Saturday, April 30, 2011

Socialism - A Lesson

Taken from Perkins Capital Management April 21 issue:

An economics professor at Bradley U. said he never failed a single student before but had, once, failed an entire class That class had insisted that 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 socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test, the grades were averaged and everyone got a B. The students who had studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who had studied little had studied even less and those 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 third test was done the average was an F.

The scores never increased as bickering, blame, and name calling all resulted in hard feelings as few would study for the benefit of anyone else. All failed, to their great surprise. Then the professor told them that socialism would 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.

Yes, I know this story, in different versions, has been around for quite a few years but facts are facts. Last year, more people received welfare benefits than at any time in recent history.

The greatest growth in employment has been in the unionized public sector where most of the stimulus money landed. The failures of our public school system is blamed on the parent, usually the ones that are single family and depend on welfare or through handouts from social service agencies. Blame the weak school boards and the strong unions who make it next to impossible to fire a union worker, and once a unionized public worker has received tenure, they usually have a lifetime job with substantial pensions and health benefits for life. Reasonable benefits are good but the same benefits go to all, no matter how hard or efficiently, they worked.

Provided this government on its way to socialism doesn't receive and F and goes broke. While I'm not a great fan of Glenn Beck, his book "Broke" detailing how and why this government is going broke, is a worth while read for anyone. Free to borrow at any public library.

Stop and observe most of our public unionized roadway workers at work. If anyone thinks we will get the bridges all repaired in their lifetimes, observe these workers in action and you make the judgment. Look at the sorry condition of the streets, curbs and sidewalks in Peoria. The worst I've seen in most any city I've visited. I have driven over 1,500,000 miles in my lifetime so I know somewhat more than some about roadways. I also talk to over the road 18 wheel drivers and read about road conditions.

I also know that the majority of public unionized workers are good workers. However, highly vocal minorities usually win the day in politics. Still, why should good workers work any harder than anyone else when the rewards are mostly evenly distributed. Do you think the hardest and best working school teachers were the ones who led the protest at Madison, Wisconsin? No, the weakest links were there, led by greedy union bosses, the teachers protesting because they were led to believe they would lose the right to organize.

As I've said before, the company I owned was unionized. No trouble getting along for 22 years. They understood their role and power and I understood my role and power. I've always believed that anyone unhappy in their work should seek another place of endeavor. Why spend your life being unhappy?

Never let the facts get in the way. No way did the governor or any of us who understood the facts believe this was an attempt to kill the unions. Just slow down their demands for more and more power. Especially, when so many in the private sector have trouble find a decent paying job; jobs, often with many less benefits than those jobs in the public sector. And while the government is unable to pay their mounting debts while paying mounting interest to foreign countries.

At home and abroad. Example, I sent a check to the IRS in early April which was cashed quickly. Prior to that, I received notice I had overpaid one year and would be reimbursed plus interest.

Still waiting for the feds to reimburse me. My accounting firm says it may be a long wait.

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