Wednesday, February 11, 2009

Adam Smith would be spinning in his grave.

It has come to my attention that a certain instructor (who shall remain nameless) of mine is a socialist. It started rather innocently. One day in class the man started telling his students about the financial crisis that the United States is currently undergoing. He mentioned that people consume less and less as the economy declines and then complained that most Americans are not self-sufficient, that is they depend on others and on the economy to make a living, as opposed to a few hundred years ago when people simply farmed.
He then went on to provide some statistics. Only 10% of Americans are self-sufficient (ie run their own business) and that the means of production are concentrated in the hands of just a handful (the corporate sector. One third of the world's population survives on less than $2 a day; their combined income is less than the total wealth of the world's 250 richest people. In the US, the top 0.5% earn more than the bottom 50% and the richest 5% own more than twice as much wealth as the lower 95%. The instructor went on to tell us about the admittedly high unemployment rate and about how hard it is to find work in the United States. The self-employed (the man has a tendency to jump from topic to topic) are being driven out of business by evil corporations. Such large companies have massive amounts of money and yet they are unwilling to share their fortunes with the government. If only they decided to help out a bit, "we would be out of this recession in a day". He then switched back to the unemployed and told the class that in a certain part of Florida 25% of households require food assistance. Between one third and one half of the American households are struggling (whatever that means).
Now let's move on to some direct quotes and some of the more outrageous ideas presented by my teacher. "Before the 1930s there was no UMass." I think he meant that the school did not get as much financial support from the government. "If people at the bottom got paid more, they would be able to spend more money at Wal-Mart", as opposed to the Dollar Store. He also proposed a "millionaire tax" and suggested that the government simply print more money to get out of the financial crisis - even though this would cause inflation (which "has a bad reputation"), it would "reduce the burden of debt". But in the end "economics is kind of confused" anyways.

Dear instructor, although some inequality of opportunity exists in this country, everyone, more or less, has the chance to succeed. The rich became rich because they or their predecessors worked for the money. William Gates came up with a revolutionary idea; Hewlett and Packard ran their company out of a garage; Sergey Brin is an immigrant who created the largest internet company in history. On the other end of the spectrum, we have Joe Smith who has not had or even looked for employment in the last decade or so and lives off of his welfare checks. In the US, the harder you work and the smarted you are/become, the more money you earn, for the most part. I will readily admit that sheer luck plays a role in it, but if you don't even try to succeed, then no amount of luck in the world (save for winning the lottery perhaps) will get you to the top, in terms of wealth. This is why some people run multi-billion dollar corporations, while others work for them. True, not everyone can make it to the Fortune 500, but it really isn't that difficult to earn yourself a fairly comfortable living. Bearing all that in mind, why should the "wealthy" give away what they have earned to help the government fix their mistakes? I'm all for charity and philanthrophy but the whole Freddie/Fannie/sub-prime loan debacle was one big mess-up and I fail to see why the private sector has to pay for it.

(note: most of the above is a rant after a fairly long day. Some things may not make perfect sense and I'm sure that there are some instances where I did not express myself in the best possible manner. Feel free to get in touch with me to clear any points of confusion or argue the other side of things.)

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