Let’s talk about socialism. It’s a very hot topic right now – particularly seeing how Sanders positions himself as the candidate with the highest chances of facing the Donald next year. And if not Sanders, Elizabeth Warren (a proclaimed capitalist with somewhat of a socialist agenda in my opinion) seems to be the next in line to face the Donald.
However, before continuing reading, you first need to check out my post about why today’s capitalism is failing. Also – sign-up to my email newsletter. Don’t ask questions. Just do it. It’ll help you.
Capitalism is freedom. Just like I mentioned the other day – I love freedom and humans will always fight for freedom. George Washington fought for freedom. Simon Bolivar fought for freedom. People in Syria today fight for freedom.
Freedom is the most necessary element if you want to live in a world of progress and collective prosperity. This is why capitalism will always prevail. Well, at least some form of capitalism.
Now… don’t get yourself fooled here. There isn’t a single country in this planet that is 100% capitalist. A completely capitalist country means absolute freedom in every stretch of the imagination. Freedom to do anything. And this is a utopia. We would kill each other in less than a week if humans were free to do anything they’d like. I personally don’t want to live in a complete capitalist nation.
So what has our solution been so far? Well, we haven’t yet found a solution that works for everyone. In the U.S. we’ve established something that has come to be known as a social democracy. That is, a democracy where economics are based on the fundamentals of capitalism but where social welfare programs are established by putting limits to our freedom rights. And so far, it seems to work. For 18% of the population at least. The other 82% of the population work for this 18%.
I need to insert the graph that I included in my last post once again if we want to understand why people like Bernie Sanders and Alexandra Ocasio Cortez are becoming so popular.
Changes in Share of Income vs 1979, after taxes and inflation.
See the gap? In the past 40 years, the middle class and the lower class have managed to “somehow” decrease their incomes in a world where currencies are inflated year after year.
The Problem
The problem is pretty simple to identify. There is a huge inequality gap among classes in today’s capitalist societies. The same inequality was around during medieval times when kings raised taxes to finance wars and buy themselves jewelry. Sure, people don’t starve to death and most of them can live well into their 70s, but as we have become more aware of our human rights we have come to realize that there is something that we haven’t been valuing enough: happiness.
The difference between today’s 1% elite and the aristocrats from the 15th century is that the latter ones had people literally enslaved. They either followed the law or got murdered.
Today, if you don’t follow the law and you don’t pay taxes you go to jail. I’m okay with this principle as long as it’s being applied to everyone – including the top 1%-20%.
The Solution
Here is my ideal solution. Hold on tight.
- A wealth tax that allows governments to tax not just income but also its derivatives (income that gets invested into other form of assets). I can’t think of any other way to stop the elites from escaping our common tax laws that law-abiding citizens like you and I follow.
- Implementing a full blockchain based economy where governmental institutions are required to be fully transparent as to how the citizen’s money is being managed. This is completely viable in today’s world.
- Implementing a full AI system that reads the blockchain in search for fraudulent payments performed by the government. Again, this is doable in today’s world.
The solution isn’t socialism. And it’s not today’s capitalism either.
Socialism by definition is “a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”
Capitalism by definition is “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.”
None of these will ever work for everyone. They are both too greedy in their own ways. Give the government too much power and you’ll takeaway people’s freedom rights. Give the people too much power and you’ll create the inequality gaps that we have today.
Want to know what the real solution is? Andrew Yang is calling it human capitalism and I’m in love with the idea. You can read about it here.
