I’m no stranger to really dumb things appearing on my Facebook feed which make a mockery of anyone trying to engage in actual, rational, substantive debate about politics and current events. Usually I let them pass, but today for some reason I feel compelled to engage. So here we go!
First, we start out with a (obviously false) story:
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that 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 Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little..
The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F. As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else. To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. It could not be any simpler than that.
Well, everything else aside, all those students deserve to fail economics if they believe that Obama’s policies will lead to a uniformly universal level of wealth. Seriously. The professor should probably not be teaching anyone either, if he really thinks Obama is a socialist. He really isn’t. If you don’t believe me, ask a socialist! But this is where the fun begins. We finish with 5 of the greatest sentences we will ever read, apparently:
Remember, there IS a test coming up. The 2012 elections.
These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.
OK, so let’s bust out the scotch and just take these one at a time.
- Well I suppose that’s true enough. Luckily no one is trying to do that! Obama has lowered taxes. True, he has proposed increasing taxes on the wealthiest Americans by letting the top level “Bush tax cuts” expire, but even this will increase taxes by a whopping 3 – 5%, and remember that were talking about marginal rates. This only applies to traditional income, by the way. Capital gains taxes will remain at their historically low levels. So if this modest increase, back to the Clinton-era tax rates (when the economy was so awful!) constitutes “legislating the wealthy out of prosperity” then we should seriously examine our definition of prosperity.
- This is just plainly not true. Economics is not a zero sum game. If this were true, what of “creating wealth”?
- Again, economics is not zero sum. If this were true, what about the bank bailouts? It turns out the government is really good at giving people free money! I presume that we’re referring to the idea that things like food stamps are just “stolen” out of the pockets of hardworking Americans by the ravenous poor, so lets assume for a minute that statement number 3 is in fact true. Now, lets assume that an employee of a bailed out bank gets a one million dollar bonus with his bailout funds. Not an outrageous assumption. Because the government can’t give someone anything it didn’t take from someone else, we’ll assume that it took that million from a foodstamp recipient. The average benefit is $4.40 per day. Thus, the government would have to take almost 623 years worth of benefits from that person to fund that bonus! That sounds way more egregious to me.
- OK. I think this means that you can’t increase (multiply) wealth by decreasing (dividing) it. Actually, I agree! Perhaps we should keep that in mind when we talk about austerity! Paul Ryan and Mitt Romney may want to call their offices.
- There just really isn’t a significant group that thinks they don’t have to work because everyone else will just take care of them. I’m sure you can point to an example or two, but that’s anecdotal, not a real chunk of the population. Like I mentioned previously, SNAP benefits average less than five dollars per day. Who needs to work when you have that! Conversely, there are folks who make more in an hour than I do in a year. Their work is clearly paying off! If they actually decided to never do anything again because their taxes may go up by a couple percent, they would be leaving a whole hell of a lot of money on the table, and would be epicly stupid.
As a final point, if we continue the story’s theme of substituting grades and money and accept the statement that the 2012 election is a test, then the only way to pass is to be rich. OK, actually that one may make sense…
Ranting over. I’ll get back to the real world now. I feel like I wasted time by writing this. Or even thinking about it. Ah, well.
520 Chestnut 
It never stops amazing me when I hit on an issue from one side and someone else hits it from another the same day. I just looked at how socialism does work in real world application and why the Republican party is terrified of the very idea.
Of course, as a socialist, I find the professors version completely inaccurate as to what socialism really is. If he was truly attempting to explain socialism to his students, it would work this way:
If the class got together and held a bake sale, the profits would be shared amongst all the students evenly. This would be socialism.
If the profits were given only to those who paid for the tables where the bake sale was held and the students were paid a small fee for their labor, this would be capitalism.
But that would show the adherent problem when the means of production are owned by faceless investors with no inherent attachment or concern for the company beyond their dividends. We can’t have that leeching into the public mind, else the people may wake up and revolt in the streets. They might even get upset enough to vote and protest! Oh no!
As always, another great post.
Thanks! Whenever I hear someone say that Obama is a socialist, my first thought (not counting “sigh… dumbass”) is to send them to you
You’ve restated the problem with socialism: sharing the proceeds equally. There is no incentive to excel when the result is the same regardless.
[…] The Fake Story of an Incredibly Bad Economics Professor… Debunked! […]
Shannon…you are truly are ignorant. If this experiment doesn’t prove to you socialism destroys wealth and innovation you are a fool. And I do not argue with fools.
Shannon, contrary to Conner’s statement above, you are far from ignorant. You have explained it very simply so that even people with the challenged intellect of Conner would be able to understand it, except Conner refuses to acknowledge your intellectual superiority, which is, of course, a trademark of “those” people.
While I disagree with the original story, I disagree with your summary as well.
Point 2, How is wealth created without it being worked for? You must have something of value, either a good or a service. You have worked to create that good or work to provide that service. The only other way I see would be to own something and hope the value inflates while you are the owner. If some is given money with out providing a service or a good to another, The source that provided that money now has less. Please give me an example of wealth being created from nothing.
Point 3. Perhaps I’m over simplifying this, but the money from the government can come from 3 sources. Taxes, borrowing from other countries, and printing. Taxes are taken directly from our checks so the less the better, borrowing causes us to need to pay back the borrowed money (which will either cause increased taxes or the printing of more money), and the printing of money reduces the buying power of current money thereby hurting everyone in the country.
Point 5. The original point to the story is not would they quit working is taxes are increased. It’s about socialism. The average income in the USA is around 50,000. So, would the people who are innovating technologies, creating new medicines, and feeding the world continue to do so for that amount yearly? I would say no, or at least no where near the rate that they do now.
Basically I think socialism can work. Just not as well as Capitalism does.
What happens when they hold the second bake sale. My guess, the individuals who put in extra effort to make a great cake, or perhaps baked a few of them, will likely not put in the same effort next time. They could also decide to not bake anything at all, and just show up to set up tables and chairs. Less items equals less profit.
I am in sales for a living. If they paid all sales an average, instead of rewarding those who succeeded, it would take away all motivation for me to work harder. If sales from companies go down, company fails and many jobs are lost. Again a simple comparison, but in the long run it will not work. You cannot have a successful economy/country if you are not rewarded for your effort. And even if you could why would you want that mentality. Socialism breeds laziness at all levels in my mind. There would be no incentive to grow or get better. Technology and education would plummet also.
i think you wasted your time writing that too, just a bunch of loud words without much to say…
@ Cole: If you were a lazy sales person, it would imply that the customer would go elsewhere and buy from another supplier. All you work is just about forcing the customers to buy from your company rather than another company. If the customer needs something they will always find some supplier themselves. And now with internet it is soooo easy! Being a sales rep. does not bring any value to the customer, it only brings the value (revenue) to your company and steals the same value (lost revenue) from your competitors. It is just a useless job that brings no value to the society, a zero sum social output.
Read the U.S. Constitution – Obama is un-American because He wants Socialism to be the rule. He says so himself.
Freedom = good : permanent welfare = bad