The Problem With Socialism

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As
I read the headlines, I can’t help but see the tendrils of
socialism grasping more and more every day. And it always brings
to mind my uncle, Wm. R. Duvall.

When I was
a boy, my uncle was the richest man I knew. He was fond of saying,
“There are three things you need to get rich: time, leverage
and other people’s money.” I didn’t know what it
meant at the time, but when I got older, I wanted to hear how he
made it big

“I always
knew I would be rich,” he said. “Even when I didn’t
have two nickels to rub together.”

He started
out as a barber, renting a chair in another man’s shop for
$20 a week. “10 heads,” he said, “that’s all
I needed. After that, every dollar was mine.”

“At that
point,” he remarked, “all I had was time. I was making
money, but I wasn’t getting rich.” It finally occurred
to him that a real way to get ahead in barbering was to have his
own shop and rent out his own chairs to other guys who were getting
started in the barbering business.

So he looked
high and low until he found a dumpy old place where he could afford
the rent, then spent his nights and weekends fixing it up. In a
couple months, he had it ready and went to work. He rented out the
five chairs in the shop while he still worked at the same chair
he had rented for several years. “It seemed like a risky idea
to leave the spot where my customers were used to coming,”
he told me.

Unfortunately,
after a year, his landlord realized how good the business was and
forced my uncle out. “What a setback,” he said. “All
these customers and nowhere to go.”

His first thought
was to look for a new place to rent. But then he was hit with a
stroke of genius: “Own my own place, and I can’t get kicked
out again!” It only took him a handful of days to locate what
would become his goldmine: 3 acres of land with a corner shop and
two houses.

He set out
his shingle in the shop, bought a trailer for $150 and moved it
onto the back of the property, then rented the two little houses.
He had talked the owners into selling him the whole ball of wax
with 100% financing over 10 years. After he got his extra chairs
rented out and moved another trailer onto the property, he was flush
with cash. In the end, the property was paid off in eight years.
But in the meantime he dabbled in other real estate, left the country
and bought a house in Cancun where he lived as a tour guide. Years
later he came back and bought a beachfront house on a local river,
where he lived until just recently.

“Everybody
gets the same amount of time, Billy,” he would often say. “But
that’s not enough to get you to the top of the heap.”
His experience with collecting the rent from four other barbers
showed him the power of leverage. His no-money-down real estate
deal taught him about other people’s money. And I imagine he
probably watched a boatload of late-night infomercials that helped
formulate his “Wealth Outline.”

I have come
to find that what he said (even though it was completely borrowed
and not original) held a great deal of truth.

But up to this
point, you’re probably wondering what in the world this has
to do with socialism. Seems like a pretty entrepreneurial story.
Right? You are correct.

Seeing the
proper working of a man and his wealth, well, that makes a counterfeit
all the more easily spotted. But we could add to that story our
own little adventure in currency options. The same three principles
are at work. Time, leverage and other peoples’ money.

But the path
to wealth through socialism is not so clearly seen. As a matter
of fact, it is more like a path to nowhere. Because socialism denies
the capitalistic importance of these four pillars: wealth, time,
leverage and other people’s money. Instead, they corrupt them
to their own destructive ends.

Any socialist
will tell you wealth is important. As a matter of fact, that is
the big carrot held out to entice people to follow such a muddleheaded
plan. They will also tell you that time is important. Not because
you need it to build wealth, but because you need it to spend wealth.
In other words, the here-and-now is what is of the utmost importance.
And you must be rich now, in order to enjoy what time you have here!

Leverage is
also important to the socialist. As poor men manage their wealth
very poorly (but seem to know instinctively how to manage their
ballot), it is imperative to leverage out the efforts of the poor
man into large voting blocks. One poor man cannot get a candidate
into office. But 100,000 of them, that’s a horse of a different
color.

Finally, we
have the socialist’s take on other people’s money. They
love it. They covet it. And they’ll do anything to get it.
Obviously it is impossible to enrich the poor men who voted for
them with the candidate’s own money. This is why other people’s
money is so critically important. Unfortunately for them, they have
forgotten the words of U.K. Prime Minister Margaret Thatcher, who
said, “The problem with socialism is that you eventually run
out of other people’s money.”

Whether she
actually believed that or not is a question for another day. But
it still has the ring of an eternal truth.

My uncle’s
understanding of other people’s money was that it could be
used to make money for himself. And he was right. But here is a
key difference. The “other people” in my uncle’s
life lent him that money VOLUNTARILY, not because they were coerced.
And they expected a real cash return on their funds, not just the
“warm feeling” that comes from being forced to help an
indolent person by way of government-run charity!

Because socialists
reward those who treat money poorly and penalize those who treat
money well, the system will never work. True, advocates of wealth
redistribution can point to circumstances where it did “work,”
and where it does “work” from time to time (if only for
a limited time). But I can also point to circumstances where the
laws of gravity are temporarily suspended, such as when I get on
a plane.

But even God
will not help me if I just assume because I can fly for a few hours
from here to there that I can fly forever. At some point my plane
has to come back to the ground. At some point the laws of gravity
will resume their authority, and I will realize that my flight and
my violation of gravity’s laws are coming to an end.

Capitalism
is a law established by God, just like gravity. Its foundation is
in the 9th Commandment, “Thou shalt not covet.” I am never
free to desire to take what is my neighbor’s. Not his wife.
Not his house. Not his lands. Not his possessions. I can trade him
for them if I have something he wants more than what he has. (Except
his wife, of course…) I can buy them from him if my offer is
right. But I cannot steal (or vote) away his property into my account.
That is not wealth creation; it is merely re-distribution. God condemns
it, and He will not be mocked by those who think that they can make
socialism “fly” forever.

Eventually,
they will run out of other people’s money. And when they do,
their plane will come crashing to the ground.

One more thing.
All around us, we see the widespread push toward more socialism,
even when it hasn’t yet worked. How could that be? To explain
what we are seeing currently, we must acknowledge that if the socialists
manage to escape complete annihilation in the plane that they wreck,
they will begin a campaign of propaganda, reminding the people that
if only the free market force of gravity hadn’t gotten involved,
they would have been successful. And that all they need is more
fuel (other people’s money) to get the thing going again.

And, of course,
the people will see the wisdom of their case, and will vote for
more fuel or parts or anything, just so long as we don’t let
those stupid Gravitarians have control of the cockpit.

More groundbreaking
efforts will be tried, such as debasing the fuel, so that we have
more of it. Sure, if you add five gallons of water to five gallons
of gasoline you get 10 gallons… Certainly we can go further
on twice as much fuel, right? Yeah, Right. Whatever you say, Comrade.
Meanwhile, anybody who knows better had better be preparing a parachute.

As the major
nations of the world move deeper and deeper into the “Pit of
Despair” (to borrow a good term from The
Princess Bride
), their solutions will work less and less.
Each effort will become more and more futile. Perhaps then we will
learn our lessons. If not we will be doomed to repeat them.

All that being
said, we did have a big news item from last week. Chinese Premier
Wen Jiabao fired a shot across the bow of the Good Ship USS Treasury.

It was not
just a request, and it was not couched in the tactfulness of political
diplomats.

China
warned the United States to “Keep its word.” Seems that
the Moral Empire of America has a hard time with the bad habits
of lying and stealing.

And now the
rest of the world knows it.

And now we
know that the Chinese know it.

And we know
that we need their lending to keep up our little charade.

And they know
we need their lending.

Now they are
telling us, do not fool with our investments. China has options
of where to put their money. What options do we have? How many nations
can lend us the amounts we are consuming? China has options. We
don’t. “The borrower is servant to the lender.”

The world is
changing… and we will keep looking for opportunities to profit
from it.

March
20, 2009

Bill Jenkins
is a church minister and owns his own contracting business.

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