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LJWorld.com weblogs The Free Market

Why People Like Socialism

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Imagine this scenario: Persons A and B are offered a gift of $1000, and they can choose to accept it or not. Person A decides how the money will be split up, and Person B decides whether or not to accept the gift. Person A splits it as $980 for himself and $20 for Person B. What would Person B decide? Most people will reject the gift. Why? They would be turning down a free $20, it harms their own interests to turn down the gift, yet most people would. The reason is because it isn't fair. They would turn down the $20 out of spite to the person who is getting the $980.

In another example, college students were asked which they would prefer:

Scenario A: USA growth rate of 1%, Japan growth rate of 3%

Scenario B: USA growth rate of -1%, Japan growth rate of -3%

Most chose scenario B. People would rather suffer through a recession than have some other group of people do better than them! It's a concept my professors called Relative Prosperity. It explains how someone who owns a car, two televisions, a cell phone, microwave, computer, has plenty of food and place to live can believe he is poor in the US, but think he is wealthy in Bangladesh. We judge our prosperity by comparing it to our neighbors.

This is why socialism is so popular. Even if you can convince people about how efficient the market is, how capitalism produces more goods and services, how socialism causes shortages, people still like it because it is "fair." If your neighbor is wealthier than you, you feel poor, regardless of your actual state. When people criticize capitalism, you hear complaints about unequal distribution of wealth--the classical argument from envy about how it is "unfair." People would rather make the emotional-based decision to reject the benefits of capitalism because someone else benefits more than they would. Instead they choose the "fair," yet poor, results of socialism.

Comments

RoeDapple 5 years, 9 months ago

After 45 years in the work force both as an employee and as a business owner I fall on the side of capitalism. Wealthy companies invest in new business, more jobs, security for all. Business that isn't growing is stagnating. Force a wealthy company to go from 13% profit to 3% and you will see a downturn in months if not weeks.Give person A the $980, next year he will have $3000 and give persons B,C and D each $25. He will be much wealthier, but now 3 others will pocket more each than person B did this year. Or force him to give B,C and D each $200, and D and maybe C won't be in line the next year

HermioneElliott 5 years, 9 months ago

I am perfectly willing to believe that there are those who envy and even hate someone who has more than they do. Just heard on MSNBC that AIG is changing its name to AIU. Because people were picketing the entrance to their Manhattan headquarters. Now people will see the new sign and move off thinking they are in the wrong place. I am overqualified to be CEO of AIG. Now that's a scary thought.

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