Communism Works?

From the Examiner:

And of course, the reason is we’ve proved [sic] that Communism works.  If you give everybody a good government job, there’s no crime.  –  Joe Garcia D-FL

Give everyone a government job? Okay, Joe let’s do just that. Let’s examine just how that would work.

Let’s say that everyone works for the government. That is, everyone --  no private industry whatsoever; it’s all government controlled. Let’s also say that someone makes $40,000 per year working for the government.  Just where, Joe, does the government get the money to pay your salary? Taxes? There’s no private industry to tax. In fact, the only thing to tax is your salary.

So let’s say the government takes an income tax of 20% ($8,000) from your $40,000 salary. That means the government is in reality only paying you $32,000 because it’s taking $8,000 back. It can use that $8,000 to help pay your salary for next year, but where does the remaining $32,000 come from? Remember, there’s no private industry to tax so one alternative is that next year some people get paid less (or not at all) so that you can get your full $40,000.

Well, you say, the people working for the government make things that can be sold. To whom can they be sold, Joe? To other people who are also paid by the government. That would be like you manufacturing a widget and selling it to yourself. That’s just shuffling currency from one pocket to another.  That’s like paying your monthly credit card bill by putting it on another credit card. That’s not creating new value, new wealth or new currency. There’s a reason that the ruble never became the world’s currency of choice and that the renminbi never will. And even though the dollar’s influence has been somewhat weakened of late, it still continues to dominate world markets.

Okay then, let’s say that the government does create currency. That is, the government simply prints money with abandon as it needs it; let’s call it quantitative easing on steroids. Remember supply and demand, Joe? When too much of anything is in circulation it becomes a simple commodity. When it becomes a commodity both its value and its price fall; every commodity has such a critical mass. In becoming less and less desirable it becomes exponentially worth less. In other words, Joe, the coin of the realm becomes devalued not in a progressive fashion (i.e., slowly) but it becomes worthless exponentially, sometimes virtually overnight. 

The last alternative when Communism “works” is that no one gets paid any salary at all. In other words, Joe, no one is compensated at all for their work. Then why bother to work at all? The government would have to force people to work. Perhaps they could force them to earn some kind of right to stand in a long lines on a certain day to get bread, meat, and other necessities while you get to drive by those lines like Leonid Brezhnev in one of the antique automobiles from his private collection.

Communism works?  Well, maybe for you, Joe . . . .

Anthony Benvin is a former university professor and has worked for over twenty-four years in the financial services industry.

From the Examiner:

And of course, the reason is we’ve proved [sic] that Communism works.  If you give everybody a good government job, there’s no crime.  –  Joe Garcia D-FL

Give everyone a government job? Okay, Joe let’s do just that. Let’s examine just how that would work.

Let’s say that everyone works for the government. That is, everyone --  no private industry whatsoever; it’s all government controlled. Let’s also say that someone makes $40,000 per year working for the government.  Just where, Joe, does the government get the money to pay your salary? Taxes? There’s no private industry to tax. In fact, the only thing to tax is your salary.

So let’s say the government takes an income tax of 20% ($8,000) from your $40,000 salary. That means the government is in reality only paying you $32,000 because it’s taking $8,000 back. It can use that $8,000 to help pay your salary for next year, but where does the remaining $32,000 come from? Remember, there’s no private industry to tax so one alternative is that next year some people get paid less (or not at all) so that you can get your full $40,000.

Well, you say, the people working for the government make things that can be sold. To whom can they be sold, Joe? To other people who are also paid by the government. That would be like you manufacturing a widget and selling it to yourself. That’s just shuffling currency from one pocket to another.  That’s like paying your monthly credit card bill by putting it on another credit card. That’s not creating new value, new wealth or new currency. There’s a reason that the ruble never became the world’s currency of choice and that the renminbi never will. And even though the dollar’s influence has been somewhat weakened of late, it still continues to dominate world markets.

Okay then, let’s say that the government does create currency. That is, the government simply prints money with abandon as it needs it; let’s call it quantitative easing on steroids. Remember supply and demand, Joe? When too much of anything is in circulation it becomes a simple commodity. When it becomes a commodity both its value and its price fall; every commodity has such a critical mass. In becoming less and less desirable it becomes exponentially worth less. In other words, Joe, the coin of the realm becomes devalued not in a progressive fashion (i.e., slowly) but it becomes worthless exponentially, sometimes virtually overnight. 

The last alternative when Communism “works” is that no one gets paid any salary at all. In other words, Joe, no one is compensated at all for their work. Then why bother to work at all? The government would have to force people to work. Perhaps they could force them to earn some kind of right to stand in a long lines on a certain day to get bread, meat, and other necessities while you get to drive by those lines like Leonid Brezhnev in one of the antique automobiles from his private collection.

Communism works?  Well, maybe for you, Joe . . . .

Anthony Benvin is a former university professor and has worked for over twenty-four years in the financial services industry.

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