Newell Fonda High School
Newell, Iowa
Teacher: Connie Doonan
Socialism vs. Capitalism
By Travis Wells
12th Grade
Although many people complain about our government, many of them do not understand what kind of government system we have. Two basic and opposite forms of social organization are socialism and capitalism. Capitalism is a political system in which the economy is based on a free enterprise system. Socialism is a political system that tries to reach equality and fairness in the economy. Although some people argue that socialism is a better system, the United States government is more like capitalism.
Although the U.S. government is more like capitalism, it has a couple things in common with socialism. Like socialism, the U.S. has some control over its economy. For example, the government has the power to collect taxes. They collect income taxes, which are then partly distributed to the poor or unemployed. This resembles the socialist idea of balancing the economy by taking from the rich and giving to the poor. However, this idea of taking money from some people to get others out of poverty is only a short-term solution. Over time, it doesn’t correct the problem, but it actually only creates more poverty.
The U.S. government applies many principles opposite of those under socialism. One of the many principles that our system has that is different from socialism is individual freedoms. Unlike socialism our government does not own all of our property. Citizens have the right to own property and have many other rights that the government cannot take away. Another difference is that our system is said to have caused greed among people while socialism creates a balance. Creating greed among citizens is not really a bad thing; it is actually better for the economy because it gives people incentive to work harder to earn a better living. Under socialism, the government balances out the economy which over time works out for the worst because it doesn’t motivate people to work hard. The people that make more are not motivated to work harder because if they do then the government will only take more money from them. The people that don’t make very much or don’t make anything at all have no reason to work hard because the government gives them money. Even if they make more money, it won’t matter because then their government will give them less, so they will end up with the same anyway. Although the U.S. government does take more taxes from the wealthy and gives some of it to the poor, there is still much more incentive and motivation in the U.S. than there is in a completely socialist nation.
While it shares many qualities of capitalism, the U.S. government also differs from it in a few ways. Even though land can be owned by citizens, it can also legally be taken away by the government. The power of eminent domain allows the government to make someone sell their land to them to be used for a public purpose. For example, a person may have to sell part of his land so that a road can be built.
The U.S. government has many of the main ideas in common with capitalism. The U.S. government has some control over its economy; however, like capitalism the economy is mostly a free market enterprise. For example, land and property can be privately owned and sold by anyone. U.S. citizens have the right to start their own business because of the free enterprise system. Like capitalism this system allows for business competition. This competition will cause businesses to provide the public with a better service, a better product, or more of that service or product. In turn the economy will then be better because of this increase in production. This is one of the reasons that capitalism tends to improve the economy more than socialism. A great example of this is the effect of WWII on Germany. Following the war, West Germany and West Berlin implemented capitalism while East Germany and East Berlin applied socialism. After the change in government systems, West Germany prospered and its living standards became much better. At the same time, East Germany’s economy and living standards deteriorated.
Although a socialist system
might work, the U.S. government is more a capitalist system. Like socialism our
government has some control over the economy, but it is mostly a free enterprise
system. Unlike socialism our system values individual freedoms over the
equality of individuals. Although our government has the power to take some
property, citizens of the U.S. have to basic right to buy and sell property
under the free enterprise system of capitalism. Capitalism also improves the
economy of a country by giving citizens incentive to work harder and produce
more. Many people do not even know the basics of our governmental system, and
they still think they know how to fix all of our country’s problems.
Answers To Questions Prompted By The Required Reading
1. What does Mr. Reed mean when he says “Equal people are not free”?
He means that for everyone to be equal there would have to be very strict rules. Some one would have to use force to make people equal. Everyone would have to be convinced to be the same as everyone else. To do this somebody would have to use very strict orders, which would make the people not free.
2. What is the deadly trade-off to reliance upon government, according to Reed?
When people rely on the government to control things for them, they will often control too much. For example, when something is passes that will protect people, the people have to pay for it to happen.
3. Why did the Founding Fathers assure that the United States became a republic rather than a pure democracy?
Pure democracy only represents the majority, and can not work for very long because it usually ignores the minority which are said to have an equal say. A republic gives the minority a chance to make a difference in several ways.
4. What is the saving grace of democracy according to Lawrence Reed?
The saving grace is that elections allow the country’s disputes to be resolved and the country to change without violence.
5. Richard Haas gives two reasons for advocating democracy. What are they?
His reasons are that mature democracies tend not to make war on one another and that people under a democracy usually don’t become terrorists.
6. Give two reasons you personally would promote democracy.
It represents the people in one of the best ways possible and it would be impossible for someone to take control over the government without using force on the entire country.
7. Comment on President Bush’s current foreign policy.
I think President Bush needs to concentrate on solving problems in the best way as they are now, instead of trying to achieve peace everywhere in the world at once and trying to make a perfect future.
8. How did you interpret each of the four hats?
I think the hats represent the high level of society that officials are in or the power they have. For example the crown represents the highest and most powerful level, the level of king or ruler. The top hat is the elected government officials and the graduation hat represents the very well educated class. The last hat represents the next level (local level) of officials, such as mayors or police.
9. How did you interpret the megaphone, baby, and knife/gun?
The megaphone, baby, and knife/gun represent the ways that officials gain their power. The megaphone stands for telling people and self-proclaiming themselves with power. The baby represents someone being born into power and having it handed to them for being in the right family. The gun and knife stand for a ruler getting his power by taking it by force.
10. Browse the “Favorite Links” and share one of your favorite discoveries. Make sure you copy the URL and tell us why you chose it.
I clicked on the CATO Institute and found at http://www.cato.org/ that there is a $500,000 prize awarded to someone for making a significant contribution to advancing human liberty. I chose this because it was the only link that deals with the U.S. and $500,000 is an enormous award.
11. Randomly choose five countries and list their names and their highest and lowest year of economic freedom.
Switzerland Low – 1975 High – 2000
France Low – 1975 High – 2000
Canada Low – 1975 High – 2000 & 2001
Brazil Low – 1985 High – 2002
Austria Low – 1975 High – 2003
12. Which of your five countries had the greatest degree of economic freedom according to this exercise?
Brazil had the greatest increase, but Switzerland had the highest level of economic freedom.
13. What was the summary rating and rank in the year it achieved this degree of economic freedom?
The summary rating
of Switzerland in the year 2000 was 8.4 and it rank was 4th.