly wrong. After Abraham Lincoln died and the democrats gained power, oppression towards black Americans increased ten fold. In fact, organizations like the KKK were created by democrats to oppose what republicans stood for and who they protected. I'm talking about democrats actually killing republican senators because these patriots were against discrimination [3]. I bet that's quite shocking to some people reading this because in these days they're told it's the republicans who are racial bigots. Well, that's a lie and history proves it.

Back to socialism--or more specifically--socialized medicine, beyond people not wanting to be controlled (and they will if the healthcare bill passes) is that more people will die under such a system. In fact, the survival rate for cancer in the U.S. is 90%+/- [4] . In England it's 50%+/- [5] . This is a result of the socialistic changes the U.K. has instilled and will get worse if it continues. And while people are attacking the current health care system of the U.S., they're so busy doing so to actually look at any other survival rate in other countries. Again, does that make the American health care system perfect? Hell no. I have plenty of issues with what's going on and what needs to be stopped, but when it comes down to it...both socialism and socialized medicine is a poison to any country that comes into contact with it.

There's one last thing I'd like to ask the people who live outside of the U.S. who are reading this: You have been living outside of the U.S. for most of your life. So...How can you judge something you've never experienced? (American health care.)

I know, I know. Some of you are probably right now thinking, "Well, Griff, I know how some of my friends who live in the U.S. have experienced it and they say it sucks", or, "O ye hypocrite! How can YOU judge something you've never experienced?! (socialism/socialized medicine.)"

Both questions are legitimate, but don't answer my question.

One final thing I'd like to say in this uber long post of mine is that the main reason I am writing this ridiculous article is besides all the arguing about this and that, I would like some of the other people on the other side of this argument to truly start researching this issue instead of simply criticizing anyone who criticizes their own opinion. I want more people to become informed because--really--a lot of people don't seem to realize that they are reacting based on their emotions instead of what they actually have learned.

This issue itself is based on life, death, liberty, and freedom. It's not just about how many people aren't getting health insurance or how poor people are being treated. It goes beyond the musicians (politicians) trying to pluck at my heart strings to a matter that is so serious it will change the present as we know it. So please, I beg you to turn off your TV and seek some answers. Question not only what I say, but what your own people are saying.

I thank you for taking the time to read this ridiculously long post. God bless.

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[Alpha]

Hmm. Where to start? You know, I have an economics test on Wednesday, and I should be studying. So this helps, and I'll give you rep when I'm done.

I fear someone giving me the old "tl;dr", and I expect most are going to do that to Griffith's post, but trust me, I read it. To avoid this, I will attempt at being concise.

Firstly, I think your definition of economics is misleading. Economics is the study of the allocation of scarce resources. That makes no judgments on it's own, and no one really can disagree with it. Why are resources scarce? Because we can't all have everything. Price, as a general rule, measures scarcity. That is why water is expensive in a desert, yet practically free in a temperate climate.

Now we have an understanding of what economics is (Griffith explained it well, aside from his clear biases - which are fair), it must be distinguished between two branches.

Positive Economics

Positive economics is statements about how the economy works; which models to use, when to use them, which variables to ignore, etc. The model of supply and demand is the simplest and the most fundamental to the study of economics.

Positive statements can be true or false, and evidence is collected in support of either position, just as in any rational scientific inquiry.

Normative Economics

Normative economics are statements which concern how the world should be, and it is here we first encounter the (very) general left/right split with which we are all familiar (I hope. Seriously, if you do not have a basic understanding of this, get the f*ck out of ID).

The questions asked by people on the left (do NOT refer to them as liberals; this is not the correct term, AT ALL) is whether the outcome of market exchange which underpins the capitalist system is desirable.

-----

Now, for some more fundamentals.

Market Goal

The market goal is efficient allocation of resources, as determined by the intersection of demand and supply.

State Goal

As a rule, the state has concerns that a market does not address. These include justice, equity, fairness, and security. The government, in capitalist (Western) socety certainly has a responsibility to efficiency, but government intervention will ALWAYS diminish this. Economic liberals (the right) dislike this, while those on the left (seriously, call them whatever; socialist is fine if you don't live in America, where it is a swear word) say it is required. Note, this is a MASSIVE generalisation, but accurate nonetheless.

No economy in the western world is one or the other. Both state and market approaches are used to various extents. As such they are called CAPITALIST MIXED ECONOMIES, and to be honest, I'd be very surprised if anyone disputed this system as being darn good.

How does socialism affect a free market system? Well, socialism is a government system of statehood that controls and regulates production and prices in favor of equal distribution to everyone. This sounds quite fine on paper, but in terms of actually working, on the other hand, it has barely been met with varying degrees of success. The affect of socialism is that it the presets of prices and wages stalls the increase in supply from satisfying the demand. So in other words, if the demand cannot be met because the supply is decreasing, then both the quality and the time to receive that quality is decreased as well, i.e. longer waiting lines for doctors and less doctors to treat patients.

What Griffith is describing here is a centrally planned economy (or command economy), where political authorities set prices and decide on quotas for production and consumption of each economy according to a long-term plan. This was the case in the former Soviet Union, Eastern Europe, China, and several smaller countries (it is still in place in North Korea and Cuba). This system of public ownership was once a credible alternative to private ownership. Proponents of CPEs claimed that it would make economies both more rational and more just. By controlling the economy, governments could guarantee the basic needs of citizens and could mobilise the state fully for war if neccessary. They also hoped that long-term planning (with authoritarianism) could prevent the boom and bust cycles undeniably associated with capitalism. Instead, and for all that I am a leftist, communist economics has been discredited as hopelessly inefficient and discarded in whole or in part by almost all of it's former followers. China, still following a Marxist political line, is now more or less a market economy.

"But how does this link to healthcare, Alpha?" Well, almost all economies are neither solely market- or state-oriented. They fall in-between. Many states own all (or part of) industries deemed vital for the economy, or industries that would otherwise be natural monopolies - which are generally regarded as a bad thing by everyone (an example is train lines). In addition, many governments use subsidies to lower the price of some domestic goods, and use a variety of tariff and non-tariff barriers ('red tape') to influence trade.

The government provides services which are deemed neccessary, and which no private firm would produce, such as streetlights. A firm would not produce streetlights as there is no way to charge people to use them - except through taxes.

I realise I am completely lacking in a coherent approach to this, so I'm going to answer a question of Griffith's.

There's one last thing I'd like to ask the people who live outside of the U.S. who are reading this: You have been living outside of the U.S. for most of your life. So...How can you judge something you've never experienced? (American health care.)

The answer, my friend, is blowing in the wind. The wind of normative economics. Me and my fellow "Communists" argue that health care is a right, not a privilege, and that price discriminates against the poor. Capitalism is based on incentive. I'd like to explain the labour market, but it's a little crazy, with backwards-bending supply curves and all sorts, so I'll do it simply. Factor rewards for labour (wages, salaries) are given on the basis of qualifications, the undesirability of the job, etc. Different jobs are awarded different rewards. This provides incentive and is remarkably efficient. The concern is that it is unequal, and that in an economy ruled by price, those who are not at the top of the pile CANNOT access the same benefits as the rich. From a leftist normative perspective, healthcare SHOULD NOT be one of those things (though they are CERTAINLY neccessary for other goods and services in a functioning economy).

PS. I want to talk about macro economics too, does this fit the scope of this thread?

PPS. For those who take after...

Life, liberty and the pursuit of happiness

PLEASE note that this is plagiarised from an Englishman...

No one ought to harm another in his life, health, liberty, or possessions.

From my perspective, price itself should not harm another in their life, health, liberty, or possessions, as far as requirements for enjoying a satisfactory quality of life are concerned.