Tuesday, October 14, 2008

Do people really think they can have it both ways: socialism and capitalism?

Not sure what is going on but I am increasingly worried that the US is embarking itself in a path that could prove disastrous for itself and the world. I was surprised when I read the WSJ Editorial "Obama 95% illusion". Surprised not by the major conclusions of the article but because the MSM is giving a pass to Obama on its implications. Obama keeps promising that 95% of Americans will get a tax cut, yet ~ one third of Americans don't pay any income taxes currently. How does Obama make it work?; well, basically under his plan 44 % of Americans would end up paying no income taxes at all and most of those 44% would end up getting a check from the IRS. This "wealth redistribution" scheme of which Obama is unapologetic is a form of socialism. Some pundits even talk about Democrats willing to implement a New Deal 2.0. Why this isn't news? Why demonizing Sarah Palin is more important than scrutinizing what could be the transformation of the US into another socialist country such as any of those which are part of the EU or Canada?

For those who don't see anything wrong with this naive scheme, I should remind them what each of those EU countries and Canada suffers from:

- Chronic high unemployment rates. This is a byproduct of the fact that many workers find it a better deal to get a check from the government than going to work.
- Mediocrity all around the place, be it at their universities, medicine (when was the last time that a genuinely European country or Canada developed a breakthrough treatment or vaccine for a deadly disease?) or science and technology. What's the value of having socialized medicine if nobody is producing the treatments that tackle the most deadly diseases?
- Very little or none entrepreneurship. If one goes back 30 years in time and compares the largest companies by either revenue or market cap with those of today in the EU and the United States, he/she will find that many companies that top the list in the US today such as Google, Cisco, Microsoft or Apple didn't exist 30 years ago or were tiny companies back then. On the contrary, the most important corporations in Europe today, with very very few exceptions, were the most important European corporations 30 years ago.
- Low birth rates. Eurostat, EU's statistics office, says that according to the current projections, in 2015 there will be more deaths than births in the EU as a whole.

Apparently some people think that they can have it both ways: a big government that acts as the mayor player in all aspects of society: business, education, science, technology, medicine and the benefits that come from a capitalistic society where government plays a minor (supervisory) role: excellence, growth, rewards for those individuals who work hard, innovation and hope for a better future for the next generation (which is what I think is at the core of EU's and Canada low birth rates). Unless they've found some kind of Philosopher's stone, every single country that has tried some form of socialism, and the US under Jimmy Carter is no exception to the rule, has suffered from the same devastating effects. Are Americans really willing to give up their exceptionalism?

12 comments:

Ferny for McCain at Stanford said...

Interesting UCLA study,

"FDR's policies prolonged Depression by 7 years, UCLA economists calculate"

Pablo said...

You are absolutely right in every single point.

Even Hayden Panettiere is so concerned that has done a public statement.

And let's give thanks God that the South has not discovered the condom ;-P

I have a laugh every time I visit this page man! I am not sure if you are trying to convince rednecks to vote for McCain (tip: they are already voting for him!) or you are just out of touch with reality: The innovators of the Silicon Valley that you talk about support Obama
¡And for good reason!

Ferny for McCain at Stanford said...

Paraphrasing Reagan, "there you go again", repeating the messages Obama has designed for people your age/demographic. So much for your "independence" :D. I wonder if there is prize that the Obama campaign gives to he or she who is more recalcitrant repeating the Obama mantra in blogs. Maybe you are trying to get the prize?

If you want to challenge my statements, please do so, for instance providing the example of a single country that has been able to have it both ways. I bet you'll find none. Truth hurts :D.

Regarding the Silicon Valley pro-Obamaniacs, the fact of the matter is that they have built their technology companies in Silicon Valley, not in Western Europe or Canada. And the reason for that is simple: capitalism is a much better engine for wealth generation than socialism.

And talking about laughing out loud, I think that if Obama wins, I'll be laughing at the face of many Obama supporters in this Valley who will see their taxes increased. It reminds me of a conversation that I was having ~ 1 month ago with a friend who is a strong supporter of Obama. I asked her, "do you realize that those making 250K or more will get their taxes increased if Obama is truthful to his word" to which she reaplied "Ouch, I didn't realize that, and now that you mention it, the combined income of my husband and I is exactly that...". Well, I feel no pity for any of those Silicon Valley Obamaniacs who will be paying more taxes with Obama :DDDD.

You say that tech innovators support Obama "for a good reason" but you don't provide any reason.

Let's talk about facts here. Two of the most powerful bosses of Silicon Valley, HP's Mark Hurd, and Cisco System's John Chambers are unapologetic Republicans. And despite all the hype, the combined revenue of HP and Cisco, which is a better measure of the impact that a company has in the Valley, surpases that of more hyped companies such as Google or Apple led by Democrats.

Another fact, those who got the credit for igniting the Silicon Valley dream (so much that no startup created in Silicon Valley afterwards has been able to attain the revenue size of HP), Bill Hewlett and Dave Packard were Republicans! Dave Packard even served under the Nixon administration for a brief period of time. Prominent Venture Capitalist Tom Perkins said about Dave Packard,

"Everything I know about entrepreneurial management I learned from Dave Packard. Packard, a founder of Hewlett-Packard, was a friend, my mentor and the most important influence on my life. He and Bill Hewlett, also a friend, established Silicon Valley and the foundation for everything that transpired there"

So! While people like you blindly embrace the lies of the Obama campaign, the rest of us prefer to do a little bit of research to make sure we know what we are talking about. In this particular case, it's a no brainer that capitalism is way better for the stuff we do in the Valley than the socialist agenda pursued by Obama.

Anonymous said...

Good point in the article. Obama's supporters haven't considered that he might lie to them.

Obama is an inexperienced, egotistical twerp, and he systematically lies to his adoring worshipers.

It both pathetic and amusing!

Pablo said...

Fernando,

When I provide links I expect you to read them. Go ahead and take a look to find countries that have it both ways.

As I told you, it happens that the rich people of this country like the innovators of the valley or the hollywood actors think that it is a good idea for them to pay more taxes in order to help the middle class and poor americans. That is the greatness of this nation, the solidarity between the americans. Not everyone is as selfish as you may be. No one below 250k$ will pay a dime more, most will pay less, and those above that number will pay more because they can and they believe in this country and in helping each other.

By the way, the reasons why the Silicon Valley innovators support Obama are in the video I linked (seriously you have to learn to read my links).

And another thing, you were talking about the great american universities. And as a proud Stanford alumni I agree indeed. But guess what, who do you think that the best brains in this country support? In McCain words: "That one".
So tell me Fernando, do you think that american universities are the best and prepare the best brains, or do you think that they prepare stupid sheeps that don't know what they are doing?

Those that you quoted as Obama supporters: "young and educated" are the ones that are innovating in the companies that you name, and those are the ones supporting Obama. Are they stupid sheeps or are they the ones that are keeping America competitive?

Fernando, no matter how hard you try, I know that 8 years in the US do not make a redneck out of a foreigner like you. You can mantain whatever public stand you want in order to defend McCain in these times where the defeat seems inminent, but I know that you don't believe a single word of what you are saying. And that is the reason why I find hilarious this comedy.

Pablo said...

Wait, on second thought, you totally convinced me: Palin for President (Not Suitable For Rednecks)

Ferny for McCain at Stanford said...

Pablo,

You have several weak points in your arguments. Somebody else already noted that you tend to sound condescending in your posts,

- Sometimes I wonder if you really read what I write. It seems to me that you filter it through your prejudices and distort my ideas when you write back. Where did I mention that I favor the rich and wealthy not helping the poor? Even Warren Buffet, despite his support for Obama, understands that a private foundation like the Bill and Melinda Gates fundation does a better job helping the poor than the Federal Government. The United States, unlike the European countries, has a rich tradition of philanthropy with the most wealthy giving back to society the way they see fit. It's the case of the Hewlett and Packard ones too, founded by accomplished business men who were both Republicans. If you look at the effects of that philanthropy, the facts speak for themselves. Rockefeller University alone, has done more to advance the treatment of horrible diseases such as cancer or AIDS than all the medical research done in the EU during the last 20 years. And the list goes on, and on. Again, your caricature that only Democrats care for the poor, it's just that a caricature. I, for instance, have had a small monthly pledge with UNICEF for almost 5 years now, including during my time as a student. More taxes from the federal goverment means lees money for me available to expend how I see fit, and that includes charitable causes of my choice. Instead you guys favor that a bunch of bureaucrats decide how to spend my money in ways not related with the minimum functions of government: national defense, courts and the like. Regarding Obama's tax plan, the WSJ did an excellent job destroying Obama's 95% point. I will just quote the conclusion of the editorial, One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.

- I have watched that video of yours, and honestly, none of those guys has done in the business world anything of the magnitude of HP or Cisco, both of which were founded and/or grown by Republicans who happen to spend a lot of money in charitable causes. Note also that people such as the Google guys or its CEO have been very careful not to endorse Obama for President publicly, even thogh it's obvious they support him and the Democrats.

- It's a well known fact that conservatives are more generous when it comes to charity than democrats. So this idea that somehow republicans don't care as much as democrats for the less fortunate is a plain lie that you have been unable to analyze critically.

- Regarding the question of why Stanford people support Obama, for me is a question as hard to answer as why the scientific establishment of Germany during the 1930s overwhelmingly supported Hitler. I just don't know. But the fact tha Obama is favored at Stanford to me means no more than the fact that the German scientists of Heissenberg's calliber, brighter than anything that I have seen at Stanford, favored Hitler. The historical record of the political movements favored by intellectual elites "as a class" is not a very good one.

Finally, I stand by all my comments that I have posted in this blog as an author or in the comments section. For me this is not a comedy; it's serious business. I came to the US to leave behind socialist Europe. I would be very saddened if the socialism that has ravaged Europe ends up devouring the US too.

Ferny for McCain at Stanford said...

For me this is not a comedy; it's serious business.

I was too quick; maybe that's another difference between you and me, this election isn't a joke (I wish it was; I still cannot understand how Obama managed to get this far, perhaps a byproduct of the Web 2.0 bubble?); it isn't about which candidate is able to gather more crowds or able to have more friends in his Facebook account. It's the future of the US that which is at stake, and with that the future of universities such as Stanford. Look no further than Cambridge or Oxford, which are both pretty much bankrupted intellectually since the British Goverment took over their control.

Pablo said...

"t's the future of the US that which is at stake, and with that the future of universities such as Stanford."

But again you miss the point that those people favor Obama. And so does most of the innovators of the Silicon Valley.
Do you believe in democracy?

The US will become a better nation under Obama. A nation were no one is left behind. A nation that will lead the green tech revolution and the biotech revolution (both of which will be severely endangered if people like McCain and Palin respectively get the government).
A nation that will be respected and admired by the rest of countries instead of hated and feared.
My parents came to this country to study years ago and they came to the country of freedoms, and now they only see a country that acts like a warmongering.

Obama plans to spread the wealth among the americans, and most of them, especially including those that make more money in this country, think that is a good idea.

Not to mention the fact that you blindly support McCain economic plans which include nationalizing mortgages and helping the banks from the federal government.
What is more socialist than that?
Furthermore, you have defended that the federal government should have regulated more the Wall Street markets. So, while you criticize the government helping the poor people by cutting their taxes, you favour the government regulating the markets.

The election is not a comedy, but your attacks to Obama and the ideas you are defending here lately are. You are more intelligent than what you are showing here, otherwise I have a wrong image from you.

Ferny for McCain at Stanford said...

Pablo,

"there you go again". When you don't know how to answer, you blindly throw at us propaganda that comes directly from the Obama campaign. We are indeed smarter than that.

I take your answer as an implicit acknowledgement that you were wrong in things such as your caricature of Republicans not caring for the poor or the fact that the Stanford people support for Obama means no more than the support of the Geman scientific elite to Hitler in the 1930s. You keep appealing to other people's opinions as if I were to respect them because you or Obama say so (I see remains of that European love for arguments of authority). Too bad for you that the facts don't match your rhetoric,

Obama plans to spread the wealth among the americans, and most of them, especially including those that make more money in this country, think that is a good idea.

But as I pointed out some of those people don't walk their talk. Case in point, Warren Buffet who prefers to have his fortune administered by a private foundation than by the Federal Government. What Buffet pays in taxes each year, dividends from a fund he has set to cover his operating expenses, is a very tiny percentage of the money he is giving each year to the Bill and Melinda Gates foundation. So much for Buffet's trust in the Federal Government.

Obama is deliberately lying to the American people with his "95% of the people" will get a tax cut. You know that, yet you keep repeating the mantra of Obama's tax cuts.

Look, I don't know what country your parents knew when they came here (it must have been more than 30 years ago I assume, if that's the case those were the Carter years, known for the type of economic catastrophe to which Obama wants to go back). I do know what type of unfair society I left behind in Spain, that's the type of society that exists all around Europe; a society where the power is concentrated in the hands of a few who impose in the middle class their choices. Let me give you an specific example. Between 2000 and 2004, as you know, I was working for HP here in Cupertino. What you might not know is that we had half of the team in Grenoble, France. As expected, there were many discussions between the engineers on both sides of the Atlantic about differences in salaries (significantly lower for the guys in France). It turned out that from an HP perspective the cost of an engineer in Cupertino or Grenoble was about the same. Why? Because in France, HP had to pay in addition to the salary, social fees to the French state per each employee. Those are the fees that pay for the socialized health care system, socialized education, etc. So the situation is simple. Say, to simplify numbers that the cost of that engineer is $150K (salary + benefits such as healthcare, life insurance, etc):

- In the US, the engineer gets a salary of 120K out of which he/she pays his/her income taxes. The other 30K go to pay for he company benefits and the employer's take in the social security tax.

- In France, the engineer gets a salary of say $75K out of which he/she pays his income taxes which might be even higher, percentage wise, than what the American engineer pays. The other half goes to the state imposed social fees that I mentioned which pay for socialized medicine, higher education, etc.

The bottom line, is that the French guy (and his family) surely has access to state sponsored education and healthcare. However, his choices are very limited. If he wants a health insurance different from the one offered by the state, he has to pay it from his own pocket (as a side note many French companies offer some kind of private insurance to employes in engineering professions and the like), same for the higher education of his/her kids. The American engineer has more money available to pick the insurance of his/her choice, same with the college, etc. The net result is that the average French is forced to use the public services while the average American has more money at his disposal to make the choices he/she sees fit. And who decides which services the average French citizen has access to? Some government bureaucrat. In the American case, the competition makes the bad service providers go out of business. In both cases, the cost to the employer is similar, but it's a no brainer which of the two makes more choices available to the average folk.

At the end of the day, the wealthy do well everyhere; it's the average guys that in Western Europe are subjected to the dictatorship of the state (because they are being imposed a lower buying power and choices by the system) while in the US they can benefit from the capitalistic society. And in the US, for those who are less fortunate, there is the work of both public and private organizations that offer a safety net. As a byproduct, the socialist systems reward mediocrity and punish excellence while capitalism rewards excellence, is indifferent to mediocrity and generous with the less fortunate.

So,

The US will become a better nation under Obama. A nation were no one is left behind.

A nation like those EU countries whose best and brightest fight to come to the US looking for better opportunities? The catch 22 is that if Obama becomes president and goes ahead with his socialist agenda, there will not be any other country left in the world that embraces individual freedom the way the US does. So if that happens, the US will slowly follow the decandent and mediocre path that each single socialist country has followed; this time though there will be no place to go. This is the real tragedy.

The election is not a comedy, but your attacks to Obama and the ideas you are defending here lately are. You are more intelligent than what you are showing here, otherwise I have a wrong image from you.

Ironic this comment comes from somebody who has been blindly throwing at us the messages from the Obama campaign or caricaturing the Republican position on the best way to help the poor. I too am appalled that a smart guy like you hasn't been able to come with something better.

I stand by my analysis. In this particular case, you had it very easy to refute me: come up with a country which has been able to have it both ways. There is no such country. Truth hurts!

That's the fundamental choice that Americans need to make, what type of country they want to leave to future generations: one that embraces socialism, which inevitably will lead to decadence, or the American exceptionalism that has been the light of the world during the previous decades, a country certainly not perfect but the last bastion of individual freedom that is left.

Anonymous said...

"Wall Street Socialists”
By Amy Goodman

The financial crisis gripping the U.S. has the largest banks and insurance companies begging for massive government bailouts. The banking, investment, finance and insurance industries, long the foes of taxation, now need money from working-class taxpayers to stay alive. Taxpayers should be in the driver’s seat now. Instead, decisions that will cost people for decades are being made behind closed doors, by the wealthy, by the regulators and by those they have failed to regulate.

Tuesday, the Federal Reserve and the U.S. Treasury Department agreed to a massive, $85-billion bailout of AIG, the insurance giant. This follows the abrupt bankruptcy of Lehman Brothers, the 158-year-old investment bank; the distressed sale of Merrill Lynch to Bank of America; the bailout of both Fannie Mae and Freddie Mac; the collapse of retail bank IndyMac; and the federally guaranteed buyout of Bear Stearns by JPMorgan Chase. AIG was deemed “too big to fail,” with 103,000 employees and more than $1 trillion in assets. According to regulators, an unruly collapse could cause global financial turmoil. U.S. taxpayers now own close to 80 percent of AIG, so the orderly sale of AIG will allow the taxpayers to recoup their money, the theory goes.

It’s not so easy.

The financial crisis will most likely deepen. More banks and giant financial institutions could collapse. Millions of people bought houses with shady subprime mortgages and have already lost or will soon lose their homes. The financiers packaged these mortgages into complex “mortgage-backed securities” and other derivative investment schemes. Investors went hog-wild, buying these derivatives with more and more borrowed money.

Nomi Prins used to run the European analytics group at Bear Stearns and also worked at Lehman Brothers. “AIG was acting not simply as an insurance company,” she told me. “It was acting as a speculative investment bank/hedge fund, as was Bear Stearns, as was Lehman Brothers, as is what will become Bank of America/Merrill Lynch. So you have a situation where it’s [the U.S. government] … taking on the risk of items it cannot even begin to understand.”

She went on: “It’s about taking on too much leverage and borrowing to take on the risk and borrowing again and borrowing again, 25 to 30 times the amount of capital. … They had to basically back the borrowing that they were doing. … There was no transparency to the Fed, to the SEC, to the Treasury, to anyone who would have even bothered to look as to how much of a catastrophe was being created, so that when anything fell, whether it was the subprime mortgage or whether it was a credit complex security, it was all below a pile of immense interlocked, incestuous borrowing, and that’s what is bringing down the entire banking system.”

As these high-rolling gamblers are losing all their banks’ money, it comes to the taxpayer to bail them out. A better use of the money, says Michael Hudson, professor of economics at the University of Missouri, Kansas City, and an economic adviser to Rep. Dennis Kucinich, would be to “save these 4 million homeowners from defaulting and being kicked out of their houses. Now they’re going to be kicked out of the houses. The houses will be vacant. The cities are going to [lose] property taxes, they’re going to have to cut back local expenditures, local infrastructure. The economy is being sacrificed to pay the gamblers.”

Prins elaborated: “You’re nationalizing the worst portion of the banking system. … You’re taking on risk you won’t be able to understand. So it’s even more dangerous.” I asked Prins, in light of all this nationalization, to comment on the prospect of nationalizing health care into a single-payer system. She responded, “You could actually put some money into something that pre-empts a problem happening and helps people get health care.”

The meltdown is a bipartisan affair. Presidential contenders John McCain and Barack Obama each have received millions of dollars from these very companies that are collapsing and are receiving the corporate welfare. President Clinton and his treasury secretary, Robert Rubin (now an Obama economic adviser), presided over the repeal in 1999 of the Glass-Steagall Act, passed after the 1929 start of the Great Depression to curb speculation that caused that calamity. The repeal was pushed through by former Republican Sen. Phil Gramm, one of McCain’s former top advisers. Politicians are too dependent on Wall Street to do anything. The people who vote for them, and whose taxes are being handed over to these failed financiers, need to show their outrage and demand that their leaders truly put “country first” and bring about “change.”

SY

M.A. Crane Alabama said...

TO Senator John McCain and the Republican party, why aren't the American People hearing about Obana and his birth certificate?I believe that the law states that you can not run for President if you are not a U.S, citizen. Am I not correct? Why don't you all do something about it? It's just not fair that he can do anything he wants to and get by with it. Look what they are doing to Sara Palin because she fired her ex-brother-in-law. Give me a break people.