Sunday, January 29, 2012

Distorted Article on Facebook about Social Democracy

There is an article circulating on Facebook about an Economics Professor and Social Democracy.  I am not even sure if the story is true, but it looks like it struck a chord with many netizens because its gets shared by so many.   This is how the story goes:

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class.  That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A... (substituting grades for dollars - something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little…

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. It could not be any simpler than that.

Remember, there IS a test coming up. The 2012 elections.

These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Now, many people seem to resonate to this idea.  Some of the comments, though they are few, seems to reflect the sentiments of the appreciative readers:

WAY TO GO!! Those fool students got an excellent lesson on why Socialism is an abysmal failure.

The students got what they deserved, and so will we if we don't change the way our youth think about this country, and the brain washing they get from most of the left leaning teachers in the system. Thank God for this Prof. and lets hope his students finally got the lesson.

Now, there is something grossly wrong with the way the story distorts the reality as we live it.  And there is something dangerously wrong when people seem to get a message out of it.

To start with, let’s understand this clearly.  Welfare state is an essential character of a modern nation along with other institutions like democracy, adult franchise, rule of law, independent judiciary and legislature from the executive, the principle of checks and balances, equality of man, and secularism.  Each of these institutions and principles has come about after nearly thousand years of human struggles spread over many countries and continents, prominent being the countries in Europe. 

Most European nations are socialist democracies.  Many of their amenities are provided for by the government at a subsidized rate or for free.  For example, health care or education system in Europe allows for everyone living in those lands to get best health cares or to attend best schools without having to pay much.  Welfare states take care of sick, the old and the unemployed.  They also take care of groups which are considered backward.  Welfare states also take care of crises situations, like responding to earthquakes, famines and floods by allocating more funds or resources.  Affirmative action in America is designed to compensate for social and economic handicaps caused by historical wrongs.   Subsidies to farmers and protection of local jobs or local car makers were taken up by the most capitalist nations at critical junctures to help their nations and people.  Though we generally agree that we are progressing towards a global and open competitive world, we realize that even the most capitalist of the countries protect some of their interests from being bought in an open market.

There has never been completely capitalist society on the planet nor can there be.  That’s because humans, though evolved as animals through the process of natural selection, do not actually practice it in their policies and principles.  That’s what the modern nation is all about.  Not allowing a weak baby to die but instead put her in an incubator, not allowing an ailing person to die but instead give him the medical treatment, not allowing a fellow man die in the cold in the name of ‘survival of the fittest’, or not keeping races for poor people so that only the winner gets the food, are what humans do.  

Not succumbing to the natural pressures of the nature which forces natural selection on all animals and plants is what makes humans humane.   Our hearts rend looking at a picture of crying and malnutritioned kid in Africa and it makes us contribute some of our earnings to help that kid though we are not connected to that kid through blood or relation.   As human societies, we believe that there are certain amenities which are considered basic, so basic that all humans should avail it without having to lose out because of lack of money. Those amenities include education, nutrition, shelter, sanitation, medical treatment, and opportunity to work and live a decent life. 

Almost all societies on the planet are socialist in nature now except may be some dictatorships and autocratic regimes.  Most mature democracies also happen to be extremely socialist in their makeup.

The above story is warped and flawed and yet for some reason seems to evoke appreciation from many, and therefore dangerous. Now, let’s take a look at the above story in new light:

A local college practices a unique method.  It adds up all the marks attained by all its students and submits it to the local government who converts the marks (scores) into dollars and gives it back to the college to be distributed to the students.   The students use these dollars to pay for the fees, dorm rents, the books, the clothes and food.

Now, very few students get 95 marks and therefore get 95 dollars while many of them get around 55 marks and therefore get 55 dollars.  But there are some students who get only 5 marks and therefore get 5 dollars.  But the food in the canteen or the books or the dorm rents costs the same for all of them.  While the kids who score 55 marks can avail all the amenities, it becomes clear that the kids who get 5 dollars can’t make a good living.  They suffer continuously, from lack of proper food, shelter, and this leads to further decrease in their grades.  They can’t even buy the books so their ability to compete is now going down compared to the rest.  Now they start getting only 4 dollars or less as time progresses with deteriorating living conditions.

A smart college professor creates a new rule.  He says that students will pay some portion of their earnings as tax to a fund so that he can use that money to provide amenities for all including those who earn really low marks.  He says that anyone who earns more than 20 dollars has to pay 10% of their earnings to this fund so that he can use this money to buy books and food to the kids who earn less than 20 dollars.  Within few semesters, the failing kids start to improve their scores, and now are earning more than 20 marks.  

The reason I had to present a completely new story is to drive home few points the original story misses.  Unlike a class where students compete and try to win over others, real life is a not a competition.  Real life is not like an Olympics 100m race.  In an Olympics 100m race, the winning runners do not give up their precious seconds to help other runners compete.  They race to win and they don’t concede even a microsecond.  Out of hundreds of competing runners, only three get the awards.  The entire glory and prize money goes only to few winners.  The organizers of the competition do not distribute awards to everyone who participate.  Such awards are called ‘awards for excellence’.  They should not be equated or confused with ‘access to basic amenities and opportunity’ which is guaranteed to all.

If a city in your country gets hit by a flood, we don’t hold a competition to award the winners with all the food.  We try to provide enough food to reach everyone, whether they are rich or poor, tall or short.  We don’t hold competitions when it concerns the issues of ‘basic amenities and opportunities’.

The modern society is a balance between trying to excel while being inclusive. Modern nations strive for ‘excellence’ by holding competitions to give out ‘awards’ in certain areas while it strives for ‘inclusiveness’ to provide basic amenities and opportunity to all in most others.  Singing competitions, Olympic races, Nobel Prizes, strive for excellence and they do not try to bring down their standards of expectation to award everyone.  However, basic school education, libraries, access to good water, medical care, etc., are to be given to everyone irrespective of whether they win a competition or not.   

Most countries provide for schools and colleges to all kids, whether the parents can afford the tuition fees or not.  When a children’s park is set up in a neighborhood we don’t give admission to those who are rich, or those who win a race, or those who are tall.  It is open to everyone, though the contribution towards building that park may not be equal from everyone.  The people who pay high taxes cannot demand a seat in a bus asking the poor man to get up.  Everyone has a right to that seat in the bus, the rich and the poor alike.  There are no competitions for getting that seat on the bus.

And that’s how we deviate from the natural selection of evolution.  We don’t let our weak fight for food by holding races where the winner gets the food while the loser gets to die.  We don’t hold competitions in each of our home saying the kid who jumps highest gets the food whereby the tall kid hogs all the food while the shorter one continues to get his growth stunted because of lack of food.  As parents, we don’t allow our kids to fight amongst themselves to get the books or milk or cookies.  As a nation we don’t say, ‘ok, we have a flood, but let the fittest survive; why should we fly down to help them out?’

That’s because we don’t treat the ‘access to basic amenities’ as competitions.  A similar misunderstanding prevails in India on the topic of reservations for lower castes.  A joke is circulated on the internet which says that out of the eleven players in the Indian cricket team, 3 are selected from ultra-low castes, 5 are from backward castes, 2 are from Muslims and Christians, and 1 is open for whoever really excels.  There is something grossly wrong in how people mix the concepts of ‘access to opportunity’ with ‘awards of excellence’. 

As modern nations we don’t strive only for excellence, but we strive for ‘excellence while being inclusive’.  That means we strive for an equitable growth.  We ensure that even the most backward of our castes or communities or races get an opportunity to compete; and we take measures to provide those amenities which allow them to compete.  The ability to compete may be obtained in a generation or it may take many generations.  And also, there will never come a day when the entire population is equally competitive.  If we can achieve that, it would be called utopia, and Karl Marx and others have already failed at achieving those utopias.

Socialism should not be confused with Communism.  Most modern nations are socialist in many of its policies and practices whether we admit it or not.  Each time the US government comes to bail out its failing companies, each time it imposes restrictions of trade with certain nations, each time it gives preferential treatment to its domestic companies, each time it provides subsidies to its local farmers, it is being socialist.  Each time a European nation gives medical care to those who cannot afford it, each time it gives scholarships to students to finish their education, they are being socialist.   Each time we are being socialist, we are saying that we are not competing like animals for basic amenities but that we are being human. 

Because we are human, we do our best to go against the natural laws of selection.   We elect our leaders and they are not the strongest or the fittest.  We follow rule of law without discriminating between the rich or the poor, the mighty or the lowly, the powerful or wretched.  We take care of our kids and protect them; not throw then into the race and see who survives and who dies.

Socialism should not be discredited the way it is being done in United States right now by certain right-wing groups in an attempt to malign Obama’s administration.  In their eagerness to settle their domestic scores, they are vilifying socialism elsewhere on the planet.  United States has set a great example when it has created a modern democracy and it should continue to set good examples in embracing an economy that is inclusive while allowing for excellence to thrive.   It should not reject inclusiveness for the sake of excellence. 

Now, let’s take a look at the five ‘best sentences you’ll ever read’ from the above warped story:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

To legislate is to make a law.  Such a process cannot push people into poverty or into richness.  For example, no amount of state legislation, oppression and suppression of Jews in medieval Europe could make them less poor.  No amount of taxation will reduce Bill Gates or Warren Buffet to become homeless bums.   Right now, taxation in United States is much less compared to most of socialist Europe.  In no nation did rich people become paupers when taxed.  And when poor are given free education, or free medical care or better working opportunities, they are not instantly made rich.  They are only provided with a mechanism to improve their lives. (Some use those mechanism and some don’t.)

2. What one person receives without working for, another person must work for without receiving.

There’s a different side to the argument.  Kids in a home do not work for their food.  Parents earn that food and give it to the kids for free in the hope that they grow up and start earning on their.  Sometimes those kids grow to become a rock star, a waiter, an artist, a lawyer, a scientist or a bum.   Just because the kid earns less or he becomes a bum, the society does not deprive him a good education, an access to a decent park, or medical care.  

Parents don’t say, ‘I will not take care of my young kids because they don’t contribute to the income'.  In the same way, a nation does not say, ‘these poor and wretched will be thrown out of the country because they don’t earn enough’, or ‘these poor and wretched will not be admitted into schools because they can’t pay the fees.’

All those in the hospitals and jails may not necessarily contribute towards the GDP of a nation.  Does that mean we get rid of them?  Someone tried to do that half a century ago.  He was called Adolf Hitler.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

True.  When flood victims get their food for free, or a less populated village gets its roads, or remote areas get their water, it is being funded by other regions which are wealthy.   To preserve a national park, the money is not earned by that region alone, but gets its funds from other areas as well.  With the above argument, no funding of science projects in universities can ever happen.  No funding of schools can ever happen, because they don’t tend to earn as much.   But taking money from corporates, the government funds the schools and science projects.

4. You cannot multiply wealth by dividing it!

False.  In fact, the only way a nation can grow is by dividing it's wealth amongst its people.   A nation with one rich man owning 12 trillion dollars of wealth while everyone owns zero dollars will not grow but crumble the very next minute. But a nation with 300 million people with enough wealth so that they are capable of making a decent livelihood, sending their kids to school to get better education, capable of contributing, creating and enterprising, will continue to grow.    Only when you divide, you tend to grow.  Only when a company gives decent salaries and shares the profits with its employees will it have the capacity to excel and grow.  When the single owner takes all the money without dividing it with its employees, that company will shut down immediately.  Such companies are called Enron.

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Not all people want to subsist on rationing or unemployment benefits provided by the government.  And not all people lose their wealth just because they pay more taxes. 

Most families, even the poor, want to make a good life, own a home, and send kids to good schools.  It has been known in American history that when ordinary people were given opportunities such as easy loans, easy access to education, easily accessible sports facilities, they have used those opportunities to excel and make their nation one of the richest and enterprising.  The above argument is fundamentally flawed in believing that some people are forever incapable of earning and aspiring while there are some who are forever enterprising and earning.


  1. Excellent post. Near perfect exposition of ideas. Liked the way you connected animal evolution into societal evolution. We should not have a society where it is the survival of the fittest all the time. One day misfortune may strike anyone and may need a helping hand. The British author of Harry Potter series J.K. Rowling was on welfare for a while to survive before becoming successful. Eventually she was able to make enormous contribution to the human society in terms of children's literature and culture. Rumor has it that she is richer than the British Queen today.

    Please keep up the good work.

  2. Some people did not get what Welfare State meant.

    Here's a link to Wiki Page:

    A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. The general term may cover a variety of forms of economic and social organization."[1]

    Modern welfare states include countries such as Sweden, Norway, Denmark and Finland[2] which employ a system known as the Nordic model. The welfare state involves a transfer of funds from the state, to the services provided (i.e. healthcare, education) as well as directly to individuals ("benefits"). The welfare state is funded through redistributionist taxation and is often referred to as a type of "mixed economy"[3] in the United States and many other countries.

  3. It is a very convincing post, if you ignore the difference between apples and oranges.

    Every person needs the basic amenities you have taken as examples but nobody is entitled excellence.
    If you start awarding marks for students even if they do not perform, the results will be disastrous. You certainly do not want to award a medical degree to someone who failed their exams, would you?

    Basic amenities are offered for free for everyone with the hope that they will out grow the situation and contribute back to it one day.

    Marks in school are merits, not a basic amenity. In your example, a better awarding system would be to provide the basic amenities (food, books, libraries) to all the students and also award the toppers.

    It has been proven multiple times that human psychology responds only to incentive, not for something that you get for free! Will you really value things if you got them for free? In no time, freebies will get abused.
    Competition is important for growth, without which even the computer/website/browser that you are using wouldn't exist. Without competition man would have never stepped on the moon.

    Should we strive for excellence or for the bottom line? You prefer

  4. Ideally, everyone should have equal access to good education, food and healthcare. But in practice, it is not always possible due to limitations. For example, basic medical service like prompt treatment for diarrhea should be provided to every child in India. But you cannot expect the state to bear the expense of a cancer treatment that costs Rs. 5 lakhs/year for every Indian. Otherwise the system will become bankrupt in no time.

    Socialist services work best in countries which are homogeneous and uniform and where the social burden on the productive portion of the population is relatively low. Even in those cases, such as Norway and Japan, with declining populations (esp. of the young and productive sectors), they have to accept immigrants to run their economies (to bear the additional burden of socialist spending), which is okay in the short term, but which will definitely cause problems of their own in the long run.

    The US has a huge deficit and Social Security might as well get exhausted in the near future. A good portion of welfare is consumed by children of illegal Mexicans (the "anchor babies") funded by taxpayers' money. Of course, many Americans feel indignant at this misuse of their government's money.

    Coming to India, I think that the quality of education, nutrition and basic healthcare can be improved a lot with existing budget allocations with proper policies and implementations in place. Throwing additional funds is not going to solve the problem since there is too much wastage/corruption and inefficiencies as a result of bad policies.

  5. @Sujai Is it possible for you to give full view of the article on RSS feed instead of just a snippet view. I use Google reader and I am not able to view the complete article on the reader since only a snippet is visible.

  6. Sorry, but I know students. If they do not see an incentive in the form of good grades, all they are going to do is play teen patta with beer bottle in hand. Nobody is going to study.

    Ill give you an example. Students work very hard at professional courses like NIIT or software trainings where they are reasonably sure of a career while the same students dont care much for their curriculum in the numerous private colleges. Why? because they see a path to career/profit in the professional courses, but not in college courses.

    Students are very sensitive to cost/benefit analysis of their effort. I think the same is true with anyone. If there is no profit, there will be no motivation. So sorry sujai, but I agree with the the professor.

  7. From: Count_Rupert_of_Hentzau

    I usually do not take polemical essays seriously, like the one mentioned in this article and purportedly being circulated over the net.

    However, heavily welfare oriented states all over the world are imploding faster than states relatively less welfare oriented. PIIGS for example.

    Regarding Nordic countries-----

    Btw, Ledzeus, whatever happened to Desicritics?

  8. Thank you for writing this rebuttal to the so-called argument against socialism making rounds on Facebook.

    And talking about reservations / affirmative action, I really like this cartoon depiction.

  9. All these years and i only found this blog today. Dude...i'm following u. Ur blog is a thoughtful read.

  10. Sujai, that is a very nice article. I have shared :-).

    I don't have an issue with the welfare state. My issue is with big govt. The govt should be as small as possible.

    The govt should define policies, set standards, should provide law and order. Those are its basic tasks. Then it should provide communication and transportation facilities where they are not available.

    They should make sure that children get basic educated and higher education to the worthy an provide medical facilities to the children. They should also provide basic education to people who want to study.

    They should also provide for preventing disasters and helping people survive these disasters.

    I am not sure if there is anything else that they should do.

    I have been thinking of a new theory. How the normal person allows the govt to become very big. Yes taxation is there. But how else does the govt make money. It is by selling debt. Those debt are bought by banks, because we save in them. I think the root of all corruption is saving money in the bank :-). Money should be saved in lockers, not as currency, but as tangibles like Gold. As our forefathers used to do. This way the govt will have only the money they can tax or inflate. There will be no buffer of debt.

    Even better would be to get into a currency union like the Euro. So that the politicians are not able to inflate away the currency at will. Look at what happened to Greece. They had to reduce the govt, to get rid of their deficit, because the ECB won't print money and give it to them, without any effort made by them.


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