Socialism and the Meaning of Investment by Government

Government makes ‘investments’ in us that we can’t refuse.

(The title was changed on 7/26/2012 from “Policies of Obama Match his Socialist Rhetoric.”)

Many, including me, have identified the socialist premises in President Obama’s remarks on July 13 in Roanoke, VA. But are Obama’s actual policies as socialist as his socialist rhetoric?

The answer is yes, but there has also been plenty of socialism in the policies of Obama’s predecessors. Obama has merely accelerated our civilization-ending march toward a predominantly socialist system.

Observe our nation’s tax structure. Tax rates are percentages (such as 5%), not amounts (such as $5,000). For example, property taxes are a percentage of assessed value, sales taxes are a percentage of sales, and income taxes—our biggest taxes—are a percentage of income. Furthermore, the personal income tax rate is not even a flat percentage: the percentage gets progressively higher for higher income. Even the proposed “flat tax” is a flat tax percentage, not a flat tax amount.

Consequently, the portion of federal individual income tax paid by the top 1% of taxpayers is 36.7%.

If we grant the dubious premise that the nation needs taxes, what is the rationale for tax percentages instead of tax amounts? After all, when one goes to a checkout counter of a supermarket, one is asked to pay a specific amount, not a percentage of one’s income or property value. If every merchant charged a fixed percentage of income for every good, then everyone’s purchasing power would be exactly equal. If every merchant charged the wealthy a higher percentage of their income, as in a ‘progressive’ income tax, the richest among us would have the least purchasing power.

The rational rationale for tax percentages is that the taxes are proportional to the amount of use of the government’s services. For example, the assumption is that people with larger, more expensive properties use a larger share of government services such as police, water, and fire fighting, and that people with more income use the public roads and bridges (touted by Obama in Roanoke) more.

However, since the growth of the welfare state over the past century, only a small percentage of government spending is for services such as these. Consider these categories of combined annual U.S. federal, state, and local spending:

Transportation: $293 billion
Water supply: $70 billion
Police: $127 billion
Fire protection: $41 billion
Law courts: $66 billion
Prisons: $83 billion

In contrast, consider these much higher expenditures in other categories:

Health Care: $1,080 billion
Education: $941 billion
Other ‘Welfare’: $679 billion
Pensions (mainly Social Security): $1,017 billion
Defense: $903 billion
Interest on debt: $330 billion

Also consider that while government spending on health care and education is offset only slightly by fees for those services, more than 70% of government spending on transportation infrastructure is paid for by fees and special taxes on the use of that infrastructure. (See also here and specifically here.)

Observe that taxpayers do not pay for services in health, education, housing, food, and other ‘welfare’ in proportion to use of those services. A man who earns twenty million dollars pays more than a thousand times as much in taxes as a man who earns twenty thousand dollars does; but the more productive man does not use government health care a thousand times as much, and he does not send a thousand times as many of his children to public school. Indeed, the wealthy use such government services far less than others do, sometimes because the wealthy are not even allowed to use the services, and sometimes because the government’s services—though already paid for—are vastly inferior to private ones.

Even in the case of defense, it does not cost the government more to protect a rich man from foreign invaders than it does to protect a poor man; yet the rich man pays many times more for the same protection.

Clearly, the very high expenditures by government on health, education and other ‘welfare’ are not for the benefit of the wealthy or ‘successful’, to use the word that Obama used in Roanoke; instead, the successful pay the most for these services and use them the least. As everyone knows, these programs are designed to redistribute income—that is, to rob from the rich to give to the poor. The apt phrase from Marx is, “From each according to his ability, to each according to his need.”

Even Obama and others in his Administration, in moments of candor, acknowledge that their policies entail income redistribution. Recall, for instance, this statement by Obama’s Administrator of the Centers for Medicare and Medicaid Services, Donald M. Berwick:

Any health care funding plan that is just, equitable, civilized and humane must—must—redistribute wealth from the richer among us to the poorer and the less fortunate. Excellent health care is by definition redistributional.

There we have the basic socialist element in Obama’s policies and in American government in general. But let us not forget the cost of “regulation” by government—that is, the fascist element—estimated in a report by the Small Business Administration (p. iv) to be more than $1.75 trillion in 2008, even before Obama. This cost too is incurred by the most productive among us, roughly in proportion to their productiveness, with no benefit to anyone.

Thus even before Obama’s recent socialist/fascist rhetoric, we already have had a large amount of socialism and fascism in our government. The recent rhetoric simply shows that Obama is pushing for much more of the same poison.

In short, Obama’s touting of government spending on fire fighting and on roads and bridges is a smokescreen for—and just small part of—his larger socialist/fascist agenda. Obama is like a slave owner saying, “Forget about all the food and clothes and toys I buy my family, and all the things I don’t allow you to do. Remember that I got other slaves to make you that shovel.”

When Obama speaks of the government ‘investing’, he is of course perverting the meaning of the word; he is really spending wealth confiscated from others. But there is a sinister way in which his use of the word ‘investing’ is revealing and apt: the government is ‘investing’ in contrast to ‘lending’. When a creditor makes a loan, the creditor obtains a promise to repay the loan with interest; in contrast, when an investor makes an investment, the investor obtains ownership and a share of the profits.

Since, according to Obama, the government ‘invests’ in you—by paying for your schooling, etc.—the government expects not a repayment of a loan to you, but rather a share of the profits in you. For the most productive among us, that share is now more than half of all that you make; and that share is growing as the government’s socialist/fascist agenda expands. Moreover, the government—in keeping with the fascist version of socialism—expects in effect to own the majority of ‘voting stock’ in the ‘business’ of your life, deciding what you must or must not produce or buy (added 7/26/2012), whom you must hire or fire or work for, to whom you must sell, where you must and must not be located, and what methods of production you must and must not use. That is, it is ‘society’, not you, that owns your productive life.

Paradoxically, Obama and other Leftist government officials have recently been pushing to forgive loans to students for college and graduate school; such loans now total a trillion dollars. But if education via government funding is so crucial to an individual’s success, as Obama claims, why is the government willing to let students get off without paying? The answer is that student loans are not socialist/fascist enough for the Left. These loans entail too much individual choice (to request the loan), individual responsibility (to repay the loan), and individual justice (to be responsible to repay only one’s own loan and not the loans to others).

The Leftists think the government can afford to forgive student loans, because the government still has its student ‘investments’. Whenever any particular student in public elementary school or high school—or, for that matter, any particular individual who does not even go to public school—becomes very successful, the socialist/fascist government can claim its lion’s share of the profit on that successful ‘investment’ by taxing that individual’s wealth. One such very successful investment can pay for thousands of failures.

Obama wants to make even more ‘investments’ in us that we can’t refuse. His brazen socialist/fascist rhetoric is part of a campaign for even more ownership of Americans.

4 Responses to “Socialism and the Meaning of Investment by Government”


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