Why is socialism such a bad word?

[Vellos]

Well, I fully agree with that: some measures are socialists in intent, and aim at redistributing wealth, while others aim at defining a safe and fair playing field for a capitalist society to thrive in. That may be the crux of Gustav's question: socialism is seen as horrible because once the word socialism is attached to a measure, people see it as fundamentally redistributive in nature, while in other places the tag has evolved and refers to a different intent.

Take socialized medicine as an example. I make the argument that presenting a bill for a necessary surgery is basically blackmail: it is threatening violence, as those unable to pay will suffer. Therefore it is necessary for the government to step in to ensure a fair treatment.

Of course, socialized medicine can also be used as a wealth redistribution tool. Most people will require hospitalization at some point in their lives, and these costs are a significant fraction of GNP; therefore how you pay for it will affect the distribution of wealth in society.

The same analysis can be made of social security. In the end, intent matters, and detail matters.

I concur. However, it's more complex than that– there is such a thing as non-socialist redistribution. Hell, there's such a thing as capitalist redistribution: if markets are less than perfectly efficient (at least some markets fit that bill), some degree of redistribution can be welfare-improve and market-making. However, I've only heard a very few politicians argue for redistribution that way. Usually they make arguments decrying inequality as bad of itself, or asserting a rhetoric of economic rights and entitlements– and that rhetoric undoubtedly is socialist in origin (if not always in final practice).

[Vellos]

Of course, socialized medicine can also be used as a wealth redistribution tool. Most people will require hospitalization at some point in their lives, and these costs are a significant fraction of GNP; therefore how you pay for it will affect the distribution of wealth in society.

And though I agree with the spirit in which you approach the issue, this is where I part ways. I regard the issue as so large that socialized medicine cannot help but be a vast step towards state control of the means of production. In the US, combined local-state-federal spending is about 43% of GDP. If healthcare were fully socialized (it's already about 50% socialized), that would rise to about 50% of GDP. Frankly, I'm uncomfortable at the 43% mark already– when you talk about the state having direct, fiat control of so many entire industries vital to everyday living, and direct control of half or more of the entire economy... yeah, I have a hard time seeing that as anything less than socialist.

[Anaris]

And though I agree with the spirit in which you approach the issue, this is where I part ways. I regard the issue as so large that socialized medicine cannot help but be a vast step towards state control of the means of production. In the US, combined local-state-federal spending is about 43% of GDP. If healthcare were fully socialized (it's already about 50% socialized), that would rise to about 50% of GDP. Frankly, I'm uncomfortable at the 43% mark already– when you talk about the state having direct, fiat control of so many entire industries vital to everyday living, and direct control of half or more of the entire economy... yeah, I have a hard time seeing that as anything less than socialist.

But again, you are simply taking as given that "socialism"—in this case equating to the spending of the government surpassing the combined spending of the private sector—is, in and of itself, inherently wrong or bad for the country.

Which brings us full circle, back to the original topic: Why?

[Gustav Kuriga]

I'm actually quite surprised this thread hasn't devolved into flaming so far. ^_^ good job guys.

[Vellos]

But again, you are simply taking as given that "socialism"—in this case equating to the spending of the government surpassing the combined spending of the private sector—is, in and of itself, inherently wrong or bad for the country.

Which brings us full circle, back to the original topic: Why?

Yerp. Now that is a long discussion. I believe it because that's what the strong majority of the empirical econometric evidence and most even semi-mainstream economic theory suggests (Krugman notwithstanding). But this debate is just going to consist of us lining up our Nobel winners and throwing quotes at one another. That won't be a very fair debate, because I probably spend more time piddling around with this data than most here.

To offer a very brief explanation: in times of normal economic output with neutral monetary policy, the difference in spending multipliers on consumption between an additional dollar spent on government purchases and an additional dollar spent on investment is negative, suggesting that an additional dollar spent autonomously on investment is better, in terms of promoting consumption by consumers (which is ultimately the point of economies). This is not accounting for the source of funds, is excluding significant amounts of government spending (most notably transfers), and does not account for debt effects or substititionary effects. It's just allocative and marginal propensity to consume effects. Including transfers could conceivably tilt the balance in favor of government spending, source of funds considerations would have various effects depending on the exact source, and debt and substititionary effects would tend to tilt the balance in favor of investment.

The debate over the relative size of these various effects is one of the central disputes of macroeconomics. A practical example of what these debates "mean" in context: the most recent edition of the Journal of Economic Policy ran two articles discussing federal relief to states under the US' stimulus package in 2009. One argued, based on its methodology and theoretical underpinnings, that the stimulus created 1 "job" for every $38,000 spent. The other disagreed, arguing the stimulus created 1 "job" for every $140,000 spent. If it's the first (and if we assume that a "job" is in line with current US cost of employment indexes, so with a private cost of usually around $40,000), then the stimulus spending was an effective stimulant and created more jobs for less money via multiplier effects. If it's the first, however, it suggests we may have been better off not spending the money at all ("may" have because one also needs to consider the context– jobs may be more "valuable" than their pay or product in a recession; also we can't be sure what long-run effects that lack of employment might have caused– surely negative ones).

Stimulus in a recession is a special case of course; we're talking about general levels in, I'm assuming "normal time." FWIW, most econometric studies which I have read (and this is admittedly not my central academic focus; I do trade issues mostly) done on this topic suggest government spending over 40% reduces GDP growth by about 1% for every 3% above that threshold, when there are no exogenous shocks (naturally that's an oversimplification– it's kinda the cocktail party version of that number). Naturally, exogenous shocks, like a financial crisis, can change that in the shorter ter,– we're talking about long-run issues here.

And yes, the above three paragraphs were a "very brief" reason that I think high levels of government spending are bad.

[Penchant]

Vellos is giving reasons why socialism is bad, which is fine but the truth of the it being good or bad isn't hugely important when talking why it's viewed as bad. IMO, socialism is viewed negatively because the government control of that much is against the mentality of freedom. With redistribution, it is generally viewed negatively because it is forcing me to do something with my money and everyone still has that "rebellious teenager" feeling in them where they rebel for the sake of control. Autonomy is something that humans naturally want, which is basically control of themselves. The government doing redistribution is frowned upon generally because of it is taking away control by forcing them to do something with their money, which is against autonomy. Now that is true for all humans the autonomy, but if you are wondering why Americans especially have a negative view is that it infringes on our freedom unnecessarily which is considered against the American way. Lastly, as has been said, what people think socialism is and what it actually is are not always the same and it is what they think it is that creates their opinion not the actuality of it.

[Eldargard]

I think that Americans (at least this American) tend to be a lot more individualistic than most of the worlds population. My wife is German and we are constantly seeing the differences in culture - even though US-German is a lot closer to US-China culture wise. Germans are willing to sacrifice a lot more for the community. I am always grumbling about class fundraising when half my money goes to the German government. She is all about the state stepping in and handing out mandates and I get paranoid when governments start telling me what to do. Personal rights and freedom of speech and all that are baked in to many Americans. Hugely.

So whenever the word socialism comes up I think that most Americans become cautious. For the average American the word socialism brings images of USSR, China, North Korea, Cuba (maybe this one is just my uneducated self), and the like. Thoughts turn to taking ones hard earned money and giving it to others without ones input or consent. Thoughts of freeloaders living off of the efforts of staunch producers. Not saying any of this is right or true but that is what I think many Americans come to and, combined with the individualistic makeup of Americans, the word can spark resistance.

[Penchant]

This is why we laugh at them pretty hard.

Why do people in the US think that socialism is such a horrible thing when the very thing they support the most, Social Security, is basically socialism defined?

To the Social Security, I see the retirement part of it as more of a savings account for when I retire kinda thing, the rest I have mixed feelings about due to people living off the system unnecessarily which makes me think of the hard worker giving his money to the person who sits on their butt doing nothing. Some people just work the system so they don't have to work even though they are perfectly capable of doing so. The mixed feelings about it comes from me knowing there are valid cases though where it is deserved.

[Anaris]

And yes, the above three paragraphs were a "very brief" reason that I think high levels of government spending are bad.

Thanks, that's interesting information, some of it quite new to me. I hope you'll forgive me for taking some of it with a grain of salt—not saying I distrust it, at least not any more than I distrust anything, just that I hold it as one possibility, and this one with more actual data than those I've seen to date

Partly in response to this, partly to Unwin and Penchant's following posts:

Personally, while I am to some extent an idealist, the ideal I wish to attain is one that fits within the bounds of practicality. As such, I am willing to support anything that really shows serious possibilities of creating meaningful improvements in the overall lot of the country. Freedom is good, but not when it comes significantly at the expense of other people. That means that if taking away your freedom (and that of the whole group like you, possibly including me) not to pay an extra 2% each year in taxes means that an extra 5 million children get a better education that year, I'm pleased with that tradeoff. (Obviously, numbers completely made up.)

To the Social Security, I see the retirement part of it as more of a savings account for when I retire kinda thing, the rest I have mixed feelings about due to people living off the system unnecessarily which makes me think of the hard worker giving his money to the person who sits on their butt doing nothing. Some people just work the system so they don't have to work even though they are perfectly capable of doing so. The mixed feelings about it comes from me knowing there are valid cases though where it is deserved.

I have never seen any study that showed any significant amount of welfare fraud. I'm well aware that it goes on, but all the data I've ever seen (which I'll admit is not a lot, and not recent, but I have seen some) strongly indicates that welfare fraud, like voter fraud, is primarily used as a boogeyman to scare people into accepting new rules that make it harder for people legitimately on welfare.

[vonGenf]

Personally, while I am to some extent an idealist, the ideal I wish to attain is one that fits within the bounds of practicality. As such, I am willing to support anything that really shows serious possibilities of creating meaningful improvements in the overall lot of the country. Freedom is good, but not when it comes significantly at the expense of other people. That means that if taking away your freedom (and that of the whole group like you, possibly including me) not to pay an extra 2% each year in taxes means that an extra 5 million children get a better education that year, I'm pleased with that tradeoff. (Obviously, numbers completely made up.)

I share that sentiment. I am aware that extra taxes and government spending result in lower economic growth. These things don't come for free, they're not just redistributing an already present wealth. They have an actual cost.

And sometimes, that cost is worth paying. Sometimes it isn't. It's up to each society to decide which costs they are willing to pay.

As a famous republican-appointed supreme court justice once said, "I like paying taxes. With them I buy civilization."

[Eldargard]

I certainly agree. The problem is that it is so incredibly hard, and sometimes simply impossible, to clearly show what works and what does not. There are simply too many factors. And what works for people of one cultural mindset might not work as well for another culture. I just can not imagine how big someones brain would have to be for them to definitively prove that a particular measure taken had particular results.

At the same time I also like paying my taxes. I like have public libraries, education assistance, police, fire and military service and more. I like the idea of having a safety net sufficient enough encourage people to make a leap and try that innovative new business idea. If all of that is socialist I welcome a bit of socialism in my life. At the same time I also like the idea of a lean government that mostly stays out of my way.

As long as the government is being steered by the will of it's people I am quite open. Unfortunately, it is too often the case that governments end up serving the will of a small subset of the people. Things like big corporation campaign contributions, the massive campaign costs, professional lobbyists and all that make me nervous. I can not truly claim to know what impact it all has but I often feel that the US government is sometimes serving nig companies more that the people. If that is capitalism, I want a bit less of it.

I think it all relates to the whole communal living thing I think. As long as a majority of people are buying into the system, things are good. People will continue to buy into the system as long as they feel they are fairly benifiting and as long as they can at least identify with it all.

[Vellos]

Thanks, that's interesting information, some of it quite new to me. I hope you'll forgive me for taking some of it with a grain of salt—not saying I distrust it, at least not any more than I distrust anything, just that I hold it as one possibility, and this one with more actual data than those I've seen to date

I encourage a large grain of salt. What I offered was simplistic, and much of it quite contentious. Obviously, I think the better argument is for "my" side (which, for the curious, would be market monetarism)– but there are certainly well-reasoned opinions on the other side, to which I cannot always offer convincing rebuttals.

I share that sentiment. I am aware that extra taxes and government spending result in lower economic growth. These things don't come for free, they're not just redistributing an already present wealth. They have an actual cost.

And sometimes, that cost is worth paying. Sometimes it isn't. It's up to each society to decide which costs they are willing to pay.

As a famous republican-appointed supreme court justice once said, "I like paying taxes. With them I buy civilization."

I also concur. I just happen to think that we are rather near the threshold where the cost is exceeding the benefit.

I have never seen any study that showed any significant amount of welfare fraud. I'm well aware that it goes on, but all the data I've ever seen (which I'll admit is not a lot, and not recent, but I have seen some) strongly indicates that welfare fraud, like voter fraud, is primarily used as a boogeyman to scare people into accepting new rules that make it harder for people legitimately on welfare.

This is correct but perhaps misunderstands the issue.

Much of what conservtives call "fraud" is not strictly fraud. For example, if I intentionally abstain from getting a job in order to maintain a certain level of benefits (yes, "welfare cliffs" of this kind where rising wages can cause lower incomes do exist), it isn't fraud. It's still an abuse of the system. But much harder to identify. A welfare-economics course I took last year had a central debate being, "What constitutes appropriate use of welfare?" It's actually a convoluted question– conservatives tend to view nearly any adaptive response to welfare as abuse. Consider an example: if I receive $100 in foodstamps, I will buy less food. If I buy less food, I may buy more cigarettes. If food stamps result in an increase in my cigarette consumption, it is essentially food stamps buying cigarettes (even if it isn't fraud). The question is: are these changes acceptable? What degree of "welfare behavioralism" is appropriate, as opposed to "welfare paternalism"?

My textbook suggested that, if our otherwise identical welfare system existed, but was redesigned to have zero "welfare cliffs" (which are the starkest but not only example of problems in welfare), we would see a 5-10% reduction in caseload, and a rise in incomes and employment (note: that number dated from 2007, using a dataset running from 1983 to 2004– today may be different).

Regarding actual "fraud" rates– the food stamp program is the easiest program to defraud probably given the fungibility of EBT cards. As of June 2012, it had a fraud rate of around 1% of it's total funding, if I remember correctly. That is a large amount of money, but, again, it's an exceptionally easy program to defraud (and most fraud was not by recipients per se, but by places of business doing illegal cash back– which is economically interesting for completely different reasons, but I'm already off topic, so I'll stop here).