by Joe Fox

Created on: April 04, 2009

A buzz-word in the coffee shops and street corners of America: Socialism. What is it? How will it affect you?

A Definition: On its most basic levels, socialism is a form of government and economics. In socialism, the government owns and regulates "important" industries. Depending on how conservative or liberal the government is, these "important" industries can include medicine and health care, various forms of transportation, agriculture, and other product manufacturing. Ideally, the government can earn money through taxes and effective management and distribute this wealth to the people.

A Tax: A high tax is at the heart of socialism. In order for the government to offer public services to such an extent, revenues are required. Depending on the form of socialism, income taxes can range from lower rates such as 40 or 50% and can go up from there. Many European countries that practice socialism currently have notoriously high income taxes.

A History: Some of the earliest ideas of socialism are from Karl Marx. His ideas were partly founded on the premise: "To each according to his need, from each according to his ability." Marx saw socialism as a transition from corrupt, inferior capital markets to communism.

A Problem: Economics is defined as meeting unlimited wants with limited resources. Because everyone wants to be rich, we find the best ways of using resources. When we waste resources or use them irresponsibly, we have wasted a potential for profit, so this drives us to being productive and industrious. In a dog-eat-dog capital market, the survival of the fittest urges people to work hard and follow ethical behavior. Because of competition, those who do not offer good products or practice unethically will be replaced by those who do. In socialism, however, the general population is effectively shielded from economic involvement. The population in a socialist country will expect health care and other benefits because the government is supposed to "take care of them". So why work hard when we can sit around and get the benefits just the same? People stop working, earn less, pay less taxes because there is less income to tax, and the government can no longer offer as good of services.

The Big Picture: Socialism isn't a bad idea. In a perfect society, man would not be only interested in earning his own money, but in working hard for the sake of working hard. This would yield high revenue for the government and the wealth of the nation would increase. But, we are driven by money. Why would we want to become rich if the government is going to take away most of that wealthy anyway? Such is socialism's boil.

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