Thoughts on Socialism

[MIKEMCKEE]

An economics professor at University of Iowa, Iowa City, Iowa said he had never failed a single student, but had once failed an entire class.

The class (students) insisted that socialism worked since 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 will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A."

After the first test the grades were averaged and everyone got a B. The students who had studied hard were upset while the students who had studied very little were happy.

But, as the second test rolled around, the students who had studied little studied even less and the ones who had studied hard decided that since they couldn't make an A, they also studied less. The second Test average was a D.

No one was happy. When the 3rd test rolled around the average grade was an F.

The scores never increased as bickering, blame, name calling, all resulted in hard feelings and no one would study for anyone else.

To their great surprise all failed. The professor told them socialism would ultimately fail because the harder people try to succeed the greater their reward (capitalism) but when a government takes all the reward away (socialism) no one will try or succeed

[jackdale]

I agree that a pure socialist state would be infeasible. As would a pure free enterprise state with no regulation. How would you feel without a Food and Drug Administration? Almost all economies are on some continuum of mixed economy.

[craigimass]

Heck, capitalism is working out pretty good lately too, don't you think?

One student gets an AAAAAA++++++++++++++++
And all the others get C's to F's.

That's the thing about stories made up to illustrate a point. They attempt to make complex things simple. Can you assure me that Trump...if he made 10 billion dollars, is truly more honest, ethical, hardworking and productive BY A FACTOR OF 1000X or more than a regular hard working carpenter? I don't think so.

And having met and hobnobbed with many a CEO in my day, I can assure you that they are not 500 to 1000x as productive as the average worker or executive.

But the rabid capitalists say "well, that CEO is responsible for billions in sales"........the same logic would mean a bank teller is paid well because so much money slides through their hands!

The truth of the matter is that many CEO's belong to a club........once you get in, use the right words, are willing to take the right actions (usually firing people and outsourcing), etc....then you get to belong to it. Should some of them make a lot of money? Of course. But should they make 500 or 1000 times as much as someone else working at the same company (at the expense of those people AND the stockholders? - and NOW at the expense of the taxpayer?). Of course not!

Logic and reason are tough things.

[camaraderie]

Well we finally agree on something Craig.
CEO and senior exec/board salaries/compensation are WAY out of line with traditional multiples of "worth" and with the rest of the world. Boards are interlocking,cronyism abounds, CEO's play musical chairs and there is unchecked personal greed that focuses on quarterly profits to enhance personal stock option grants...at the expense of the long term health of the company and employees and society. The PUBLIC corporation that is permitted to exist here and benefit from our laws and freedoms has not ONLY an obligation to shareholders, but one to its' employees and society as well.
CEO salaries at Fortune 500 in the 1960's averaged about 60 times the salary of their average employees. Today it is roughly 350 times higher (and that is down a bit from the REAL CEO heyday a few years back.)
I do not want to put a specific monetary limit on compensation but think instead that a generous MULTIPLE of average salary should be instituted...let's say 100 times AVERAGE EARNINGS (including benefits). Even a CEO with a 20K average company wage could earn a measly $2million this way...but the incentive would be to raise ALL wages. If your workers earned 40K a year...you could make $4million.
Wanna run up the stock price? Fine...give each employee 1/100th of what the CEO gets to make it happen and the WHOLE company will be focused on maximizing shareholder value.
My guess is the quality of CEO's would not diminish...nor would the available talent pool. After all...where else are they gonna go to earn that much if they can't throw a left handed curve ball?
What would change is the cronyism and the greed at the expense of workers and society as a whole.
Not very conservative of me...but this is ONE area where I part company with unrestrained capitalism.

[PBzeer]

Yep, more regulation is the answer.

Business Law Prof Blog: Executive Compensation and Government Regulation

[camaraderie]

Well...of course PB...the businesses "lobbied" congress for the loopholes and proceeded to drive Mack trucks through the "gaps" they created.
Kinda like Chris Dodd and AIG.

[PBzeer]

Cam - of course they did. You can't create political solutions to economic actions. There's a reason why the tax code is 67,421 pages long, and it has nothing to do with economics. The more you try to micro-manage economic activity, then more unintended consequences result.

You can't do away with cronyism by legislation or regulation. It exists in any and every economic system. Some more overtly than others. But, the point I'm making is, that the original efforts to do so have only exacerbated the "problem", that left alone, would not have necessarily have become the "problem" it is perceived to be today.

[erps]

To their great surprise all failed. The professor told them socialism would ultimately fail because the harder people try to succeed the greater their reward (capitalism) but when a government takes all the reward away (socialism) no one will try or succeed

Thanks for posting that mikemckee,

[jackdale]

BTW - this might be one of the great urban myths circulating on the Internet. Most sources ascribe it to a Texas Tech professor, other to Texas A&M. Regardless I am pretty skeptical about the story. Anyone have anything more specific. Even Hannity.com doubts its validity.

[PBzeer]

The point of it, actual or invented, is that it graphically illustrates human nature much like Animal Farm did.