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Szalapski

Objectivism vs. Social Democracy (TVoS 11, 13)

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In TVoS 11, Rand decries both outright socialism, for example in Nazi Germany and the U.S.S.R.  Since her writing, its failure has been made even more clear by the horrible results in the U.S.S.R. and more recently in Venezuela.  She was equally vehement against the failings of the democratic socialism in the U.K. in the 40s and 50s, but Britain's outcomes did not head in the same direction as the Soviet Union's.  Instead, democratic socialism has been firmly established as perhaps permanent in nearly all of Western Europe, especially U.K., France, Germany, and the Nordic countries, but these nations have had nowhere near the same downward spiral as the U.S.S.R. or Venezuela.

Far from the disasters that full socialism brings, these "mixed" social democracies seem to have a somewhat sustainable model in place.  At least in the countries with some degree of work ethic and natural resources, they have achieved more than Rand might have predicted.  It hasn't worked in Spain, Greece, or Italy as well, but isn't Sweden is rather capitalist overall even with high government spending and regulation?  Isn't Germany's economy is strong despite pessimism there?  And doesn't Brexit show the strength of the U.K. economy to blaze a middle road with indeed lots of government spending though determined by themselves and not by the community of nations?  In short, it seems that the looters and moochers have found a system that they can at least claim works well and is flexible, unlike the despair and hopelessness found in, for example, *We The Living*.

In TVoS 13, Rand claims that all mixed economies are either on the road to freedom or full dictatorship.  Since most countries in the world are in this state, and many are stable, hasn't she been proven wrong?  Or do you really believe that the whole world will eventually be ruled by dictators?

So should we continue to make the same doom-and-gloom argument against social democracy that we can more easily make against full socialism?  Or is the current state of Europe one that doesn't quite fit Rand's model, and so we should adjust it?

Edited by Szalapski

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Why is Venezuela not democratic socialism? Wasn't Hugo Chavez elected? Several times? Same with Argentinian, Peruvian, Bolivian, etc. socialism. South America is almost entirely democratic. Same with India, some countries in Africa, etc.

If anything, those countries are more democratic than Europe, North America and Japan. In South America, whoever wins the election has the power to impose the "will (or whim) of the people".

In the West and Japan, elected officials don't actually have that much power. There are very tight limits on how much an elected official can get done, because there are constitutional checks in place protecting a fundamentally capitalist system of government: private property is protected, the sanctity of contracts, free speech, privacy, etc. are protected, you can't even raise taxes past a certain level (take the recent French Supreme Court decision throwing out Hollande's 90% rich tax, for instance).

On top of that, Europe has the EU, which guarantees free trade, free movement and equal rights (among other things: it also imposes a host of other rules designed to limit government power and protect capitalism, like an independent judiciary and strict anti-corruption laws), and, as Britain is about to find out, is extremely costly to get out of. Japan and North America are also part of free trade treaties that are not easy to overthrow: Donald Trump for instance ran against NAFTA (and won the election because of that populist message), and guess what: he won't even try to make good on his promise to get rid of it (not that he could, even if he tried). How is that a democracy? Do you know how unpopular NAFTA is in the US? And yet, it's in no danger whatsoever of getting dismantled.

 

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I think you may have missed my main point--that Rand predicted disaster for the U.K. which since has done well, in a mediocre yet sustainable manner.  There are many in the U.K. who accept their "successful" mediocre economy with all their social programs as a good moderate compromise--a model that Rand thought was impossible.

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If I'm not mistaken, Rand's argument against Mixed Economies (i.e. Democratic Socialism) was related to her epistemology. (See Chapter 20 on the new fascism;rule by consensus and 21. the wreckage of consensus in Capitalism; the unknown ideal). To her, it would seem to be arguing that a society can remain "half slave and half free" is fundamentally unsustainable and that the nature of compromise is  detrimental to freedom as an illogical position to take. If Objectivism means the separation of economics and politics and of the state as coercion from economic activity, this would seem to be something non-negotiable within objectivist politics. But that's just my reading of it so I'm not 100% sure. 

Edited by Laika

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What was not foreseen when Social Security and other entitlements programs were enacted in the United States (and Europe in general) was the precipitous drop in population replacement rates in the West, coupled with a dramatic increase in life expectancy (which increases the number of years that people will collect entitlements). From an article at the Mercatus Center :

Most of the major shifts in worker-to-beneficiary ratios before the 1960s are attributable to the dynamics of the program's maturity. In the early stages of the program, many paid in and few received benefits, and the revenue collected greatly exceeded the benefits being paid out. What appeared to be the program's advantage, however, turned out to be misleading. Between 1945 and 1965, the decline in worker-to-beneficiary ratios went from 41 to 4 workers per beneficiary.

The Social Security program matured in the 1960s, when Americans were consistently having fewer children, living longer, and earning wages at a slower rate than the rate of growth in the number of retirees. As these trends have continued, today there are just 2.9 workers per retiree—and this amount is expected to drop to two workers per retiree by 2030.

The program was stable when there were more than 3 workers per beneficiary. However, future projections indicate that the ratio will continue to fall from two workers to one, at which point the program in its current structure becomes financially unsustainable.

 

We have a $19 trillion debt and are borrowing hundreds of billions of dollars each year just to keep these entitlements programs afloat.  We also have over $100 trillion in unfunded liabilities associated with these programs.  Last time I checked, interest payments alone on the national debt comprised over 6% of collected Federal revenues.  To a large extent, the reason the Federal Reserve has kept interest rates hovering at just over 0% has been to reduce payments on the national debt.

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5 hours ago, Szalapski said:

Her predictions of doom and gloom for these mixed economies did not come true.

I guess, but that's not what Laika was suggesting. Given what he quoted, Rand thought mixed economies can trend either to freedom or dictatorship. She also thought mixed economies were unsustainable.

How are you determining this is not true. You suggested that countries like Sweden lean capitalist, so that would support her idea. It's not like she said mixed economies would collapse in a month, or within 5 years, or 50 years. Maybe it'd take 100 years. It'd still be unsustainable in the long run.

At worst, she was wrong and actually mixed economies are static and unchanging. This is still undesirable and hardly a flourishing society.

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1 hour ago, Eiuol said:

At worst, she was wrong and actually mixed economies are static and unchanging. This is still undesirable and hardly a flourishing society.

Yes, I think we have to argue that and not what Rand argued.  (I wouldn't say they are static, but perhaps more or less stagnant).  A mixed economy has been proven to "work" in a pathetic sort of way.

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2 hours ago, Szalapski said:

Yes, I think we have to argue that and not what Rand argued.  (I wouldn't say they are static, but perhaps more or less stagnant).  A mixed economy has been proven to "work" in a pathetic sort of way.

I would say that stagnation for a while leads to eventual destruction of a society in the long run. It would mean that on average, a society is mediocre and doesn't seek to be productive or virtuous. By nature of Rand's claims, she's suggesting that anything less than flourishing is decay - that goes for the individual level too. "Working" in a pathetic way isn't really working at all. Working for what?

I don't think any society in history has really stagnated. They either all died out (Alexander the Great's empire only lasted so long), or started to die out after a period of stagnation (Rome, Athens).

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2 hours ago, Eiuol said:

I would say that stagnation for a while leads to eventual destruction of a society in the long run. It would mean that on average, a society is mediocre and doesn't seek to be productive or virtuous. By nature of Rand's claims, she's suggesting that anything less than flourishing is decay - that goes for the individual level too. "Working" in a pathetic way isn't really working at all. Working for what?

I don't think any society in history has really stagnated. They either all died out (Alexander the Great's empire only lasted so long), or started to die out after a period of stagnation (Rome, Athens).

Did these societies (nations) fall, or just their governments?  We still have Greeks and Italians today.  Claiming that "all mixed economies will fail, and all fully socialist economies will too" seems a stretch to me in that we have many examples where it seems that many could credibly claim "so far, so good".  A thoughtful lower-income person in Britain who has government assistance might be willing to give it up to save their economy, but there is no danger of that being necessary so they have no worry about their "mixed economy".

Edited by Szalapski

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22 hours ago, Szalapski said:

I think you may have missed my main point--that Rand predicted disaster for the U.K. which since has done well, in a mediocre yet sustainable manner.  There are many in the U.K. who accept their "successful" mediocre economy with all their social programs as a good moderate compromise--a model that Rand thought was impossible.

So you agree that Venezuela and Argentina are examples of socialist democracies that failed?

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Sure.  I'm sure one with more interest could point to the factors that made Venezuela collapse but makes the U.K. or Sweden sustainable.  I'm guessing it is because Venezuela tended to dictatorship and total socialism, even if via democracy.

Edited by Szalapski

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2 hours ago, Szalapski said:

Did these societies (nations) fall, or just their governments?

Both. What we're talking about is still mostly governments. Athenian society and so much of Europe too was absorbed by Rome. And we can argue which naturally transitioned well into Roman society as an improvement, or which collapsed but thankfully the Romans replaced. If you have evidence that stagnating societies are sustainable, show me, but I'm not aware of any. The examples you gave are short range and don't engage the main question: are mixed economies sustainable?

History suggest moving towards laissez faire is better than not.

Italian societies are great examples of chaos and frequent collapse. Italy was fragmented for centuries with frequent war and political intrigue. It didn't become a country for a long time. Then it turned Fascist. Then it wasn't. It only seems to get any better thanks to the EU and trending to be more capitalist than not. Same with Germany.

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