The Marxists are Coming!

Communism from Capitalism, Do Government Subsidies Create Wealth?, Socialists or Marxists, Paul Revere

In this issue…

  • Liberty Perspective: Communism from Capitalism

  • Wealth Digest: Do Government Subsidies Create Wealth?

  • The Word: Socialists or Marxists

  • Historical Hero: Paul Revere

Liberty Perspective

Mao Zedong and Richard Nixon, 1972 China National Archives

According to recent analysis from the WSJ, China’s President Xi Jinping wants to transition from China’s version of capitalism to that of the socialist vision of Mao Zedong. Chairman Mao was a founding father of the Communist Party of China (CPC) which began in 1921. He eventually became the CPC’s first president of China (1949-1976).

For some background: in 1911, China’s emperor was removed from power during a revolution and Sun Yat-sen became president. After failing to adopt a multiparty political system like that of Britain or the United States, they settled on a one party ruled system known as the Guomindang (KMT).

Sun Yat-sen died in 1925. The new leader of KMT killed many of those who were a part of the new Communist Party.

After WWII and the defeat of Japan from within China, a civil war began between the ruling party KMT and the CPC. The communists won this civil war in 1949 with Mao Zedong becoming the president of China.

Mao was eager to move China out of third world status, but not through capitalism. Without much knowledge of economics, however, the CPC failed terribly with their Great Leap Forward (1958 -1961) and the Cultural Revolution (1966 -1976).

Their lack of success brought about reflection and with that, the belief that capitalism had a purpose. It wasn’t to bring about freedom or prosperity for their people, but according to Karl Marx, its purpose was to raise capital for development and to acquire the technology for advancement:

Hence, the credit system accelerates the material development of the productive forces and the establishment of the world-market. It is the historical mission of the capitalist system of production to raise these material foundations of the new mode of production to a certain degree of perfection. —Karl Marx, Capital Volume III, Ch. XXVII.

From 1949 to 1977 the CPC was committed to equal outcomes, but the country was still poor and isolated. Calls from the U.S. were for China to break out of its “angry isolation” and to join the “society of nations.”

In 1978, Chairman Deng Xiaoping introduced the socialist market economy which began to allow some economic freedoms and quasi capitalism. Until very recently, some in the West wondered if the CCP (Chinese Communist Party) would one day abandon communism altogether. Such sentiment as it turns out was misplaced.

CCP policies all along were just to use capitalism for a larger goal, known as the Bird Cage Strategy. This allows the bird some freedoms to fly around, but always contained within the CCP’s cage and under its rule. The bird will never be free.

It’s becoming apparent that China’s economic rise wasn’t to become a friendly partner in liberty. Richard Nixon and Henry Kissinger had many reasons to open up China, but they may not have realized that China wasn’t about to open up to capitalist America to reform, but to further their communist goals.

The Chinese have long departed from their angry isolationism and has engaged with the rest of world. As a result of foreign capital, international trade and economic freedoms, China has become rich and powerful. Even though tens of millions still live in extreme poverty, China could soon surpass the U.S. as the world’s largest economy.

China didn’t emerge with just capitalism, however. They also broke international trade laws, mandated intellectual property transfers, infringed on legal copyrights, implemented cyber espionage, and placed spies nearly everywhere within the U.S. and other advanced nations.

They now have the riches and the technology for the implementation of the final phase: They will begin transforming from their version of free enterprise to Mao’s vision of communism. Their ultimate goal is to have a successful communist system with equality for all.

To enter the final phase, they’ll continue to rein in billionaires and large Chinese companies that have brought them this far. Over time they will do the same to free markets and private property rights along with other freedoms to establish their ideal of communism, which necessarily leaves capitalism behind.

The Liberty Perspective is that China’s path is the same path that some Americans want the U.S. to get on. That’s called progress to these progressives who want to arrive at the same destination as those of the likes of Xi Jinping and Mao Zedong.

There are many socialists within the Democratic Party who may also have influence over the Biden Regime. There’s no doubt that the Squad are Marxists and they seem to have great power over this regime. I make the case in Organic Wealth that there are many within the Democratic Party who desire some form of democratic socialism; their policy positions betray them.

Even though Joe recently said, “I’m a capitalist,” it doesn’t mean that he isn’t willing to use the riches of capitalism to further the utopian dreams of the socialists who make up the Democratic Party.

To resist this Marxist plan of transforming U.S. capitalism to democratic socialism, we must support only those who value individual liberty and free markets. And equally important, reveal the socialists’ objectives to others.

Do Government Subsidies Create Wealth?

In the last issue of Liberty Word, wealth was defined as the saved monetary value from meeting demand. This type of wealth, by meeting demand, expands the wealth pie. It’s brand new wealth that didn’t exist before.

But what if someone doesn’t meet demand? They receive an income, but it’s from a government subsidy such as unemployment compensation, child tax credits or a universal basic income. If this money is saved and therefore becomes wealth for the saver, does it increase the size of the wealth pie as new wealth?

Wealth of this kind isn’t new and it doesn’t effectively expand the wealth pie. The reason is that the subsidy payment was taken from taxpayers who don’t receive an equal value in return. A taxpayer’s loss for another’s gain isn’t an increase in value; it’s zero sum.

Any wealth from a subsidy will dwarf what would have been created by those who were taxed. This is because most of the subsidies are just consumed altogether, never becoming wealth.

If taxpayers’ incomes weren’t confiscated by the government, they could have saved it and created new wealth, or consumed it in our economy to receive an equal value in return. Instead their money is just removed in an unequal transaction.

As a result of redistribution taxation, the wealth pie’s growth potential is stunted. The opportunity to grow the pie is eliminated because potential savings by the actual earner of the income doesn’t occur.

In addition, redistribution taxation takes money which was earned by a person’s labor to give to others. This means that people are forced to work for another group’s benefit. In essence, redistribution is a form of slavery.

As a consequence of socialist policies that redistribute income, the nation’s total wealth doesn’t grow as robust as it could be. And if these policies begin to tax existing wealth to further redistribute, the nation’s total wealth will stop growing completely and will eventually decline. I detail in Organic Wealth how democratic socialism is a zero sum game that will lead to eating away of the existing pie.

Taxation to Fund Government

There is a difference between tax payments that go to fund the government, which benefits everyone and those that go to subsidize others.

Both divert otherwise productive capital that could expand our economy. The economy slows as a result of any taxation. Without taxation, those that earn income could demand an equal amount of products or investments. Economic activity that originates from meeting demand is great for our economy and generates opportunities for everyone.

Tax revenue taken out of the economy to fund the government isn’t redistribution like with subsidies. Such taxation at least has an indirect benefit to the taxpayer of paying for a functioning government.

Some may argue that not all government expenditures meet taxpayer demand because of waste, unused or unwanted services, and because they are compulsory. A good case can be made that they are unequal transactions.

Most of us would agree, however, that all of the tax revenue collected is used to fund the government whether we’re happy about it or not. If we’re not happy, then we can vote for new representatives.

Because taxation to fund the government technically meets taxpayer demand, it’s much different than that of subsidies, which don’t provide any value to those who are taxed. Redistribution taxation is just a loss of an earner’s income and more importantly, it’s stolen labor for another’s benefit.

Just because socialist policies do harm our economy in multiple ways, it doesn’t mean that we should rid ourselves of all individual government subsidies. The majority of Americans want a safety net of some sort.

Unemployment, for instance, should exist but be temporary and without federal assistance. Welfare should be tied to a work program. Social Security is a contract, but should gradually be replaced by the Savings Tax as described in Organic Wealth. Disability should exist but reformed to eliminate fraud. And so on.

Our political leaders should ensure they’re not wasting the money of those who earned it. After all, the taxpayers are given no value in return for these kinds of expenditures and it’s an opportunity loss. Whenever D.C. proposes a new program, ask yourself if they care about the taxpayer or is it just a giveaway to buy votes.

Taxpayers shouldn’t be robbed for another groups’ benefit who could otherwise meet demand in the labor market. We should never accept a universal basic income, guaranteed government jobs or giving people money to not work because of a sick political strategy to keep people dependent upon the government.

Individual government subsidies, both the safety net kind and the socialist kind, do not expand the wealth pie. They stunt its growth. If socialism is ever implemented by a one party ruled Democratic Party, the wealth pie will shrink as the riches of capitalism are consumed until only crumbs remain.

The Word

It’s pretty obvious that using the word liberal to describe today’s democrats isn’t accurate any longer. We designate certain crazed political positions as coming from liberals, but this should change. I can hear Rush Limbaugh now, “They’re liberals folks, that’s who they are!”

Here are two traditional types of liberalism:

Classical liberalism is a limited government philosophy that emphasizes the inalienable rights of the individual. These rights include the civil liberties within the Bill of Rights, private property rights and access to a free market economy.

Social Liberalism also promotes freedom of the individual and free markets, but it also espouses an active role by the government to ensure everyone’s liberties and to provide a social safety net. Though, the funding of the safety net diminishes the individual liberty of the taxpayer.

Today’s left, however, has deviated even more from individual liberty protections in a couple of ways. First, they believe the government should guarantee so-called positive rights, which include free health care, higher education and even a basic income.

How can something be a right that costs money? Forcing one group to pay for another group violates individual liberty. The reason is taking one’s income away is the same thing as taking one’s labor. Remember, money is just a medium of exchange.

Secondly, today’s left has become authoritarian. They’re no longer idealists who advocate for free speech, unless the person or group agrees with them. If you disagree or your speech offends them, they want to cancel you and shut you down. They want total domination in advancing their agenda despite the cost to individual freedoms.

Though many say the Democratic Party is a “big tent party,” the policies that they support don’t seem to be influenced by traditional liberals. I guess they’re the ones with the masks on serving the celebrities within the Party.

There are a couple of more descript words that Republicans should use when referring to today’s political opposition. We should use either socialists or Marxists.

Socialists: Their support for positive rights requires wealth transfers just like with socialism. I outline in Organic Wealth how the Democrats want to remake the U.S. economy from capitalism to democratic socialism.

Marxists: Karl Marx wanted societies to transition to communism. In order to do so, they would need a “dictatorship of the proletariat.” This doesn’t mean dictatorship by an authoritarian. It means a one party rule in a democracy to ensure the transition to communism, which supposedly society would demand.

Today’s left wants one party rule. It’s why they want to federalize the elections to ensure they win. It’s why the Democrats want open borders to have millions of new voters who’ll be more than happy to demand a collective system where they’ll benefit. In Organic Wealth, I detail how their one party rule and their version of democratic socialism would be authoritarian.

So using liberal was kind of a dirty word to describe the left, but it’s a word they themselves dirtied up. Instead, we should use what they truly are, socialists or Marxists. Then, those who don’t know what’s happening will begin to ask why do you call them that?

Historical Hero

A hysterical piece was recently issued by The Babylon Bee that depicted General Milley riding a horse through the streets of Beijing shouting, “The Americans are coming!”

This funny but fictitious article combined two references. The first was Bob Woodward’s new book, titled Peril, in which it says that General Milley called his counterparts in China to say that he would warn them if the United States was going to attack. The second, of course, was Paul Revere's famous midnight ride.

Paul Revere was employed as an express rider in Massachusetts. His job was to carry messages and documents between different parties.

On April 18, 1775, Revere was hired to ride to Lexington, Massachusetts to deliver the news the British troops were about to arrive by sea to arrest Samuel Adams and John Hancock. The alert also warned the troops may continue to Concord, MA where military equipment was being stored.

The original midnight rider first had a friend place two lanterns in the tower of Christ’s Church to warn everyone that troops would arrive by sea.

Revere was taken by boat across the river to Charlestown where he began his run, about 11 pm. He set out warning the town of Medford and their local militia. He arrived in Lexington shortly after midnight. Revere delivered his message to the town of Lexington and warned Adams and Hancock.

On his way to Concord, Revere was captured by some British troops and questioned. They stole his horse, but let him go. Revere walked back to Lexington where the battle of Lexington Green was underway.

George Washington wrote in his diary of this battle, "The Spot on which the first blood was spilt in the dispute with Great Britain."

Of the 77 minute men that faced the British troops, 8 died and 10 were wounded. The British had two that were injured. After the battle was over, Samuel Adams said to John Hancock, "What a glorious morning for America!"

If it weren’t for Revere’s famous run, the outcome may not have been so glorious.

Spread the Liberty Word

Quotable suggestions:

“China’s path (abandoning capitalism completely) is the same path that some Americans want the U.S. to get on.”

“Individual government subsidies, both the safety net kind and the socialist kind, do not expand the wealth pie. They stunt its growth.”

“So using liberal was kind of a dirty word to describe the left, but it’s a word they themselves dirtied up. Instead, we should use what they truly are, socialists or Marxists.”