How do you smash capitalism? That is easy: Spend $20 on a Democratic Socialists of America (DSA) t-shirt, $15 on a DSA coffee mug, and $10 on a button that reads “Workers Create All Wealth,” which is a premise that defies basic economics. It is great to see the Bernie Bros, the disciples of Saint Greta Thunberg, and Rep. Alexandria Ocasio-Cortez (D-NY) groupies take advantage of the free market system and sell merchandise to willing participants in a voluntary exchange.
For every item, the latte-sipping, iPhone-using hipsters likely calculated resources, labor, shipping, overhead, and a myriad of other factors that went into manufacturing a Toward Socialist Feminism poster (whatever that means) and Abolish ICE lapel pins. The entrepreneurial spirit lives in the bodies of folks channeling the spirit of Karl Marx.
But anyone who understands a sliver of economics would be embarrassed to wear any of these items, especially the “Workers Create All Wealth” button. It suggests that DSA members do not understand how an economy functions, how wealth is generated, and the role of the worker.
First, businesses and entrepreneurs are the wealth creators – for both themselves and the public. Let’s look at the dishwasher, for instance. The companies producing dishwashers are earning profits, but the buyers are also wealthier in the exchange because they can spend less time cleaning dishes at breakfast, lunch, and dinner and have more time writing the next great American novel, Billy and the Cloneasaurus. Second, private enterprises hire people to fulfill tasks that can create these goods and services, and they are paid an hourly wage or an annual salary to complete these jobs. So, you could say, at the very least, that workers are contributing to wealth creation, but they are not creating any of the wealth. It is the business owner who has invested his own capital, taken on all the risk, and came up with the idea.
The DSA has a bunch of other economically fallacious buttons, including “Tax the Rich” and “Housing for All.” The rich are already taxed more than their fair share and guaranteeing a house has never worked.
Until Debt Do Us Part
The national debt recently topped $23 trillion, driven by the explosion in the federal budget deficit. Nobody seems to care, which means you can soon anticipate the debt to reach $24 trillion – and then $25 trillion and so on. But one Republican politician wants to remind every member of Congress about the ocean of red ink.
Rep. Chip Roy (R-TX) recently introduced an 18-line piece of legislation, titled “Know Debt Resolution.” The bill aims to instruct the House Clerk to install debt clocks in real-time in the House Budget Committee and the House Appropriations Committee meeting rooms.
He said in a statement:
“The fruits of our nation’s fiscal irresponsibility was on full display this month as we topped $23 trillion in debt. In response to such a sad achievement, I introduced a simple piece of legislation titled the ‘Know Debt Resolution.’
“It is quite clear to me that if Congress ever intends to eliminate the national debt, we need to at least know what the national debt is.”
It would not matter one iota. Politicians will only pay lip service to the national debt when it is politically expedient. We see this every time there is a debt ceiling debate. One side will complain about how the federal government is crippling future generations, while the other side warns that the government will destroy the economy if it does not raise the debt ceiling – and then they reverse positions depending on who is in office.
It might only be a political stunt, but at least it reminds the public of the trillions the state owes.
You Mocha the Swiss Crazy
How prepared is the Swiss population for a disaster – manmade or natural? It has a nuclear bunker prepared for every household, it tests air raid sirens each year, and it has thousands of tons of goods. By law, producers of goods that are on the government’s essential list must store a certain amount, and the state will cover storage costs. Private citizens are also required to possess emergency supplies, like drinking water, toilet paper, and enough food for a week.
One item that Switzerland has stockpiled over the years is coffee. With a population of more than eight million people and a total supply of 15,000 tons, the country has enough coffee for three days. But the government is proposing removing coffee from its list of essential items, which include sugar, cooking oil, rice, gasoline, and freshwater.
Because coffee contains few calories and little nutritional value, the government does not think coffee is “essential to life.” The Swiss disagree, and they are pushing back. Switzerland consumes approximately 18 pounds of coffee per person per year, so it is safe to say that the entire nation views coffee as an essential good.
But the story offers an important economic lesson of scarcity, the bedrock of economics.
Scarcity means that there are not infinite resources to meet humans’ infinite needs and wants. We have limitations in the marketplace. That is until entrepreneurs invent the replicator machine from Star Trek. Some might also confuse scarcity and shortage, but the latter is when the supply of a good is lower than its demand. So, when a product vanishes from the market at the time of an emergency, it will likely be due to shortages, prompting higher prices (if the state allows gouging) that send market signals.
Are DSA memorabilia, U.S. dollars, and coffee infinite? What is interesting is that politicians and socialists, usually one and the same, believe they are. They think that a small percentage of the population is hoarding the dollars – and coffee. In Switzerland, there will likely be people who think a tiny number of citizens are storing all the coffee under a mattress or in a vault. A funny thing about all these stories is that if everyone took one Econ 101 class, then we would not have trillions in debt, a government stockpiling mandate, or even a Democratic Socialists of America faction. No wonder there is a growing movement to insert social justice into the sciences.
Read more from Andrew Moran.