We, here in the United States, are slipping more and more into the economic structure of socialism. Why is that happening? It seems to me there is one primary force working in that direction: socialism appears attractive because it looks like citizens get something for nothing.
It concerns me because I love individual freedom and I love what that freedom can do. Socialism is for ants - it denies individualism and forbids the freedoms that go with it. If one takes a quick glance at socialism through the Marxian slogan “from each according to his ability, to each according to his need”, it looks beautiful. It looks like we are all the same (no class differences) and all take care of each other - no one goes hungry or unsheltered. The problem with “from each according to his ability” is no one can be allowed to stand out from anyone else and if you really have ability, you will stand out. Socialism must, by its definition, minimize differences to prevent class structures from developing. Individualism must be pounded down flat with an ideological hammer or cut off at the root with a legal sickle. You cannot be other than a worker in the hive.
The other end of Marx’s slogan (“to each according to his need”) also appears beautiful and diaphanous, but in reality it casts a dark shadow over the whole socialist concept. It is my understanding that in virtually every instance where socialism has been tried, the needs change. In particular, one seemingly minor need changes – the need to produce. Granted that it is not directly related to the physical needs Marx was referring to, but in a socialist environment people quickly learn they don’t need to produce anything because someone else will. The cumulative effect is that products aren’t produced and services aren’t provided. In this way Marxist economies are arrested in a collective fashion, yet the citizens starve individually.
Labor laws and labor unions, while they can provide elegant solutions to desperate problems, tend to Marxism in their function. When a labor union first begins at a company, it is usually in response to a problem with the business owner. The very first order of business for the union is to establish a clearly defined adversarial condition between employees and employer. Any cooperative relationship between employees and employers must be eliminated. Working conditions, pay and job security are frequently issues labor unions can improve. But what happens after the problems are corrected? Unions usually continue to make themselves valuable to employees (or at least appear to be valuable) in order to exist. When a better response might be to step into the background in the role of monitor. Instead they work to make sure that no one worker stands out too much from any other worker – every one doing the same job gets paid the same no matter what their skill level or amount of effort; everyone gets the same amount of leave time; no one gets fired (not even for being incompetent); everyone gets healthcare, education and retirement benefits. Remember the adversarial condition? That gets maintained and amplified - class distinctions are established and hardened and there can never again be a cooperative effort in those companies between labor and management. It is in that disjunction between labor and management that unions exist. (Wouldn't it be a vastly better situation if the unions would, instead, create and increase cooperative efforts between the two classes). The demands of the union increase to maintain the appearance of usefulness. The overall process is called collective bargaining, and each bargaining unit is a miniaturized form of socialism. Socialism works well for ants – not so well for humans. While I am not completely anti-union, it seems that collective bargaining will, sooner or later, turn any group of enterprising humans into an anthill - but an anthill with an internal purpose of disabling all classes except the workers. Perhaps some sort of mechanism could be devised to allow unions to function in a non-adversarial way once major employment issues are resolved.
Curiously, few labor unions appear more Marxist than those that function within our various levels of government. Because of that, the government of the ”land of the free and the home of the brave” operates internally as a socialist institution. We can see the effects of Marxism in our education system, our postal system or, in fact, nearly any other government agency.
My little tirade against Marxism and labor unions is somewhat unfair, I’ll admit. Marxism is meant to be more than an economic system. It is meant to be a more fair system for society in general. It is proposed as an alternative to unfair economic systems such as feudalism, monarchy and, in our case, the effects of rampant, big capitalism. We can easily understand why feudalism and monarchy can be unfair, but why is capitalism unfair? Everybody has a chance to own their own stuff – right? The owners and controllers of big corporations tend to make decisions based only on financial profit. The economic power of large corporations can become sufficient to enslave entire communities and wield control over not only our own government, but other governments as well. Big capitalism, as it is practiced today, is increasingly becoming what some have called neo-feudalism. Capitalism, as it is practiced today, also relies on its own growth to keep it functioning. Growth means ever increasing markets and an ever increasing quest for profit and power. This is only a slight departure from historical feudal nations and monarchies that depended on military conquest for expansion of profit and power. The problem is that markets and profits cannot continue to grow indefinitely. There must always be a point when a market becomes saturated. When that happens, growth stops, economies stagnate and poverty envelopes the affected area. To prevent that, markets must be found, manufactured – even synthesized.
What else makes big capitalism unfair? Because under big capitalism laws are made to benefit big corporations not citizens; entire blocks of citizens are economically abandoned when markets shift; and in the course of it, citizens often become the functional property of the corporations.
We have laws to prevent monopolies and monopolistic behavior among corporations. Such laws indicate that lawmakers recognize the problems of corporations becoming too large and powerful – at least some of the problems. But power and control can be approached from different directions. It is impossible to regulate the nearly infinite number of creative approaches that can be devised. One of the more favored work-arounds in use today is for corporations (or entire industries) to send representatives to influence elected and appointed people in government. Those representatives can offer perks and persuasive arrangements that the average citizen can not. The result is laws, regulations, taxation and enforcement of each favors them. The citizens (the actual residents of our nations - and electors) seem to get marginalized except during election time whereupon they are, reportedly, simply patronized. All this is not to say that big business is bad. It is to say that big business is too frequently getting away with more than their fair share of the American pie. America is, after all, a nation of people – not a nation of corporations serving an elite class.
Much is currently being said about a global economy and a single world government. Such an economy is doomed if built upon either socialism or contemporary capitalism because of the same things that doom the smaller-scaled economies. That failure will subject, not just citizens here and there, to poverty and starvation, but every human being - including the very wealthy.
There is another way. Another way which is neither Marxism nor neo-feudalistic capitalism – a way that neither stymies the economy with governmental favors nor hinders the economy by crippling the desire for productivity. There is a way that is eminently fair to the citizens, promotes their freedom and does not require excessive market growth to sustain it (thus reducing imperialism) – a way that extinguishes the need for most of our present social welfare system and actually gets things done.
That way is Proprietarianism. Proprietarianism is a social and economic system focused on the very small proprietor and based in the simple idea that every citizen has not just an opportunity, but an equal opportunity to own and operate a business and derive his livelihood from it if he so chooses. If that sounds familiar, it is because that is the system our national founders were working toward. Such a system was more assumed than spelled out in our foundation documents because the founders had no notion of socialism nor of corporations as they exist today.
A fundamental tenet of Proprietarianism is it must be no more costly to be poor than it is to be wealthy. Here is are some examples that illustrate what that means:
- Suppose a wealthy individual purchased a recent model automobile. That individual simply goes to a car dealer, hands the money to the dealer and the dealer hands the keys to the individual. Now suppose also that a poorer individual purchases the exact same model car. That individual goes first to the bank and secures a loan (with interest), and not being wealthy enough to self-insure must purchase automobile insurance. At the end of the automobile’s life, the poorer individual may have spent twice as much for his car as the richer individual.
- A wealthy individual may easily purchase a house in which to live. A poorer individual may not be able to afford to buy such a dwelling and may have to rent a house or apartment from a landlord. In fact, if an individual is poor enough he or she may not be able to afford the necessary up-front damage and utility deposits usually necessary to rent such a living space and may be forced by those circumstances to pay the weekly or daily cost of a hotel room. In the course of a year, a poorer person may pay many times more for housing than a wealthy person.
- A large business may be able to manufacture and distribute a product at a much lower cost (due to what is called economies of scale) than a smaller business. Hence their profit for the sold product will be much greater than the smaller business. This situation usually results in small businesses being unable to successfully compete with large ones.
These examples illustrate that the current economic playing field is not even – that it is biased unfairly toward wealthy people and big business. Under such unfair influence it is extremely difficult, in the land of opportunity, for the small business or individual to achieve the American dream. The philosophy of the New Commoner (Proprietarianism) attempts to correct the competition imbalance through regulation, incentives and market and business strategies. The intent is to allow less wealthy individuals to compete more effectively with very wealthy people and very small businesses to compete effectively with very large businesses. For example, under Proprietarianism, a local mom and pop store could sell plastic spoons for approximately the same price as a giant retail chain store.
We already have laws, regulations and practices controlling formation and operation of business monopolies as well as trading and marketing issues. These things are each meant to improve the fairness of business competition. But regulation surrounding the fundamental ability to compete have been unjustifiably overlooked. I propose laws, regulations and practices to correct such imbalances.
One such proposed change is in taxation. I propose that all corporate and private income taxes and property taxes be replaced with a single retail sales tax. All taxes involved in the manufacture of goods and the productions of services would then no longer be hidden in the costs of goods and services, but become visible to the only real tax payer – the citizen. Under such a system, each business would be assigned its own tax rate which would depend on its volume of sales – the higher the sales volume, the higher the tax rate.
To understand how such a tax rearrangement might work one must first understand that it is only the end consumer who actually pays taxes under our current tax system. All taxes paid by companies, corporations, businesses, etc. are included in and recovered by the cost of the goods and services they sell. Suppose a company manufactures widgets and sells each one at retail. In order for the company to earn a profit, the sales price must first recover all of the expenses of production which includes all of the taxes it pays – corporate income tax, property taxes, permits and inspection fees as well as tax items it pays for its employees such as Medicare, Medicaid and social security.
Suppose the above widget manufacturer buys the parts it uses to make widgets from other companies and those companies, in turn, buy from other companies. Each of them, in turn, must recover the taxes they pay by passing on the expense embedded in the cost of the goods and services they sell.
It should be clear at this point that the only one not passing on the cost of taxes to someone else is the last one in the chain – the consumer. The consumer doesn't see all those taxes because they are embedded in the cost of the widget. If all the embedded taxes were removed, a widget that now sells for $10 might instead sell for $3.
Under this tax proposal, all of the taxes would be added back in at the end as a single sales tax so the consumer would still pay $10 for his widget (that way the government still gets its money – reducing that is a separate issue). However, each company would have its own tax rate depending on its volume of sale. A high volume of sale would mean a higher sales tax. A low volume of sales would mean a lower sales tax rate. A mom-and-pop company may be able to produce, distribute and sell widget for $4. Whereas a bigger company, due to economies of scale, may be able to sell an identical widget for $2. Recall that the consumer still pays $10 for his widget no matter which company he buys it from because of different tax rates. The big company may still earn a greater profit from each widget it sells, but the really small company can effectively compete – at least in terms of retails sales prices.
Tax reform represents one part of the Proprietarian strategy – it allows very small businesses to compete economically with very large businesses. There must also be changes in other laws. Especially the the laws regarding vertical monopolies and vertical pseudo-monopolies. An intended effect of any monopoly is to limit competition. A vertical monopoly is a situation where a single entity owns all steps in the production of an item or a service – from raw material to finished product. A vertical pseudo-monopoly is a situation where a single entity has exclusive trade agreements with other companies at all steps of production of an item or service. Either arrangement can be used to control a market and inhibit or block competition.
Suppose Joe & Sally wanted to sell widgets in their small store. They contact the wholesaler to make arrangements to do so, but are told the wholesaler only sells widgets in lots of a thousand or more. Joe & Sally only have warehouse space for twenty or thirty widgets. The wholesaler's policy limits their product to sales to large businesses only and would effectively contribute to limiting the competition of those businesses. Such restraint-of-trade agreements would not be allowed under Proprietarian philosophy.
Other laws that make it difficult or impossible to start and operate very small businesses such as zoning, operating permits, labor laws and insurance requirements would also need to be reviewed and discarded or modified with the intent of making it easier for such businesses to be started and operated profitably.
Why are the tax changes so critical? Such changes not only allow businesses of all sizes to compete more fairly, it also makes taxes visible to the people who pay them. However, there are other objectives that are important. Redefining the taxes from income taxes and property taxes to sales tax removes the burden of regularly filing complex government reports from the average citizen. It also removes the threat of the government forcibly taking property and freedom away from ordinary citizens for failure to pay such taxes.
Why is it important to allow very small businesses to compete effectively with large businesses? Effective competition would enable many people to own and operate their own small businesses thereby dramatically reducing unemployment in our nation. Easy proliferation of very small businesses means small towns, communities and neighborhoods can, once again, flourish and move beyond being bedroom communities. That translates into shorter commutes to work and shopping for many. It allows rebuilding of neighborhood principles and relationships – and that translates into safer, more stable communities and means a more stable economy and a safer nation.