With all the talk about socialism, democratic socialism, capitalism, and the like, I've been wanting to walk you through the story a bit. Fortunately, someone else did it for me...and they did it brilliantly!
Watch the video above. Show it to your kids. And then think.
When I was a senior in high school, my English teacher had me read "The American Scholar" by Ralph Waldo Emerson. That essay is one of the most influential things I have ever read in my life. Why? It is because Emerson warned students not to merely read and parrot the thoughts of others. Instead, he recommended that we read, think about the ideas put forth by others, form our own opinions, and act. Be an individual.
In my line of work -- and probably yours -- that is a very good advice. Human beings tend to follow the herd....and the herd sometimes goes over a cliff.
Capitalism vs. Socialism
It has always inspired me that America's Declaration of Independence and Adam Smith's "Wealth of Nations" were both published in 1776. It's hard to imagine America without capitalism.
As another interesting thought, I am intrigued by the idea that the Scientific Revolution (1500 - 1800) and the discoveries that allowed humans to understand and manipulate nature (e.g. biology, chemistry, physics)....greatly influenced Karl Marx's belief that society could be "scientifically managed" from the top down.
History allows you to connect the dots.
Was Adam Smith correct about capitalism and human flourishing? Yes...and it is clear that capitalism has raised billions out of abject poverty over the last few centuries. That said, Smith also wrote a very interesting book called "The Theory of Moral Sentiments." In it, he said that capitalism would naturally lead adherents to think of only material and financial interests and that it would degrade social fabric. Because of that, he argued that capitalism should be carefully employed by a "moral people" with the inference that a moral people would maintain the social fabric. In a global economic environment where economic competitors don't share our values...and in a world where artificial intelligence and robotics may one day replace human beings in mass...that is a point to consider.
Was Marx correct about materialism in capitalist societies and economic disparities? Yes, but only up to a very narrow point. The core problem with Marx and socialism (at any level) is that it requires top-down control. That control isn't exercised by angels, but by human beings. And history illustrates that human beings are very susceptible to being corrupted by power and in exercising that power in very destructive ways. Marx also glosses over the difficulty of the government having knowledge about how to allocate resources effectively in the absence of prices (in pure socialism) or the lack of a profit incentive (in Democratic Socialism).
Paracelsus was an early medical pioneer during the Scientific Revolution. He's often quoted for, "It is only the dose that makes a thing poison." Food without salt is uninspired. Add the right amount and the meal is delicious. Add too much and dinner is ruined. Add a lot and you can kill people.
I'm a capitalist, but I acknowledge capitalism does not solve all ills. Some social programs make sense. I don't know why it makes sense to create those programs at the federal level, however. Maybe think about that a bit.
Social fabric is key.
Let me know if I can be of help.
Bruce Wing is the president of Strategic Wealth, LLC, a Registered Investment Adviser located on the north side of Atlanta.
Entrepreneur, financial guy, husband and father of two great kids.