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Socialism is still a dirty word

By Henry Lamb
web posted July 21, 2008

In the 1950s, the word "socialism" was as vulgar as the four-letter words, which, when uttered by a youngster, could result in a mouthful of soap.  Not so today.  Perhaps contemporary acceptance of the term is the result of tolerance lessons, or political correctness that permeates progressive thought today. It could be ignorance; schools no longer teach the flaws of socialism.  Or, what's even worse, today's acceptance of the term is more likely to be acceptance of the system.

When Representative Maxine Waters blurted out in a congressional hearing that she was ready to "socialize" the oil industry, it caused only a minor ripple in the media.  There's no way of knowing, of course, whether any school teachers seized on the event to discuss with their students why government should, or should not, follow Ms. Waters' advice and "socialize" the industry.  This would have been a great teaching opportunity. 

Had a representative made such a suggestion in the 1950s, she might not have been allowed to complete her term, and almost certainly would not have been re-elected.  Civics teachers across the nation would have pounced on the opportunity to explain why socialism must never be allowed to penetrate the American system of government.  Many of today's teachers may not know why socialism should be avoided.  Or worse, they may believe socialism should be embraced. 

As frustrating and painful as it is to pay $4 per gallon for gasoline, Maxine Waters' medicine would be far worse than the disease.   The price of gasoline is determined by the amount people are willing to pay for the available supply.  As the supply diminishes, the people who need gasoline are willing to pay ever higher prices, as long as they can.  When they can no longer pay the price, they do not use the product.  When they stop buying, the supply increases by the exact quantity they no longer purchase.  The more people who are priced out of the market, the less demand there is, and the more supply is available, which tends to put downward pressure on the price.

Were government to "socialize" the oil industry, as Ms. Waters threatened, the price could be set at any amount the government determined to be appropriate.  How loud would be the applause were government to take over the oil industry, and reduce the price of gasoline to $2 per gallon?  Congress could triple its dismal approval ratings overnight.  Would this be a good thing?

Guess who would pay for the difference between the government-dictated retail price and the production costs.  It would be the taxpayers, of course.  Government cannot create wealth; only people can create wealth by combining their time, energy, and talent with some form of raw material to create a product that someone is willing to buy.  Government can only take wealth from the people who created it.

 The people would pay through their taxes, rather than at the pump.  U.S. tax policy would force wealthier people to subsidize the fuel costs of poorer people.  The people who receive the subsidy think this is a great idea.  The politicians who make it happen solidify votes from the subsidy recipients, and the people who pay the tax cast far fewer votes than those who receive the benefits.

This scenario is an example of socialism at work.  Ms. Waters obviously thinks this is great – and she is not alone.  Congress is full of representatives who campaign on the promise that they will enact programs that take money from those who have it and redistribute it to those who need it.  This is pure socialism.  This system inevitably destroys the society that practices it.

Socialism destroys incentive, kills initiative, minimizes risk-taking, and diminishes productivity.  Why should worker "A" work harder to produce more than worker "B," if the extra proceeds from his labor is taken by government and given to others?    

Imagine the consequences of Ms Waters' proposal.  What would happen when the vast oil industry infrastructure needed updating?  Government-controlled prices would be increased arbitrarily –without competitive pressure, or taxes would increase, or the infrastructure would not be updated.  Politicians, dependent upon votes for their power, would be most reluctant to increase prices, or taxes, so the infrastructure would be the likely victim. 

The current system is far from perfect.  But it is vastly superior to any form of socialized system.  The government already has its hands around the throat of the industry so tightly that the industry has not been able to meet the growing demand for oil.   It is government that has prevented the construction of a new refinery for more than thirty years.  It is government that prevents the oil industry from drilling offshore, or in the Arctic National Wildlife Refuge, or in the oil sands of North Dakota and Minnesota, or anywhere else.

 When government even thinks about taking control of the source of production – as in "socialized" oil industry, it reeks of socialism – which is still a dirty word. ESR

Henry Lamb is the executive vice president of the Environmental Conservation Organization (ECO), and chairman of Sovereignty International.

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