Are You Sure You Understand Socialism?

so·cial·ism

–noun

a political theory or system in which the means of production and distribution are controlled by the people and operated according to equity and fairness rather than market principles.

I am both amused and dismayed when I see people claim that dreaded socialism is creeping into the American culture and redefining how various vital services are created and distributed.  If the definition presented above, which is the standard dictionary version, is accurate then much of what is being labeled as socialism is not even close. 

Instead, what is being labeled as socialism is actually anything that shifts responsibility away from individuals and distributes it collectively across the population spectrum.  The usual suspects who often cry “socialism” are those who believe they are being asked to carry part, if not all of the burden for others who have less access, or assets, with which to acquire vital personal needs. 

When those basic needs become economically out of reach for a growing percentage of the population, this can reveal that something is out of line and a mechanism for addressing this misalignment is advisable in order to avoid social unrest.  But that typically is not the case.  Instead, the less affluent populations are often chastised for their circumstance without any regard to the reasons for why they are disadvantaged.  While there may be some merit to classifying reasons for economic inequity, this alone does not resolve the reality that such inequity exists and may even be increasing at a dangerous rate of speed.  There will always be inequities of one sort or another, and I think that is actually appropriate in a number of situations.  Sometimes fairness is overrated, especially when it negates enterprise and innovation.  But social inequity that places large numbers of the population at risk where health and safety is concerned should not be encouraged or supported.

One very interesting example of this incorrect interpretation of socialism is the entire insurance industry.  If you think about it, the very premise of the insurance industry is the idea that an individual can escape the fiscal responsibility for their experiences and actions by passing off the financial consequences to a broader population instead of absorbing the total cost personally.  Doesn’t that idea have a socialist implication?  For example, I wreck my car, and then you help me pay for repairing it by means of the insurance premiums you also paid, be it to the same company or another one.  The company writes the checks to the repair service but the funds do not come from my premium payments alone, but yours and everyone else who is a policy holder.  Sounds like most people’s version of socialism, or perhaps even more like communism, doesn’t it?

This model is even more obvious in health care coverage.  Insurance companies are complaining that they cannot get healthy young people to contribute to the pool even though they often do not need any services.  So they are pushing for laws that force this population group to buy their services regardless of need in order to maintain their profit levels while absorbing the costs for the population segment that does need expensive services.  Isn’t that a very clear example of socialism and communism?  Just because there is someone making a profit from the system doesn’t mean it is a purely capitalistic enterprise.

Of course I am picking on the insurance industry here, largely because they deserve it.  Historically, they have been nearly as successful at writing and passing their own laws as the banking industry has.  But it is also true that very large corporations are paradoxically singing the praises of free market capitalism while working diligently behind the scenes to write and revise laws and regulations that help them avoid the harsh the realities of the market place. True capitalism is what they want their competitors to struggle with while they socialize as much of their expenses and responsibilities as possible.  Perhaps it has always been thus, but it seems it is even more so today.

As a side note, two people that most Americans revere and take pride in claiming as national treasures were avowed socialists.  Albert Einstein is one of them, and the author of the pledge of allegiance to the American flag, Edward Bellamy, is the other.  But we generally choose not to recall those facts when we think of the two men, right?

If you share my interest about this issue, what should you and I do about it on a daily basis?  I have some suggestions that could make a difference.  How much difference remains the question.

First, choose to patronize the smallest, most local businesses available to you that deliver good service and quality at a price you can afford.  Did I say the cheapest price?  No, I did not, nor did I mean to.  Stay away from the big box national chains as much as possible.  When you do patronize the giants, shamelessly cherry pick them by only taking advantage of the ‘loss leaders’ they offer, and only if it is something you really need, and walk out of the store without spending another dime for anything else.  It is quite ok for the big box national chains to go out of business.  Regardless of what the ‘big boys’ claim to the contrary, they will be quickly replaced with local entrepreneurs when they die, and they never paid their staff well or contributed significantly to your community anyway.  They only extract value from your community by selling you cheap Chinese manufactured merchandise and sending the cash they collect to the giant banks in faraway places.

Next, do your banking business with your smaller, local banks.  There isn’t any disadvantage to doing that today, especially if you are not a multimillion dollar borrower.  All of them have debit card services that give you access to accounts and services anywhere in the world.  They typically charge smaller fees for their services and you can actually become personally acquainted with the staff from the president down to the tellers if you choose to.  When you do have a need they can serve, they are much more likely to be interested in helping you than the monster banks.  And when you need to phone them you can talk to a real person who knows you. Try to do that with a huge banking organization.  I dare you.

And third, conduct a careful assessment of your personal lifestyle, financially and otherwise.  Just for fun, see how many things you buy and use at this time that you could eliminate if you chose and it would not have any real impact on your well being.  Calculate the dollar value and savings that eliminating those things would represent to you.  I’m not going to tell you to take immediate action on the results of that exercise, but I think you will enjoy the empowerment you will realize from just knowing you could.  

That’s the kind of ‘socialism’ I can get behind.  How about you?

Finally, send me a note telling me what you think about these ideas and how they might fit into your personal paradigm.

As always, thanks for reading!